<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE OF 1934
For the transition period from _____________ to _____________
COMMISSION FILE NUMBER 0-22972
CELLSTAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2479727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1730 BRIERCROFT COURT
CARROLLTON, TEXAS 75006
TELEPHONE (972) 466-5000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
---
On October 11, 1996, there were 19,273,562 outstanding shares of Common Stock,
$0.01 par value per share.
<PAGE>
CELLSTAR CORPORATION
INDEX TO FORM 10-Q
Page
Number
------
PART I. - FINANCIAL INFORMATION
- ------ ---------------------
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
August 31, 1996 (unaudited) and November 30, 1995 3
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three and nine months ended August 31, 1996 and 1995 4
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited)
Nine months ended August 31, 1996 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine months ended August 31, 1996 and 1995 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II. - OTHER INFORMATION 17
- -------- -----------------
Item 1. LEGAL PROCEEDINGS 17
Item 2. CHANGES IN SECURITIES 17
Item 3. DEFAULTS UPON SENIOR SECURITIES 17
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17
Item 5. OTHER INFORMATION 17
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 17
2
<PAGE>
PART 1
------
ITEM 1. FINANCIAL STATEMENTS
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
----------- ------------
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,783 31,508
Accounts receivable (less allowance for doubtful accounts
of $17,042 and $3,738, respectively) 126,214 125,079
Inventories 94,825 109,287
Deferred income taxes 2,141 3,158
Prepaid expenses 1,705 2,124
--------- ---------
Total current assets 235,668 271,156
Property and equipment, net 24,596 23,549
Goodwill (less accumulated amortization of $1,093 and
$437, respectively) 16,834 17,047
Other assets 1,866 3,169
--------- ---------
$ 278,964 314,921
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 82,516 78,758
Notes payable to financial institutions 71,874 98,603
Accrued expenses 13,705 8,446
Income taxes payable 7,686 10,355
Current portion of long-term debt 559 584
--------- ---------
Total current liabilities 176,340 196,746
Long-term debt, less current portion 6,447 6,880
---------- ---------
Total liabilities 182,787 203,626
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized;
19,274,000 shares issued and outstanding 193 193
Additional paid-in capital 68,167 68,167
Common stock warrants 4 4
Foreign currency translation adjustments (4,373) (3,901)
Retained earnings 32,186 46,832
---------- ---------
Total stockholders' equity 96,177 111,295
---------- ---------
$ 278,964 314,921
========== =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months Nine months
ended August 31, ended August 31,
1996 1995 1996 1995
---------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Net product sales $ 195,679 175,017 573,168 502,535
Activation income 24,454 20,145 70,786 55,335
Residual income 3,457 3,138 10,182 9,079
---------------- -------------- -------------- ---------------
Total revenues 223,590 198,300 654,136 566,949
Cost of sales 192,798 167,554 561,711 489,127
---------------- -------------- -------------- ---------------
Gross profit 30,792 30,746 92,425 77,822
Selling, general and administrative expenses 37,285 21,012 97,872 55,258
---------------- -------------- -------------- ---------------
Operating (loss) income (6,493) 9,734 (5,447) 22,564
---------------- -------------- -------------- ---------------
Other income (expense):
Interest expense (1,886) (1,856) (6,861) (3,606)
Equity in earnings (undistributed loss) of joint
ventures 96 24 (554) 3,367
Other, net (1,332) 4 (167) (101)
---------------- -------------- -------------- ---------------
Total other income (expense) (3,122) (1,828) (7,582) (340)
---------------- -------------- -------------- ---------------
(Loss) income before income taxes (9,615) 7,906 (13,029) 22,224
Provision for income taxes 2,716 1,684 1,617 5,696
---------------- -------------- -------------- ---------------
Net (loss) income $ (12,331) 6,222 (14,646) 16,528
================ ============== ============== ===============
Net (loss) income per share $ (0.64) 0.33 (0.76) 0.89
================ ============== ============== ===============
Weighted average number of shares outstanding 19,274 18,895 19,274 18,673
================ ============== ============== ===============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Nine months ended August 31, 1996
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Foreign
Additional Common currency
Common Stock paid-in stock translation Retained
Shares Amount capital warrants adjustments earnings Total
--------- --------- ---------- -------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at November 30, 1995 19,274 $ 193 68,167 4 (3,901) 46,832 111,295
Net loss - - - - - (14,646) (14,646)
Foreign currency translation
adjustments - - - - (472) - (472)
--------- --------- ---------- ------- ----------- --------- ---------
Balance at August 31, 1996 19,274 $ 193 68,167 4 (4,373) 32,186 96,177
========= ========== ========== ======= =========== ========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended August 31, 1996 and 1995
(Unaudited)
(in thousands)
<TABLE>
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (14,646) 16,528
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,074 2,267
Deferred income taxes 1,017 (58)
(Equity in earnings) undistributed loss of joint ventures 554 (3,367)
Changes in certain operating assets and liabilities:
Accounts receivable (1,607) (37,811)
Inventories 15,633 (57,090)
Prepaid expenses 419 (694)
Other assets 333 (978)
Accounts payable 2,587 (17,146)
Accrued expenses 4,816 1,589
Income taxes payable (2,669) 489
------------- -------------
Net cash provided by (used in) operating activities 10,511 (96,271)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (4,049) (7,154)
Purchase of equity investments in joint ventures - (750)
------------- -------------
Net cash used in investing activities (4,049) (7,904)
------------- -------------
Cash flows from financing activities:
Net (payments) borrowings on notes payable to financial institutions (26,729) 95,405
Proceeds from issuance of long-term debt - 4,425
Net proceeds from issuance of common stock - 15,243
Proceeds from issuance of note payable to stockholder - 3,728
Payment on notes payable to stockholder - (22,000)
Principal payments on long-term debt (458) (190)
------------- -------------
Net cash (used in) provided by financing activities (27,187) 96,611
------------- -------------
Net decrease in cash and cash equivalents (20,725) (7,564)
Cash and cash equivalents at beginning of period 31,508 13,970
------------- -------------
Cash and cash equivalents at end of period $ 10,783 6,406
============= =============
Supplemental cash flow information:
Interest paid $ 7,419 3,381
============= =============
Income taxes paid $ 2,180 3,481
============= =============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
CELLSTAR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
---------------------
Although interim consolidated financial statements of CellStar Corporation
(the "Company" or "CellStar") are unaudited, it is the opinion of the Company's
management that all recurring adjustments necessary for a fair statement of the
results have been reflected therein. Operating revenues and net earnings for any
interim period are not necessarily indicative of the results that may be
expected for the entire year.
These statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company's Annual Report
on Form 10-K for the year ended November 30, 1995.
(2) Geographic Area Information
---------------------------
The Company operates predominately within one business segment, wholesale
and retail sales of cellular phones and related products and services. Financial
information by geographic area as of and for the nine months ended August 31,
1996 and 1995, is as follows (in thousands):
<TABLE>
<CAPTION>
United South Asia-
States Mexico America Pacific Total
----------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
August 31, 1996:
Total revenues, net of
intercompany amounts $ 386,460 32,478 61,626 173,572 654,136
Intercompany sales
(purchases) 29,019 (9,661) (18,445) (913) -
(Loss) income before
income taxes (9,827) 2,394 (18,613) 13,017 (13,029)
Net (loss) income (7,122) 1,996 (19,124) 9,604 (14,646)
Identifiable assets 145,434 12,749 43,116 77,665 278,964
August 31, 1995:
Total revenues, net of
intercompany amounts $ 367,118 35,050 79,597 85,184 566,949
Intercompany sales
(purchases) 87,870 (16,324) (39,589) (31,957) -
Income (loss) before
income taxes 13,498 (3,538) 944 11,320 22,224
Net income (loss) 8,347 (2,399) 776 9,804 16,528
Identifiable assets 160,052 9,186 59,317 74,223 302,778
</TABLE>
The Company classifies export sales to its foreign nonconsolidated joint
ventures as revenues attributable to its U.S. operations. Certain prior year
amounts have been reclassified to conform to the current year presentation. The
Company does not allocate corporate overhead to specific geographic regions.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company experienced a net loss of $12.3 million in the third
fiscal quarter, primarily due to unusual expenses incurred in its South
American operations. The South American loss was attributable to $14.9
million of unusual expenses in the Company's South American operations,
including an $8.5 million increase in trade accounts receivable reserves
and a $2.0 million write-off of a deferred tax asset. See "International
Operations" and "Provision for Income Taxes." In addition, the Company
continued to experience unprofitable performance in its Communication
Centers in Sam's Club locations. As reported earlier, the Company is
continuing to strengthen its internal controls to reduce its exposure to
financial and operating risks.
The Company announced in April 1996 that it was encountering
problems with its financial controls. At that time, CellStar initiated a
program to build stronger financial and information technology control
systems. The initial focus has been on materials management,
international operations and information technology. The Company expects
to see positive impact from these important steps by the end of fiscal
year 1996.
The Company primarily relies on cash generated from operations and
borrowings under existing credit facilities to fund working capital,
capital expenditures and expansions. The Company believes that its
current cash resources will be adequate to meet the Company's capital
needs in the near term. The Company also believes that long-term capital
will be required over time to allow the Company to grow and anticipates
that such funding will be available. See "Liquidity and Capital
Resources."
The Company has entered into a definitive agreement with MCI
Telecommunications Corporation ("MCI") for the sale of the Company's
Communication Centers located in Sam's Clubs for $17.2 million, subject
to certain purchase price adjustments. Under the terms of the agreement,
MCI will purchase certain assets of the Communication Center operations,
assume certain contracts used in connection with the operations and
retain substantially all of the employees. The Company will also sign a
distribution agreement with MCI to supply MCI with cellular phones and
accessories for the Communication Centers. The Company expects to
consummate this transaction by the end of fiscal year 1996. The closing
of the transaction is subject to certain conditions. Accordingly, there
can be no assurance that the transaction will be consummated. The
Company anticipates that this sale will enable it to focus its resources
more effectively on its core wholesale business.
8
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain unaudited consolidated statement of
operations data for the Company expressed as a percentage of total revenues for
the three and nine months ended August 31, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Nine Months
ended August 31, ended August 31,
1996 1995 1996 1995
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Net product sales 87.5 % 88.3 % 87.6 % 88.6 %
Activation income 10.9 10.1 10.8 9.8
Residual income 1.6 1.6 1.6 1.6
------------ ------------- ------------ ------------
Total revenues 100.0 100.0 100.0 100.0
Cost of sales 86.2 84.5 85.9 86.3
------------ ------------- ------------ ------------
Gross profit 13.8 15.5 14.1 13.7
Selling, general and administrative expenses 16.7 10.6 14.9 9.7
------------ ------------- ------------ ------------
Operating (loss) income (2.9) 4.9 (0.8) 4.0
------------ ------------- ------------ ------------
Other income (expense):
Interest expense (0.8) (0.9) (1.1) (0.7)
Equity in earnings (undistributed loss) of
joint ventures - - (0.1) 0.6
Other, net (0.6) - - -
------------ ------------- ------------ ------------
Total other income (expense) (1.4) (0.9) (1.2) (0.1)
------------ ------------- ------------ ------------
(Loss) income before income taxes (4.3) 4.0 (2.0) 3.9
Provision for income taxes 1.2 0.9 0.2 1.0
------------ ------------- ------------ ------------
Net (loss) income (5.5) % 3.1 % (2.2) % 2.9 %
============ ============= ============ ============
</TABLE>
The Company classifies revenues generated by its majority-owned foreign
subsidiaries as revenues attributable to its international operations and
classifies export sales to its foreign nonconsolidated ventures as revenues
attributable to its domestic operations. The amount of net revenue and their
percentages of the Company's domestic and international revenues for the three
and nine months ended August 31, 1996 and 1995 are shown below:
<TABLE>
<CAPTION>
Three Months ended August 31, Nine Months ended August 31,
1996 1995 1996 1995
--------------------- -------------------- ------------------ --------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic:
Net product sales $ 124,610 55.7 % $ 75,121 37.9 % $ 320,001 48.9 % $ 322,228 56.8 %
Activation income 19,521 8.7 13,773 6.9 57,496 8.8 37,328 6.6
Residual income 3,043 1.4 2,679 1.4 8,963 1.4 7,562 1.3
----------- -------- ---------- -------- ---------- ------- ---------- --------
Total domestic 147,174 65.8 91,573 46.2 386,460 59.1 367,118 64.7
----------- -------- ---------- -------- ---------- ------- ---------- --------
International:
Net product sales 71,069 31.8 99,896 50.4 253,167 38.7 180,307 31.8
Activation income 4,933 2.2 6,372 3.2 13,290 2.0 18,007 3.2
Residual income 414 0.2 459 0.2 1,219 0.2 1,517 0.3
----------- -------- ---------- -------- ---------- ------- ---------- --------
Total international 76,416 34.2 106,727 53.8 267,676 40.9 199,831 35.3
----------- -------- ---------- -------- ---------- ------- ---------- --------
Total $ 223,590 100.0 % $ 198,300 100.0 % $ 654,136 100.0 % $ 566,949 100.0 %
=========== ======== ========== ======== ========== ======= ========== ========
</TABLE>
9
<PAGE>
THREE MONTHS ENDED AUGUST 31, 1996 COMPARED TO THREE MONTHS ENDED AUGUST
31, 1995
Revenues. Total revenues increased $25.3 million, or 12.8%, from
$198.3 million in the third fiscal quarter of 1995 to $223.6 million in
the third fiscal quarter of 1996.
Domestic revenues increased $55.6 million, or 60.7%, from $91.6
million to $147.2 million. The increase in domestic revenues was due
primarily to increased product sales from the Company's Miami, Florida
warehouse to customers exporting into South American countries as the
cellular capacity in those countries expanded. In addition, the Company
changed its business strategy to shift sales from its South American
operations to the United States. See "International Operations." Also
contributing to this increase was the Company's increased presence in the
western United States market through its acquisition of 80% ownership in
CellStar West, Inc. ("CellStar West") in February 1996.
Domestic activation income increased $5.7 million primarily as a
result of an overall increase in unit sales at the retail level, which
was partially offset by a decrease in the average commission per
activation paid by cellular carriers. The increase in unit sales at the
retail level was attributable to the Company's expansion of Communication
Centers from an average of 219 to 354 Sam's Club locations for the three
months ended August 31, 1995 and 1996, respectively. The increase in
residual income corresponds to the Company's growing cellular phone user
base, which was partially offset by lower average monthly user phone
bills.
The Company's international revenues decreased 28.4% from $106.7
million to $76.4 million. Net product sales in the Company's Asia-
Pacific operations declined $31.9 million, or 42.1%, from $75.7 million
in 1995 to $43.8 million in 1996. This decline resulted from a lower
level of net product sales in the Company's Hong Kong operations. Net
product sales in Hong Kong declined $34.3 million, from $65.3 million in
1995 to $31.0 million in 1996, due to several factors including the
unavailability of the highly popular digital PCS phones and increased
competition that caused downward pressure on selling prices. The
decrease in net product sales in Hong Kong was somewhat offset by the
Company's operations in Singapore, which generated $12.3 million of
revenue in 1996, an 18.3% increase from $10.4 million in 1995.
Net product sales in Mexico increased by approximately $4.3 million,
or 95.6%, from $4.5 million in 1995 to $8.8 million in 1996. This
improvement was due to both an improvement in general economic conditions
and the introduction of the lower cost prepaid cellular plans, which
stimulated demand for cellular products. However, the Company does not
expect this trend to continue due to a change in market conditions, which
may cause a reduction in net product sales.
Net product sales in the Company's South American operations
declined $1.2 million, or 6.1%, from $19.7 million in 1995 to $18.5
million in 1996. This decline resulted from lower levels of net product
sales in each of the Company's South American operations, with the
exception of the Company's operations in Argentina and Ecuador, which
commenced business in November 1995 and had combined net product sales of
$5.4 million in 1996. See "International Operations." The largest
declines in net product sales were experienced by the Company's
operations in Venezuela, Colombia and Brazil. Net product sales in
Venezuela declined by $3.2 million, or 72.7%, from $4.4 million in 1995
to $1.2 million in 1996. This decrease in net product sales resulted from
declining economic conditions in Venezuela and a major devaluation in the
Venezuelan bolivar relative to the U.S. dollar during the second fiscal
quarter of 1996. Net product sales in other South American countries were
impacted by the Company's change in its business strategy to shift sales
from its South American operations to the United States. Net product
10
<PAGE>
sales in Colombia declined $0.8 million, or 33.3%, from $2.4 million in
1995 to $1.6 million in 1996. Net product sales in Brazil declined $2.4
million, or 21.4%, from $11.2 million in 1995 to $8.8 million in 1996.
Gross Profit. Gross profit as a percentage of total revenues
decreased from 15.5% in the third quarter of fiscal year 1995 to 13.8% in
the third quarter of fiscal year 1996 primarily due to an increase in the
provision of $3.1 million for inventory obsolescence, principally related
to the South American operations.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $16.3 million, or 77.6%, from $21.0
million to $37.3 million. Approximately $8.5 million of the increase
resulted from an increase in trade accounts receivable reserves to
reflect a deterioration in the trade accounts receivable portfolio in the
Company's South American operations, primarily in Brazil. See
"International Operations." An additional $2.9 million, or 17.8%, of the
increase was attributable to an increase in salaries and benefits for the
addition of employees to support the growth of the Company's operations,
primarily the expansion of Communication Centers from an average of 219
to 354 Sam's Club locations for the three months ended August 31, 1995
and 1996, respectively. The expansion of Communication Centers also gave
rise to other increases in selling, general and administrative expenses
as these operations have experienced higher operating expenses than
wholesale operations.
Operating (Loss) Income. Operating income decreased from $9.7
million to a loss of $6.5 million primarily due to the significant
increase in selling, general and administrative expenses and the
reduction in net product sales in the Company's Asia-Pacific operations.
Provision for Income Taxes. Income tax expense increased from $1.7
million in the third quarter of 1995 on pre-tax income of $7.9 million to
$2.7 million in the third quarter of 1996 on a pre-tax loss of $9.6
million. At August 31, 1996, the Company wrote off a deferred tax asset
of approximately $2.0 million associated with its Brazilian operation due
to the uncertainty of the Company's ability to generate sufficient future
taxable income to utilize this tax benefit in the near term. Further, for
the same reason, the Company did not recognize a tax benefit associated
with current period losses in its South American operations. See
"International Operations."
11
<PAGE>
NINE MONTHS ENDED AUGUST 31, 1996 COMPARED TO NINE MONTHS ENDED AUGUST
31, 1995
Revenues. Total revenues increased $87.2 million, or 15.4%, from
$566.9 million in the nine-month period ended August 31, 1995 to $654.1
million in the nine-month period ended August 31, 1996.
Domestic revenues increased $19.4 million, or 5.3%, from $367.1
million to $386.5 million. The increase in domestic revenues was
attributable to increased product demand and increases in activation and
residual income. Domestic net product sales decreased as a result of the
acquisition of the remaining 50% interest in the Company's Hong Kong
joint venture, CellStar (Asia) Corporation, Ltd. ("CellStar Asia"), in
June 1995. Sales of product to CellStar Asia, which were $90.2 million
through the date of acquisition, were considered export sales within
domestic operations. Net product sales for CellStar Asia for the nine
months ended August 31, 1996 were included in international operations.
The decrease in domestic product sales, which resulted from the
acquisition of CellStar Asia, was offset by increased net product sales
from the Company's Miami, Florida warehouse to customers exporting into
South American countries as the cellular capacity in those countries
expanded. In addition, the Company changed its business strategy to shift
sales from its South American operations to the United States. See
"International Operations." Also contributing to this increase was the
Company's increased presence in the western United States market through
its acquisition of 80% ownership in CellStar West in February 1996.
Domestic activation income increased $20.2 million, primarily as a
result of an overall increase in unit sales at the retail level, which
was partially offset by a decrease in the average commission per
activation paid by cellular carriers. The increase in unit sales at the
retail level was attributable to the Company's expansion of Communication
Centers from an average of 154 to 352 Sam's Club locations for the nine
months ended August 31, 1995 and 1996, respectively. The increase in
residual income corresponds to the Company's growing cellular phone user
base. The increase, however, was partially offset by lower average
monthly user phone bills.
The Company's international revenues increased 34.0%, from $199.8
million to $267.7 million. The growth in international revenues was due
primarily to the acquisition of the remaining 50% interest in CellStar
Asia, which resulted in CellStar Asia's revenues being classified as
international revenues beginning in June 1995. Prior to the acquisition,
CellStar Asia's operations were not consolidated with the operations of
the Company and sales to CellStar Asia were considered revenues of the
Company's domestic operations. CellStar Asia provided $140.4 million in
product revenues in the first three quarters of 1996 compared to $65.3
million in 1995 subsequent to the acquisition. Sales of product to
CellStar Asia in 1995, prior to the Company's acquisition of the
remaining 50% interest, were $90.2 million and were included in domestic
net product sales. The Company's operations in Singapore, which commenced
in the first quarter of 1995, generated $32.6 million of revenue in 1996,
a 63.8% increase from $19.9 million in 1995.
Net product sales in Mexico decreased by approximately $0.8 million,
or 3.5%, from $22.8 million in 1995 to $22.0 million in 1996. This
decline in net product sales in Mexico was primarily due to decreased
demand for cellular products in Mexico that began in the second quarter
of 1995 and continued through the first quarter of fiscal 1996. The
decline in demand was, in turn, caused in part by a large devaluation of
the Mexican peso relative to the U.S. dollar in December 1994. While net
product sales in Mexico declined during the first nine months of 1996
relative to the same period in 1995, net product sales during the third
quarter of 1996 improved from the same period in 1995 due to an improved
economy and the introduction of
12
<PAGE>
lower cost prepaid cellular plans that stimulated demand for cellular
products. However, the Company does not expect this trend to continue due
to a change in market conditions, which may cause a reduction in net
product sales.
Net product sales in the Company's South American operations
declined $14.8 million, or 20.4%, from $72.4 million in 1995 to $57.6
million in 1996. This decline in net product sales resulted from lower
levels of net product sales in each of the Company's South American
operations, with the exception of the Company's operations in Argentina
and Ecuador, which commenced business in November 1995 and had combined
net product sales of $15.5 million in 1996. Net product sales were
impacted by the Company's change in its business strategy to shift sales
from its South American operations to the United States and by tighter
credit controls imposed by the Company on its wholesale customers in
South America. See "International Operations." The largest declines in
net product sales in South America were experienced by the Company's
operations in Colombia and Brazil. Net product sales in Colombia declined
$11.6 million, or 55.8%, from $20.8 million in 1995 to $9.2 million in
1996 due to the unavailability of product. Net product sales in Brazil
declined by $11.0 million, or 30.4%, from $36.2 million in 1995 to $25.2
million in 1996.
Gross Profit. Gross profit increased by $14.6 million, or 18.8%,
from $77.8 million to $92.4 million, and gross profit as a percentage of
total revenues increased from 13.7% in the nine-month period ended August
31, 1995 to 14.1% in the current period. Revenues for the nine-month
period ended August 31, 1995 included export sales of $90.2 million, with
a gross margin of 4.1%, to CellStar Asia, which became a wholly-owned
subsidiary on June 2, 1995. The increase in gross profit in 1996 was
primarily due to the consolidation of CellStar Asia's higher gross margin
sales and an increase in domestic retail sales relative to wholesale
sales, which have a higher gross margin than wholesale domestic sales.
Domestic retail revenues increased from $63.4 million to $101.6 million
primarily due to the increase in the number of Communication Centers.
These gross profit increases were partially offset by provisions for
inventory obsolescence.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $42.6 million, or 77.0%, from $55.3
million to $97.9 million. Approximately $11.2 million, or 26.3%, of the
increase resulted from an increase in trade accounts receivable reserves
to reflect a deterioration in the trade accounts receivable portfolio in
the Company's South American operations, primarily in Brazil. See
"International Operations." An additional $12.0 million, or 28.2%, of
the increase was attributable to an increase in salaries and benefits for
the addition of employees to support the growth of the Company's
operations, primarily the expansion of Communication Centers from an
average of 154 to 352 Sam's Club locations for the nine months ended
August 31, 1995 and 1996, respectively. The expansion of Communication
Centers also gave rise to other increases in selling, general and
administrative expenses as these operations have experienced higher
operating expenses than wholesale operations.
Operating (Loss) Income. Operating income decreased from $22.6
million to a loss of $5.4 million due to the significant increase in
selling, general and administrative expenses.
Interest Expense. Interest expense increased in the nine months
ended August 31, 1996 to $6.9 million from $3.6 million in the nine
months ended August 31, 1995. The increase in interest expense resulted
primarily from the maintenance of a higher balance under the Company's
revolving credit agreements.
Equity in Earnings (Undistributed Loss) of Joint Ventures. Equity
in earnings of joint ventures decreased $3.9 million from the nine months
ended August 31, 1995 to the nine months ended August 31, 1996. The
decrease was attributable to the Company's acquisition of the
13
<PAGE>
remaining 50% interest in CellStar Asia in June 1995. The Company's 50% equity
interest in the operations of CellStar Asia prior to the date of the acquisition
was classified as equity in earnings of joint ventures.
Provision for Income Taxes. Income tax expense decreased from $5.7 million
in the nine months ended August 31, 1995 to $1.6 million in the nine months
ended August 31, 1996. This change was primarily due to the net loss for the
period and the non-recognition of tax benefits related to current period losses
in the Company's South American operations. See "International Operations."
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company primarily relies on cash generated from operations and
borrowings under its credit facilities to fund working capital, capital
expenditures and expansions. In addition, in certain situations, the Company has
been provided with extended terms from key suppliers to fund working capital
requirements of the domestic and Latin American operations.
The Company's primary revolving credit facility (the "Credit Agreement") is
with a group of five banks and currently has a maximum borrowing limit of $90.0
million. Fundings under the line are limited by a borrowing base computed as a
percentage of domestic accounts receivable and inventories. At October 8, 1996,
the borrowing base limited borrowings to $79.2 million ($75.7 million at August
31, 1996).
CellStar Asia has a $15.0 million credit agreement with a bank. Fundings
under this credit agreement are limited by a borrowing base computed as a
percentage of CellStar Asia's accounts receivable and inventories. At October 8,
1996, the borrowing base limited borrowings to $15.0 million ($14.2 million at
August 31, 1996).
At August 31, 1996, the Company had $10.8 million of cash and cash
equivalents, a decrease of $20.7 million since November 30, 1995. This decrease
is reflective of a reduction of credit obligations and domestic and South
American operating losses. The Company reduced bank debt by $27.2 million during
the nine months ended August 31, 1996 by effectively managing inventory levels
downward by $15.6 million primarily in its domestic and South American
operations. On October 3, 1996, the Company announced it had signed an agreement
with MCI for the sale of the Company's Communication Centers. The Company
anticipates the sale will close by November 30, 1996. Proceeds from the sale
will be used to pay down the Credit Agreement and for working capital purposes.
The Company does not currently anticipate that it will need capital in excess of
its current credit facilities in the near future to fund its operations, capital
expenditures and near term business expansion.
The Company has received extended credit terms from key suppliers. The
Company anticipates that such extended terms will continue to be made available
to the Company in certain situations and the Company will take advantage of the
extended terms to meet part of its short-term working capital needs. This
situation did not materially impact the Company's ability to obtain inventory
and thus did not have a significant impact on sales for the period.
Cash used in investing activities of $4.0 million primarily related to
purchases of various computer and office equipment during the nine months ended
August 31, 1996. By comparison, the Company spent $7.2 million during the same
period in the last fiscal year for the construction of its distribution
warehouse in Carrollton, Texas and office equipment primarily for the expansion
of Communication Centers.
Traditionally, CellStar has financed growth in its domestic business and
expansion into international markets with bank credit facilities. The Company
believes that long-term capital funding in the form of debt and/or equity will
be required over time to continue to allow the Company to grow. While CellStar
has no immediate plans for long-term debt and/or equity financing, it
anticipates that financing will be available at the appropriate time to meet the
Company's long-term capital needs.
15
<PAGE>
INTERNATIONAL OPERATIONS
The Company's South American operations were negatively impacted by several
factors during the third quarter, including a significant deterioration in the
trade accounts receivable portfolio, an increase in the provision for inventory
obsolescence and the write-off of a deferred tax asset. In recognition of the
deterioration of its trade accounts receivables portfolio in specific South
American markets, the Company added $8.5 million to its allowance for doubtful
accounts in the region. Two countries, Brazil and Colombia, were responsible for
a majority of this increase in the allowance, with the bankruptcy of one
Brazilian customer during September accounting for the addition of $3.3 million
to the allowance. While the Company believes that the level of its allowance is
adequate to cover the risks of loss it has currently identified in its trade
accounts receivable portfolio in South America, a further decline in economic
conditions in the region could have an adverse effect on the Company, including
the possible negative impact of such decline on a concentration of receivables
among relatively few customers in Brazil.
At August 31, 1996, the Company wrote off a deferred tax asset of
approximately $2.0 million associated with its Brazilian operation due to the
uncertainty of the Company's ability to generate sufficient future taxable
income to utilize this tax benefit in the near term.
During the third quarter, the Company continued its program to reduce the
overall level of assets maintained in South America. The intent of this program
is to reduce the Company's working capital requirements related to its South
American operations to reduce the Company's exposure to financial and operating
risks in the region. This program resulted in a $30.8 million, or 41.7%,
reduction in South American assets from $73.9 million at February 29, 1996, to
$43.1 million at August 31, 1996. Other changes to the Company's South American
business strategy include a trend toward selling product to certain large South
American customers directly from the Company's U.S. operations, where feasible,
and a general reduction in the number of employees in the region. The Company
expects this South American asset reduction trend to continue in subsequent
quarters, although at a somewhat slower pace than experienced in the second and
third quarters of 1996.
As a result of economic volatility in Latin America, many currencies in the
region have consistently lost value relative to the U.S. dollar over time. This
regional history of local currency devaluations relative to the U.S. dollar
along with the Company's largely U.S. dollar based cost structure for its Latin
American operations produce the potential for the Company to incur foreign
currency transaction losses in the normal course of business. In the third
quarter of 1996, the Company experienced $0.7 million in foreign currency
transaction losses, primarily related to its operation in Brazil. The Company
attempts to mitigate the financial impact of foreign currency devaluations
relative to the U.S. dollar by pricing its products in U.S. dollars where
possible, by increasing prices of products at or above the anticipated rate of
local currency devaluations, by indexing certain of its local currency accounts
receivable to exchange rates in effect at the time of their payment, and by
entering into foreign currency hedge contracts in certain instances.
16
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 22, 1996, a purported class action lawsuit was filed in the
Northern District of Texas, Dallas Division, styled as follows: Reed and
Lillian Riemer v. CellStar Corporation, Alan H. Goldfield, Terry S.
Parker, John S. Bain, Kenneth W. Sanders and KPMG Peat Marwick, L.L.P.
(the "Riemer Suit"). The Riemer Suit alleges violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and
Rule 10b-5 promulgated thereunder, as well as certain state laws. The
plaintiffs allege that the defendants made untrue statements of material
fact and/or omitted to state material facts about the business, financial
condition, performance and future prospects of the Company, and that the
value of the Company's common stock was artificially inflated as a result
of such statements and omissions. The Riemer Suit seeks compensatory and
exemplary damages and reimbursement of counsel and expert fees and costs.
The Riemer Suit has been consolidated with the Gluck Suit, the
Larson Suit, and the Goggin Suit discussed in the Form 10-Q for the
quarterly period ended May 31, 1996, and the State of Wisconsin
Investment Board has been appointed lead plaintiff in the consolidated
action.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
2.1 Asset Purchase Agreement, dated as of October 1, 1996, by and
among MCI Telecommunications Corporation and National Auto
Center, Inc., CellStar Ltd. and CellStar Corporation (4)(5)
3.1 Amended and Restated Certificate of Incorporation of the
Company (1)
3.2 Amended and Restated Bylaws of the Company (3)
4.1 The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company filed as Exhibits
3.1 and 3.2 are incorporated into this item by reference
(1)(3)
17
<PAGE>
4.2 Specimen Common Stock Certificate of the Company (2)
10.1 Second Amendment to Amended and Restated Loan Agreement, dated
as of July 31, 1996, among National Auto Center, Inc.,
CellStar Corporation, each of the banks or other lending
institutions signatory thereto, and Texas Commerce Bank
National Association (4)
10.2 Third Amendment to Amended and Restated Loan Agreement, dated
as of July 31, 1996, among National Auto Center, Inc.,
CellStar Corporation, each of the banks or other lending
institutions signatory thereto, and Texas Commerce Bank
National Association (4)
10.3 Agreement by and between Motorola Inc., by and through its Pan
American Cellular Subscriber Group, and CellStar, Ltd.,
effective January 1, 1996 (Domestic U.S.) (4)(5)
27.1 Financial Data Schedule (4)
________________________________________
(1) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1995, and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report
of Form 10-K for the fiscal year ended November 30, 1995, and
incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference.
(4) Filed herewith.
(5) Certain provisions of this exhibit are subject to a request
for confidential treatment filed with the Securities and
Exchange Commission.
(B) REPORTS ON FORM 8-K.
None.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CELLSTAR CORPORATION
By: /s/ RICHARD M. GOZIA
__________________________________
Richard M. Gozia,
Executive Vice President-
Administration and Chief Financial
Officer (Principal Financial
Officer)
By: /s/ EVELYN HENRY MILLER
__________________________________
Evelyn Henry Miller,
Vice President and Corporate
Controller
Date: October 15, 1996
19
<PAGE>
EXHIBIT INDEX
---------------
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ------------------------------------------------------------
<S> <C>
2.1 Asset Purchase Agreement, dated as of October 1, 1996, by and
among MCI Telecommunications Corporation and National Auto
Center, Inc., CellStar Ltd. and CellStar Corporation (4)(5)
3.1 Amended and Restated Certificate of Incorporation of the
Company (1)
3.2 Amended and Restated Bylaws of the Company (3)
4.1 The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company filed as Exhibits
3.1 and 3.2 are incorporated into this item by reference
(1)(3)
4.2 Specimen Common Stock Certificate of the Company (2)
10.1 Second Amendment to Amended and Restated Loan Agreement, dated
as of July 31, 1996, among National Auto Center, Inc.,
CellStar Corporation, each of the banks or other lending
institutions signatory thereto, and Texas Commerce Bank
National Association (4)
10.2 Third Amendment to Amended and Restated Loan Agreement, dated
as of July 31, 1996, among National Auto Center, Inc.,
CellStar Corporation, each of the banks or other lending
institutions signatory thereto, and Texas Commerce Bank
National Association (4)
10.3 Agreement by and between Motorola Inc., by and through its Pan
American Cellular Subscriber Group, and CellStar, Ltd.,
effective January 1, 1996 (Domestic U.S.) (4)(5)
27.1 Financial Data Schedule (4)
</TABLE>
________________________________________
(1) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1995, and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report
of Form 10-K for the fiscal year ended November 30, 1995, and
incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference.
(4) Filed herewith.
(5) Certain provisions of this exhibit are subject to a request
for confidential treatment filed with the Securities and
Exchange Commission.
20
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
MCI TELECOMMUNICATIONS CORPORATION
AND
NATIONAL AUTO CENTER, INC.
CELLSTAR, LTD.
AND
CELLSTAR CORPORATION
October 1, 1996
CONFIDENTIAL
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED,
WHICH PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH
BRACKETS ([ ]).
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 -- DEFINITIONS ................................................... 1
1.1 "Acquired Assets ........................................... 1
1.2 "Accord" ................................................... 1
1.3 "Activation Contracts" ..................................... 1
1.4 "Advertising Allowance" .................................... 1
1.5 "Affiliate" ................................................ 2
1.6 "Assets Determination" ..................................... 2
1.7 "Assumed Liabilities" ...................................... 2
1.8 [REDACTED] ................................................. 2
1.9 [REDACTED] ................................................. 2
1.10 "Best Efforts" ............................................ 2
1.11 "Bill of Sale" ............................................ 2
1.12 "Book Value" .............................................. 2
1.13 "Business" ................................................ 2
1.14 "Business Employees" ...................................... 2
1.15 "Business Intellectual Property Rights" ................... 2
1.16 "Code" .................................................... 2
1.17 [REDACTED] ................................................ 2
1.18 "Contracts" ............................................... 3
1.19 "Closing" ................................................. 3
1.20 "Closing Date" ............................................ 3
1.21 "Closing Amount" .......................................... 3
1.22 "Confidential Information" ................................ 3
1.23 "Consents" ................................................ 3
1.24 "Distribution Agreement" .................................. 3
1.25 "Employees" ............................................... 3
1.26 "Employment Loss" ......................................... 3
1.27 "Encumbrance" ............................................. 3
1.28 "Environment" ............................................. 3
1.29 "Environmental, Health, and Safety Laws" .................. 4
1.30 "ERISA" ................................................... 4
1.31 "ERISA Plans" ............................................. 4
1.32 "Exchange Act" ............................................ 4
1.33 "Excluded Assets" ......................................... 4
1.34 "Excluded Agreements" ..................................... 4
1.35 "Facilities" .............................................. 4
1.36 "Final Statement" ......................................... 4
1.37 "Financial Statements" .................................... 4
1.38 "Fixed Assets" ............................................ 4
1.39 "GAAP" .................................................... 4
CONFIDENTIAL i
__________________________
Brackets ([/]) indicate cofidential portions omitted and filed separately with
the Commission.
<PAGE>
1.40 "Governmental Approvals" .................................. 4
1.41 "Governmental Authority" .................................. 4
1.42 "Hazardous Activity" ...................................... 5
1.43 "Hazardous Materials" ..................................... 5
1.44 "Intellectual Property" ................................... 5
1.45 "Interim Services Agreement" .............................. 6
1.46 "Interim Balance Sheets" .................................. 6
1.47 "Interim Financial Statements" ............................ 6
1.48 "Inventory Determination" ................................. 6
1.49 "Inventory" ............................................... 6
1.50 "Leased Real Property" .................................... 6
1.51 "Legal Proceeding" ........................................ 6
1.52 "Liability" ............................................... 6
1.53 "Lien" .................................................... 6
1.54 "Material Adverse Effect" ................................. 6
1.56 "Non-Competition Agreement" ............................... 6
1.57 "November Balance Sheets" ................................. 7
1.59 "Ordinary Course of Business" ............................. 7
1.60 "Paid Time Off" ........................................... 7
1.61 "Permits" ................................................. 7
1.62 "Permitted Liens" ......................................... 7
1.63 "Person" .................................................. 7
1.64 "Plans" ................................................... 7
1.65 "POS System" .............................................. 7
1.66 "Purchased Contracts" ..................................... 7
1.67 "Purchase Price" .......................................... 7
1.68 "Preliminary Statement" ................................... 7
1.69 "primarily in connection with the Business" ............... 7
1.70 "Release" ................................................. 8
1.71 "Sam's Club Agreement" .................................... 8
1.72 "Sam's Club Locations" .................................... 8
1.73 "Sublease Agreement" ...................................... 8
1.74 "Subsidiary" .............................................. 8
1.75 "Taxes" or "Tax" .......................................... 8
1.76 "Tax Return" .............................................. 8
1.77 "Threat of Release" ....................................... 8
1.78 "Trade Secrets" ........................................... 8
ARTICLE 2 -- PURCHASE AND SALE OF ACQUIRED ASSETS .......................... 9
2.1 Purchase and Sale of Acquired Assets ....................... 9
------------------------------------
2.2 Acquired Assets ............................................ 9
---------------
2.3 Inventory ................................................. 11
---------
2.4 Excluded Assets ........................................... 11
---------------
CONFIDENTIAL ii
<PAGE>
2.5 Assumption of Assumed Liabilities ........................ 12
---------------------------------
2.6 Excluded Liabilities ..................................... 12
--------------------
ARTICLE 3 -- THE CLOSING ................................................ 13
3.1 The Closing .............................................. 13
-----------
3.2 Deliveries at the Closing ................................ 13
-------------------------
3.3 Purchase Price ........................................... 14
--------------
3.4 Allocation of Purchase Price ............................. 14
----------------------------
3.5 Prorations ............................................... 14
----------
3.6 Closing Adjustment ....................................... 15
------------------
3.7 Adjustment to Purchase Price ............................. 15
----------------------------
3.8 Post Closing Payments .................................... 16
---------------------
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF THE SELLERS .............. 16
4.1 Organization of the Seller; No Subsidiaries .............. 16
-------------------------------------------
4.2 Authorization of Transaction ............................. 17
----------------------------
4.3 Noncontravention ......................................... 17
----------------
4.4 Governmental and Third Party Consents .................... 18
-------------------------------------
4.5 Good Title Conveyed; Binding Obligations; Etc. ........... 18
----------------------------------------------
4.6 Financial Statements ..................................... 19
--------------------
4.7 Undisclosed Liabilities .................................. 19
-----------------------
4.8 Legal Compliance; Litigation ............................. 20
----------------------------
4.9 Permits .................................................. 20
-------
4.10 Tax Matters ............................................. 20
-----------
4.11 Condition of Acquired Assets ............................ 21
----------------------------
4.12 Business Intellectual Property Rights ................... 21
-------------------------------------
4.13 Real Property ........................................... 22
-------------
4.14 Inventory ............................................... 23
---------
4.15 Contracts ............................................... 23
---------
4.16 Insurance ............................................... 24
---------
4.17 Employee Benefits ....................................... 24
-----------------
4.18 Employee Salaries ....................................... 26
-----------------
4.19 Employee Relations and Labor Matters .................... 26
------------------------------------
4.20 Environment, Health and Safety .......................... 27
------------------------------
4.21 Affiliate Transactions .................................. 27
----------------------
4.22 Entire Business ......................................... 27
---------------
4.23 Absence of Certain Changes or Events .................... 28
------------------------------------
4.24 Ability to Pay Debts .................................... 28
--------------------
4.25 Customers and Suppliers ................................. 28
-----------------------
4.26 Furniture, Fixtures, Equipment, etc. .................... 29
------------------------------------
4.27 WARN Act ................................................ 29
--------
4.28 Brokers' Fees ........................................... 29
-------------
4.29 Disclosure .............................................. 29
----------
CONFIDENTIAL iii
<PAGE>
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF THE BUYER .................. 29
5.1 Organization of the Buyer ................................ 29
-------------------------
5.2 Authorization of Transaction ............................. 29
----------------------------
5.3 Noncontravention ......................................... 30
----------------
5.4 Governmental Consents .................................... 30
---------------------
5.5 Brokers' Fees ............................................ 30
-------------
ARTICLE 6 -- COVENANTS OF THE PARTIES ..................................... 31
6.1 General................................................... 31
-------
6.2 Expenses ................................................. 31
--------
6.3 Public Announcements ..................................... 31
--------------------
6.4 Cooperation; Further Assurances .......................... 31
-------------------------------
6.5 Consents, Filings and Approvals .......................... 31
-------------------------------
6.6 Accuracy of Representations .............................. 32
---------------------------
6.7 Notification of Certain Matters .......................... 32
-------------------------------
6.8 Hart-Scott-Rodino......................................... 32
-----------------
6.9 Disclosure of Confidential Information ................... 33
--------------------------------------
6.10 Retention of Records ..................................... 33
--------------------
6.11 Return of Inventory....................................... 34
-------------------
6.12 Employment Matters........................................ 34
------------------
ARTICLE 7 -- COVENANTS OF THE SELLERS ..................................... 35
7.1 Conduct of Business ...................................... 35
-------------------
7.2 Access and Information ................................... 36
----------------------
7.3 Supplemental Disclosure .................................. 36
-----------------------
7.4 Exclusivity .............................................. 36
-----------
7.5 Discharge of Liabilities ................................. 36
------------------------
7.6 Employee Benefits ........................................ 37
-----------------
7.7 Noncompetition ........................................... 38
--------------
7.8 Tax Matters. ............................................. 38
-----------
7.9 Inventory. ............................................... 38
---------
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF THE BUYER TO CLOSE .............. 38
8.1 Representations and Warranties ........................... 38
------------------------------
8.2 Compliance with Agreement ................................ 38
-------------------------
8.3 Officers' Certificates ................................... 39
----------------------
8.4 Absence of Litigation; No Violation of Statutes, etc ..... 39
----------------------------------------------------
8.5 Approval by the Board of Directors of the Sellers ........ 39
-------------------------------------------------
8.6 Governmental Approvals and Third Party Consents .......... 39
-----------------------------------------------
8.7 Other Agreements ......................................... 39
----------------
8.8 Opinion of Counsel ....................................... 40
------------------
8.9 Release of Liens ......................................... 40
----------------
CONFIDENTIAL iv
<PAGE>
8.10 Activation Contracts ..................................... 40
--------------------
8.11 Employment Matters. ...................................... 40
------------------
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF THE SELLERS TO CLOSE ............ 40
9.1 Representations and Warranties ............................ 41
------------------------------
9.2 Compliance with Agreement ................................. 41
-------------------------
9.3 Officer's Certificates .................................... 41
----------------------
9.4 Absence of Litigation; No Violation of Statutes, etc. ..... 41
-----------------------------------------------------
9.5 Approval by the Board of Directors of the Buyer. .......... 41
-----------------------------------------------
9.6 Governmental Approvals and Third Party Consents ........... 41
-----------------------------------------------
9.7 Other Agreements. ......................................... 41
----------------
9.8 Payment of the Purchase Price ............................. 42
-----------------------------
ARTICLE 10 -- INDEMNIFICATION ............................................. 42
10.1 Indemnification .......................................... 42
---------------
10.2 Procedure ................................................ 44
---------
10.3 Third Party Claims ....................................... 44
------------------
ARTICLE 11 -- TERMINATION ................................................. 45
11.1 Termination .............................................. 46
-----------
11.2 Effect of Termination .................................... 46
---------------------
11.3 Survival. ................................................ 46
--------
ARTICLE 12 -- MISCELLANEOUS ............................................... 47
12.1 Arbitration .............................................. 47
-----------
12.2 Notices .................................................. 47
-------
12.3 Entire Agreement ......................................... 48
----------------
12.4 Expenses ................................................. 48
--------
12.5 Waiver ................................................... 48
------
12.6 Amendment ................................................ 48
---------
12.7 No Third Party Beneficiary ............................... 48
--------------------------
12.8 No Assignment, Binding Effect ............................ 49
-----------------------------
12.9 Headings ................................................. 49
--------
12.10 Schedules, Exhibits and Other Agreements ................ 49
----------------------------------------
12.11 Severability ............................................ 49
------------
12.12 Governing Law ........................................... 49
-------------
12.13 Counterparts ............................................ 49
------------
12.14 Specific Performance .................................... 49
--------------------
12.15 Construction of Certain Terms and Phrases ............... 49
-----------------------------------------
12.16 Bulk Sales Laws ......................................... 50
---------------
CONFIDENTIAL v
<PAGE>
EXHIBITS:
- ---------
Exhibit A Form of Bill of Sale
Exhibit B Allocation of Purchase Price
Exhibit C Form of Non-Competition Agreements
Exhibit D Form of Sublease Agreement
Exhibit E Form of Assignment and Assumption Agreement
Exhibit F Form of Opinion of the Sellers' General Counsel
SCHEDULES:
- ----------
Schedule 1.25 Non-Employees
Schedule 1.72 Sam's Club Locations
Schedule 2.1 Locations not being sold
Schedule 2.2(A) Fixed Assets
Schedule 2.2(B) Material Business Intellectual Property Rights
Schedule 2.2(C) Purchased Contracts
Schedule 2.2(G) Sam's Club Certificates
Schedule 2.2(H) Other Assets and properties of the Sellers
Schedule 2.3 Inventory
Schedule 2.4(H) Excluded Intellectual Property Assets
Schedule 2.5(A) Paid Time Off
Schedule 4.4 Consents and Waivers
Schedule 4.5 Liens and Encumbrances
Schedule 4.6(A) Financial Statements
Schedule 4.6(B) Interim Financial Statements
Schedule 4.7 Undisclosed Liability
Schedule 4.8 Legal Proceedings
Schedule 4.9 Permits
Schedule 4.10 Tax Matters
Schedule 4.11 Potential Defects
Schedule 4.12 Business Intellectual Property Rights Exceptions
Schedule 4.13 Leased Real Property
Schedule 4.15 Material Contracts and Agreements
Schedule 4.16 Insurance Policies
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Employee Information
Schedule 4.19 Employee Relations and Labor Matters
Schedule 4.21 Affiliate Transactions
Schedule 4.27 WARN Act
Schedule 5.4 Governmental Consents
Schedule 7.1 Amendment to Benefits Plan
CONFIDENTIAL vi
[The Company agrees to furnish supplementally a copy of any omitted schedule to
the Securities and Exchange Commission upon request.]
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 1st day of
October, 1996, by and between MCI TELECOMMUNICATIONS CORPORATION, a Delaware
corporation (the "Buyer"), and NATIONAL AUTO CENTER, INC., a Texas corporation
("NAC"), CELLSTAR, LTD., a Texas limited partnership of which NAC is the sole
general partner (the "Partnership") and CELLSTAR CORPORATION, a Delaware
corporation (the "Parent"), which directly and indirectly owns all the equity
and voting interests in the Partnership. NAC, the Partnership and the Parent
are sometimes hereinafter referred to as the "Sellers" and individually as a
"Seller". The Buyer and the Sellers are sometimes herein after referred to
collectively herein as the "Parties."
W I T N E S S E T H:
WHEREAS, the Parties have entered into that certain Letter of Intent,
dated August 6, 1996, relating to the sale of certain assets held by the Sellers
to the Buyer;
WHEREAS, pursuant to the terms and subject to the conditions set forth in
this Agreement, the Sellers desire to sell and the Buyer desires to purchase
certain of the assets of the Sellers relating to the Business (as defined
herein) as set forth specifically herein; and
WHEREAS, the Parties desire to enter into certain other agreements and
arrangements in connection with the purchase of such assets.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, and in consideration of the
representations, warranties, and covenants herein contained, the Parties hereby
agree as follows:
ARTICLE 1 -- DEFINITIONS
The following capitalized terms shall have the meanings set forth below.
1.1 "Acquired Assets" shall have the meaning set forth in
Section 2.2 below.
1.2 "Accord" shall have the meaning set forth in Section 6.5.(B) below.
1.3 "Activation Contracts" shall have the meaning set forth in
Section 2.2 below.
1.4 "Advertising Allowance" shall have the meaning set forth in
Section 2.2.(G) below.
CONFIDENTIAL
<PAGE>
1.5 "Affiliate" shall mean, with respect to a particular Person, another
Person or entity, that directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with the particular
Person. For purposes hereof, the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
1.6 "Assets Determination" shall have the meaning set forth in
Section 3.6 below.
1.7 "Assumed Liabilities" shall have the meaning set forth in
Section 2.5 below.
1.8 [REDACTED]
1.9 [REDACTED]
1.10 "Best Efforts" means the reasonable efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
1.11 "Bill of Sale" shall have the meaning set forth in Section 2.2 below.
1.12 "Book Value" of the Fixed Assets, other than the kiosks, shall mean
the book value computed in accordance with GAAP, and the "Book Value" of the
kiosks shall mean the book value of the kiosks computed in accordance with GAAP
before reductions for payments made by cellular companies or others.
1.13 "Business" means the business of the Sellers at kiosks located within
the Sam's Club Locations located within the continental United States, Alaska
and Hawaii, relating to the retail sale of wireless communications equipment,
including but not limited to, cellular telephone equipment and accessories, and
the sale and activation of wireless telephone services, but specifically
excluding Seller's paging business and customer base.
1.14 "Business Employees" shall have the meaning set forth in Section 8.11
below.
1.15 "Business Intellectual Property Rights" shall have the meaning set
forth in Section 2.2.(B) below.
1.16 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
1.17 [REDACTED]
CONFIDENTIAL 2
_________________________
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
1.18 "Contracts" shall have the meaning set forth in Section 4.15 below.
1.19 "Closing" shall have the meaning set forth in Section 3.1 below.
1.20 "Closing Date" shall have the meaning set forth in Section 3.1 below.
1.21 "Closing Amount" shall have the meaning set forth in Section 3.3
below.
1.22 "Confidential Information" shall mean collectively, (i) any and all
"Confidential Information" exchanged by the Parties pursuant to the Confidential
Disclosure Agreement, dated February 23, 1996, between Parent and MCI
Communications Corporation, as such term is defined therein; and (ii) all
information relating to or concerning the Business, the Acquired Assets or the
Inventory or otherwise disclosed by the Parties in connection with the
transactions contemplated by this Agreement (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), and that should reasonably
have been understood by the receiving party, because of legends or other
markings, the circumstances of disclosure or the nature of the information
itself, to be proprietary and confidential to the disclosing party or its
Affiliates or to a third party. Confidential Information may be disclosed in
written or other tangible form (including on magnetic media) or by oral, visual
or other means.
1.23 "Consents" shall have the meaning set forth in Section 6.5.(A) below.
1.24 "Distribution Agreement" shall have the meaning set forth in Section
8.7.(A) below.
1.25 "Employees" shall mean the full time and part time employees of the
Sellers' whose primary work responsibilities relate to the operations of the
Business, but not including those employees of the Sellers included on
Schedule 1.25.
- -------------
1.26 "Employment Loss" means (a) an employment termination, other than a
discharge for cause, voluntary departure, or retirement, (b) a layoff exceeding
six (6) months or (c) a reduction in hours of work of more than fifty percent
(50%).
1.27 "Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
1.28 "Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
CONFIDENTIAL 3
<PAGE>
1.29 "Environmental, Health, and Safety Laws" means all laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state and local governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws relating
to conditions, emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
1.30 "ERISA" shall have the meaning set forth in Section 4.17.(A) below.
1.31 "ERISA Plans" shall have the meaning set forth in Section 4.17.(A)
below.
1.32 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.33 "Excluded Assets" shall have the meaning set forth in Section 2.4
below.
1.34 "Excluded Agreements" shall have the meaning set forth in Section
2.4.(F) below.
1.35 "Facilities" mean any real property, leaseholds, or other interests
currently owned or operated by the Sellers and used primarily in connection with
the Business and any buildings, plants, structures, or equipment (including
motor vehicles, tank cars, and rolling stock) currently owned or operated by the
Sellers and used primarily in connection with the Business.
1.36 "Final Statement" shall have the meaning set forth in Section 3.6
below.
1.37 "Financial Statements" shall have the meaning set forth in Section
4.6.(A) below.
1.38 "Fixed Assets" shall have the meaning set forth in Section 2.2.(A)
below.
1.39 "GAAP" means generally accepted United States accounting principles
as they may be modified from time to time.
1.40 "Governmental Approvals" shall have the meaning set forth in Section
6.5 below.
1.41 "Governmental Authority" means any:
(A) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(B) federal, state, local municipal or other government;
CONFIDENTIAL 4
<PAGE>
(C) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or entity
and any court or other tribunal);
(D) multi-national organization or body; or
(E) body exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
1.42 "Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Business.
1.43 "Hazardous Materials" mean any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental, Health and Safety Law, including any admixture or
solution thereof, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
1.44 "Intellectual Property" means:
(A) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof;
(B) all trademarks, service marks, trade dress, logos, trade names,
and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith;
(C) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith;
(D) all mask works and all applications, registrations, and renewals
in connection therewith;
(E) all trade secrets and confidential business information
(including, but not limited to, ideas, research and development, know-how,
formulas, patterns, devices, compilations, methods, compositions,
manufacturing and production processes and techniques, technical
CONFIDENTIAL 5
<PAGE>
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans, studies, proposals and
data)(collectively, the "Trade Secrets");
(F) all computer and other software (including data and related
documentation);
(G) all other proprietary rights; and
(H) all copies and tangible embodiments of any of the foregoing (in
whatever form or medium).
1.45 "Interim Services Agreement" shall have the meaning set forth in
Section 8.7.(E) below.
1.46 "Interim Balance Sheets" shall have the meaning set forth in Section
4.7 below.
1.47 "Interim Financial Statements" shall have the meaning set forth in
Section 4.6.(B) below.
1.48 "Inventory Determination" shall have the meaning set forth in Section
3.6 below.
1.49 "Inventory" shall have the meaning set forth in Section 2.3 below.
1.50 "Leased Real Property" shall have the meaning set forth in Section
4.13 below.
1.51 "Legal Proceeding" means any action, suit, proceeding, hearing,
investigation, charge, complaint, demand or notice.
1.52 "Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
1.53 "Lien" shall mean any mortgage, chattel mortgage, conditional sales
contract, pledge, lien, charge, encumbrance, restriction, option, lease,
license, easement, or adverse claim of any nature whatsoever, direct or
indirect, whether accrued, absolute, contingent or otherwise.
1.54 "Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the assets, properties, financial or other
condition, operations, or results of operations of the Business.
1.55 "Microstep POS" means the point-of-sale system developed by the
Sellers and Larry R. Pettit, P.C. and used in the Business.
1.56 "Non-Competition Agreement" shall have the meaning set forth in
Section 7.7 below.
CONFIDENTIAL 6
<PAGE>
1.57 "November Balance Sheets" shall have the meaning set forth in Section
4.6.(A) below.
1.58 "Option Agreement" shall have the meaning set forth in Section 8.10
below.
1.59 "Ordinary Course of Business" shall have the following meaning: an
action taken by a Person will be deemed to have been taken in the "Ordinary
Course of Business" only if:
(A) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of
such Person;
(B) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(C) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or
by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that
are in the same line of business as such Person.
1.60 "Paid Time Off" shall have the meaning set forth in Section 2.5.(A)
below.
1.61 "Permits" shall have the meaning set forth in Section 4.9 below.
1.62 "Permitted Liens" means Liens that do not individually or in the
aggregate materially impair the value or use of the asset to which they relate
or the operation of the Business.
1.63 "Person" means an individual, a general or limited partnership, a
corporation, an association, a joint stock company, a limited liability company,
an estate, a labor union, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.64 "Plans" shall have the meaning set forth in Section 4.17.(A) below.
1.65 "POS System" means retail point-of-sale system developed by the
Sellers and Progress as developed through the Closing Date.
1.66 "Purchased Contracts" shall have the meaning set forth in Section
2.2.(C) below.
1.67 "Purchase Price" shall have the meaning set forth in Section 3.3
below.
1.68 "Preliminary Statement" shall have the meaning set forth in Section
3.5 below.
1.69 "primarily in connection with the Business" and "primarily used in
connection with the Business" shall mean (i) with respect to an item or service,
those items or services whose primary use
CONFIDENTIAL 7
<PAGE>
(i.e. 80% or greater use) relates to the Business, or (ii) with respect to an
individual, those individuals whose primary work responsibilities (i.e. 80% or
greater) relate to the Business.
1.70 "Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
1.71 "Sam's Club Agreement" shall have the meaning set forth in Section
8.7.(C) below.
1.72 "Sam's Club Locations" shall mean the stores of Wal-Mart Stores, Inc.
d/b/a "Sam's Club" in which the Sellers currently are conducting the Business
and which are set forth on Schedule 1.72.
--------------
1.73 "Sublease Agreement" shall have the meaning set forth in Section
8.7.(D) below.
1.74 "Subsidiary" means any corporation, association, partnership, limited
liability company, joint venture or other business entity with respect to which
a specified Person (through or with one or more subsidiaries of such Person)
owns or otherwise controls, either directly or indirectly, a majority of the
voting stock, membership interests or other equity interests (in the case of
Persons other than corporations) or has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors, members, or
general partners, as the case may be.
1.75 "Taxes" or "Tax" are defined to include all net income, capital
gains, gross income, gross receipts, sales, use, transfer, ad valorem,
franchise, profits, license, withholding, payroll, employment, workers'
compensation, excise, severance, stamp, occupation, premium, property, or
windfall profit taxes, environmental (including taxes under Code Section 59A),
customs duties, social security (or similar), unemployment, disability,
registration, value added, alternative or add-on minimum, estimated payments,
estimated taxes, or other taxes, fees, levies, assessments, or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax,
or additional amounts imposed by the United States or any other jurisdiction in
which the Seller conducts activities or is subject to taxing jurisdiction, and
any state, province, county, local or other government, taxing authority, or
subdivision thereof.
1.76 "Tax Return" means any return, report, information return,
declaration, statement or other document (including any related or supporting
information) filed or required to be filed with any governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax (whether or not such Tax is imposed on the Seller) or the administration of
any law, regulations or administrative requirements relating to any Tax.
1.77 "Threat of Release" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
1.78 "Trade Secrets" shall have the meaning set forth in Section 1.44
above.
CONFIDENTIAL 8
<PAGE>
ARTICLE 2 -- PURCHASE AND SALE OF ACQUIRED ASSETS
2.1 Purchase and Sale of Acquired Assets. Subject to the terms and
------------------------------------
conditions of this Agreement, at the Closing (as hereinafter defined) the
Sellers shall sell, transfer, convey, assign and deliver to the Buyer and the
Buyer shall purchase, acquire and accept from the Sellers all of the Acquired
Assets (as hereinafter defined), other than the Inventory (as herein defined)
and the Fixed Assets related to the Sam's Club Locations set forth in Schedule
--------
2.1, which schedule shall be prepared by the Buyer at least five days prior to
- ---
the Closing provided for in Section 3.1 for the considerations specified below
in Section 3.3.
2.2 Acquired Assets. Subject to Section 2.4 hereof respecting Excluded
---------------
Assets (which shall not be Acquired Assets), the "Acquired Assets" shall mean
any and all of the rights, properties, assets, claims, and contracts of every
kind, character and description, whether tangible or intangible, whether real,
personal or mixed, and wherever located, of the Sellers which are used primarily
in the Business, including but not limited to the following to the extent used
primarily in the Business:
(A) all tangible personal property (whether owned, or for which
there are rights under any lease or other arrangement), including without
limitation, all machinery, computer and other equipment and furniture,
including, without limitation, the tangible personal property related to
the Microstep POS System and those described on Schedule 2.2(A)
---------------
(collectively, the "Fixed Assets");
(B) all Intellectual Property, as to which any Seller has any right,
title or interest (including any rights under franchises, licenses,
sublicenses, contracts, agreements), goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions,
including, without limitation, those described on Schedule 2.2(B)
---------------
(collectively, the "Business Intellectual Property Rights");
(C) all agreements, commitments, undertakings, contracts,
indentures, mortgages, instruments, Liens, Encumbrances, guaranties, or
other similar arrangements whether oral or written, identified on
Schedule 2.2(C) and all rights thereunder (collectively, the "Purchased
---------------
Contracts");
(D) all claims and rights of every kind relating to the Acquired
Assets, including without limitation, deposits, prepayments, refunds, all
causes of action, chooses in action, rights of recovery, rights of set off,
and rights of recoupment (including any such item relating to the payment
of Taxes for periods following the Closing);
(E) to the extent transferable, franchises, approvals, permits,
licenses, orders, registrations, certificates, variances, and similar
rights obtained from any federal, state, local
CONFIDENTIAL 9
<PAGE>
or foreign governmental entity, authority, department, commissioner, board,
bureau, agency court or instrumentality;
(F) except for information that is subject to the attorney-client
work privilege, all operating data and business records, including without
limitation, all books, records, ledgers, files, documents, correspondence,
cost and pricing information for customers of the Business, business plans,
reference catalogs, plats, architectural plans, drawings, and
specifications, creative materials, advertising and promotional materials
to the extent transferable, studies, reports, and other printed or written
materials;
(G) the Sam's Club gift certificates that do not have expiration
dates, a recent listing of which are set forth on Schedule 2.2(G)
---------------
(collectively, the "Advertising Allowance");
(H) All other assets and properties of the Sellers identified on
Schedule 2.2(H) hereto; and
---------------
(I) A license to use "Communication Center" and "Communications
Center Affiliates" in stylized version during the term of the Interim
Services Agreement.
The Sellers will assign and transfer to the Buyer all of the Sellers'
right, title and interest in and to the Acquired Assets by delivery of (i) a
bill of sale in substantially the form set forth as Exhibit A hereto (the "Bill
---------
of Sale"), duly executed by the Sellers, and (ii) such other good and sufficient
instruments of conveyance, assignment and transfer, as may reasonably be
requested by the Buyer, as shall be effective to vest in the Buyer all of the
Sellers' right, title and interest in, to and under the Acquired Assets (the
"General Conveyance").
To the extent that any material contract or license identified in Section
2.2 above is not assignable without the consent of a third party, this Agreement
shall not constitute an assignment or an attempted assignment thereof if such
assignment or attempted assignment would constitute a breach thereof. The
Sellers and the Buyer shall use their Best Efforts to obtain the consent of such
other party to the assignment of any such contract or license to the Buyer in
all cases in which such consent is or may be required for such assignment. If
any such consent shall not be obtained, the Buyer shall cooperate with the
Sellers in concluding any other mutually agreeable arrangement (including,
without limitation, entering into sub-contracting) designed to allow the Buyer,
or the Sellers on the Buyer's account, to offer cellular services in all of the
Sam's Club Locations (collectively with the Purchased Contracts that are
assigned to the Buyer, the "Activation Contracts").
Without limitation as to the preceding paragraph, the Parties shall use
their Best Efforts to enter into, and shall cooperate with each other in good
faith in entering into, appropriate, reasonable transitional arrangements, on
terms mutually agreeable, with respect to any contract or license to which a
Seller is a party and which is utilized in the conduct of the Business and which
is not, by its terms, assignable (in whole or in part) by the Sellers or under
which Sellers may not assign its
CONFIDENTIAL 10
<PAGE>
obligations or delegate its duties. In connection with any such transitional
arrangement, the Buyer shall cooperate with the Sellers in good faith, in
seeking to have Sellers released from its obligations under any such contract or
license.
2.3 Inventory. "Inventory" shall mean all inventories present in the
---------
Sam's Club Locations and used in connection with, or relating to the conduct of,
the Business on the Closing Date, including without limitation, finished goods
and goods in transit from the Sellers to the Sam's Club Locations used or
intended for use or held for sale, but excluding the Seller's inventory of non-
PageNet pagers. Schedule 2.3 lists of all of the Sellers' inventory used in
------------
connection with, or relating to the conduct of, the Business as of July 31,
1996. The Sellers will assign and transfer to Buyer all of Sellers' right,
title and interest in and to the Inventory by delivery of a Bill of Sale.
2.4 Excluded Assets. Notwithstanding anything contained in Section 2.2 to
---------------
the contrary, the Acquired Assets shall not include any of the following (the
"Excluded Assets"):
(A) All of the Sellers' cash on hand or on deposit as of the Closing
Date;
(B) The Sellers' corporate books and records, including the
corporate charter and bylaws, qualifications to conduct business as a
foreign corporation, corporate seals, minute books, stock transfer books,
and other documents relating to the organization, maintenance, and
existence of the Sellers as corporations and a limited partnership,
respectively;
(C) Any and all employment agreements, contracts or other
understandings, whether written or oral, to which Sellers are a party,
relating to employment by the Sellers of any Person;
(D) Any loss, liability, cost or expense related to the Sellers'
failure to pay or discharge any claims or creditors that could be asserted
against the Buyer in connection with the bulk sales laws of the applicable
jurisdictions;
(E) All accounts receivable, other than the Advertising Allowance,
and notes, and other receivables and any security arrangements and
collateral securing the repayment or other satisfaction of such accounts
receivable and notes, and other receivables;
(F) All agreements, commitments, contracts or similar arrangements
and all rights thereunder, of the Sellers (i) related solely to the paging
business, (ii) not included in the Purchased Contracts and (iii) not
otherwise provided for herein, including, but not limited to, all
agreements, commitments, contracts or similar arrangements and all rights
thereunder primarily related to the Seller's paging customers (the
"Excluded Agreements");
(G) Customer lists, credit information, the Sellers' accounting
records and supplier pricing information; and
CONFIDENTIAL 11
<PAGE>
(H) All assets, property, rights and claims of the Sellers (i)
related solely to the paging business, except for the PageNet pagers
included in the Inventory, (ii) not included in the Acquired Assets or the
Inventory and (iii) not otherwise provided for herein, including, but not
limited to, the Seller's paging customers and the excluded intellectual
property assets set forth on Schedule 2.4(H) hereto; provided, however,
--------------- -------- -------
that nothing in this Agreement shall preclude the Buyer from using any
generic, descriptive or disclaimed term contained in the trademarks listed
in Schedule 2.2(B) or Schedule 2.4(H), except for the trademarks listed
--------------- ---------------
therein in their entireties.
2.5 Assumption of Assumed Liabilities. Subject to Section 2.6 below and
---------------------------------
the terms and conditions of this Agreement, upon the transfer of the Acquired
Assets at the Closing, the Buyer agrees to assume the Assumed Liabilities (as
hereinafter defined), but only those and no others. The Liabilities of the
Sellers to be transferred and assumed by the Buyer (the "Assumed Liabilities")
shall mean and consist solely of certain Liabilities of the Seller relating to
the Acquired Assets, which are strictly limited to:
(A) the actual costs incurred by the Sellers for the payment of the
paid time off of the Employees (as hereinafter defined) on the Closing Date
(the "Paid Time Off"), estimates of which amounts are set forth on Schedule
--------
2.5(A); provided, however, that the Buyer shall not be obligated to
------ -------- -------
reimburse the Sellers for more than an aggregate of Three Hundred Thousand
Dollars ($300,000) in Paid Time Off; provided, further that the Sellers
-------- -------
shall reimburse the Buyer for any payments made to Employees, pursuant to
this Section 2.5(A), who are reemployed by the Seller's within six (6)
months of the Closing Date; and
(B) all Liabilities and obligations of the Sellers arising from and
after the Closing Date under the Activation Contracts or otherwise related
to the operation of the Business or the ownership of the Acquired Assets,
but only to the extent such Liabilities and obligations do not relate to
any default or breach which has occurred on or prior to the Closing Date.
2.6 Excluded Liabilities. Except as expressly set forth in Section 2.5
---------------------
hereof, the Buyer does not assume and shall not be deemed to have assumed or be
responsible for any Liabilities of the Sellers. Without limiting the foregoing
in any manner, the Assumed Liabilities do not include any of the following
Liabilities and obligations of the Sellers, and the Sellers will promptly pay
and perform and hold the Buyer harmless from and against:
(A) any Liability or obligation relating to the Excluded Assets;
(B) any Liability or obligation of the Sellers or any of their
Affiliates in respect of any Taxes or any reporting requirement or
estimated Tax payable with respect thereto relating to events or
transactions occurring on or prior to the Closing Date, or any Liability
for any property taxes for the tax year that includes the Closing Date,
involving the Sellers or any of their Affiliates, the Business or the
Acquired Assets, the transactions contemplated hereby,
CONFIDENTIAL 12
<PAGE>
in whole or in part, or relating to the inclusion of any Affiliate of the
Seller in a consolidated tax group or tax sharing arrangement with the
Sellers or their Affiliates;
(C) any Liability, claim or obligation relating to any Legal
Proceeding arising from or relating to the Business, the Acquired Assets,
the Inventory or other events or conditions occurring or existing prior to
or on the Closing Date (including any warranty claim);
(D) any Liability to any Employee or independent contractor or
subcontractor of the Sellers or any other Person for termination pay or
pension or other obligation in connection with the transactions that are
the subject of this Agreement or otherwise, or for termination pay or
pension or other obligations to former Employees or independent contractors
or subcontractors of the Sellers or any other Person or otherwise
pertaining to the Acquired Assets and attributable to employment or
services provided prior to the Closing;
(E) any Liability of Sellers for accounts payable due or owed by the
Sellers or any of their respective Affiliates;
(F) any Liability relating to the Excluded Agreements or the
operations of the Sellers not strictly relating to the operation of the
Business.
ARTICLE 3 -- THE CLOSING
3.1 The Closing. The closing of the transactions contemplated by this
-----------
Agreement (the "Closing") shall take place at the offices of Sellers located at
1730 Briercroft Court, Carrollton Texas, commencing at 10:00 a.m. (Dallas, Texas
time) on the fifth business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date"). The Closing shall be deemed
to have occurred at 11:59 p.m. (Dallas, Texas time) on the Closing Date.
3.2 Deliveries at the Closing. At the Closing: (i) the Sellers will
-------------------------
deliver to the Buyer the various certificates, instruments, and documents
referred to in Article 8; (ii) the Buyer will deliver to the Sellers the various
certificates, instruments, and documents referred to in Article 9 below; (iii)
the Sellers will execute, acknowledge (if appropriate), and deliver to the Buyer
any and all assignments (including contracts, real property and Intellectual
Property transfer documents) and such other instruments of sale, transfer,
conveyance, and assignment as the Buyer and its counsel may reasonably request;
and (iv) the Buyer will deliver to the Sellers the consideration specified in
Section 3.3.
CONFIDENTIAL 13
<PAGE>
3.3 Purchase Price. Subject to the adjustments described in Sections 3.5,
--------------
3.6 and 3.7, the Buyer agrees to pay to the Sellers the aggregate amount equal
to Seventeen Million Two Hundred Forty-One Thousand Six Dollars ($17,241,006) of
which (i) Eight Million Eighty-Four Thousand Nine Hundred Seven Dollars
($8,084,907) shall be paid for the Acquired Assets, other than the Advertising
Allowance, and the non-competition agreement contained in Section 7.7 hereof,
(ii) Eight Million Seven Hundred Thirteen Thousand Five Hundred Sixty-Seven
Dollars ($8,713,567) shall be paid for the Inventory, (iii) Three Hundred
Thousand Dollars ($300,000) shall be paid for Paid Time Off, and (iv) One
Hundred Forty-Two Thousand Five Hundred Thirty-Two Dollars ($142,532) will be
paid for the Advertising Allowance (collectively, the "Purchase Price"). On the
Closing Date the Buyer shall pay to the Sellers the Purchase Price less product
of (x) the number of Sam's Club Locations not being acquired on the Closing
Date, as set forth on Schedule 2.1, and (y) Twenty Thousand Dollars ($20,000)
------------
(collectively, the "Closing Amount"). The Closing Amount shall be paid in
immediately available funds via wire transfer to such account as Sellers may
reasonably direct by written notice delivered to the Buyer at least three (3)
business days prior to the Closing Date.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
----------------------------
among the Inventory, the Acquired Assets and the noncompetition agreement
contained in Section 7.7 hereof in the manner set forth on Exhibit B attached
hereto. Such allocation of the Purchase Price shall be conclusive and binding
on the Parties for purposes of their federal, and where applicable, state and
local income tax returns, and the Parties agree not to take positions on any Tax
Returns inconsistent with such allocation. The Parties shall prepare and timely
file all such reports and returns as may be required by Section 1060 of the Code
to report such allocation of the Purchase Price.
3.5 Prorations. Utility charges, rental payments and charges and similar
----------
proratable items which are attributable to the Inventory and the Acquired Assets
shall be apportioned between the Buyer, on the one hand, and the Sellers, on the
other hand, as of the Closing Date. Any item which relates to the period prior
to or on the Closing Date shall be apportioned to the Sellers, and any such item
which relates to the period after the Closing Date shall be apportioned to the
Buyer. Notwithstanding the foregoing, the Sellers shall be responsible for any
property taxes on the Inventory and the Acquired Assets for the tax year
including the Closing Date. The Sellers shall, no later than five days prior to
the Closing Date, prepare a preliminary statement (the "Preliminary Statement")
in writing of the amount of the adjustments to be made hereunder and to be
included in the Purchase Price adjustment made pursuant to Section 3.7. The
Preliminary Statement shall be certified by the Sellers' Chief Financial Officer
as true and correct and as having been prepared in accordance with the Sellers'
books and records. The Purchase Price to be paid at Closing shall be adjusted
either upward or downward, as applicable, based on the amount of such
Preliminary Statement; provided, however, that if any upward adjustment to the
-------- -------
Purchase Price would be in excess of Twenty-Five Thousand Dollars ($25,000), the
Buyer shall not pay such adjustment unless and until the Buyer shall have
verified and agreed to the amount of such upward adjustment, which verification
and agreement shall be made no later than five days prior to the Closing Date.
If the Buyer fails to so agree with any item in the Preliminary Statement
prepared by the Seller, then any items on which the Buyer has so failed to agree
shall remain open and be determined in conjunction with the preparation of the
Final Statement (as hereinafter defined).
CONFIDENTIAL 14
<PAGE>
3.6 Closing Adjustment. As soon as practical, but in any event within
------------------
thirty (30) days following the Closing, the Buyer shall prepare and deliver to
the Sellers a determination (the "Assets Determination") comparing (i) the Book
Value, as of July 31, 1996, of the Fixed Assets estimated to be transferred on
the Closing Date, which Fixed Assets and Book Values are set forth in Schedule
--------
2.2(A) hereto, with the Book Value, as of July 31, 1996, of the Fixed Assets
- ------
transferred on the Closing Date, (ii) the estimated Advertising Allowance set
forth on Schedule 2.2(G) with the actual Advertising Allowance on the Closing
--------------
Date, and (iii) the estimated amount paid in Paid Time Off set forth on Schedule
--------
2.5(A) with the actual amount paid at the Closing for Paid Time Off. The
- -----
Sellers shall notify the Buyer in writing of any disputed items contained in the
Assets Determination within thirty (30) days from its delivery, and after such
date all undisputed items shall be deemed accepted by Seller and made part of
the final determination of the adjustment, if any, to be made to the Purchase
Price (the "Final Statement").
As soon as practical, but in any event within thirty (30) days following
the Closing, the Sellers shall prepare and deliver to the Buyer an inventory
determination (the "Inventory Determination") comparing the cost of the
Inventory as of July 31, 1996, which is set forth in Schedule 2.3 hereto, with
------------
the actual cost (including the actual and reasonable freight and handling costs
associated with acquiring and delivering the Inventory to the Sam's Club
Locations) of the Inventory transferred on the Closing. The Sellers and the
Buyer may each conduct their own physical count of the Inventory transferred on
the Closing Date. The Buyer shall notify the Sellers in writing of any disputed
items contained in the Inventory Determination within thirty (30) days from its
delivery, and after such date all undisputed items shall be deemed accepted by
the Buyer and made part of the Final Statement.
In the event that the Sellers and the Buyer are unable to agree upon
disputed items within thirty (30) days after the Buyer's notification thereof,
then the amount of the disputed items shall be determined by the accounting firm
of Price Waterhouse LLP, or such other firm selected by the Buyer within fifteen
days after the end of such thirty day period. The disputed items shall be
submitted to the selected accounting firm within thirty days after such
accounting firm is selected. The determination by such accounting firm shall be
conclusive and binding on all parties, shall be made within sixty days after
such disputed items are so submitted and shall be made a part of the Final
Statement. The Buyer shall pay all of the fees and expenses of the accounting
firm settling any disputed items on the Final Statement.
3.7 Adjustment to Purchase Price. In the event the Final Statement
----------------------------
reflects an increase in the actual cost of the Inventory, the aggregate Book
Value of the Fixed Assets, the amount paid in Paid Time Off or the Advertising
Allowance, the Purchase Price shall be adjusted upward (i) on a dollar for
dollar basis for any increase in the cost of Inventory, Book Value of the Fixed
Assets, or amount paid in Paid Time Off, and (ii) one dollar for every two
dollar increase in Advertising Allowance. In the event that the Final Statement
reflects a decrease in the actual cost of the Inventory, the aggregate Book
Value of the Fixed Assets, the amount paid in Paid Time Off or the Advertising
Allowance, the Purchase Price shall be adjusted downward (i) on a dollar for
dollar basis for any decrease in the cost of Inventory, Book Value of the Fixed
Assets, or amount paid in Paid Time Off, and (ii) one dollar for every two
dollar decrease in Advertising Allowance. If such adjustments result in a
balance due
CONFIDENTIAL 15
<PAGE>
the Sellers (after taking into account the amount of the upward or downward
adjustment to the Purchase Price made based on the Preliminary Statement), the
Buyer shall pay such balance to the Parent within fifteen days after the date of
determination of the Final Statement; provided, however, that in no event shall
-------- -------
the Buyer be obligated to pay in the aggregate more than One Hundred Fifty
Thousand Dollars ($150,000) for any Purchase Price adjustments resulting from an
increase in the aggregate Book Value as of July 31, 1996, of the Fixed Assets
transferred on the Closing Date. If such adjustment results in a balance due
the Buyer (after taking into account the amount of the upward or downward
adjustment to the Purchase Price made based on the Preliminary Statement), the
Sellers shall pay such balance to the Buyer within fifteen (15) days after the
date of determination of the Final Statement.
3.8 Post Closing Payments. The Buyer and the Sellers acknowledge and
---------------------
agree that the Buyer shall establish a new Agent ID with respect to each
cellular service agreement assumed. Except for the Assumed Liabilities, the
Sellers will retain and discharge in a timely manner all bills, obligations,
indebtedness or other liabilities (including without limitation chargeback,
return and warranty obligations) due, accrued or incurred in connection with the
ownership of the Acquired Assets or the operation and/or maintenance of the
Acquired Assets and the Business for the period prior to and including the
Closing Date and the Buyer shall be responsible for all bills, obligations,
indebtedness or other liabilities (including without limitation chargeback,
return and warranty obligations) due, accrued or incurred in connection with the
ownership of the Acquired Assets or the operation and/or maintenance of the
Acquired Assets and the Business for the period subsequent to the Closing Date.
If at any time the Buyer receives any consideration for a receivable of the
Seller for the period prior to the Closing or the Sellers receive any
consideration on any receivable of the Buyer, the recipient shall forward such
receipts to the appropriate party on a weekly basis. In addition, after the
Closing Date, (i) if invoices are received by the Buyer that are the
responsibility of the Sellers hereunder, the Buyer will accumulate and deliver
such invoices to the Sellers on a weekly basis for payment by the Seller, and
(ii) if invoices are received by the Sellers that are the responsibility of the
Buyer hereunder, the Sellers will accumulate and deliver such invoices to the
Buyer on a weekly basis for payment.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to the Buyer that
the following matters are correct and complete as of the date hereof and will
also be correct and complete as of the Closing:
4.1 Organization of the Seller; No Subsidiaries. NAC is a corporation
-------------------------------------------
duly incorporated, validly existing, and in good standing under the laws of the
State of Texas; the Parent is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Delaware; and the
Partnership is a limited partnership validly existing under the laws of the
State of Texas. Each
CONFIDENTIAL 16
<PAGE>
of the Sellers has the full corporate or partnership power and authority, as the
case may be, to own, lease and operate its assets (including, collectively, the
Acquired Assets) and to carry on their respective businesses as they are now
being conducted, to own the properties and assets they now own and to perform
their obligations under the contracts by which they are bound (including the
Purchased Contracts). The Sellers are each duly qualified or registered to do
business as a foreign corporation or a foreign partnership, as the case may be,
and are in good standing in each jurisdiction in which the ownership of its
assets or the conduct of its business requires such qualification or
registration.
4.2 Authorization of Transaction. Each of the Sellers has the full
----------------------------
corporate or partnership power and authority, as the case may be, to execute and
deliver this Agreement and any other agreements or instruments to be executed by
the Sellers hereunder, to perform its obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby, including
without limitation, to own, hold and transfer to the Buyer (pursuant to this
Agreement) the Acquired Assets. The execution and delivery by the Sellers of
this Agreement and any other agreements or instruments to be executed by the
Sellers hereunder and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate or
partnership action, as the case may be, on the part of each of the Sellers, no
other corporate or partnership action on the part of the Sellers being
necessary. The transactions contemplated hereby and thereby do not require
approval by the stockholders or general partners of the Sellers or if such
approval is required, it shall be obtained prior to the Closing Date in
accordance with applicable law. This Agreement has been, and any other
agreements and instruments to be executed by the Sellers will be, duly and
validly executed and delivered by each Seller and constitute, or will
constitute, the legal, valid and binding obligation of each Seller, enforceable
against each Seller in accordance with their terms, except as such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar law affecting the enforcement of creditors' rights generally and to
general equitable principles.
4.3 Noncontravention. Neither the execution, delivery or performance of
----------------
this Agreement and any other agreements or instruments to be executed by any of
the Sellers hereunder, nor the consummation of the transactions contemplated
hereby, will (i) conflict with or violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Authority to which any Seller is subject; (ii) conflict
with or violate any provision of the charter, bylaws or any other constitutive
document of any Seller or any resolution adopted by the board of directors, the
stockholders or the general partners of any Seller; or (iii) except for the
consents set forth in Schedule 4.4 hereto, conflict with, result in a breach of,
------------
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any material agreement, contract, lease, license, instrument, or other
arrangement to which any Seller is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Lien or
Encumbrance upon any of its assets) or result in the imposition or creation of
any Encumbrance upon or with respect to any of the Acquired Assets.
CONFIDENTIAL 17
<PAGE>
4.4 Governmental and Third Party Consents.
-------------------------------------
(A) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
Governmental Authority on the part of any of the Sellers is required in
connection with the execution, delivery and performance of this Agreement
or consummation of the transactions contemplated hereby, except for filings
required pursuant to Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "Hart-Scott-Rodino Act").
(B) Except as set forth on Schedule 4.4 hereto, no consent or waiver
------------
of any Person is required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, consents or waivers
from parties to loans, contracts, indentures, leases, licenses or other
agreements.
4.5 Good Title Conveyed; Binding Obligations; Etc. Except as set forth on
---------------------------------------------
Schedule 4.5, the Sellers are the sole and exclusive owners of the Acquired
- ------------
Assets and the Inventory and have good, valid and marketable title therein, free
and clear of all Liens and Encumbrances, other than the Permitted Liens. Except
as set forth in the Activation Contracts and on Schedule 4.5, on the Closing
------------
Date the Sellers will be the sole and exclusive owners of the Acquired Assets
and the Inventory and will have good, valid and marketable title therein, free
and clear of all Liens and Encumbrances, other than the Permitted Liens. Except
for the Activation Contracts, or as set forth on Schedule 4.4 or Schedule 4.5,
------------- -------------
each Seller has complete and unrestricted power and the unqualified right to
sell, assign, transfer and deliver to the Buyer, and upon consummation of the
transactions contemplated by this Agreement, the Buyer will acquire, good, valid
and marketable title to, or as applicable a valid and enforceable leasehold
interest in, the Acquired Assets and the Inventory, free and clear of all Liens
and Encumbrances, other than the Permitted Liens. Except for the Activation
Contracts, or as set forth on Schedule 4.5, and subject to the consents set
------------
forth on Schedule 4.4, each assignment document executed by the Sellers and the
------------
other instruments to be executed and delivered to the Buyer by the Sellers at
Closing will effectively vest in the Buyer good, valid and marketable title to
the Acquired Assets and the Inventory, free and clear of any Liens and
Encumbrances, except Permitted Liens. Except as set forth on Schedule 4.5,
-------------
contained in the Excluded Assets or retained for use in the Interim Services
Agreement, the Acquired Assets are all of the material tangible personal
property and Intellectual Property adequate to carry on the Business as
presently conducted and include all tangible and intangible assets and goodwill
relating to the Business.
CONFIDENTIAL 18
<PAGE>
4.6 Financial Statements.
--------------------
(A) Attached hereto as Schedule 4.6(A) are the audited balance
---------------
sheets and statements of operations, stockholders' equity and cash flow
(collectively, the "Financials") as of and for the three (3) years ended
November 30, 1993, November 30, 1994 and November 30, 1995, respectively
(collectively, the "Financial Statements") presented on a consolidated
basis for the Parent and its subsidiaries. As used herein the balance
sheets as of the year ended November 30, 1995, included as part of the
Financial Statements are referred to as the "November Balance Sheets". The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP on a consistent basis throughout the periods covered
thereby, are materially correct, and present fairly the consolidated
financial condition of the Parent and its subsidiaries as of such dates and
the consolidated results of operations of the Parent and its subsidiaries
for such periods.
(B) Attached hereto as Schedule 4.6(B) are the July 31, 1996,
---------------
unaudited balance sheet and the related unaudited statement of operations
of the Parent and its subsidiaries on a consolidated basis and the list of
fixed assets and profit and loss statements for the Sam's Club segment of
business for the eight-month period then ended not reflecting quarterly
adjustments typically made in the Ordinary Course of Business (the "Interim
Financial Statements"). The Interim Financial Statements have been prepared
from the books and records of the Parent and its subsidiaries on a
consolidated basis in accordance with GAAP for interim financial statements
(except for the allocation of selling, general and administrative expenses
and not reflecting quarterly adjustments typically made in the Ordinary
Course of Business for the Sam's Club segment of the business), fairly
present the consolidated financial condition of the Parent and its
subsidiaries at such date and the results of operations of the Parent and
its subsidiaries on a consolidated basis for such period, are true, correct
and complete, and are consistent with the books and records of the Parent
and its subsidiaries on a consolidated basis (which books and records are
true, correct and complete in all material respects).
(C) Since December 7, 1993, the minute books and stock record books
of each of the Sellers, all of which have been made available to Buyer, are
complete and correct and have been maintained in accordance with good
business practices. The minute books of each of the Sellers contain
accurate and complete records of all meetings held since December 7, 1993
of, and material corporate or partnership action by, the stockholders, the
board of directors (and committees thereof) and the general partner, as the
case may be, of each Seller, and no meeting of any such stockholders, board
of directors (or committees thereof) or general partner has been held since
December 7, 1993, for which minutes have not been prepared and are not
contained in such minute books.
4.7 Undisclosed Liabilities. Except as set forth on Schedule 4.7, no
----------------------- ------------
Seller has a material Liability relating to the Business (and to the best of
each Seller's knowledge, there is no basis for any present or future Legal
Proceeding against any Seller relating to the Business giving rise to any
CONFIDENTIAL 19
<PAGE>
Liability including, without limitation, claims for infringement), except for
(i) Liabilities set forth on the face of the balance sheets included as part of
the Interim Financial Statement (the "Interim Balance Sheets") and (ii) non-
material Liabilities which have arisen after the date of Interim Balance Sheets
in the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).
4.8 Legal Compliance; Litigation. Except as set forth on Schedule 4.8,
---------------------------- ------------
each Seller and their Affiliates have complied with all material applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of Governmental Authorities relating
to the Business, including without limitation, all such laws, regulations and
requirements relating to antitrust, consumer protection, equal opportunity
health, occupational safety, zoning, building, environmental, product liability,
employee benefits, payment of Taxes, and securities, and no Legal Proceeding has
been filed, commenced or, to the best of Seller's knowledge, threatened or
proposed in any manner or any circumstances which should or could reasonably
form the basis of any such action, suit, proceeding or investigation against any
of them alleging any failure so to comply. Schedule 4.8 sets forth each instance
------------
in which the Seller (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge related to the Business or (ii) is a party to
or, to the knowledge of the Seller, is threatened to be made a party to, any
Legal Proceeding related to the Business, before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. To the best of the Sellers' knowledge, none of the Legal
Proceedings set forth in Schedule 4.8 is expected to result in a Material
------------
Adverse Effect.
4.9 Permits. To the best of Sellers' knowledge, each Seller has all
-------
material licenses, permits, approvals, and any required material registration
with, any Governmental Authority necessary for the conduct of the Business as
currently operated or for the lawful operation of each Seller's real property
and equipment as currently operated and as used in connection with the Business
("Permits"). All Permits are in full force and, as of the date hereof, no Legal
Proceeding is pending, or to the best of the Sellers' knowledge, threatened, to
revoke or limit any such Permit. Each such Permit required to permit each
Seller to carry on the Business as currently conducted is listed in Schedule
--------
4.9.
- ----
4.10 Tax Matters. There are no Tax Liens upon any of the Acquired Assets
-----------
or the Inventory. Except as set forth on Schedule 4.10, each of the Sellers have
-------------
timely filed with the appropriate Governmental Authorities all federal, state
and local Tax Returns as required by law, and all such Tax Returns were true,
correct and complete in all respects. Except as set forth on Schedule 4.10, all
-------------
Taxes which are due or payable with regard to the Business, and the Acquired
Assets, the Inventory and their use in the Business and all interest and
penalties thereon, have been paid in full. Except as set forth on Schedule
--------
4.10, there are no audits or other proceedings or investigations currently
- ----
pending or to the best of the Sellers' knowledge, threatened and that it has not
taken any position on a Tax Return that would rise to a Tax Lien upon the
Acquired Assets or Inventory.
CONFIDENTIAL 20
<PAGE>
4.11 Condition of Acquired Assets. Except as set forth on Schedule 4.11,
---------------------------- -------------
all of the Acquired Assets are currently being used in the operations of the
Business, are free and clear of all material defects (whether patent or latent),
have been maintained in accordance with normal industry practice, are in good
operating condition and repair (subject to normal wear and tear), and are
suitable for the purposes for which they presently are used.
4.12 Business Intellectual Property Rights.
-------------------------------------
(A) Schedule 2.2(B) sets forth an accurate and complete description
---------------
of all material Business Intellectual Property Rights specifying as to each
such Business Intellectual Property Right, as applicable: (i) the nature of
such Business Intellectual Property Right; (ii) the owner of such Business
Intellectual Property Right; (iii) if such Business Intellectual Property
Right is owned by a Seller, the jurisdiction(s) by or in which such
Business Intellectual Property Right has been issued or registered or in
which an application for such issuance or registration has been filed,
including the respective registration or application number; (iv) all
franchises, licenses, sublicenses, contracts and agreements pursuant to
which any Person other than a Seller is authorized to use any such Business
Intellectual Property Right owned by a Seller; and (v) the franchises,
licenses, sublicenses, contracts and agreements pursuant to which a Seller
is authorized to use any such Business Intellectual Property Right not
owned by such Seller, including with respect to (iv) or (v), the identity
of all parties thereto, a description of the nature and subject matter
thereof, the royalty provided and the term thereof.
(B) Except as set forth on Schedule 2.2(B), Schedule 2.4(H), or
--------------- ---------------
Schedule 4.12, the Sellers own or have the right to use pursuant to
-------------
franchise, license, sublicense, contract, agreement, or permission, all of
the Business Intellectual Property Rights. Except for the trademarks
licensed pursuant to the Interim Services Agreement and as set forth on
Schedule 2.2(B) and Schedule 4.12, each Business Intellectual Property
-------------- -------------
Right owned or as to which any Seller has the right to use immediately
prior to the Closing hereunder will be owned or available for use by the
Buyer on identical terms and conditions immediately subsequent to the
Closing hereunder. The Sellers have taken all reasonably necessary and
desirable action to maintain and protect each Business Intellectual
Property Right that they own or have the right to use.
(C) All applicable fees, royalties and other amounts due and payable
by or to any Person or the Sellers in respect of the Business Intellectual
Property Rights have been paid. Except for third party licenses listed on
Schedule 2.2(B), the Sellers are the sole and exclusive owners of the
---------------
Business Intellectual Property Rights including, but not limited to, those
listed or described on Schedule 2.2(B) and have the sole and exclusive
---------------
right to the use thereof for the material covered thereby in connection
with the services or products in respect to which they have been or are now
being used.
(D) Except as set forth on Schedule 4.12, no Seller (i) is the
-------------
subject of any pending litigation or to such Seller's knowledge, any claim
regarding infringement of or
CONFIDENTIAL 21
<PAGE>
misappropriation or misuse of any Business Intellectual Property Right or
other intangible right of any other Person, (ii) has any knowledge of any
such infringement, whether or not claimed by any other Person, which
infringement might have a Material Adverse Effect, (iii) has any knowledge
of any infringement by any other Person of any of the Business Intellectual
Property Rights, and (iv) has any knowledge of any facts or circumstances
which could reasonably be anticipated to result in any such litigation or
claim or which could reasonably lead any Seller to conclude that the
continued operation and conduct of any aspect of the Business could result
in any such litigation or claim. Except as set forth on Schedule 4.12, no
-------------
Seller is aware of any other Person that is operating under or otherwise
using any name confusingly similar with any trade names, trademarks,
service names, service marks or logos included in the Business Intellectual
Property Rights. Except as set forth on Schedule 4.12, to the best of the
-------------
Sellers' knowledge no Business Intellectual Property licensed from a third
party is subject to any outstanding order, judgment, decree, stipulation or
agreement restricting the use thereof by any of the Sellers. Except as set
forth on Schedule 4.12, no Business Intellectual Property Right is subject
-------------
to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by any of the Sellers. Except as set forth on
Schedule 4.12, no Seller has entered into any written agreement to
-------------
indemnify any other Person against any charge of infringement by any
Business Intellectual Property Rights.
(E) To the best of Sellers' knowledge after reasonable inquiry, no
material Trade Secrets included in the Business Intellectual Property
Rights have been disclosed by any Seller to any Person other than
employees, agents and representatives of the Sellers and their Affiliates
or the Buyer. The Sellers have taken such reasonable and desirable measures
as the Sellers deem appropriate to protect all of the Trade Secrets.
(F) Except for obligations that arise under the common law of the
appropriate jurisdiction, to the best of the Sellers' knowledge, neither
the Sellers, nor to the best of the Sellers' knowledge any of the
Employees, has any written agreements or arrangements with former employers
of such Employees relating to Trade Secrets of such employers, the
assignment of inventions of such employers, or such Employee's engagement
in activities competitive with such employers. Except for obligations that
arise under the common law of the appropriate jurisdiction, to the best of
the Sellers' knowledge, the activities of such Employees on behalf of the
Sellers do not violate any agreements or arrangements known to any of the
Sellers, which any such Employees have with former employers.
4.13 Real Property. Schedule 4.13 sets forth a list of all of the real
------------- -------------
property leased by the Sellers and used primarily in connection with the
Business (the "Leased Real Property") and the agreements evidencing such leases.
Except as set forth on Schedule 4.13, Sellers (i) have a valid leasehold
-------------
interest in the Leased Real Property, and fixtures and improvements thereon used
by it in the Business free and clear of all Liens other than Permitted Liens,
(ii) are not in default under any lease or license for such Leased Real Property
and (iii) there is not, under any lease or license for such Leased Real
Property, any event of default or event which, with notice and/or lapse of time
would constitute a default by any party to such agreements. No Seller owns or
has title to any real property
CONFIDENTIAL 22
<PAGE>
used primarily in connection with the Business nor does any Seller have any
right in or use or occupy any real property for a purpose primarily in
connection with the Business except as set forth in this Section 4.13.
4.14 Inventory. All of the Inventory is used in connection with, or
---------
relates to the conduct of the Business, and none of the Inventory is damaged or
materially defective.
4.15 Contracts.
---------
(A) Schedule 4.15 is an accurate list and summary description of all
-------------
material contracts and agreements to which any of the Sellers is a party
and relating primarily to the conduct of the Business (including, without
limitation, joint venture agreements, employment contracts, loan
agreements, bonds, mortgages, Liens, Encumbrances, pledges or other
security agreements) (collectively, the "Contracts").
(B) Except as set forth on Schedule 4.15 or contracts related solely
-------------
to the Seller's paging business, with regard to the operation of the
Business:
(1) No Seller is a party to any contract, purchase or sales
orders out of the Ordinary Course of Business, or commitment relating
primarily to the conduct of the Business or the ownership of the
Acquired Assets or the Inventory that involves a dollar amount in
excess of $25,000;
(2) No Seller is a party to any employment contracts with any
Employees;
(3) No Seller is a party to any material contract with sales or
other agents, brokers, franchisees, distributors or dealers relating
primarily to the conduct of the Business or the ownership of the
Acquired Assets or the Inventory;
(4) No Seller is a party to any partnership or joint venture
agreement;
(5) No Seller is a party to any material lease or other
occupancy or use agreements, oral or written, nor has any Seller
granted any options, rights of first refusal or security or other
interests in or relating to the Acquired Assets, the Inventory or the
Business;
(6) No Seller has any material agreements giving any party the
right to renegotiate or require a reduction in price or refund of
payments previously made in connection with the Business;
(7) No Seller has any material agreements for the borrowing or
lending of money with respect to the Business and none is a party to
any;
CONFIDENTIAL 23
<PAGE>
(8) No Seller has any material agreement for the sale of goods
or services to any Governmental Authority;
(9) No Seller has any agreement granting any Person a Lien or
Encumbrance on any of the Acquired Assets or the Inventory;
(10) Except for the Purchased Contracts, no Seller is a party to
or bound by any non-competition, secrecy or confidentiality agreement
relating to the Business or the Acquired Assets or any other contract
restricting its right to conduct the Business at any time, in any
manner or at any place in the world, or the expansion thereof to
other geographical areas, customers, suppliers or lines of Business;
and
(11) No Seller is a party to any material contract or
arrangement that under circumstances now foreseeable is likely to
have a Material Adverse Effect.
(C) A true and correct copy of each Contract (or, where they are
oral, complete and correct written summaries thereof) has been delivered to
the Buyer prior to the date hereof. To the best of Sellers' knowledge, each
Contract is now valid and in full force and effect. None of the Sellers has
breached or improperly terminated any such Contract, and neither the
Sellers nor, to the Sellers' knowledge, any third party is in default under
any such Contract, the effect of which would have a Material Adverse
Effect. To the best of Sellers' knowledge, there exists no condition or
event which, after notice or lapse of time or both, would constitute any
such breach, termination or default the effect of which would have a
Material Adverse Effect. Except as set forth on Schedule 4.4, each such
------------
Contract to be assigned to the Buyer pursuant to this Agreement either is
assignable to the Buyer without the consent of the other parties thereto
or, with respect to any which may not be so assigned without such consents,
the required consents are set forth in Schedule 4.4.
------------
4.16 Insurance. Schedule 4.16 contains a description of all policies of
--------- -------------
title, liability, fire, worker's compensation and other forms of insurance
currently insuring the Acquired Assets and sets forth the name of the insurer,
and type and amount of coverage. All such policies are in full force and effect
and all premiums due and payable on all such policies have been paid.
4.17 Employee Benefits.
-----------------
(A) Schedule 4.17 completely and accurately lists (and identifies
-------------
the sponsor of) every "employee pension benefit plan," as that term is
defined in Section 3 of the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder ("ERISA"), every "employee welfare benefit plan," as
that term is defined in Section 3 of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"), and every other retirement,
pension, profit-sharing, money purchase, deferred compensation, incentive
compensation, bonus, stock option, stock purchase, severance pay,
unemployment benefit, vacation pay, health, life or other insurance,
CONFIDENTIAL 24
<PAGE>
fringe benefit, or other employee benefit plan, program, agreement, or
arrangement maintained or contributed to by the Sellers, in respect of or
for the benefit of any Employee or former Employee or in which any Employee
or former Employee (or beneficiary thereof) is a participant as of the date
hereof or of the Closing (collectively, together with the ERISA Plans,
referred to hereinafter as the "Plans"). There are no Plans, written or
unwritten, that are not listed on Schedule 4.17.
--------------
(B) Except as set forth on Schedule 4.17, with respect to the ERISA
-------------
Plans:
(1) neither the Sellers nor any of the Plans, any trust
established thereunder, any trustee or administrator thereof, or any
"party-in-interest" or "disqualified person" with respect to any Plan
(respectively, within the meanings of Section 3 of ERISA and Section
4975 of the Code, has engaged in any transaction as a result of which
the Sellers, could be subject to Liability pursuant to Section 409 of
ERISA or to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed pursuant to Section 4975 of the
Code;
(2) none of the Plans is a defined benefit pension plan subject
to Title IV of ERISA ("Pension Plan"), and none of the Sellers has
terminated any such Plan;
(3) full and timely payment has been made or shall be made of
all amounts that, the Sellers are required to pay as contributions to
the Plans as of the Closing Date or as of the last day of the most
recent fiscal year of each of the Plans ended prior to the date of
this Agreement;
(4) each of the Plans and each of the trusts established
thereunder have been operated and administered in all material
respects in accordance with all applicable laws, including, but not
limited to, ERISA and the Code;
(5) each of the ERISA Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the Code, and each of the
trusts established thereunder that is intended to be "qualified"
within the meaning of Sections 401(a) and 501(a) of the Code, have
been determined by the Internal Revenue Service (the "IRS") to be so
qualified, and nothing has occurred since the date of the most recent
such determination that would adversely affect the qualified status
of any of such ERISA Plans or the trusts thereunder;
(6) there are no pending claims by or on behalf of any of the
Plans, by any Employee, former Employee, participant, or beneficiary
covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits);
CONFIDENTIAL 25
<PAGE>
(7) no Plan provides for post-retirement health, welfare, or
life insurance benefits, except as may be required under Part 6 of
Subtitle B of Title I of ERISA; and
(8) each Plan is operated and administered in accordance with
the written plan documents governing such plan, and there are no
provisions not included in such documents that the Plan is obligated
to add to such documents or to observe as of the date hereof or at
any time hereafter.
(C) None of the Plans is a "multiemployer plan," as that term is
defined in Section 3(37) of ERISA and, with respect to multiemployer plans
(as so defined), none of the Sellers has made or incurred a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively
defined in Sections 4203 and 4205 of ERISA.
(D) Under the applicable laws of all jurisdictions within the United
States of America and all foreign jurisdictions or other agreement
whatsoever, with respect to any Plan, (i) there were no amounts accrued but
unpaid that are not reflected on the November Balance Sheet; and (ii)
consummation of the acquisition of the Acquired Assets by the Buyer as
contemplated herein would not trigger, result in, or cause to mature,
otherwise than in the ordinary course of the business as heretofore
conducted, any Employee or employee benefits-related claims, whether
assertable by Employees or by any other Person or legal entity or by any
Governmental Authority or other entity.
4.18 Employee Salaries. Schedule 4.18 sets forth for each of the
----------------- -------------
Employees the following: (i) the employment date of such Employee by each
Seller; (ii) the title or position of such Employee; (iii) the social security
number of each such Employee; and (iv) the current salary rate for such Employee
as of July 31, 1996 (also showing separately amounts paid as commissions, bonus
payments and other cash compensation from January 1, 1995, through July 31,
1996). Schedule 4.18 sets forth a complete description of all commission and
-------------
bonus policies of each Seller related primarily to the Business in force from
and after November 1, 1994.
4.19 Employee Relations and Labor Matters.
------------------------------------
(A) Except as set forth on Schedule 4.19 with respect primarily to
-------------
the conduct of the Business and the ownership of the Acquired Assets and
Inventory:
(1) there are no charges of discrimination (relating to age,
sex, race, religion, national origin, color, disability, sexual
preference, handicap, veteran status or any other factors prohibited
by law) or unfair labor practice charges or complaints against the
Seller pending or, to the knowledge of the Sellers, threatened before
any Governmental Authority;
CONFIDENTIAL 26
<PAGE>
(2) there is no labor strike, dispute, slowdown or stoppage
actually pending or, to the knowledge of the Sellers, threatened
against or affecting any Seller; and
(3) there is no representation, claim or petition pending before
the National Labor Relations Board and no question concerning
representation exists with respect to the Employees of any of the
Sellers. None of the Sellers is a party to any collective bargaining
agreement, and to the Sellers' knowledge there have been no
threatened or contemplated attempts to apply for certification of a
collective bargaining agent for any of the Employees.
(B) Except as set forth on Schedule 4.19 and except for matters that
-------------
do not have a Material Adverse Effect,
(1) each Seller is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions
of employment, and wages and hours, and are not engaged in any unfair
labor practice;
(2) there is no labor or employment grievance and no claim
therefor exists; and
(3) neither the Sellers nor their predecessors, in connection
with the Business, have experienced any work stoppage or other labor
difficulty during the three (3) year period ending on the date
hereof.
4.20 Environment, Health and Safety. Each Seller, and its respective
------------------------------
predecessors and Affiliates, have complied with all Environmental, Health, and
Safety Laws, and no Legal Proceeding has been filed or commenced against any of
them alleging any failure so to comply. Neither the Sellers nor any other
Person for whose conduct it is or may be held responsible, has permitted or
conducted, or is aware of, any Hazardous Activity conducted with respect to the
Facilities. There has been no Release or, to the knowledge of the Sellers,
Threat of Release, of any Hazardous Materials at or from the Facilities.
4.21 Affiliate Transactions. Except for the Employees and except as set
----------------------
forth in Schedule 4.21 hereto, no officer, director or Affiliate of any Seller
-------------
provides or causes to be provided any assets or facilities used primarily in
connection with or services whose primary focus relates to the Business which
are individually or in the aggregate material to its operation. No Affiliate of
any Seller owns or has any rights to the Acquired Assets. Except as set forth
on Schedule 4.21 hereto, the Business does not provide or cause to be provided
-------------
any assets, services or facilities to any such officer, director or Affiliate of
any Seller which are individually or in the aggregate material to the operations
of the Business.
4.22 Entire Business. The sale of the Acquired Assets and the Inventory
---------------
by the Sellers to the Buyer pursuant to this Agreement, together with the
consummation of the other transactions
CONFIDENTIAL 27
<PAGE>
contemplated by this Agreement, will effectively convey to the Buyer, in all
material respects all tangible personal property and Intellectual Property that
is necessary or useful to operate the Business as conducted by the Sellers.
4.23 Absence of Certain Changes or Events. Since July 31, 1996 with
------------------------------------
regard to the Business, there has not been:
(A) any material change in the financial condition, assets,
liabilities, personnel policies or practices, or contracts or business of
the Sellers or in its relationships with suppliers, customers, licensees,
distributors, lessors or others, except changes in the Ordinary Course of
Business;
(B) any material damage, destruction or loss (whether or not covered
by insurance) or any other event materially affecting the Business or the
Acquired Assets or the Inventory;
(C) any forgiveness or cancellation of material debts or claims owed
to the Sellers and related primarily to the Business, or termination,
abandonment or waiver of any material rights related primarily to the
Business;
(D) except for increases in the Ordinary Course of Business, any
increase in the compensation or benefits payable or to become payable by
the Sellers to any of the directors, officers or Employees of the Sellers;
(E) any discharge or satisfaction of any Lien or payment of any
Liability or obligation by the Sellers other than current Liabilities in
the Ordinary Course of Business;
(F) any material change in the credit practices of the Sellers or in
their methods of maintaining their books, accounts or business records; or
(G) any event that would have a Material Adverse Effect.
4.24 Ability to Pay Debts. On and as of the Closing Date, after giving
--------------------
effect to the transactions contemplated hereby the Sellers will not have
incurred, nor intend to incur, nor know or have reason to believe any of them
will incur, debts beyond their ability to pay such debts as they mature.
4.25 Customers and Suppliers. Except for the Purchased Contracts,
------------------------
customers and suppliers related solely to the paging business, the Sellers have
no knowledge of any termination or cancellation of (or any intent to terminate
or cancel) the business relationship of any Seller with (i) any single customer
or any group of affiliated customers who represented five percent (5%) or more
of the revenues of the Business during the fiscal year ended November 30, 1995,
or (ii) any single supplier or any group of affiliated suppliers who provided
five percent (5%) or more of the requirements of the Business during the fiscal
year ended November 30, 1995.
CONFIDENTIAL
28
<PAGE>
4.26 Furniture, Fixtures, Equipment, etc. Except for the Fixed Assets and
------------------------------------
the items listed on Schedule 4.5, there are no items of furniture, fixtures,
------------
equipment, machinery, computer and other equipment and other tangible personal
property used or held for use at the locations at which the Business is
conducted, or at customers' premises on consignment, or otherwise owned or held
by the Sellers for use primarily in the Business as well as any motor vehicles
owned by the Sellers and utilized by their Employees or agents in the conduct of
the Business with a value in excess of $1,500.
4.27 WARN Act. Schedule 4.27 hereto lists the full name, job title, job
-------- -------------
site and unit, date of Employment Loss, and type of Employment Loss of each
Employee who has experienced an Employment Loss in the ninety (90) days
preceding the date of this Agreement. The Sellers do not presently intend to
take any action that would result in an Employment Loss by any Employee between
the date of this Agreement and the Closing, and the Sellers shall assume any and
all obligations and liabilities related to any terminations of employment
through the Closing Date with respect to Employees.
4.28 Brokers' Fees. The Sellers have no Liability or obligation to pay
-------------
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
4.29 Disclosure. Each of the Sellers has used their Best Efforts to fully
----------
provide the Buyer with all documents and information which the Buyer has
requested and to the best of each Seller's knowledge, all information material
to a decision to make the investment and enter into the transactions
contemplated hereby. To the best of each Seller's knowledge, neither this
Agreement, the Schedules hereto nor any other agreements, documents, statements
or certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading. To the best of each Seller's
knowledge, there is no material fact relating to the Sellers or the operations,
affairs or conditions of the Sellers which would have a Material Adverse Effect
which has not been set forth in this Agreement or in the other documents
furnished to the Buyer prior to the date hereof.
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the following matters
are correct and complete as of the date hereof and will also be correct and
complete as of the Closing Date:
5.1 Organization of the Buyer. The Buyer is a corporation duly
-------------------------
incorporated, validly existing, and in good standing under the laws of the State
of Delaware.
5.2 Authorization of Transaction. The Buyer has the full corporate power
----------------------------
and authority to execute and deliver this Agreement and any other agreements or
instruments to be executed by the Buyer hereunder, to perform its obligations
hereunder and thereunder, and to consummate the
CONFIDENTIAL
29
<PAGE>
transactions contemplated hereby and thereby, including without limitation, to
acquire (pursuant to this Agreement) the Acquired Assets. The execution and
delivery by the Buyer of this Agreement and of any other agreements or
instruments to be executed hereunder, and the performance by the Buyer of its
respective obligations hereunder and thereunder have been duly and validly
authorized by all necessary corporate actions of the Buyer, no other corporate
action on the part of the Buyer being necessary. The transactions contemplated
hereby and thereby do not require approval of the stockholders of the Buyer, or
if such approval is required, it shall be obtained prior to the Closing Date in
accordance with applicable law. This Agreement has been, and any other
agreements and instruments to be executed hereunder shall be, duly and validly
executed and delivered by the Buyer and shall constitute legal, valid and
binding obligations of the Buyer enforceable against the Buyer in accordance
with their terms, except as enforceability may be limited by any bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general equitable principles.
5.3 Noncontravention. Neither the execution, delivery or performance of
----------------
this Agreement and any other agreements or instruments to be executed by the
Buyer hereunder, nor the consummation of the transactions contemplated hereby,
will (i) conflict with or violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which the Buyer is subject; (ii) conflict with or
violate any provision of the charter, bylaws or any other constitutive document
of the Buyer or any resolution adopted by the board of directors or the
stockholders of the Buyer; or (iii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to which any of its
assets is subject.
5.4 Governmental Consents.
---------------------
(A) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental
Authority on the part of the Buyer is required in connection with the
execution, delivery and performance of this Agreement or consummation of
the transactions contemplated hereby, except for filings required pursuant
to the Hart-Scott-Rodino Act.
(B) Except as set forth on Schedule 5.4 hereto, no consent or waiver
------------
of any Person is required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, consents or waivers
from parties to loans, contracts, indentures, leases, licenses or other
agreements.
5.5 Brokers' Fees. The Buyer has no Liability or obligation to pay any
-------------
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
CONFIDENTIAL
30
<PAGE>
ARTICLE 6 -- COVENANTS OF THE PARTIES
The Parties hereto hereby covenant with each other as follows:
6.1 General. Prior to the Closing Date, each of the Parties will use
-------
its Best Efforts to take all actions and do all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including satisfying the conditions to closing set forth in Articles
8 and 9 hereto. In the event that the Parties cannot obtain an assignment of
the AT&T Contract, the parties shall enter into the Option Agreement.
6.2 Expenses. Except as otherwise specifically provided herein, each
--------
Party hereto will bear the legal, accounting and other expenses incurred by such
Party in connection with this Agreement, and the other agreements and
transactions contemplated hereby. The Sellers agree to bear all sales, use,
transfer, recording and other similar taxes and fees including, but not limited
to, any income, franchise, gross receipts, capital gains or similar taxes
imposed on the income, receipts or gain of the Sellers arising out of or in
connection with the transactions contemplated by this Agreement. In addition,
the Sellers shall be responsible for any property taxes on the Inventory and the
Acquired Assets for the tax year that includes the Closing Date as provided in
Section 3.5 above. Each Party will use its Best Efforts to avail itself of any
available exemptions from any such taxes or fees, and will cooperate with the
other in providing any information and documentation that may be necessary to
obtain such exemptions.
6.3 Public Announcements. Unless required to be made pursuant to any
--------------------
applicable law, regulation or other requirement of any Governmental Authority,
neither the Sellers nor the Buyer shall make any public announcement regarding
this Agreement or the consummation of the transactions contemplated hereby
without the prior consent of the other Party hereto to such announcement or
press release and its contents.
6.4 Cooperation; Further Assurances. Subject to the terms and
-------------------------------
conditions of this Agreement, each of the Parties hereto shall cooperate fully
with the others in preparing and filing all notices, applications, reports and
other instruments and documents that are required by any statute, rule,
regulation or order of any Person in connection with the transactions
contemplated by this Agreement and shall use all reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations, or
otherwise to fulfill its obligations under this Agreement and to consummate
fully the transactions contemplated by this Agreement.
6.5 Consents, Filings and Approvals.
-------------------------------
(A) Prior to the Closing Date, each of the Parties hereto
shall use their Best Efforts to obtain at the earliest practicable
date prior to the Closing all governmental and administrative
consents, approvals, authorizations, waivers, permits, licenses,
certificates and franchises, including filings pursuant to the Hart-
Scott-Rodino Act as described in Section
CONFIDENTIAL
31
<PAGE>
6.8 below (collectively "Governmental Approvals") and all consents or
waivers of all third parties to leases, licenses, agreements,
indentures or other instruments (collectively, "Consents") necessary
to the consummation of the transactions contemplated hereby or to
assign or transfer effectively to the Buyer the Acquired Assets and
the Business and will provide to the Buyer copies of each such
Governmental Approval and Consent promptly after it is obtained. The
Parties shall coordinate and cooperate with one another in exchanging
such information and reasonable assistance as may be requested in
connection with all of the foregoing.
(B) Nothing contained in this Section 6.5 to the contrary, this
Agreement shall not constitute an agreement to assign any claim,
contract, license, lease, commitment, sales order or purchase order
(an "Accord") if an attempted assignment of the same without the
consent of the other party thereto, would constitute a breach thereof
or in any way have a Material Adverse Effect on the rights of the
Sellers thereunder. The Parties shall use their Best Efforts to obtain
all Consents and to resolve all impracticalities of assignments or
transfers necessary to convey the Acquired Assets, the Inventory and
the Business to the Buyer. If such Consents or waivers are not
obtained, or if an attempted assignment would be ineffective, the
Parties agree to use their Best Efforts to resolve such matter in a
mutually beneficial manner. In addition to, and not by way of
limitation of, the Buyer's obligations pursuant to the foregoing
sentence, as to any Accord included in the Acquired Assets that is not
effectively assigned to the Buyer at the Closing but is thereafter
effectively assigned to the Buyer, the Buyer shall, from and after the
effective date of such assignment assume, and shall thereafter pay,
perform and discharge as and when due, all Liabilities and obligations
of the Sellers arising under such Accord from and after the effective
date of such assignment.
6.6 Accuracy of Representations. Each of the Parties agrees that
---------------------------
prior to the Closing Date it will not knowingly enter into any transaction or
take any action, and will endeavor in good faith not to permit any event to
occur, which would result in any of its representations, warranties, covenants
or agreements contained in this Agreement (or in any agreement, document or
instrument required by the terms of this Agreement to be delivered hereunder)
being untrue and incorrect in any material respect, or not being performed as
contemplated in this Agreement.
6.7 Notification of Certain Matters. Prior to the Closing Date, the
-------------------------------
Sellers shall give prompt notice to the Buyer, and the Buyer shall give prompt
notice to the Sellers, of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any respect
at any time from the date hereof, except with respect to Section 4.19 the hiring
and firing of Employees in the Ordinary Course of Business, and (ii) any failure
of the Buyer or the Sellers, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
6.8 Hart-Scott-Rodino. As promptly as practicable, but in no event
-----------------
later than fifteen (15) days following the date hereof, the Sellers and the
Buyer shall complete any filing that may be
CONFIDENTIAL
32
<PAGE>
required pursuant to the Hart-Scott-Rodino Act, or shall mutually agree that no
such filing is required. The Sellers and the Buyer shall diligently take (or
fully cooperate in the taking of) all actions, and provide any additional
information, required or reasonably requested in order to comply with the
requirements of the Hart-Scott-Rodino Act. The Buyer shall pay the Hart-Scott-
Rodino Act filing fee.
6.9 Disclosure of Confidential Information. Each of the Parties
--------------------------------------
shall protect all Confidential Information from disclosure to others, using the
same degree of care used to protect its own confidential or proprietary
information of like importance, but in any case using no less than a reasonable
degree of care. Each of the Parties may disclose Confidential Information to
(i) its Affiliates who agree, in advance, in writing, to be bound by the
restrictions on disclosure and use set forth in this Section 6.9, and (ii) to
its employees and consultants, and its Affiliates' employees and consultants,
who have a need to know, for the purpose of this Agreement, and who are bound to
protect the received Confidential Information from unauthorized use and
disclosure under the terms of a written agreement. Confidential Information
shall not otherwise be disclosed to any third party without the prior written
consent of the Parties; provided, however, that the Buyer may publish,
-------- -------
disseminate or otherwise disclose or reveal in any manner any Business
Intellectual Property Rights. In the event that a Party is required by law,
regulation or court order to disclose any Confidential Information, such Party
will promptly notify the other Parties in writing prior to making any such
disclosure in order to facilitate the other Parties seeking a protective order
or other appropriate remedy from the proper authority. The Parties not seeking
to disclose the Confidential Information agree not to impede with the Party
seeking such order or other remedy. The Party seeking to disclose the
Confidential Information further agrees that if such Party is not successful in
precluding the requesting legal body from requiring the disclosure of the
Confidential Information, it will furnish only that portion of the Confidential
Information which is legally required and will exercise all reasonable efforts
to obtain reliable assurances that confidential treatment will be accorded the
Confidential Information. The term "Confidential Information" does not include
information which (i) was publicly known at the time of a Party's communication
thereof to the recipient, (ii) becomes publicly known through no fault of the
recipient subsequent to the time of its communication thereof to the recipient,
(iii) was in the recipient's possession free of any obligation of confidence at
the time of its communication thereof to the recipient, (iv) is developed by the
recipient independently of and without reference to any of the Confidential
Information or other information that the disclosing Party disclosed in
confidence to any third party, (v) is rightfully obtained by the recipient from
third parties authorized to make such disclosure without restriction; or (vi) is
identified by the disclosing Party as no longer proprietary or confidential.
6.10 Retention of Records. The Parties agree all books and records
--------------------
which relate to the Business shall be available for inspection for any
reasonable purpose during reasonable business hours to counsel, accountants and
other agents or representatives of the Sellers or the Buyer, as the case may be;
provided, however, that the Buyer may transfer such books and records to another
- -------- -------
Person in connection with a sale or transfer by the Buyer to such other Person
of all or any substantive part of the Business so long as such Person assumes
and agrees to be bound by the Buyer's obligations under this Section 6.10 and
the Parent consents to such transfer, which consent shall not unreasonably
CONFIDENTIAL
33
<PAGE>
be withheld. In the event that either Party proposes at any time after the
Closing Date to destroy any of such books and records, such Party shall give at
least sixty (60) days prior notice to the other Parties and shall, if the other
Parties so requests by notice within thirty (30) days of the notice, deliver to
the other Parties at such Parties' sole expense the books and records otherwise
to be destroyed.
6.11 Return of Inventory. The Parties agree that at any time after
-------------------
December 31, 1996, the Buyer shall have the right to return any item of
Inventory that the Buyer has not sold within ninety (90) days of the Closing
Date, to the Sellers for a full refund of the price paid for such item of
Inventory. The Buyer shall use its Best Efforts to sell the Inventory and shall
pay the reasonable shipping costs associated with any items of Inventory
returned by the Buyer pursuant to this section. The Parties further agree that
any items of Inventory returned pursuant to this Section 6.11 must be sent to
the Sellers for return within one hundred and fifty (150) days of the Closing
Date, and may not be returned to the Sellers on or before December 31, 1996.
6.12 Employment Matters.
------------------
(A) Within ten (10) days of the date hereof, the Buyer shall
provide written offers of employment to all of the Employees, at the
same or substantially the same overall compensation levels as in
effect on the date of this Agreement, effective as of and conditioned
upon the Closing. Such employment offers will be subject to the
Buyer's standard employment policies and practices and any employment
shall be at will and shall not be deemed to be pursuant to any
contract of employment, express or implied, and nothing shall limit
the Buyer's right to terminate any Employee's employment with or
without cause and with or without notice.
(B) The Sellers agree to terminate the employment of all
Business Employees, contractors and consultants with respect to the
Acquired Assets and the Business effective as of the end of business
on the Closing Date, and to give timely and legally sufficient notice
of termination to them.
(C) Nothing herein is intended to confer upon any employee of
the Sellers any rights of any kind whatsoever under or by reason of
this Agreement, including, without limitation, any rights to
employment for a specified period or any other form of employment
security. Except as otherwise specifically provided herein, the Buyer
shall have no Liability or obligation nor incur any cost or expense
with respect to any claims, whether arising before or after Closing,
by any employee or former employee of the Sellers arising by reason of
the sale or purchase of the Acquired Assets pursuant to this Agreement
or by reason of such employee or former employee's employment, or the
termination of his or her employment, by the Sellers. The Buyer shall
provide medical coverage under its current medical plan to the
Business Employees commencing on the day after the Closing Date.
Except as otherwise specifically provided herein, the Sellers shall
have no Liability or obligation nor incur any cost or expense with
respect to any claims arising after Closing, by any Business Employee
arising by reason of the sale or purchase of the Acquired Assets
pursuant to this Agreement or by
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reason of such Business Employees employment, or the termination of
his or her employment, by the Buyer. Without limiting the foregoing,
any severance obligation arising by reason of the sale of the
Acquired Assets by the Sellers pursuant to this Agreement shall
remain the sole Liability of the Sellers.
ARTICLE 7 -- COVENANTS OF THE SELLERS
Each of the Sellers hereby covenant with the Buyer as follows:
7.1 Conduct of Business. For the period from the date hereof through
-------------------
the Closing Date with respect to the operation of the Business and maintenance
of the Acquired Assets and the Inventory:
(A) The Sellers shall carry on the Business in the Ordinary
Course of Business using their Best Efforts to: (i) maintain and
preserve in good operating condition and repair the Acquired Assets,
the Inventory and the Business in substantially the same manner as
heretofore conducted; (ii) retain the services of present officers,
Employees and agents of the Business; (iii) not engage in any business
practice that could reasonably be expected to damage the reputation of
the Business; (iv) preserve material business relationships of the
Business with customers, suppliers and others; (v) confer with Buyer
concerning operational matters of a material nature affecting the
Business; and (vi) otherwise periodically report to Buyer concerning
the Business, the Fixed Assets and the Inventory.
(B) Except as set forth on Schedule 7.1, no increase will be made
------------
in the compensation or rate of compensation payable or to become
payable to any Employee, and no arrangement or plan other than those
now in effect shall be adopted or committed for.
(C) Except as specifically indicated on Schedule 2.2(C) or
---------------
Schedule 4.15, the Sellers shall not, without the prior consent of the
-------------
Buyer, waive any material right, cancel any material contract,
material debt or claim, or assume or enter into any material contract,
lease, license, obligation, indebtedness, commitment, purchase or
sale. Without limiting the foregoing and except as specifically
indicated on Schedule 2.2(C) or Schedule 4.15, the Sellers shall
--------------- -------------
not, without the prior written consent of the Buyer, enter into any
discussions with any third party regarding any change or amendment to
any material contract, agreement, understanding, or established
business practice between the Sellers and any customer of the
Business.
(D) The Sellers shall not, without the prior written consent of
the Buyer, acquire or dispose of any capital asset used in the
Business having an original cost of more than $5,000 other than in the
Ordinary Course of Business. Prior to the Closing, the Sellers shall
not make any intercompany transfers related to the Business of assets
or indebtedness, without the prior written consent of the Buyer.
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(E) The Sellers shall not, without the prior written consent of
the Buyer: (i) enter into, assume, permit or grant any Liens or
Encumbrance of any kind on any of the Acquired Assets; (ii) make any
capital contributions or investments in any corporation, business or
other Person related to the Business that competes with the Business;
(iii) sell, transfer, assign or otherwise dispose of any of the
Acquired Assets having an a Book Value in excess of $5,000; or (iv)
grant or convey any license or sublicense in the Business Intellectual
Property Rights to any Person.
7.2 Access and Information. The Sellers shall permit the Buyer,
----------------------
through its employees and representatives, including, without limitation, its
attorneys and accountants, to make such investigation of the assets, properties,
business and operations of the Sellers related to the Business and such
examination of the books, records and financial condition of the Sellers related
to the Business, as the Buyer wishes. Any such investigation and examination
shall be conducted at reasonable times and under reasonable circumstances and,
in any event, in a manner which shall cause no serious disruption of the
Sellers' operations. No investigation by the Buyer shall diminish or obviate
any of the representations, warranties, covenants or agreements of the Sellers
under this Agreement. Prior to the Closing Date, the Sellers shall furnish the
representatives of the Buyer with all such information and copies of such
documents concerning the affairs of the Sellers as such representatives may
reasonably request, and cause their officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with such representatives in
connection with such review and examination.
7.3 Supplemental Disclosure. The Sellers shall promptly notify the
-----------------------
Buyer if any Schedule hereto needs to be updated, corrected or otherwise
modified with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth on or described in the Schedules. No such update, correction or
modification shall be deemed to cure any breach of any representation or
warranty herein unless agreed to in writing by the Buyer.
7.4 Exclusivity. At all times prior to termination of this Agreement
------------
pursuant to Article 11 below, the Sellers will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of the Business or of any substantial portion of the Acquired
Assets (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Sellers will notify the Buyer immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
7.5 Discharge of Liabilities. At or prior to the Closing, the
------------------------
Sellers shall have obtained a release of any Liens or Encumbrances, other than
Permitted Liens, on the Acquired Assets and the Inventory.
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7.6 Employee Benefits.
-----------------
(A) Subject to Section 2.5.(A), the Sellers shall retain sole
responsibility for all costs, Liabilities and obligations of any kind
(including, without limitation, all obligations imposed by ERISA or the Code)
with respect to, or arising in any way from, the employment, compensation or
benefits of any Employee or former Employee (including any benefits with respect
to an Employee's or former Employee's dependents), whether under any Plans,
contracts or otherwise, including, without limitation, (i) any amounts that are
payable or may have accrued to any Employee or former Employee, or that are in
any way attributable to such Employee's or former Employee's service with the
Seller, prior to or as of the Closing Date under the Sellers' health, life, and
long term disability insurance plans, (ii) any post-retirement medical, life
insurance or other benefit that is payable or may have accrued to any Employee
or former Employee, or that is in any way attributable to such Employee's or
former Employee's service with the Sellers, prior to or as of the Closing Date,
(iii) any accrued and unused vacation or sick leave, (iv) any severance benefits
of whatever nature that may be payable or will have accrued to any Employee or
former Employee as a result of the sale of the Acquired Assets to the Buyer
and/or the termination of the Employees' employment in connection therewith; and
(v) any Liabilities or obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). The Sellers shall retain all
Liabilities and obligations under any Pension Plan that the Sellers maintains or
maintained, or contributes or contributed to, on behalf of any Employees or
former Employees, including, without limitation, any obligations for unpaid
contributions as of the Closing Date, and the Buyer shall in no way assume any
Liabilities and obligations with respect to any Employees or former Employees
under or arising out of any Pension Plan that the Sellers maintains or
maintained, or contributes or contributed to, on behalf of any Employees or
former Employees.
(B) The Buyer shall in no way be responsible for any costs,
Liabilities and obligations arising out of, by reason of, or in connection with
any Employee's or former Employee's employment with the Sellers, including all
Liabilities and obligations relating to the Employee's or former Employee's
compensation and benefits, whether under any Plan, contract or otherwise, which
shall include, but shall not be limited to, the items enumerated in clauses (i)
through (v) of the first sentence of Section 7.6(A).
(C) The Buyer shall be responsible for any Liabilities and
obligations relating to the compensation and benefits of its employees as of the
Closing that may arise under any of the Buyer's plans covering such employees
and their dependents. The Sellers shall in no way be responsible for any
Liabilities and obligations relating to the compensation and benefits of the
Buyer's employees following the Closing that may arise under any contract
between the Buyer and its employees or under any plans that maintains or
contributes to on behalf of its employees.
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(D) The Sellers shall have sole responsibility with respect to
any workers compensation claims with respect to its Employees that
arise out of occurrences on or prior to the Closing Date. The Buyer
shall have sole responsibility with respect to any workers
compensation claims with respect to any Employees who accept the
Buyer's offer of employment that arise out of occurrences after the
Closing Date.
(E) No Employee, whether hourly or salaried, shall be deemed to
be a third-party beneficiary of this Section or this Agreement.
7.7 Noncompetition. In consideration of the payment specified in
--------------
Section 3.3 above, the Sellers agree to execute and deliver a non-competition
agreement with the Buyer, in substantially the form attached hereto as Exhibit C
---------
(the "Non-Competition Agreement").
7.8 Tax Matters.
-----------
(A) The Sellers shall prepare, or cause to be prepared, and shall
file timely, or cause to be filed timely (taking into account all
applicable extensions of time), all Tax Returns of the Sellers for
taxable periods that end before or include the Closing Date that have
not been filed prior to such date. The Sellers shall prepare all such
returns in a manner that is consistent with past practice.
(B) The Sellers shall remit all Taxes collected by the Sellers
prior to the Closing Date under the color of law to appropriate taxing
jurisdictions.
7.9 Inventory. Except for their inventory of pagers, the Sellers
---------
shall use their Best Efforts to maintain typical inventory levels at each Sam's
Club Location, which levels on the Closing Date shall be sufficient for at least
a thirty (30) day period.
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF THE BUYER TO CLOSE
Except as may be waived by the Buyer in writing, the obligations of
the Buyer to consummate the transactions contemplated by this Agreement is
subject to each of the following conditions:
8.1 Representations and Warranties. The representations and
------------------------------
warranties of the Sellers contained in this Agreement shall be true and complete
as of the date of this Agreement and (unless made as of a specified date) shall
be true and complete on and as of the Closing Date as though such
representations and warranties were made again at and as of such date.
8.2 Compliance with Agreement. On and as of the Closing Date, the
-------------------------
Sellers shall have performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by the Sellers
prior to or on the Closing Date.
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8.3 Officers' Certificates. The Sellers shall have delivered to the
----------------------
Buyer a certificate dated as of the Closing Date and duly executed on behalf of
the Sellers by an authorized officer of each of the Sellers to the effect that
the conditions set forth in Sections 8.1 and 8.2 above have been satisfied.
8.4 Absence of Litigation; No Violation of Statutes, etc. No
----------------------------------------------------
statute, rule, regulation, order, stay, injunction or decree shall have been
promulgated, enacted, entered or enforced, and no investigation or inquiry shall
be pending or, to the knowledge of the Buyer, threatened against the Sellers or
the Buyer, by any Governmental Authority, including, but not limited to,
Governmental Authorities with jurisdiction over antitrust matters, which would
prevent or make illegal the consummation of the transactions contemplated
hereby, which would impose additional conditions on the Parties hereto in order
to consummate the transactions contemplated hereby, or which could have a
Material Adverse Effect on the Acquired Assets, the Inventory or the Business.
8.5 Approval by the Board of Directors of the Sellers. This
-------------------------------------------------
Agreement and all transactions contemplated hereunder shall have been approved
by the board of directors and the stockholders, if required by law or otherwise
sought by the Sellers, of each of the Sellers, and the Buyer shall have received
from each of the Sellers a certificate dated as of the Closing Date evidencing
such approvals.
8.6 Governmental Approvals and Third Party Consents. On or prior to
-----------------------------------------------
the Closing Date, all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated,
and all Consents and Governmental Approvals required to be obtained by the
Sellers, as a condition to the lawful consummation of the transactions
contemplated hereby shall have been obtained, including, but not limited to, any
and all Consents required under any Contract that any Seller is a party to, and
the Buyer shall have received copies of each such Consents and Governmental
Approvals in form and substance reasonably satisfactory to the Buyer. No such
required Consent or Governmental Approval shall have been withdrawn or suspended
as of the Closing Date.
8.7 Other Agreements. On or prior to the Closing Date, the following
----------------
agreements shall have been executed and delivered by the Parties thereto:
(A) A two (2) year supply and distribution agreement, between
Buyer and the Partnership providing for (i) the distribution by the Sellers of
all wireless communications equipment and related accessories and materials
purchased, including paging equipment, from the Seller or third parties to the
Sam's Club Locations, (ii) the right, but not the obligation, of Buyer to
purchase certain cellular telephone equipment from the Sellers and (iii) the
exclusive obligation of the Buyer to purchase certain cellular telephone
accessories from the Sellers [REDACTED]; provided, however, that the Buyer shall
-----------------
have the right to terminate the agreement at any time after 18 months if any of
the Sellers violate the terms of the Non-Competition Agreement as though such
agreement was still in force (the "Distribution Agreement"). The Distribution
Agreement also shall provide that (i) at least twenty (20) days before offering
any non OEM accessories for sale, and at least twenty (20) days before changing
from one style or manufacturer to another, the Partnership must ship at least
three random pieces to the Buyer for a ten day technical and quality
evaluation, (ii) Cellstar shall replace equipment which fails to meet the
Buyer's reasonable performance standards with equipment that does conform,
within thirty (30) days of notification, (iii) Cellstar will offer a [REDACTED]
warranty on all non-OEM batteries and a [REDACTED] warranty on all other non-OEM
accessories, and (iv) weekly inventory reporting on a per Sam's Club basis for
all products shipped by the Partnership under the Distribution Agreement.
(B) The Non-Competition Agreement;
(C) The National License Agreement with Sam's Club for the
retail operation of the kiosks in the Sam's Club Locations and the sale of
wireless telecommunications services in the kiosks, including, but not limited
to, cellular and PCS service (the "Sam's Club Agreement");
(D) The sublease agreement for the Commercial Lease Agreement,
dated February 2, 1995, between National Auto Center, Inc. and Ishida Texas,
Inc., pursuant to which the Buyer shall sublease the premises covered by the
Commercial Lease Agreement until
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Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
39
<PAGE>
December 31, 1997 (the "Sublease Agreement"), which agreement shall be
in substantially in the form attached hereto as Exhibit D, and the
---------
Buyer carve out of the sublease, a portion of the leased
premises for use by certain of Seller's paging personnel;
(E) A six (6) month interim services and support agreement
between the Sellers and the Buyer for the provision of the following
services at the Sellers' actual cost (including overhead costs): (i)
system support for the Microstep point-of-sale system; (ii) support
from JD Edwards system for outsourcing (including file extracts),
purchase orders, receiving, inventory management and reporting
(including the deployment of data as needed by the Business); (iii)
technical support for (a) the Xcellenet system, (b) the computer
equipment employed in the Business and (c) the Microstep point-of-sale
system; (iv) any required transitional data processing, data entry
support, accounting and minor reporting enhancements services; (v) use
of the Seller's PBX equipment, and (vi) a license to the stylized
versions of the marks "Communication Center" and "Communication Center
Affiliates"(the "Interim Services Agreement"); and
(F) Assignment and Assumption Agreement, substantially in the
form attached hereto as Exhibit E.
---------
8.8 Opinion of Counsel. The Buyer shall have received from Sellers'
------------------
general counsel an opinion substantially in the form and substance attached
hereto as Exhibit F.
---------
8.9 Release of Liens. The Sellers shall have obtained a release of
----------------
any Liens or Encumbrances, other than Permitted Liens, on the Acquired Assets
and the Inventory and shall have provided the Buyer with evidence thereof,
including UCC termination statements for all jurisdictions where financing
statements have been filed in connection with such Liens or Encumbrances. All
of the Acquired Assets and the Inventory shall be delivered on the Closing Dates
free and clear of any Liens or Encumbrances, other than Permitted Liens.
8.10 [REDACTED]
8.11 Employment Matters. On or prior to the Closing Date at least
------------------
eighty percent (80%) of the Employees that the Buyer makes offers of employment
to shall have accepted such offers of employment (the "Business Employees").
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF THE SELLERS TO CLOSE
Except as may be waived by the Sellers in writing, the obligations of
the Sellers to consummate the transactions contemplated by this Agreement are
subject to each of the following conditions:
- ------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
40
<PAGE>
9.1 Representations and Warranties. The representations and
------------------------------
warranties of the Buyer contained in this Agreement were true and complete when
made, and (unless made as of a specified date) shall be true and complete on and
as of the Closing Date as though such representations and warranties were made
on and as of such date.
9.2 Compliance with Agreement. On and as of the Closing Date, the
-------------------------
Buyer shall have performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by the Buyer prior
to or on the Closing Date.
9.3 Officer's Certificates. The Buyer shall have delivered to the
----------------------
Seller a certificate dated as of the Closing Date and duly executed on behalf of
the Buyer by any authorized officer of the Buyer with respect to the effect that
the conditions set forth Sections 9.1 and 9.2 above have been satisfied.
9.4 Absence of Litigation; No Violation of Statutes, etc. No
-----------------------------------------------------
statute, rule, regulation, order, stay, injunction or decree shall have been
promulgated, enacted, entered or enforced, and no investigation or inquiry shall
be pending or, to the knowledge of the Sellers, threatened against the Sellers
or the Buyer, by any Governmental Authority, including, but not limited to,
Governmental Authorities with jurisdiction over antitrust matters, which would
prevent or make illegal the consummation of the transactions contemplated
hereby, or which would impose additional conditions on the parties hereto in
order to consummate the transactions contemplated hereby.
9.5 Approval by the Board of Directors of the Buyer. This Agreement
-----------------------------------------------
and all transactions contemplated hereunder shall have been approved by the
board of directors and the stockholders, if required by law or otherwise sought
by the Buyer, of the Buyer, and the Sellers shall have received from the Buyer a
certificate dated as of the Closing Date evidencing such approvals.
9.6 Governmental Approvals and Third Party Consents. On or prior to
-----------------------------------------------
the Closing Date, all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated,
and all Consents required to be obtained by the Buyers, as a condition to the
lawful consummation of the transactions contemplated hereby shall have been
obtained, and the Sellers shall have received copies of each such Consent in
form and substance satisfactory to the Sellers. No such required Consents shall
have been withdrawn or suspended as of the Closing Date.
9.7 Other Agreements. On or prior to the Closing Date, the following
----------------
agreements shall have been executed and delivered by the Parties thereto:
(A) The Distribution Agreement;
(B) The Interim Services Agreement;
(C) The Sublease Agreement;
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(D) The Assignment and Assumption Agreement;and
(E) The termination and release from liability under the terms of
the National License Agreement between the Sellers and Sam's.
9.8 Payment of the Purchase Price. On the Closing Date, the Buyer
-----------------------------
shall deliver the Purchase Price to the Sellers.
ARTICLE 10 -- INDEMNIFICATION
10.1 Indemnification.
---------------
(A) Following Closing, the Sellers (jointly and severally) agree
to indemnify and hold harmless the Buyer and any director, officer,
employee and agent of the Buyer (as applicable, individually or
collectively "Buyer Group") from and against any and all demands,
claims, actions or causes of action, assessments, losses, damages,
Liabilities, costs and expenses, including without limitation,
interest, penalties, consequential damages and reasonable fees of
attorneys, accountants and other experts, disbursements and expenses
(collectively, "Damages"), arising out of, by reason of, or in
connection with:
(1) any Legal Proceeding arising out of or in connection
with any transaction or event involving the operation or
ownership of the Business or any of the Acquired Assets or the
Inventory, including without limitation any Legal Proceeding
relating to employment matters, which arose, occurred or is
attributable to acts, circumstances, omissions, conditions or
events existing on or prior to the Closing Date, or
(2) a breach or inaccuracy of any covenants, agreements,
representations or warranties made by the Sellers under this
Agreement;
(3) the bulk sales law as effective as of the Closing Date in
the applicable jurisdiction;
(4) all Taxes imposed on the Business, the Acquired Assets
or the Inventory, the Assumed Liabilities or the Buyer or any
Affiliate thereof as a result of operations relating to the
Business conducted prior to the Closing Date including Damages
incurred in the contest in good faith by appropriate proceedings
of the imposition, assessment or assertion of any such Taxes and
including any property taxes on the Acquired Assets or the
Inventory for the tax year that includes the Closing Date;
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(5) any Liabilities with respect to an Employee's or former
Employee's employment with the Sellers, including all Liabilities
and obligations relating to the Employee's or former Employee's
compensation or benefits, whether under any Plan, contract or
otherwise, which shall include, but shall not be limited to, the
items enumerated in clauses (i) through (iv) of the first
sentence of this Section as well as any and all liabilities
associated with the Sellers' termination of the employment of
such Employees; and
(6) any failure to comply with the continuation health care
coverage requirements of Section 4980B of the Code and sections
601 through 608 of ERISA which failure occurred with respect to
any Employee or former Employee or any qualified beneficiary of
such Employee or former Employee (as defined in Section
4980B(g)(1) of the Code) on or prior to the Closing Date.
(B) Following the Closing, the Buyer agrees to indemnify and
hold harmless each of the Sellers and any director, officer, employee
and agent of such Seller (as applicable, individually or collectively
"Seller Group") from and against any and all Damages arising out of,
by reason of, or in connection with:
(1) any Legal Proceeding arising out of or in connection
with any transaction or event involving the operation or
ownership of the Business or any of the Acquired Assets or
Inventory, including without limitation any Purchased Contracts
or Legal Proceeding relating to employment matters, which arose,
occurred or is attributable to acts, circumstances, omissions,
conditions or events existing subsequent to the Closing Date;
(2) a breach or inaccuracy of any covenants, agreements,
representations or warranties made by the Buyer under this
Agreement; and
(3) all Taxes imposed on the Business, the Acquired Assets
or the Inventory, the Assumed Liabilities of the Sellers or any
Affiliate thereof as a result of operations relating to the
Business conducted subsequent to the Closing Date including
Damages incurred in the contest in good faith by appropriate
proceedings of the imposition, assessment or assertion of any
such Taxes but not including any property taxes on the Acquired
Assets or the Inventory for the tax year that includes the
Closing Date; or
(4) any Liabilities with respect to a Business Employee
employment with the Buyer, including all Liabilities and
obligations relating to the Business Employee compensation or
benefits, whether under any Plan, contract or otherwise,
including any and all liabilities associated with the Buyer's
termination of the employment of such Business Employees.
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(C) Except as set forth in this Article 10, in no event shall
either Party be liable to the other for any special, incidental, or
consequential damages including lost profits whether or not such
damages were foreseeable. The Parties hereby agree to use their Best
Efforts to mitigate any Damages for which they may seek indemnity
under this Article 10.
(D) No Indemnified Party (as defined below) shall be entitled to
indemnification pursuant to this Article 10 unless and until the
amount of Damages due with respect to such claims exceeds, in the
aggregate, Fifty Thousand Dollars ($50,000) (the "Basket Amount"),
whereupon all amounts then or thereafter due (including, but not
limited to, the Basket Amount) shall be payable; provided, however,
-------- -------
that any indemnification arising under Section 10.1(A)(3) hereof shall
not be subject to the Basket Amount and the Indemnified Party
thereunder shall be entitled to indemnification pursuant to this
Article 10 for any and all amount of Damages due with respect to such
claims; provided, further, that the indemnity provided by each of the
Parties pursuant to this Article 10 shall be limited to the Purchase
Price.
10.2 Procedure. Any claim for Damages hereunder shall be made in
---------
writing (a "Claim") to the Buyer or the Sellers, as the case may be. Such
writing shall be delivered pursuant to the notice provision of this Agreement
and shall set forth the cause of action, or assert or allege the obligation
specifically covered by such claim, action, suit or similar matter. Subsequent
to the date of receipt of a Claim, the Party receiving such notice (the
"Indemnifying Party") shall (i) reimburse in cash (or pay on behalf of) the
Buyer Group or the Seller Group, as the case may be (the "Indemnified Party")
any Damages incurred (or which would otherwise be incurred) by the Indemnified
Party within ten (10) days of the indemnified party's delivery of any bills,
receipts, statements or other evidence of Damages, or (ii) give written notice
to the Indemnified Party that it contests such claim. If the Indemnifying Party
contests such claim in good faith (a "Disputed Claim"), then the Indemnified
Party and Indemnifying Party will proceed in good faith to negotiate a
resolution of such dispute, and if no resolution is reached within thirty (30)
days after the receipt by the Indemnified Party of the notice contesting the
Claim, the matter shall be resolved pursuant to Section 12.1 below.
10.3 Third Party Claims. The obligations and Liabilities of any of
------------------
the Parties to this Agreement under Section 10.1 hereof with respect to all
items indemnified against in Section 10.1 and which are initiated by third
parties (the "Third Party Claims") will be subject to the following terms and
conditions:
(A) Upon receipt of written notice of any Third Party Claim
asserted against, resulting from, imposed upon or incurred by the
Indemnified Party, the Indemnifying Party will undertake the defense
thereof by counsel of its own choosing, which counsel shall be
reasonably satisfactory to the Indemnified Party; provided, however,
-------- -------
that the Indemnified Party shall have the right at its own expense to
participate in the defense thereof and to employ counsel at its own
expense to assist in such defense; and provided, further, that if the
-------- -------
Indemnified Party has been advised in writing by such counsel that a
conflict of interest exists between such Indemnified Party and the
Indemnifying Party with respect to such Third Party
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Claim, such Indemnified Party shall be entitled to select counsel of
its own choosing, in which event the Indemnified Party shall be
obligated to pay the reasonable fees and expenses of such counsel. In
any such defense, the Indemnified Party shall have the right, but not
the obligation, to assert any and all cross claims or counterclaims it
may have. In case any Third Party Claim shall be instituted involving
any Person in respect of which indemnity may sought pursuant to this
Article 10, such Indemnified Party shall promptly notify the
Indemnifying Party in writing of such proceeding. No indemnification
provided for in Section 10.1 above shall be available to any Person
who shall fail to promptly give notice of a Third Party Claim as
provided in the immediately preceding sentence if the Person to whom
such notice was not given was unaware of the Third Party Claim to
which such notice would have related and was materially prejudiced by
the failure to receive such notice.
(B) If within a reasonable time after written notice of any
Third Party Claim, the Indemnifying Party fails to defend the
Indemnified Party against whom such Third Party Claim has been
asserted or shall fail to diligently prosecute such defense or
compromise such claim, the Indemnified Party will have the right, with
counsel of its own choice, at the Indemnifying Party's expense, to
undertake the defense, compromise or settlement of such Third Party
Claim on behalf of and for the account and at the risk of the
Indemnifying Party.
(C) Nothing in this Section 10.3 to the contrary, the
Indemnifying Party will not, without the prior written consent of each
Indemnified Party against whom a Third Party Claim is asserted, settle
or compromise, any claim or consent to the entry of any judgment
relating to any such Third Party Claim, unless such settlement,
compromise or judgment includes as an unconditional term thereof the
giving by the claimant or the plaintiff to each Indemnified Party
against whom a Third Party Claim is asserted, a release from all
Liabilities in respect of such Third Party Claim and does not result
in the imposition on the Indemnified Party of any remedy other than
monetary damages up to the amount to be paid with respect to such
claim by the Indemnifying Party pursuant to Section 10.1.
(D) The Indemnifying Party will, at its expense, provide each
Indemnified Party against whom a Third Party Claim is asserted with
reasonable access to all records and documents of the Indemnifying
Party relating to any Third Party Claim. The Indemnified Party, at the
expense of the Indemnifying Party, will provide the Indemnifying Party
with reasonable access to all records and documents of the Indemnified
Party relating to any Third Party Claim.
ARTICLE 11 -- TERMINATION AND SURVIVAL
CONFIDENTIAL
45
<PAGE>
11.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned:
(A) at any time before the Closing by mutual written agreement
of the Seller and the Buyer;
(B) by either the Sellers, on the one hand, or the Buyer, on the
other hand, if, without the fault of such terminating Party, the
Closing shall not have taken place prior to October 31, 1996; or
(C) by the Sellers, on the one hand, or the Buyer, on the other
hand, if any court of competent jurisdiction in the United States
shall have issued an order, stay, injunction or decree preventing the
transactions contemplated by this Agreement, and such order, stay,
injunction or decree shall have become final and non-appealable.
11.2 Effect of Termination. If this Agreement is validly terminated
---------------------
pursuant to Section 11.1, this Agreement will forthwith become null and void,
and there will be no Liability or obligation on the part of the Sellers or the
Buyer (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except that the provisions with respect to
arbitration and expenses in Sections 12.1 and 12.4, respectively, will continue
to apply following any such termination and that such termination shall not
constitute a waiver or bar by any Party of any rights or remedies at law or in
equity they may have for damages caused by reason of a breach of this Agreement
by the other Party. In addition, termination of this Agreement for any reason
shall not terminate the obligations of the Parties under Section 6.9, which
obligations shall continue for a period of three (3) years after such
termination.
11.3 Survival. All of the representations and warranties set forth
--------
herein shall survive the Closing without limitation. All covenants and
agreements set forth herein shall survive the Closing Date and shall continue
until the latter of (i) the performance, satisfaction or termination, each in
accordance with their terms, of such covenants and agreements, or (ii) three (3)
years from the Closing Date. Any right of indemnification provided for herein
shall survive for a period of three (3) years from the Closing Date, except for
indemnification with respect to tax matters in Section 4.10 (without regard to
the exceptions provided therein), which shall survive until the expiration of
the applicable statute of limitation period. Notwithstanding the foregoing or
the provisions of Article 10, if any claim or other matter is attributable to
any fraud or intentional deceit on the part of any Seller, on the one hand, or
the Buyer, on the other hand, as the case may be, then the indemnification
provided herein shall survive for the duration of the applicable statute of
limitations.
CONFIDENTIAL
46
<PAGE>
ARTICLE 12 -- MISCELLANEOUS
12.1 Arbitration. Without prejudice to any Party's right to seek
-----------
equitable relief (including, but not limited to, injunction) from a court, any
dispute arising out of or related to this Agreement, which cannot be resolved by
negotiation, shall be settled by binding arbitration in accordance with the
J.A.M.S./ENDISPUTE Arbitration Rules and Procedures ("Endispute Rules"), as
amended by this Agreement. The costs of arbitration, including the fees and
expenses of the arbitrator, shall be shared equally by the Parties unless the
arbitration award provides otherwise. Each Party shall bear the cost of
preparing and presenting its case. The Parties agree that this provision and
the Arbitrator's authority to grant relief shall be subject to the United States
Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this
Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The Parties agree that the arbitrator shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrator have the
authority to make any award that provides for punitive or exemplary damages.
The arbitrator's decision shall follow the plain meaning of the relevant
documents, and shall be final and binding. The award may be confirmed and
enforced in any court of competent jurisdiction. All post-award proceedings
shall be governed by the USAA.
12.2 Notices. All notices, requests, demands, or other
-------
communications required or permitted hereunder shall be in writing, shall be
deemed delivered (i) on the date of delivery when delivered by hand, (ii) on the
date of transmission when sent by telex, electronic mail or facsimile
transmission during normal business hours with telephone confirmation of
receipt, (iii) one (1) day after dispatch when sent by overnight courier
maintaining records of receipt, or (iv) three (3) days after dispatch when sent
by registered mail, postage prepaid, return-receipt requested, all addressed as
follows (or at such other addresses as shall be given in writing by either Party
to the other):
If to the Buyer:
MCI Telecommunications Corporation
1200 S. Hayes Street
Arlington, VA 22202
Attn: Terry Macko
Vice President
Fax: (703) 415-6789
with a copy to:
MCI Telecommunications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: General Counsel
Fax: (202) 887-2047
CONFIDENTIAL
47
<PAGE>
If to the Sellers:
CellStar Corporation
National Auto Center, Inc.
CellStar, Ltd.
1730 Briercroft Court
Carrollton, TX 75006
Attn: Alan H. Goldfield
Chairman and CEO
Fax: (214) 466-0288
with a copy to:
Attn: General Counsel
Fax: (214) 466-0288
with an additional copy to:
Attn: Chief Financial Officer
Fax: (214) 466-0288
12.3 Entire Agreement. This Agreement (including the Schedules and
----------------
Exhibits hereto) supersedes the Letter of Intent, effective August 6, 1996, the
Confidential Disclosure Agreement, dated February 23, 1996, between the Parent
and MCI Communications Corporation and all other prior discussions and
agreements between the Parties with respect to the subject matter hereof, and
contains the sole and entire agreement between the Parties hereto with respect
to the subject matter hereof and thereof.
12.4 Expenses. Except as otherwise expressly provided in this
--------
Agreement, whether or not the transactions contemplated hereby are consummated,
each Party will pay its own costs and expenses incurred in connection with the
negotiation, execution and closing of this Agreement and the transactions
contemplated hereby.
12.5 Waiver. Any term or condition of this Agreement may be waived
------
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
12.6 Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by or on behalf of each
Party hereto.
12.7 No Third Party Beneficiary. The terms and provisions of this
--------------------------
Agreement are intended solely for the benefit of each party hereto and their
respective permitted successors or assigns, and
CONFIDENTIAL
48
<PAGE>
it is not the intention of the Parties to confer third-party beneficiary rights
upon any other person other than any person entitled to indemnity under this
Agreement.
12.8 No Assignment, Binding Effect. Neither this Agreement nor any
-----------------------------
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other Party hereto and any attempt to
do so will be void, except (i) for assignments and transfers by operation of
law, and (ii) that the Buyer may assign any or all of its rights, interests and
obligations hereunder to an Affiliate of the Buyer with the consent of the
Parent, which consent shall not unreasonably be withheld. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the Parties hereto and their respective permitted successors
and assigns.
12.9 Headings. The headings used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit the
provisions hereof.
12.10 Schedules, Exhibits and Other Agreements. The Schedules,
----------------------------------------
Exhibits, and other agreements specifically referred to in and delivered
pursuant to this Agreement are incorporated herein and shall be part of this
Agreement for all purposes.
12.11 Severability. In the event that any provision of this
------------
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and this Agreement shall be construed as if such provision or
clause had never been contained in this Agreement, and there shall be deemed
substituted therefor such other provisions or clauses as will most nearly
accomplish the intent of the Parties expressed therein to the fullest extent
permitted by law.
12.12 Governing Law. Except as provided in Section 12.1, this
-------------
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflict of laws provisions
thereof.
12.13 Counterparts. The Agreement may be executed in counterparts,
------------
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
12.14 Specific Performance. The Buyer and the Sellers recognize that
--------------------
any breach of the terms of this Agreement may give rise to irreparable harm for
which money damages would not be an adequate remedy, and accordingly agree that,
in addition to other remedies any non-breaching party shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
12.15 Construction of Certain Terms and Phrases. Unless the content
-----------------------------------------
of this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) "knowledge", as used with respect to the
representations and warranties of this Agreement, means and includes: (a) actual
CONFIDENTIAL
49
<PAGE>
knowledge (which shall be the actual knowledge of any of the officers and
directors of the entity whose knowledge is referred to ins such representations
and warranties) and (b) that knowledge which a prudent business person should
have obtained in the management of his business; and (iv) whenever this
Agreement refers to a number of days, such number shall refer to calendar days.
12.16 Bulk Sales Laws. The Parties hereto waive compliance with the
---------------
"bulk sales" provisions of Article 6 of the Uniform Commercial Code as it is in
effect in the states where the Sellers own Acquired Assets to be conveyed to the
Buyer hereunder and any other "bulk sales" law of any jurisdiction that is
applicable to the transactions contemplated hereby.
[The Remainder of This Page Intentionally Left Blank]
CONFIDENTIAL 50
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have entered into this Asset
Purchase Agreement as of the date first hereinabove written.
BUYER: SELLERS:
MCI TELECOMMUNICATIONS NATIONAL AUTO CENTER, INC.
CORPORATION
By: /s/ Wayne Huyard By: /s/ Richard M. Gozia
------------------------------ -----------------------------------
Name: Wayne Huyard Name: Richard M. Gozia
----------------------------- ----------------------------------
Title: President, Mass Markets Title: Executive Vice President
---------------------------- ---------------------------------
CELLSTAR LTD.
By: National Auto Center, Inc.,
Its General Partner
By: /s/ Richard M. Gozia
-----------------------------------
Name: Richard M. Gozia
----------------------------------
Title: Executive Vice President
---------------------------------
CELLSTAR CORPORATION
By: /s/ Richard M. Gozia
-----------------------------------
Name: Richard M. Gozia
----------------------------------
Title: Executive Vice President
---------------------------------
CONFIDENTIAL 51
<PAGE>
EXHIBIT 10.1
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
This SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment"), dated as of July 31, 1996, is among NATIONAL AUTO CENTER, INC., a
Texas corporation (the "Borrower"), CELLSTAR CORPORATION, a Delaware corporation
(the "Parent"), each of the banks or other lending institutions which is or may
from time to time become a signatory to the Agreement (hereinafter defined) or
any successor or permitted assignee thereof (each a "Bank" and collectively, the
"Banks"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association ("TCB"), as agent for itself and the other Banks and as issuer of
Letters of Credit under the Agreement (in such capacity, together with its
successors in such capacity, the "Agent").
RECITALS:
A. The Borrower, the Parent, the Banks and the Agent have entered into
that certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996 (the "Agreement").
B. The obligations of the Borrower pursuant to the Agreement are
guaranteed by the Parent, CellStar, Ltd. and CellStar Fulfillment, Ltd.
C. The Borrower, the Parent, the Agent and the Banks now desire to amend
the Agreement (i) to reinstate the revolving credit facility established under
the Agreement, (ii) to reduce the aggregate amount of the Commitments to
$90,000,000, (iii) to increase the interest rate margins, (iv) to modify certain
covenants, (v) to obtain certain additional collateral and guaranties, and (vi)
as otherwise provided herein.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
---------
Definitions
-----------
Section 1.1. Definitions. Capitalized terms used in this Amendment, to
-----------
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
<PAGE>
ARTICLE II
----------
Amendments and Waiver
---------------------
Section 2.1 Amendment to Commitments. Effective as of the date hereof,
------------------------
the amount set forth opposite the name of each respective Bank on the signature
pages to the Agreement under the heading "Commitment" is hereby amended to
reflect the amount set forth below opposite the name of such Bank:
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
Texas Commerce Bank National Association $ 45,000,000
National City Bank $ 18,000,000
NBD Bank $ 10,000,000
Bank of Scotland $ 8,500,000
Banque Nationale de Paris, Houston Agency $ 8,500,000
TOTAL: $ 90,000,000
</TABLE>
Section 2.2 Amendments to Definitions. Effective as of the date hereof,
-------------------------
Section 1.1 of the Agreement is hereby amended as follows:
(a) The following definitions are added and shall read in their
respective entireties as follows:
"A & S" means A & S Air Services, Inc., a Delaware
-----
corporation and a Subsidiary of CAS.
"Asia Line of Credit" means the line of credit of CellStar
-------------------
Asia.
"BNP" means Banque Nationale de Paris, Houston Agency.
---
"BNP Collateral" has the meaning specified in the Borrower
--------------
Security Agreement.
"BNP Term Loan" means the term loan made by BNP to the
-------------
Parent in the principal amount of $3,000,000.
"CAS" means CellStar Air Services, Inc., a Delaware
---
corporation and a Subsidiary of the Parent.
"CAS Pledge Agreement" means the Pledge Agreement of CAS in
--------------------
favor of the Agent in substantially the form of Exhibit "E-12"
hereto, as the same may be amended, supplemented or modified from
time to time.
-2-
<PAGE>
"CellStar SA" means CellStar International Corporation/SA,
-----------
a Delaware corporation and a Subsidiary of Borrower.
"Companies Cash Flow" means, for any period, the sum of the
-------------------
following, calculated on a combined basis for the Companies, without
duplication:
(a) the amount of net income for such period (whether
positive or negative) before interest expense, income taxes
and extraordinary items, net of
(b) all non-cash items (such as deferred taxes,
depreciation, amortization of goodwill and all other non-
cash charges accrued but not actually paid) which, in
determining net income for such period, were deducted from
(or included in) gross income for such period.
"CWI" means CellStar West, Inc., a Delaware corporation and
---
a Subsidiary of the Borrower.
"Exception Period Termination Date" means November 29,
---------------------------------
1996.
"FIBOT" means Wells Fargo Bank (Texas), National
-----
Association, formerly known as First Interstate Bank of Texas, N.A.
"FIBOT Collateral" means all equipment, fixtures and other
----------------
articles of personal property of CellStar, Ltd. now or hereafter
attached or affixed to the real property described in the FIBOT DOT.
"FIBOT DOT" means that certain Deed of Trust dated April
---------
28, 1995, executed by CellStar, Ltd. for the benefit of FIBOT,
recorded in Volume 95090, Page 01805 of the Deed of Trust Records of
Dallas County, Texas.
"Inventory Cap" means an amount equal to one-half (1/2) of
-------------
the aggregate amount of the Commitments.
"New Guarantors" means, collectively, CAS, A & S, CellStar
--------------
SA, Audiomex, CellStar International, CWI, Fulfillment, and Holdings.
"Parent Pledge Agreement" means the Pledge Agreement of the
-----------------------
Parent in favor of the Agent in substantially the form of Exhibit "E-
11" hereto, as the same may be amended, supplemented or modified from
time to time.
"Sam's Operations" means the opertions of the Borrower
----------------
conducted in Sam's Wholesale Clubs.
-3-
<PAGE>
(b) The following definitions are amended to read in their
respective entireties as follows:
"Applicable Margin" means, for any day, (a) with respect to
-----------------
Eurodollar Advances, the margin of interest over the Eurodollar Rate
that is applicable when any Applicable Rate based on the Eurodollar
Rate is determined under this Agreement, and (b) with respect to
Floating Rate Advances, the margin of interest over the Alternate Base
Rate that is applicable when any Applicable Rate based on the
Alternate Base Rate is determined under this Agreement. The Applicable
Margin is subject to adjustment (upwards or downwards, as appropriate)
based on the ratio of Consolidated Funded Debt to Consolidated Cash
Flow. On each March 10, June 10, September 10 and December 10 the
Applicable Margin shall be adjusted to reflect the Applicable Margin
prescribed below for the ratio of Consolidated Funded Debt to
Consolidated Cash Flow as demonstrated by the most recently delivered
Compliance Certificate. At all times other than any Exception Period
the Applicable Margin shall be as follows:
<TABLE>
<CAPTION>
RATIO OF
CONSOLIDATED FUNDED DEBT APPLICABLE MARGIN APPLICABLE MARGIN
TO FOR EURODOLLAR FOR FLOATING
CONSOLIDATED CASH FLOW ADVANCES RATE ADVANCES
---------------------- -------- -------------
<S> <C> <C>
Less than 0.75 to 1.00 1.25% 0.50%
Greater than or equal to 0.75 to 1.50% 0.50%
1.00, but less than 1.25 to 1.00
Greater than or equal to 1.25 to 1.75% 0.50%
1.00, but less than 2.00 to 1.00
Greater than or equal to 2.00 to 2.00% 0.50%
1.00, but less than 2.50 to 1.00
Greater than or equal to 2.50 to 2.25% 0.75%
1.00 but less than 3.00 to 1.00
Greater than or equal to 3.00 to 2.50% 1.00%
1.00 but less than 3.50 to 1.00
Greater than or equal to 3.50 to 2.75% 1.25%
1.00
</TABLE>
During each Exception Period, at all times when the Borrowing Base
advance rate on inventory is greater than 50% but less than or equal
to 60% and the Borrowing Base advance rate on accounts receivable is
less than or equal to 80%, the Applicable Margin shall be as follows:
-4-
<PAGE>
<TABLE>
<CAPTION>
RATIO OF
CONSOLIDATED FUNDED DEBT APPLICABLE MARGIN APPLICABLE MARGIN
TO FOR EURODOLLAR FOR FLOATING
CONSOLIDATED CASH FLOW ADVANCES RATE ADVANCES
---------------------- -------- ------------
<S> <C> <C>
Less than 0.75 to 1.00 1.50% 0.75%
Greater than or equal to 0.75 1.75% 0.75%
to 1.00, but less than 1.25 to
1.00
Greater than or equal to 1.25 2.00% 0.75%
to 1.00, but less than 2.00 to
1.00
Greater than or equal to 2.00 2.25% 0.75%
to 1.00, but less than 2.50 to
1.00
Greater than or equal to 2.50 2.50% 1.00%
to 1.00 but less than 3.00 to
1.00
Greater than or equal to 3.00 2.75% 1.25%
to 1.00 but less than 3.50 to
1.00
Greater than or equal to 3.50 3.00% 1.50%
to 1.00
</TABLE>
During each Exception Period, at all times when the Borrowing Base
advance rate on inventory is greater than 60% or the Borrowing Base
advance rate on accounts receivable is greater than 80%, the
Applicable Margin shall be as follows:
<TABLE>
<CAPTION>
RATIO OF
CONSOLIDATED FUNDED DEBT APPLICABLE MARGIN APPLICABLE MARGIN
TO FOR EURODOLLAR FOR FLOATING
CONSOLIDATED CASH FLOW ADVANCES RATE ADVANCES
---------------------- -------- -------------
<S> <C> <C>
Less than 0.75 to 1.00 1.75% 1.00%
Greater than or equal to 0.75 2.00% 1.00%
to 1.00, but less than 1.25 to
1.00
Greater than or equal to 1.25 2.25% 1.00%
to 1.00, but less than 2.00 to
1.00
Greater than or equal to 2.00 2.50% 1.00%
to 1.00, but less than 2.50 to
1.00
Greater than or equal to 2.50 2.75% 1.25%
to 1.00 but less than 3.00 to
1.00
Greater than or equal to 3.00 3.00% 1.50%
to 1.00 but less than 3.50 to
1.00
Greater than or equal to 3.50
to 1.00 3.25% 1.75%
</TABLE>
The Applicable Margin shall be 2.75% for Eurodollar Advances and 1.25%
for Floating Rate Advances from July 31, 1996 until the first March
10, June 10, September 10 or December 10 thereafter that the
Compliance Certificate
-5-
<PAGE>
demonstrates a change in the ratio of Consolidated Funded Debt to
Consolidated Cash Flow to an amount so that another Applicable Margin
shall be applied, or until another Applicable Margin is otherwise
applicable. After each adjustment of the Applicable Margin in
accordance herewith due to a change in the ratio of Consolidated
Funded Debt to Consolidated Cash Flow as demonstrated by the
Compliance Certificate, the new Applicable Margin shall apply to all
Advances made or outstanding thereafter until the next March 10, June
10, September 10 or December 10 that the Compliance Certificate
demonstrates a change in the ratio of Consolidated Funded Debt to
Consolidated Cash Flow to an amount so that another Applicable Margin
shall be applied. Upon the request of the Agent, the Borrower must
demonstrate to the reasonable satisfaction of the Agent the required
applicable ratio in order to obtain an adjustment to a lower
Applicable Margin. If the Borrower fails to furnish to the Agent any
Compliance Certificate by the date required by this Agreement, then
the maximum Applicable Margin shall apply at all times after such date
for all Advances made or outstanding after such date until the
Borrower furnishes the required Compliance Certificate to the Agent.
"Borrowing Base" means:
--------------
(1) at any time other than during any Exception Period, an
amount equal to the sum of (a) eighty percent (80%) of Eligible
Domestic Accounts, plus (b) ninety percent (90%) of Eligible
Foreign Accounts, plus (c) the lesser of (i) the Inventory Cap or
(ii) fifty percent (50%) of Eligible Inventory; and
(2) at any time during each Exception Period, an amount
equal to the sum of (a) a percentage of Eligible Domestic
Accounts, selected by Borrower in the Notice of Election for such
Exception Period, but not to exceed eighty-five percent (85%) of
Eligible Domestic Accounts, plus (b) ninety percent (90%) of
Eligible Foreign Accounts, plus (c) the lesser of (i) the
Inventory Cap or (ii) a percentage of Eligible Inventory,
selected by Borrower in the Notice of Election for such Exception
Period, but not to exceed (x) during the period from and
including the date of this Agreement to and including August 30,
1996, sixty-five percent (65%) of Eligible Inventory, and (y)
during the period from and including August 31, 1996 through the
end of the Exception Period, sixty percent (60%) of Eligible
Inventory; provided, however, that in the event the information
delivered to the Agent with any Borrowing Base Report furnished
pursuant to Section 9.1(j) during any Exception Period shows that
less than sixty-five percent (65%) of Eligible Inventory is Price
Protected Inventory, as of the last day of the month for which
such Borrowing Base Report was delivered, the advance rate for
Eligible Inventory shall be fifty percent (50%) until the
next Borrowing Base Report and related information delivered
during such Exception Period
-6-
<PAGE>
pursuant to Section 9.1(j) for any month show that at least
sixty-five percent (65%) of Eligible Inventory is Price Protected
Inventory, as of the last day of such month; and provided,
further, that in the event a sale of the Sam's Operations is
completed, (i) the Borrowing Base as reflected in the most recent
Borrowing Base Report shall be recalculated as of such date,
excluding the assets sold in the sale of the Sam's Operations,
and (ii) the Borrower shall remain in compliance with such
recalculated Borrowing Base until the next Borrowing Base Report
is delivered in accordance with this Agreement.
"Exception Period" means (a) the period from and including the
----------------
date of this Agreement to and including August 31, 1995, and (b) each
subsequent fiscal quarter of the Borrower (or portion thereof)
occurring during the period beginning on the date of this Agreement
and ending on the Exception Period Termination Date, which the
Borrower elects to be an Exception Period, such election to be made by
Borrower giving the Agent written notice of such election, by means of
a Notice of Election, no later than fifteen (15) days prior to the
beginning of such fiscal quarter and no earlier than thirty (30) days
prior to the beginning of such fiscal quarter.
"Guaranties" means the guaranties of Guarantors in favor of the
----------
Agent and the Banks, each in substantially the form of Exhibit "F-1"
hereto for the Parent, Exhibit "F-2" hereto for each Partnership, and
Exhibit "F-3" hereto for the New Guarantors, as the same may be
amended, supplemented or modified from time to time.
"Guarantor Security Agreements" means the security agreements of
-----------------------------
the Guarantors in favor of the Agent, in substantially the form of
Exhibit "E-2" hereto for the Parent, Exhibit "E-3" hereto for each
Partnership, and Exhibit "E-10" hereto for the New Guarantors, as the
same may be amended, supplemented or modified from time to time.
"Guarantors" means, collectively, the Parent, the Partnerships,
----------
the New Guarantors, and each other Subsidiary that at any time
executes a Guaranty in favor of the Agents and the Banks.
"Interest Period" means with respect to any Eurodollar Advances,
---------------
each period commencing on the date such Advances are made or Converted
from Floating Rate Advances or, in the case of each subsequent,
successive Interest Period applicable to a Eurodollar Advance, the
last day of the next preceding Interest Period with respect to such
Advance, and ending on the numerically corresponding day in the first
(1st), second (2nd), or third (3rd) calendar month thereafter
(provided, however, that the Borrower shall be allowed one Interest
Period commencing on any day during the period from July 31, 1996
through August 6, 1996 and ending on August 29, 1996, hereinafter
referred to as the
-7-
<PAGE>
"Special Interest Period"), as the Borrower may select as provided in
Section 2.5 or 2.6 hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing:
(a) each Interest Period which would otherwise end on a day which is
not a Business Day shall end on the next succeeding Business Day (or,
if such succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); (b) any Interest Period
which would otherwise extend beyond the Termination Date shall end on
the Termination Date; (c) no more than five (5) Interest Periods for
Eurodollar Advances shall be in effect at the same time; and (d)
except for the Special Interest Period, no Interest Period for any
Eurodollar Advances shall have a duration of less than one (1) month
and, if the Interest Period for any Eurodollar Advances would
otherwise be a shorter period, such Advances shall not be available
hereunder.
"Required Banks" means at any time while no Advances are
--------------
outstanding, Banks having at least 70.1% of the aggregate amount of
the Commitments and, at any time while Advances are outstanding, Banks
holding at least 70.1% of the outstanding aggregate principal amount
of the Advances.
(c) The definitions of "Initial Compliance Date" and "Overadvance
Period" are hereby deleted in their entirety.
Section 2.3 Advances. Effective as of the date hereof, the proviso of the
--------
first sentence of Section 2.1 of the Agreement is hereby amended to read as
follows:
provided that the aggregate amount of all Advances at any time outstanding
--------
shall not exceed, and the Banks shall not be obligated to make any Advance
which would cause the aggregate amount of all outstanding Advances to
exceed, the amount equal to (a) the lesser of (i) the aggregate amount of
the Commitments or (ii) the Borrowing Base, minus (b) the Letter of Credit
Liabilities.
Section 2.4 Commitment Fee. Effective as of the date hereof, Section 2.8
--------------
of the Agreement is hereby amended to read in its entirety as follows:
Section 2.8 Commitment Fee. The Borrower agrees to pay to the Agent
--------------
for the account of each Bank a commitment fee on the daily average unused
amount of such Bank's Commitment (a) for the period from and including the
date of this Agreement to and including July 31, 1996, at the rate of
three-eighths of one percent (3/8 of 1%) per annum, and (b) from and after
July 31, 1996 to and including the Termination Date, at the rate of (i)
one-half of one percent (1/2 of 1%) per annum at all times when the ratio
of Consolidated Senior Debt to Consolidated Capitalization, as reflected in
the most recent Compliance Certificate delivered in accordance with this
Agreement, is greater than or equal to 40%, and
-8-
<PAGE>
(ii) three-eighths of one percent (3/8 of 1%) per annum at all times when
the ratio of Consolidated Senior Debt to Consolidated Capitalization, as
reflected in the most recent Compliance Certificate delivered in accordance
with this Agreement, is less than 40%, in each case based on a 360 day year
and the actual number of days elapsed; provided, however, that if the
Borrower fails to furnish to the Agent any Compliance Certificate by the
date required by this Agreement, then the rate specified in clause (i)
above shall apply for each calculation of the commitment fee hereunder
after such date until the Borrower furnishes the required Compliance
Certificate to the Agent. For the purpose of calculating the commitment fee
hereunder, the Commitments shall be deemed utilized by the amount of all
outstanding Advances and Letter of Credit Liabilities. Accrued commitment
fees shall be payable in arrears on each Quarterly Payment Date and on the
Termination Date.
Section 2.5 Collateral. Effective as of the date hereof, subsections (a),
----------
(b) and (c) of Section 6.1 of the Agreement are hereby amended to read in their
respective entireties as follows:
(a) The Borrower shall grant to the Agent or confirm that the
Agent has been granted and possesses, for the pro rata benefit of the
Banks, a first priority security interest in all of the Borrower's personal
property, including without limitation all of its accounts, accounts
receivable, equipment, furniture, fixtures, inventory, chattel paper,
documents, instruments and general intangibles, whether now owned or
hereafter acquired, and all products and proceeds thereof, pursuant to the
Borrower Security Agreement, provided that (i) the Agent's security
interest in the Collateral shall be junior in priority to any prior Liens
thereon existing on the date hereof and permitted under this Agreement, and
(ii) the Agent's security interest in the BNP Collateral shall be junior in
priority to the Lien of BNP to secure the BNP Term Loan.
(b) The Guarantors shall grant to the Agent or confirm that the
Agent has been granted and possesses, for the pro rata benefit of the
Banks, a first priority security interest in all personal property of the
Guarantors, including without limitation all accounts, accounts receivable,
equipment (except that one certain aircraft owned by A&S), furniture,
fixtures, inventory, chattel paper, documents, instruments and general
intangibles of each Guarantor, whether now owned or hereafter acquired, and
all products and proceeds thereof, pursuant to the Guarantor Security
Agreements, provided that (i) the Agent's security interest in the
Collateral shall be junior in priority to any prior Liens thereon existing
on the date hereof and permitted under this Agreement, (ii) the Agent's
security interest in the BNP Collateral shall be junior in priority to the
Lien of BNP to secure the BNP Term Loan, and (iii) the Collateral shall not
include the FIBOT Collateral so long as FIBOT has a prior perfected
security interest therein.
(c) The Borrower shall grant to the Agent or confirm that the Agent
has been granted and possesses, for the pro rata benefit of the Banks, a
first
-9-
<PAGE>
priority security interest in (a) all of the Borrower's rights, titles and
interests as a general partner of CellStar, Ltd., (b) all of the Borrower's
shares of capital stock of Holdings, Fulfillment and CWI, and (c) sixty-
five percent (65%) of the shares of voting stock and all of the shares of
non-voting preferred stock of CellStar SA, Audiomex and CellStar
International, pursuant to the Borrower Pledge Agreement; provided that the
Agent's security interest in the stock of CellStar SA shall be second in
priority to the security interest of BNP securing the BNP Term Loan. The
Borrower shall cause CAS to grant to the Agent, for the pro rata benefit of
the Banks, a first priority security interest in all of the shares of
capital stock of A & S, pursuant to the CAS Pledge Agreement.
(d) The Parent shall grant to the Agent, for the pro rata benefit
of the Banks, a first priority security interest in all of the shares of
capital stock of the Borrower and CAS pursuant to the Parent Pledge
Agreement.
Section 2.6 Other Subsidiaries. Effective as of the date hereof, Article
------------------
VI of the Loan Agreement is hereby amended to add Section 6.3 to the end
thereof, which Section shall read in its entirety as follows:
Section 6.3 Other Subsidiaries. Each Person which is now or
------------------
hereafter becomes a Subsidiary (other than Subsidiaries addressed in
subsections (b) and (c) of Section 6.1 and Foreign Subsidiaries) shall
execute and deliver to the Agent (a) a Guaranty in form and substance
satisfactory to the Agent, pursuant to which such Subsidiary guaranties the
prompt payment and performance in full of all of the Obligations, and (b) a
Guarantor Security Agreement in form and substance satisfactory to the
Agent, pursuant to which such Subsidiary grants to the Agent, for the pro
rata benefit of the Banks, a first priority security interest in all of
such Subsidiary's personal property, including without limitation the types
of personal property described in Section 6.1(b), whether now owned or
hereafter acquired, and all products and proceeds thereof. With regard to
each Person which is now or hereafter becomes a Subsidiary (other than
Subsidiaries addressed in subsections (b) and (c) of Section 6.1 and
Foreign Subsidiaries), the Borrower shall execute or cause to be executed a
pledge agreement in form and substance satisfactory to the Agent, pursuant
to which the Agent, for the pro rata benefit of the Banks, is granted a
first priority security interest in all of the capital stock of such
Subsidiary, provided that such security interest shall be limited to sixty-
five percent (65%) of the voting stock of each holding company of any
Foreign Subsidiary. The Borrower shall cause to be executed and delivered
to the Agent (i) such further documents and instruments, including without
limitation Uniform Commercial Code financing statements, as the Agent in
its sole discretion deems necessary or desirable to create, evidence,
preserve, and perfect its Liens in the Collateral, and (ii) such legal
opinions, corporate and partnership documents and certificates as Agent or
its counsel may require in connection with the documents executed and
delivered pursuant to this Section.
-10-
<PAGE>
Section 2.7 Financial Reports. Effective as of the date hereof, Section
-----------------
9.1 of the Agreement is hereby amended as follows:
(a) Subsection (c) is amended to delete the language that was
added to the end of such subsection by the First Amendment to Amended and
Restated Loan Agreement dated as of February 29, 1996; and
(b) The following sentence is added to the end of Section 9.1,
which sentence shall read in its entirety as follows:
All financial statements and reports, including Borrowing Base
Reports, required to be delivered under this Section shall be due on
the Business Day immediately following the specified due date if the
specified due date is not a Business Day.
Section 2.8 Debt. Effective as of the date hereof, Section 10.1 of the
----
Agreement is hereby amended as follows:
(a) subsection (b) is amended to read in its entirety as follows:
(b) Debt of the Foreign Subsidiaries, Debt of the Foreign
Affiliates, and Guarantees by the Borrower or the Parent of any Debt
of any of the Foreign Subsidiaries or the Foreign Affiliates, all
incurred when no Default exists or would result therefrom, provided
that the aggregate amount of all such Debt (including such Debt
existing on the date hereof and described on Schedule 2 hereto)
outstanding at any time shall not exceed $30,000,000; and
(b) subsections (c) and (h) are deleted in their respective
entireties.
Section 2.9. Limitations on Liens. Effective as of the date hereof,
--------------------
subsection (i) of Section 10.2 of the Agreement is hereby amended to read in its
entirety as follows:
(i) Liens on the assets of any of the Foreign Subsidiaries or
Foreign Affiliates (other than Eligible Foreign Accounts), to secure Debt
permitted by Section 10.1(b) in an aggregate amount outstanding at any time
not to exceed $30,000,000.
Section 2.10. Mergers, Etc. Effective as of the date hereof, the proviso
-------------
of Section 10.3 of the Agreement is hereby amended to read in its entirety as
follows:
provided, however, that the Borrower, the Parent or any Subsidiary shall be
permitted to become a party to a merger or consolidation or acquire all or
any part of the assets of any Person or any shares or other beneficial
ownership of any Person, so long as (a) no Default is existing or would
result therefrom, (b) the
-11-
<PAGE>
Borrower has given the Agent at least twenty (20) days prior notice of such
merger, consolidation or acquisition, (c) the Borrower has provided to the
Banks calculations demonstrating the pro forma compliance with all
financial and other covenants contained herein, after giving effect to such
merger, consolidation or acquisition, based on the most recently delivered
financial statements, (d) the total cash and non-cash consideration paid
and Debt assumed or incurred by the Borrower, the Parent or any Subsidiary
in connection with all such mergers, consolidations or acquisitions (i)
shall not exceed $3,000,000.00 for any single transaction and (ii) shall
not exceed $5,000,000 in the aggregate for any fiscal year, and (e) the
Borrower, the Parent or such Subsidiary, as the case may be, is the
surviving corporation in such merger or consolidation.
Section 2.11. Restricted Payments. Effective as of the date hereof,
-------------------
Section 10.4 of the Agreement is hereby amended to read in its entirety as
follows:
Section 10.4. Restricted Payments. Neither the Borrower nor the
-------------------
Parent will make, or permit any Subsidiary to make, any Restricted Payment;
provided, however, that the Subsidiaries shall be permitted to declare and
pay dividends to the Borrower, the Parent or any Subsidiary that guarantees
payment of the Obligations.
Section 2.12. Loans and Investments. Effective as of the date hereof,
---------------------
Section 10.5 of the Agreement is hereby amended as follows:
(a) Clause (B) of subsection (i) is amended to read in its
entirety as follows:
(B) (i) initial start-up advances and initial and further equity
contributions made by the Parent or the Borrower to any Subsidiary or
Foreign Affiliate prior to July 31, 1996 in the amounts specified on
Schedule 2 hereto, (ii) initial start-up advances and initial and
further equity contributions made by the Borrower and the Parent to
any Subsidiary or Foreign Affiliate on or after July 31, 1996, in an
aggregate amount not to exceed $5,000,000 during the twelve (12) month
period beginning on July 31, 1996 and during each subsequent twelve
(12) month period beginning on July 31 of each year during the term
hereof, and (iii) initial start-up advances and initial and further
equity contributions made by any Subsidiary (other than the Borrower)
to any other Subsidiary or Foreign Affiliate on or after July 31,
1996, in an aggregate amount not to exceed $3,000,000 during the
twelve (12) month period beginning on July 31, 1996 and during each
subsequent twelve (12) month period beginning on July 31 of each year
during the term hereof; provided, however, that funds which are
advanced or contributed to such Subsidiary or Foreign Affiliate by the
Borrower or the Parent as permitted by clause (ii) and promptly
advanced or contributed to such other Subsidiary or Foreign Affiliate
in accordance with this clause (iii) shall not be
-12-
<PAGE>
included in the calculation of the $3,000,000 aggregate amount
permitted under this clause (iii);
(b) Subsection (o) is amended to read in its entirety as follows:
(o) investments by Foreign Subsidiaries and Foreign Affiliates
which follow a similar risk profile as the investments described in
subsections (a) through (h) and subsection (m) above;
Section 2.13 Disposition of Assets. Effective as of the date hereof
---------------------
clause (b) of Section 10.7 of the Agreement is hereby amended to read as
follows:
(b) dispositions of equipment and fixtures having a fair market value not
to exceed $1,000,000 in the aggregate during the period from the date of
this Agreement through the Termination Date, and
Section 2.14 Capital Expenditures. Effective as of the date hereof, the
--------------------
amount "Eight Million Five Hundred Thousand Dollars ($8,500,000)" appearing in
Section 11.7 of the Agreement is hereby amended to read "Five Million Five
Hundred Thousand Dollars ($5,500,000)".
Section 2.15 Consolidated Senior Debt to Consolidated Cash Flow Ratio.
--------------------------------------------------------
Effective as of the date hereof, Section 11.8 of the Agreement is hereby amended
to read in its entirety as follows:
Section 11.8 Consolidated Senior Debt to Consolidated Cash Flow
--------------------------------------------------
Ratio. The Borrower and the Parent will maintain, or cause to be
maintained, as of the end of the quarter ended August 31, 1996 and each
fiscal quarter ended thereafter, a ratio of Consolidated Senior Debt, as of
the end of such quarter, to Consolidated Cash Flow, for the most recent
four fiscal quarters then ended, of not greater than 3.0 to 1.0.
Section 2.16 New Ratios. Effective as of the date hereof, Article XI of
----------
the Agreement is hereby amended to add Sections 11.9 and 11.10 to the end
thereof, which Sections shall read in their entirety as follows:
Section 11.9 Consolidated Senior Debt to Consolidated Capitalization
-------------------------------------------------------
Ratio. The Borrower and the Parent will maintain, or cause to be
-----
maintained, a ratio of Consolidated Senior Debt to Consolidated
Capitalization of not greater than: (a) 47% during the Parent's fiscal
quarter ending August 31, 1996; (b) 45% during the Parent's fiscal quarter
ending November 30, 1996; and (c) 40% during the Parent's fiscal quarter
ending February 28, 1997 and at all times thereafter.
Section 11.10 Companies Cash Flow to Companies Interest Expense
-------------------------------------------------
Ratio. The Borrower will maintain, or cause to be maintained, a ratio of
Companies Cash
-13-
<PAGE>
Flow to interest expense of the Companies of not less than (a) 1.25 to 1.0
for the quarter ending February 28, 1997, (b) 1.50 to 1.0 for the two
quarters ending May 31, 1997, (c) 1.75 to 1.0 for the three quarters ending
August 31, 1997, and (d) 2.0 to 1.0 for the four quarters ending November
30, 1997 and each four quarter period ending thereafter.
Section 2.17 Release of Sam's Operations Collateral. Effective as of the
--------------------------------------
date hereof, clause (h) of Section 14.9 of the Agreement is hereby amended to
read in its entirety as follows:
(h) release any Collateral, except releases of Collateral in connection
with the sale of the Sam's Operations which shall be effective if agreed or
consented to in writing by Banks having at least 85% of the aggregate
amount of the Commitments (or by Agent with the consent of such Banks);
Section 2.18 Amendments to Exhibits. Effective as of the date hereof,
----------------------
Exhibits "A," "D," "E-1," "E-2," "E-3," "E-4," "H" and "L" to the Agreement are
hereby amended to read in their respective entireties as set forth on Annexes 1
through 8 hereto, respectively.
Section 2.19 New Exhibits. Effective as of the date hereof, the Agreement
------------
is hereby amended to add Exhibits "E-10" through "E-12", consecutively, and "F-
3" thereto, which Exhibits shall read in their respective entireties as set
forth on Annexes 9 through 12 hereto, respectively.
Section 2.20 Amendments to Schedules. Effective as of the date hereof,
-----------------------
Schedules 1, 2, 3, 5 and 6 to the Agreement are hereby amended to read in their
respective entireties as set forth on Annexes 13, 14, 15, 16 and 17 hereto,
respectively.
Section 2.21 Waiver. The Banks hereby waive any Default existing on the
------
date hereof under subsection (o) of Section 12.1 of the Agreement to the extent
the events disclosed by the Parent in press releases issued on or before the
date hereof constitute a material adverse change under such subsection.
However, nothing contained herein or in any of the Loan Documents shall waive or
be construed to waive any Default which may hereafter occur based on events or
announcements subsequent to the date hereof which alone or together with other
events or announcements, including those which were the subject of press
releases issued on or before the date hereof, may constitute a material adverse
change under subsection (o) of Section 12.1 of the Agreement.
ARTICLE III
-----------
Conditions Precedent
--------------------
Section 3.1 Conditions. The effectiveness of this Amendment is subject to
----------
the satisfaction of the following conditions precedent:
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<PAGE>
(a) Documents. The Agent shall have received all of the following,
---------
each dated (unless otherwise indicated) the date of this Amendment, in form
and substance satisfactory to the Agent:
(1) Certificates of Secretary for Certain Corporations. A
--------------------------------------------------
certificate of the Secretary or an Assistant Secretary of each of the
Borrower, the Parent, Holdings, Fulfillment, CellStar International
and Audiomex, certifying (i) as to the resolutions of the Board of
Directors of such Person which authorize the execution, delivery, and
performance by such Person of this Amendment and the other Loan
Documents to which such Person is or is to be a party, (ii) the names
of the officers of such Person authorized to sign this Amendment, the
other Loan Documents to which such Person is or is to be a party and
the certificates contemplated herein, (iii) that neither the Articles
or Certificate of Incorporation nor the Bylaws of such Person have
been modified, amended or revoked since the most recent date as of
which certified copies of such documents were delivered to the Agent;
and (iv) that the Agreements of Limited Partnership of the
Partnerships have not been modified, amended or revoked since the most
recent date as of which a certified copy thereof was delivered to the
Agent ;
(2) Certificates of Secretary of Additional Corporations. A
----------------------------------------------------
certificate of the Secretary or an Assistant Secretary of each of CAS,
A & S, CellStar SA and CWI, certifying (i) as to the resolutions of
the Board of Directors of such Person which authorize the execution,
delivery, and performance by such Person of the Loan Documents to
which such Person is or is to be a party, and (ii) the names of the
officers of such Person authorized to sign the Loan Documents to which
such Person is or is to be a party and the certificates contemplated
herein;
(3) Certificates and Articles of Incorporation. The
------------------------------------------
Certificates or Articles of Incorporation of CAS, A & S, CellStar SA
and CWI certified by the Secretary of State of their respective states
of incorporation as of a date within twenty (20) days prior to the
date hereof;
(4) Bylaws. The Bylaws of CAS, A & S, CellStar SA and CWI
------
certified by the Secretary or an Assistant Secretary of such Person;
(5) Governmental Certificates. Certificates of the
-------------------------
appropriate government officials of the respective jurisdictions of
incorporation of the Parent and its Subsidiaries, except the
Partnerships, as to the existence and good standing of each such
Person and certificates of the appropriate governmental officials of
each state where any such Persons own inventory located in such state
having an aggregate value of $100,000 or more, as to the qualification
and good standing of such Persons, respectively, in such
jurisdictions, each dated within twenty (20) days prior to the date
hereof;
-15-
<PAGE>
(6) Partnership Governmental Certificates. Certificates of
-------------------------------------
the Secretary of State of the State of Texas as to the existence of each of
the Partnerships, and certificates of the appropriate governmental
officials of each state where the Partnerships conduct business or employ
any Persons as to the qualification of the Partnerships to do business in
such jurisdictions, each dated within twenty (20) days prior to the date
hereof;
(7) Opinions of Counsel. A favorable opinion of outside
-------------------
counsel of the Borrower, as to the matters set forth in Annex 19 hereto,
and such other matters as the Agent may reasonably request;
(8) New Notes. Promissory Notes, each in the form of Annex 1
---------
hereto with appropriate completions, payable to the order of each Bank in
the stated amount of such Bank's Commitment, executed by the Borrower (the
"New Notes");
(9) New Guaranty. The Guaranty of the New Guarantors in
------------
substantially the form of Annex 12 hereto, executed by the New Guarantors;
(10) Borrower Security Agreement. The Borrower Security
---------------------------
Agreement in substantially the form of Annex 3 hereto, executed by the
Borrower;
(11) Guarantor Security Agreements. The Guarantor Security
-----------------------------
Agreements in substantially the form of Annexes 4, 5 and 9 hereto, executed
by the Guarantors.
(12) Borrower Pledge Agreement. The Borrower Pledge
-------------------------
Agreement, in substantially the form of Annex 6 hereto, executed by the
Borrower;
(13) Parent Pledge Agreement. The Parent Pledge Agreement, in
-----------------------
substantially the form of Annex 10 hereto, executed by the Parent;
(14) CAS Pledge Agreement. The CAS Pledge Agreement, in
--------------------
substantially the form of Annex 11 hereto, executed by CAS;
(15) Consent Letter. The consent letter relating to the BNP
--------------
Term Loan and the sale of the Sam's Operations, in substantially the
form of Annex 18 hereto, executed by the parties thereto.
(16) Stock Certificates. The original certificates
------------------
representing the stock pledged pursuant to the Pledge Agreements executed
in connection herewith, together with stock transfer powers duly executed
in blank (except the certificates representing the stock of CellStar SA and
related transfer powers, which shall have been delivered to BNP);
-16-
<PAGE>
(17) CellStar SA Stock. A document in form and substance
-----------------
satisfactory to the Agent, executed by BNP, whereby BNP (a)
acknowledges that it holds the original certificates representing the
pledged stock of CellStar SA as bailee for the Agent to perfect the
Agent's security interest in such stock, and (b) agrees to deliver
such certificates to the Agent promptly upon payment in full of the
BNP Term Loan.
(18) Financing Statements. Uniform Commercial Code financing
--------------------
statements and amendments in form and substance satisfactory to the
Agent, executed by the Borrower and the Guarantors;
(19) Intellectual Property Documentation. Documentation
-----------------------------------
satisfactory to the Agent, for filing in the U.S. Patent and Trademark
Office and the U.S. Copyright Office to properly reflect Agent's
security interest in all U.S. patents, trademarks, copyrights and
applications therefor of the Borrower and the Guarantors;
(20) Contribution and Indemnification Agreement. An Amended
------------------------------------------
and Restated Contribution and Indemnification Agreement in
substantially the form of Annex 8 hereto, executed by the Borrower and
the Guarantors.
(21) Lien Searches. The results of Uniform Commercial Code,
-------------
tax and judgment lien searches showing all financing statements and
other documents, instruments and Liens on file against the Borrower
and the Guarantors in such jurisdictions as the Agent may request,
each such search to be as of a current date.
(22) Additional Information. Such additional approvals,
----------------------
opinions, documents, instruments and information as the Agent or its
legal counsel, Winstead Sechrest & Minick P.C., may reasonably
request.
(b) Amendment Fees. The Borrower shall have paid or caused to be
--------------
paid amendment fees to the Banks and an advisory fee to Chase Securities
Inc. ("CSI"), in the total amount of $337,500, to be distributed among the
Banks and CSI as specified by the Banks.
(c) Asia Line of Credit. The termination date of the Asia Line of
-------------------
Credit shall have been extended to July 31, 1997, pursuant to terms and
documentation satisfactory to the Required Banks.
(d) BNP Term Loan. The outstanding Debt of the Parent to BNP shall
-------------
have been refinanced by the BNP Term Loan and the maturity date thereof
extended to November 21, 1996, pursuant to terms and documentation
satisfactory to the Required Banks.
-17-
<PAGE>
(e) Expenses. The Borrower shall have paid or caused to be paid in
--------
full all expenses invoiced through the date hereof which are reimbursable
under Section 14.1 of the Agreement.
(f) Representations and Warranties. The representations and
------------------------------
warranties contained herein and in all other Loan Documents, as amended
hereby, shall be true and correct as of the date hereof as if made on the
date hereof.
(g) No Default. No Default shall have occurred and be continuing.
----------
(h) Adjustment of Principal Balances. One or more Banks shall have
--------------------------------
made offsetting payments to other Banks as requested by the Agent in order
to cause the outstanding principal balance of each Bank's New Note to
correspond to its Commitment as amended herein.
(i) Corporate Matters. All corporate proceedings taken in connection
-----------------
with the transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be satisfactory
to the Agent and its legal counsel, Winstead Sechrest & Minick P.C.
ARTICLE IV
----------
Ratifications, Representations and Warranties
---------------------------------------------
Section 4.1 Ratifications. The terms and provisions set forth in this
-------------
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrower and Parent agree that the Agreement, as amended hereby, and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
Section 4.2 Representations and Warranties. Borrower and Parent each
------------------------------
hereby represent and warrant to the Agent that (1) the execution, delivery, and
performance by the Borrower and the Guarantors of this Amendment and the other
Loan Documents to which each such Person is a party, and compliance with the
terms and provisions hereof and thereof, have been duly authorized by all
requisite action on the part of each such Person and do not and will not (a)
violate or conflict with, or result in a breach of, or require any consent under
(i) the articles of incorporation, certificate of incorporation, bylaws,
partnership agreement or other organizational documents of any such Person, (ii)
any applicable law, rule, or regulation or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator, or (iii) any material
agreement or instrument to which any such Person is a party or by which any of
them or any of their property is bound or subject, (2) the representations and
warranties contained in the Agreement, as amended hereby, and any other Loan
Document are true and correct on and as of the date hereof as though made on and
as of the date hereof and all information on the Schedules
-18-
<PAGE>
to the Agreement, as amended hereby, is correct and complete, and (3) no Default
has occurred and is continuing, except any Default waived in Section 2.20
hereof.
ARTICLE V
---------
Miscellaneous
-------------
Section 5.1 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Amendment or any other Loan Document
including any Loan Document furnished in connection with this Amendment shall
survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by the Agent or any Bank or any closing shall
affect the representations and warranties or the right of the Agent or any Bank
to rely upon them.
Section 5.2 Reference to Agreement. Each of the Loan Documents, including
----------------------
the Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
Section 5.3 Expenses of the Agent. Each Company agrees to pay on demand
---------------------
all costs and expenses incurred by the Agent in connection with the preparation,
negotiation, and execution of this Amendment and the other Loan Documents
executed pursuant hereto and any and all amendments, modifications, and
supplements thereto, including without limitation the costs and fees of the
Agent's legal counsel, and all costs and expenses incurred by the Agent in
connection with the enforcement or preservation of any rights under the
Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of the Agent's legal counsel.
Section 5.4 Severability. Any provision of this Amendment held by a court
------------
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.5 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
--------------
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 5.6 Successors and Assigns. This Amendment is binding upon and
----------------------
shall inure to the benefit of the Borrower, the Parent, the Agent and the Banks
and their respective successors and assigns, except neither the Borrower nor the
Parent shall assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Agent.
-19-
<PAGE>
Section 5.7 Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
Section 5.8. Effect of Waiver. No consent or waiver, express or implied,
----------------
by the Agent or the Banks to or for any breach of or deviation from any
covenant, condition or duty by Borrower or Parent shall be deemed a consent or
waiver to or of any other breach of the same or any other covenant, condition or
duty.
Section 5.9. Headings. The headings, captions, and arrangements used in
--------
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.10. Non-Application of Chapter 15 of Texas Credit Code. The
--------------------------------------------------
provisions of Chapter 15 of the Texas Credit Code (Vernon's Annotated Texas
Statutes, Article 5069-15) are specifically declared by the parties not to be
applicable to this Amendment or any of the Loan Documents or the transactions
contemplated hereby.
Section 5.11. Release of Claims. The Borrower and the Guarantors
-----------------
each hereby acknowledge and agree that none of them has any and there are no
claims or offsets against or defenses or counterclaims to the terms and
provisions of or the obligations of the Borrower, any Guarantor or any
Subsidiary created or evidenced by the Agreement or any of the other Loan
Documents, and to the extent any such claims, offsets, defenses or counterclaims
exist, Borrower and the Guarantors each hereby waives, and hereby release the
Agent and each of the Banks from, any and all claims, offsets, defenses and
counterclaims, whether known or unknown, such waiver and release being with full
knowledge and understanding of the circumstances and effects of such waiver and
release and after having consulted legal counsel with respect thereto.
Section 5.12 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
----------------
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO REGARDING
THIS AMENDMENT AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. This Amendment
supersedes that certain letter agreement dated as of April 15, 1996 among the
parties hereto, CellStar, Ltd. and CellStar Fulfillment, Ltd.
-20-
<PAGE>
Executed as of the date first written above.
BORROWER:
--------
NATIONAL AUTO CENTER, INC.
By: /s/ Alan H. Goldfield
--------------------------------------
Alan H. Goldfield
Chairman and Chief Executive Officer
PARENT:
------
CELLSTAR CORPORATION
By: /s/ Alan H. Goldfield
--------------------------------------
Alan H. Goldfield
Chairman and Chief Executive Officer
AGENT AND BANKS:
---------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Agent and as a Bank
By: /s/ Kevin Kelly
--------------------------------------
Name: Kevin Kelly
---------------------------------
Title: Senior Vice President
--------------------------------
NATIONAL CITY BANK
By: /s/ D.PULLEN
--------------------------------------
Name: DON PULLEN
---------------------------------
Title: V.P.
---------------------------------
-21-
<PAGE>
NBD BANK
By: [SIGNATURE ILLEGIBLE]
--------------------------------------
Name:________________________________
Title:_______________________________
BANK OF SCOTLAND
By: /s/ CATHERINE M. ONIFFREY
--------------------------------------
Name: CATHERINE M. ONIFFREY
--------------------------------
Title: VICE PRESIDENT
-------------------------------
BANK OF SCOTLAND
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ HENRY F. SETINA
--------------------------------------
Name: HENRY F. SETINA
---------------------------------
Title: VICE PRESIDENT
--------------------------------
-22-
<PAGE>
Each of the undersigned Partnerships hereby (a) consents and agrees to
this Amendment, (b) agrees that its Guaranty shall continue to be the legal,
valid and binding obligation of such Partnership enforceable against such
Partnership in accordance with its terms, and (c) acknowledges and agrees that
the "Guaranteed Indebtedness," as defined in its Guaranty, includes without
limitation the indebtedness evidenced by the New Notes.
CELLSTAR, LTD.
By: National Auto Center, Inc.,
General Partner
By: /s/ Alan H. Goldfield
--------------------------------------
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR FULFILLMENT, LTD.
By: CellStar Fulfillment, Inc.,
General Partner
By: /s/ Alan H. Goldfield
--------------------------------------
Alan H. Goldfield
Chairman and Chief Executive Officer
-23-
<PAGE>
Each of the undersigned Subsidiaries hereby (a) consents and agrees to
this Amendment, (b) acknowledges and agrees that the Obligations secured by the
existing Pledge Agreements executed by such Subsidiaries pursuant to the
Agreement include without limitation the indebtedness evidenced by the New
Notes, and (c) acknowledges and agrees that the Liens created and evidenced by
such Pledge Agreements are legal, valid, binding and enforceable Liens of the
respective dignity and priority recited therein and all of such Liens are hereby
ratified and shall continue as security for the Obligations, including without
limitation the indebtedness evidenced by the New Notes.
CELLSTAR FULFILLMENT, INC.
By: /s/ Alan H. Goldfield
------------------------------------------
Name: Alan H. Goldfield
-------------------------------------
Title: Chairman and Chief Executive
Officer
-----------------------------------
NAC HOLDINGS INC.
By: /s/ Elaine Flud Rodriquez
-----------------------------------------
Name: Elaine Flud Rodriquez
------------------------------------
Title: President, Treasurer and Director
------------------------------------
AUDIOMEX EXPORT CORPORATION
By: /s/ Alan H. Goldfield
------------------------------------------
Name: Alan H. Goldfield
-------------------------------------
Title: Chairman and Chief Executive
Officer
-----------------------------------
CELLSTAR INTERNATIONAL CORPORATION/ASIA
By: /s/ Alan H. Goldfield
------------------------------------------
Name: Alan H. Goldfield
-------------------------------------
Title: Chairman and Chief Executive
Officer
-----------------------------------
-24-
<PAGE>
INDEX TO ANNEXES
<TABLE>
<S> <C>
Annex 1 - Exhibit "A" (Form of Note)
Annex 2 - Exhibit "D" (Compliance Certificate)
Annex 3 - Exhibit "E-1" (Borrower Security Agreement)
Annex 4 - Exhibit "E-2" (Parent Security Agreement)
Annex 5 - Exhibit "E-3" (Partnership Security Agreements)
Annex 6 - Exhibit "E-4" (Borrower Pledge Agreement)
Annex 7 - Exhibit "H" (Borrowing Base Report)
Annex 8 - Exhibit "L" (Contribution Agreement)
Annex 9 - Exhibit "E-10" (Security Agreement of New Guarantors)
Annex 10 - Exhibit "E-11" (Parent Pledge Agreement)
Annex 11 - Exhibit "E-12" (CAS Pledge Agreement)
Annex 12 - Exhibit "F-3" (Guaranty of New Guarantors)
Annex 13 - Schedule 1 (Existing Litigation)
Annex 14 - Schedule 2 (Existing Debt)
Annex 15 - Schedule 3 (Subsidiaries and Foreign Affiliates)
Annex 16 - Schedule 5 (Existing Liens)
Annex 17 - Schedule 6 (Patents, Trademarks and Copyrights)
Annex 18 - Consent Letter
Annex 19 - Matters to be Addressed in Opinion of Counsel
</TABLE>
<PAGE>
ANNEX 1
Exhibit "A" (Form of Note)
--------------------------
<PAGE>
PROMISSORY NOTE
---------------
$________________ Dallas, Texas July 31, 1996
FOR VALUE RECEIVED, the undersigned, NATIONAL AUTO CENTER, INC., a Texas
corporation ("Maker"), hereby promises to pay to the order of
___________________________ ("Payee"), at the offices of Texas Commerce Bank
National Association, as agent (together with any successor as provided in the
Agreement, hereinbelow defined, the "Agent") at 1111 Fannin St., 9th Floor,
MS46, Houston, Texas 77002 on the dates hereinafter specified, in lawful money
of the United States of America, the principal sum of _____________________
DOLLARS ($_________), or so much thereof as may be advanced and outstanding
hereunder, together with interest as hereinafter specified.
This Note is one of the Notes referred to in that certain Amended and
Restated Loan Agreement dated as of July 20, 1995, among Maker, CellStar
Corporation, a Delaware corporation, Payee, Agent and each of the other banks or
lending institutions which is or may from time to time become a signatory
thereto and any successors or permitted assigns thereof, as amended by that
certain First Amendment to Amended and Restated Loan Agreement dated as of
February 29, 1996, and as further amended by that certain Second Amendment to
Amended and Restated Loan Agreement of even date herewith (such Amended and
Restated Loan Agreement, as the same has been and may be amended, modified, or
supplemented from time to time, being referred to herein as the "Agreement").
Capitalized terms used and not otherwise defined in this Note have the
respective meanings specified in the Agreement.
This Note is in renewal and replacement of, but not extinguishment of, the
outstanding indebtedness evidenced by the existing promissory note previously
executed by Maker pursuant to the Agreement and payable to the order of Payee in
the stated amount of Payee's Commitment, which existing promissory note was
given in partial renewal, extension, modification and rearrangement of, but not
extinguishment of, the outstanding indebtedness of Maker under the Existing Loan
Agreement.
The Agreement, among other things, contains provisions for acceleration of
the maturity of this Note upon the happening of certain stated events and also
for prepayments of Advances prior to the maturity of this Note upon the terms
and conditions specified in the Agreement.
This Note evidences Advances made by the Agent and the Banks to Maker under
the Agreement. In addition, as provided in Section 3.4 of the Agreement, each
payment made by Agent pursuant to a drawing under a Letter of Credit shall
constitute and be deemed an Advance by the Banks to Maker, including an Advance
by Payee to Maker under this Note, in accordance with the terms of the
Agreement. Maker may borrow, repay and reborrow hereunder upon the terms and
conditions specified in the Agreement.
The outstanding principal balance hereof shall bear interest at a varying
rate per annum which shall from day to day be equal to the lesser of (a) the
Maximum Rate, or (b) the
<PAGE>
Applicable Rate, each such change in the rate of interest charged hereunder to
become effective, without notice to Maker, on the effective date of each change
in the Applicable Rate or the Maximum Rate, as the case may be; provided,
however, if at any time the Applicable Rate shall exceed the Maximum Rate,
thereby causing the interest rate hereon to be limited to the Maximum Rate, then
any subsequent reduction in the Applicable Rate shall not reduce the rate of
interest hereon below the Maximum Rate until the total amount of interest
accrued hereon equals the amount of interest which would have accrued hereon if
the Applicable Rate had at all times been in effect.
Accrued and unpaid interest on this Note shall be due and payable on the
dates specified in Section 2.4 of the Agreement. All principal of this Note
shall be due and payable on the Termination Date. All past due principal and
interest shall bear interest at the Default Rate. Interest payable at the
Default Rate shall be payable from time to time on demand.
Interest on the Eurodollar Advances shall be computed on the basis of a
year of 360 days and the actual number of days elapsed, and interest on the
Floating Rate Advances shall be computed on the basis of a year of 360 days and
the actual number of days elapsed at all times when the Alternate Base Rate is
based on the Federal Funds Effective Rate and a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed at all times when the
Alternate Base Rate is the Prime Rate.
Notwithstanding anything to the contrary contained herein, no provisions of
this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Note or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by any
court of competent jurisdiction, any such excess shall be applied as a payment
and reduction of the principal of indebtedness evidenced by this Note; and, if
the principal amount hereof has been paid in full, any remaining excess shall
forthwith be paid to Maker. In determining whether or not the interest paid or
payable exceeds the Maximum Rate, Maker and Payee shall, to the extent permitted
by applicable law, (i) characterize any non-principal payment as an expense,
fee, or premium rather than as interest, (ii) exclude voluntary prepayments and
the effects thereof, and (iii) amortize, prorate, allocate, and spread in equal
or unequal parts the total amount of interest throughout the entire contemplated
term of the indebtedness evidenced by this Note so that the interest for the
entire term does not exceed the Maximum Rate.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE IS PERFORMABLE IN DALLAS COUNTY, TEXAS.
Maker and each surety, guarantor, endorser, and other party ever liable for
payment of any sums of money payable on this Note jointly and severally waive
notice, presentment, demand
PROMISSORY NOTE - Page 2
<PAGE>
for payment, protest, notice of protest and non-payment or dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
diligence in collecting, grace, and all other formalities of any kind, except
any notice and grace periods provided in the Agreement, and consent to all
extensions without notice for any period or periods of time and partial
payments, before or after maturity, and any impairment of any Collateral
securing this Note, all without prejudice to the holder. The holder shall
similarly have the right to deal in any way, at any time, with one or more of
the foregoing parties without notice to any other party, and to grant any such
party any extensions of time for payment of any of said indebtedness, or to
release or substitute part or all of the Collateral securing this Note, or to
grant any other indulgences or forbearances whatsoever, without notice to any
other party and without in any way affecting the personal liability of any party
hereunder.
Maker hereby authorizes the holder hereof to endorse on the Schedule
attached to this Note or any continuation thereof or to record in its internal
records all advances made to Maker hereunder and all payments made on account of
the principal thereof, which endorsements or records shall be prima facie
evidence as to the outstanding principal amount of this Note; provided, however,
any failure by the holder hereof to make any endorsement or record shall not
limit or otherwise affect the obligations of Maker under the Agreement or this
Note.
NATIONAL AUTO CENTER, INC.
By:______________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
PROMISSORY NOTE - Page 3
<PAGE>
Schedule
DATE ADVANCE PRINCIPAL PAYMENT BALANCE
- -------- ------------- ------------------ ----------
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
________ _____________ __________________ __________
_________ _____________ __________________ _________
_________ _____________ __________________ _________
_________ _____________ __________________ _________
<PAGE>
ANNEX 2
Exhibit "D" (Compliance Certificate)
------------------------------------
<PAGE>
COMPLIANCE CERTIFICATE
TO: Texas Commerce Bank National Association, as Agent
2200 Ross Avenue, Post Office Box 660197
Dallas, Texas 75266-0197
Attention: Allen K. King
Ladies and Gentlemen:
The undersigned is the president, chief executive officer, the chief
financial officer or the corporate controller of NATIONAL AUTO CENTER, INC., a
Texas corporation (the "Borrower"), and is authorized to make and deliver this
certificate pursuant to that certain Amended and Restated Loan Agreement dated
as of July 20, 1995, among the Borrower, CellStar Corporation, a Delaware
corporation ("Parent"), each of the banks or other lending institutions which is
or may become a party thereto and the successors and permitted assigns thereof,
and Texas Commerce Bank National Association, a national banking association, as
agent for itself and each of the other Banks and as issuer of Letters of Credit
thereunder, as amended by that certain First Amendment to Amended and Restated
Loan Agreement dated as of February 29, 1996, and as further amended by that
certain Second Amendment to Amended and Restated Loan Agreement dated as of July
31, 1996 (such Amended and Restated Loan Agreement, as the same has been and may
be amended, supplemented or modified from time to time, being hereinafter
referred to as the "Loan Agreement"). All terms defined in the Loan Agreement
shall have the same meaning herein.
In connection with the foregoing and pursuant to the terms and provisions
of the Loan Agreement, the undersigned hereby certifies to the Agent and each
Bank that the following statements are true and correct:
A. Representations and Warranties. The representations and warranties
------------------------------
contained in Article VIII of the Loan Agreement and in each of the other Loan
Documents are true and correct on and as of the date hereof with the same force
and effect as if made on and as of such date.
B. Financial Covenants. The information set forth below is true and
-------------------
correct based upon the financial statements delivered herewith as of the last
day of the fiscal quarter next preceding the date of this certificate:
<TABLE>
<CAPTION>
<S> <C> <C>
(1) Consolidated Current Ratio as of ___________, 19___:
--------------------------
(a) Consolidated Current Assets as of such date....................................... $___________
(b) Consolidated Current Liabilities as of such date.................................. $___________
(c) All other Debt of the Borrower to the Agent and the Banks under or
pursuant to the Loan Agreement as of such date.................................... $___________
(d) Sum of Line (b) plus Line (c)..................................................... $___________
(e) Current Ratio (Ratio of Line (a) to Line (d))..................................... _____:_____
(f) Minimum Current Ratio required by Section 11.1 of Loan Agreement.................. 1.20 to 1.00
(2) Tangible Net Worth as of ___________, 19___:
------------------
(a) Stockholders' or owners' equity of the Companies on a
consolidated basis as of such date.................................................. $___________
(b) Amount at which shares of capital stock of the Borrower appear as an
asset on the Borrower's balance sheet............................................... $___________
(c) Goodwill, including amounts that represent the excess of the purchase
price paid for assets or stock over the value assigned thereto...................... $___________
(d) Patents, trademarks, trade names, and copyrights.................................... $___________
(e) Deferred expenses................................................................... $___________
(f) Loans and advances to any stockholder, director, officer, partner or
employee of the Companies or any Affiliate of the Companies......................... $___________
(g) All other assets which are properly classified as intangible assets................. $___________
(h) Sum of Lines (b), (c), (d), (e), (f) and (g)........................................ $___________
</TABLE>
COMPLIANCE CERTIFICATE - PAGE 1
<PAGE>
<TABLE>
<S> <C> <C>
(i) Tangible Net Worth (Difference of Line (a) minus Line (h)).......................... $___________
(j) Sum of net income, after provision for income taxes, of the Companies
(without any deduction for losses) for each fiscal quarter of the
Companies ended through such date, beginning with the fiscal
quarter ending November 30, 1994.................................................... $___________
(k) 50% of Line (j)..................................................................... $___________
(l) With respect to any issuance, sale or other disposition of any
shares of capital stock or other equity securities of Parent of
any class (or any securities convertible or exchangeable for any
such shares, or any rights, warrants or options to subscribe for
or purchase any such shares), the aggregate gross proceeds of such
issuance, sale or other disposition, less the following:
----
(i) placement agent fees, (ii) underwriting discounts and
commissions, (iii) bank and other lender fees, and (iv) legal fees
and other expenses payable by the issuer in connection with such
issurance, sale or other disposition, to the extent such proceeds
are received by any of the Companies................................................ $___________
(m) Minimum Tangible Net Worth required by Section 11.2 of Loan Agreement
($57,500,000 plus Line (k) plus Line (1))........................................... $___________
(3) Interest Coverage Ratio as of ___________, 19___ (for the four (4) fiscal quarter period
-----------------------
most recently ended):
(a) The amount of net income of Parent and the Subsidiaries for the
four (4) fiscal quarter period most recently ended (whether positive
or negative) before interest expense, income taxes and extraordinary
items, net of all non-cash items (such as deferred taxes,
depreciation, amortization of goodwill and all other
non-cash charges accrued but not actually paid) which, in determining
net income of the Parent and the Subsidiaries for such period, were
deducted from (or included in) gross income for such period......................... $___________
(b) Interest expense of the Parent and the Subsidiaries on a
consolidated basis.................................................................. $___________
(c) Ratio of Line (a) to Line (b)....................................................... ____ to ____
(d) Minimum Interest Coverage Ratio required by Section 11.3 of Loan
Agreement........................................................................... 3.0 to 1.0
(4) Turnover ratio for the quarter ended ___________, 19___:
--------------
(a) Cost of goods sold for the Parent and the Subsidiaries on a consolidated
basis in the period of the four fiscal quarters then ended.......................... $___________
(b) Average Inventory Per Quarter for each of the most recent four fiscal
quarters then ended:
Beginning Ending
Inventory Inventory
Quarters Amount Amount
-------- ------ ------
<S> <C> <C> <C>
1 $_______ + $_______ divided by 2 =...... $___________
2 $_______ + $_______ divided by 2 =...... $___________
3 $_______ + $_______ divided by 2 =...... $___________
4 $_______ + $_______ divided by 2 =...... $___________
(c) Total sum of Average Inventory Per Quarter for quarters
shown in Line (b)................................................................... $___________
(d) Average Inventory (Line (c) divided by four)........................................ $___________
(e) Turnover Ratio (Ratio of Line (a) to Line (d))...................................... ____ to ____
(f) Minimum turnover ratio required by Section 11.4 of Loan Agreement at
all times other than any Exception Period........................................... 5.0 to 1.0
(g) Minimum turnover rate required by Section 11.4 of Loan Agreement
during each Exception Period........................................................ 5.25 to 1.00
(5) Consolidated Funded Debt to Consolidated Cash Flow Ratio as of __________, 19___:
--------------------------------------------------------
(a) On a consolidated basis for the Parent and the Subsidiaries in accordance
with GAAP, all obligations for borrowed money (whether as a direct obligor on
a promissory note, bond, debenture or other similar instrument, as a
reimbursement obligor with respect to an issued letter of credit or similar
</TABLE>
COMPLIANCE CERTIFICATE - PAGE 2
<PAGE>
<TABLE>
<S> <C> <C>
instrument, as an obligor under a Guarantee for borrowed money, or
as any other type of direct or contingent obligor) as of the last day of
the fiscal quarter most recently ended.............................................. $__________
(b) On a consolidated basis for the Parent and the Subsidiaries, without
duplicating any amount included in Line (a) above, all obligations to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
real and/or personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet (other than the interest
component of such obligations), as of the last day of the fiscal quarter most
recently ended...................................................................... $__________
(c) Consolidated Funded Debt (the sum of Line (a) plus Line (b))........................ $__________
(d) Consolidated Cash Flow (Line 3(a)).................................................. $__________
(e) Ratio of Line (c) to Line (d)....................................................... _____ to _____
(f) Maximum Consolidated Funded Debt to Consolidated Cash Flow Ratio
permitted by Section 11.5 of Loan Agreement......................................... 4.0 to 1.0
(6) Consolidated Funded Debt to Consolidated Capitalization Ratio as of _____________, 19___:
-------------------------------------------------------------
(a) Consolidated Funded Debt (Line (5)(c)).............................................. $__________
(b) The sum of Line (a) plus all amounts which, in conformity with GAAP,
would be included as stockholders' equity on a consolidated balance
sheet of the Parent and the Subsidiaries............................................ $__________
(c) Ratio of Line (a) to Line (b)....................................................... _____%
(d) Maximum Consolidated Funded Debt to Consolidated Capitalization Ratio
permitted by Section 11.6 of Loan Agreement......................................... 60%
(7) Capital Expenditures during the fiscal year ending ____________, 19___:
--------------------
(a) Aggregate capital expenditures of the Parent and the Subsidiaries on a
consolidated basis.................................................................. $___________
(b) Maximum capital expenditures permitted by Section 11.7 of Loan Agreement............ $5,500,000.00
(8) Consolidated Senior Debt to Consolidated Cash Flow Ratio as of _____________, 19___:
--------------------------------------------------------
(a) Consolidated Funded Debt (Line (5)(c)).............................................. $___________
(b) Subordinated Debt................................................................... $___________
(c) Consolidated Senior Debt (Line (a) minus Line (b)).................................. $___________
(d) Consolidated Cash Flow (Line (3)(a))................................................ $___________
(e) Ratio of Line (c) to Line (d)....................................................... $____ to ____
(f) Maximum Consolidated Senior Debt to Consolidated Cash Flow Ratio
permitted by Section 11.8 of Loan Agreement......................................... 3.0 to 1.0
(9) Consolidated Senior Debt to Consolidated Capitalization Ratio as of _____________, 19____:
-------------------------------------------------------------
(a) Consolidated Senior Debt (Line (8)(c)).............................................. $___________
(b) Consolidated Capitalization (Line (6)(b))........................................... $___________
(c) Ratio of Line (a) to Line (b)....................................................... _____%
(d) Maximum Consolidated Senior Debt to Consolidated Capitalization Ratio
permitted by Section 11.9 of Loan Agreement......................................... _____%
(10) Companies Cash Flow to Companies Interest Expense Ratio as of ____________, 19____:
-------------------------------------------------------
(a) The amount of net income of the Companies for the four (4) fiscal
quarter period most recently ended (whether positive or negative)
before interest expense, income taxes and extraordinary items, net of
all non-cash items (such as deferred taxes, depreciation, amortization
of goodwill and all other non-cash charges accrued but not actually
paid) which, in determining net income of the Companies for such
period, were deducted from (or included in) gross income for such
period.............................................................................. $___________
(b) Interest expense of the Companies................................................... $___________
</TABLE>
COMPLIANCE CERTIFICATE - PAGE 3
<PAGE>
<TABLE>
<S> <C> <C>
(c) Ratio of Line (a) to Line (b)....................................................... ____ to ____
(d) Minimum Companies Cash Flow to Companies Interest Expenses Ratio
required by Section 11.10 of Loan Agreement......................................... ____ to ____
(11) Advances and Equity Contributions by the Borrower and the Parent to
Subsidiaries and Foreign Affiliates as of ____________, 19___:
(a) Aggregate amount of all initial start-up advances and initial and further
equity contributions by the Borrower or the Parent to any Subsidiary or
Foreign Affiliate during the period from the most recent July 31
through such date................................................................... $___________
(b) Maximum amount of such advances and equity contributions permitted by
Section 10.5(i)(B) of Loan Agreement during each 12-month period
beginning on each July 31........................................................... $5,000,000
(12) Advances and Equity Contributions by Subsidiaries (other than the
Borrower) to Subsidiaries and Foreign Affiliates as of ______________, 19___:
(a) Aggregate amount of all initial start-up advances and initial and
further equity contributions by any Subsidiary (other than the
Borrower) to any other Subsidiary or Foreign Affiliate during the
period from the most recent July 31 through such date............................... $___________
(b) Maximum amount of such advances and equity contributions
permitted by Section 10.5(i)(B) of Loan Agreement during each
12-month period beginning on each July 31........................................... $3,000,000
</TABLE>
The undersigned hereby certifies that (a) the above information
and calculations are true and correct and not misleading as of the date
hereof, (b) Borrower and Parent have delivered to the Agent and the Banks
all financial information and reports required by the Loan Agreement by the
dates provided therein, and (c) no Default has occurred and is continuing.
By:
___________________________
Name:
______________________
Title:
_____________________
Dated as of:___________________
COMPLIANCE CERTIFICATE - PAGE 4
<PAGE>
ANNEX 3
Exhibit "E-1" (Borrower Security Agreement)
-------------------------------------------
<PAGE>
AMENDED AND RESTATED SECURITY AGREEMENT
---------------------------------------
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement") dated as of
July 31, 1996, is by and between NATIONAL AUTO CENTER, INC., a Texas corporation
(the "Debtor"), whose address is 1730 Briercroft, Carrollton, Texas 75006, and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association
("TCB"), not in its individual capacity but solely as agent for itself and each
of the other banks or lending institutions (each, a "Bank" and, collectively,
the "Banks") which is or may from time to time become a signatory to the Loan
Agreement (hereinafter defined) or any successor or permitted assignee thereof
(TCB in such capacity, together with its successors in such capacity, the
"Agent"), whose address is 2200 Ross Avenue, Post Office Box 660197, Dallas,
Texas 75266-0197.
R E C I T A L S:
- - - - - - - -
A. The Debtor, CellStar Corporation, a Delaware corporation (the
"Parent"), the Agent, and certain of the Banks heretofore entered into that
certain Loan Agreement dated as of November 9, 1994, as amended by that certain
First Amendment to Loan Agreement dated as of February 28, 1995, and as further
amended by that certain Second Amendment to Loan Agreement dated as of June 28,
1995 (such Loan Agreement, as amended, being hereinafter referred to as the
"Original Loan Agreement").
B. Pursuant to the Original Loan Agreement, certain of the Banks made
loans to Debtor (the indebtedness of Debtor to such Banks under the Original
Loan Agreement being hereinafter referred to as the "Existing Indebtedness").
C. Pursuant to the Original Loan Agreement, Debtor executed and delivered
to the Agent that certain Security Agreement dated as of November 9, 1994 (the
"Original Security Agreement"), granting a security interest in the Collateral
to the Agent to secure the Existing Indebtedness.
D. The Debtor, the Parent, the Banks and the Agent are parties to that
certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996 (such Loan Agreement, as the same has been and may
be amended, supplemented or modified from time to time, being hereinafter
referred to as the "Loan Agreement"), pursuant to which, among other things, (i)
the Original Loan Agreement was amended and restated in its entirety, and (ii)
the Existing Indebtedness was renewed, extended, modified and rearranged, but
not extinguished.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 1
<PAGE>
E. Pursuant to the Loan Agreement, the Debtor executed and delivered to
the Agent that certain Amended and Restated Security Agreement dated as of July
20, 1995 (the "Existing Security Agreement"), pursuant to which the Original
Security Agreement was amended and restated in its entirety.
F. Concurrently herewith, the Debtor, the Parent, the Banks and the Agent
are entering into that certain Second Amendment to Amended and Restated Loan
Agreement of even date herewith (the "Second Amendment").
G. The parties hereto now desire to amend the Existing Security Agreement
as hereinafter provided and have agreed, for purposes of clarity and ease of
administration, to carry out the agreed upon amendments by amending the
pertinent provisions of the Existing Security Agreement and then restating the
Existing Security Agreement in its entirety by means of this Agreement.
H. The Agent and the Banks have conditioned their obligations under the
Loan Agreement and the effectiveness of the Second Amendment on the execution
and delivery by the Debtor of this Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows, and the Existing Security Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE I
Definitions
-----------
Section 1.1. Definitions. As used in this Agreement, the following terms
-----------
have the following meanings:
"Accounts" means any "account", as such term is defined in Section
--------
9.106 of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by the Debtor: (a) all rights of
the Debtor to payment for goods sold or leased or services rendered,
whether or not earned by performance, (b) all accounts receivable of the
Debtor, (c) all rights of the Debtor to receive any payment of money or
other form of consideration, (d) all security pledged, assigned, or granted
to or held by the Debtor to secure any of the foregoing, (e) all guaranties
of, or indemnifications with respect to, any of the foregoing, and (f) all
rights of the Debtor as an unpaid seller of goods or services, including,
but not limited to, all rights of stoppage in transit, replevin,
reclamation, and resale.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 2
<PAGE>
"BNP Collateral" means the Sam's Collateral, except proceeds of
--------------
Inventory (including pagers), pager customer lists and Accounts.
"Chattel Paper" means any "chattel paper", as such term is defined in
-------------
Section 9.105(a)(2) of the UCC, now owned or hereafter acquired by the
Debtor.
"Collateral" has the meaning specified in Section 2.1 of this
----------
Agreement.
"Document" means any "document", as such term is defined in Section
--------
9.105(a)(6) of the UCC, now owned or hereafter acquired by the Debtor,
including, without limitation, all documents of title and warehouse
receipts of the Debtor.
"Equipment" means any "equipment", as such term is defined in Section
---------
9.109(2) of the UCC, now owned or hereafter acquired by the Debtor and, in
any event, shall include, without limitation, all machinery, equipment,
furnishings, fixtures, and vehicles now owned or hereafter acquired by the
Debtor and any and all additions, substitutions, and replacements of any of
the foregoing, wherever located, together with all attachments, components,
parts, equipment, and accessories installed thereon or affixed thereto.
"General Intangibles" means any "general intangibles", as such term is
-------------------
defined in Section 9.106 of the UCC, now owned or hereafter acquired by the
Debtor and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by the Debtor: (a) all
of the Debtor's patents, patent applications, patent rights, service marks,
trademarks, trade names, trade secrets, intellectual property,
registrations, goodwill, copyrights, franchises, licenses, permits,
proprietary information, customer lists, designs, and inventions, (b) all
of the Debtor's books, records, data, plans, manuals, computer software,
and computer programs, (c) all of the Debtor's contract rights, partnership
interests, joint venture interests, securities, deposit accounts,
investment accounts, and certificates of deposit, (d) all rights of the
Debtor to payment under letters of credit and similar agreements, (e) all
tax refunds and tax refund claims of the Debtor, (f) all choses in action
and causes of action of the Debtor (whether arising in contract, tort, or
otherwise and whether or not currently in litigation) and all judgments in
favor of the Debtor, (g) all rights and claims of the Debtor under
warranties and indemnities, and (h) all rights of the Debtor under any
insurance, surety, or similar contract or arrangement.
"Instrument" means any "instrument", as such term is defined in
----------
Section 9.105(a)(9) of the UCC, now owned or hereafter acquired by the
Debtor.
"Inventory" means any "inventory", as such term is defined in Section
---------
9.109(4) of the UCC, now owned or hereafter acquired by the Debtor,
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 3
<PAGE>
and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by the Debtor: (a) all
goods and other personal property of the Debtor that are held for sale or
lease or to be furnished under any contract of service, (b) all raw
materials, work-in-process, finished goods, inventory, supplies, and
materials of the Debtor, (c) all wrapping, packaging, advertising, and
shipping materials of the Debtor, (d) all goods that have been returned to,
repossessed by, or stopped in transit by the Debtor, and (e) all Documents
evidencing any of the foregoing.
"Letter of Intent" means that certain letter of intent dated May 6,
----------------
1996, among the Debtor, the Parent, CellStar, Ltd. and the Buyer named
therein.
"Obligations" means:
-----------
(a) the indebtedness, liabilities and obligations of the Debtor
to the Banks evidenced by those certain Promissory Notes of even date
herewith, executed by Debtor and payable to the order of the Banks in
the aggregate principal amount of $90,000,000.00;
(b) the "Obligations", as such term is defined in the Loan
Agreement;
(c) all future Advances by the Agent or any Bank to Debtor;
(d) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the Agent
or any Bank to preserve and maintain the Collateral, collect the
obligations herein described and enforce this Agreement;
(e) all other obligations, indebtedness and liabilities of
Debtor to the Agent or any Bank under any of the Loan Documents, now
existing or hereafter arising, regardless of whether such obligations,
indebtedness and liabilities are similar, dissimilar, related,
unrelated, direct, indirect, fixed, contingent, primary, secondary,
joint, several, or joint and several; and
(f) all extensions, renewals and modifications of any of the
foregoing.
"Permitted Liens" means (a) the security interests granted hereby, (b)
---------------
Liens expressly permitted by Section 10.2 of the Loan Agreement, and (c)
the Lien of BNP in the BNP Collateral securing the BNP Term Loan.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 4
<PAGE>
"Proceeds" means any "proceeds", as such term is defined in Section
--------
9.306 of the UCC and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty, or guaranty
payable to the Debtor from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to the Debtor from time to time in connection with any
requisition, confiscation, condemnation, seizure, or forfeiture of all or
any part of the Collateral by any Governmental Authority (or any person
acting under color of Governmental Authority), and (c) any and all other
amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Sam's Collateral" means any contract or agreement which exists or may
----------------
exist with respect to the sale or other transfer of the Sam's Operations,
including without limitation any contract or agreement which arises as a
result of or in connection with the Letter of Intent, together with all
proceeds from any sale or transfer pursuant to such contract or agreement.
"UCC" means the Uniform Commercial Code as in effect in the State of
---
Texas or, if so required with respect to any particular Collateral by
mandatory provisions of applicable law, as in effect in the jurisdiction in
which such Collateral is located.
Section 1.2. Terms Defined in Loan Agreement. All capitalized terms used
-------------------------------
and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
ARTICLE II
Security Interest
-----------------
Section 2.1. Security Interest. As collateral security for the prompt
-----------------
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), the Debtor hereby grants, and ratifies
and confirms the prior grant made pursuant to the Original Security Agreement
and the Existing Security Agreement, to the Agent, for the pro rata benefit of
the Banks, a first priority lien on and security interest in all of the Debtor's
right, title, and interest in and to the following, whether now owned or
hereafter arising or acquired and wherever located (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments;
(d) all General Intangibles;
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 5
<PAGE>
(e) all Documents;
(f) all Inventory;
(g) all Equipment;
(h) without in any way limiting the foregoing, the Sam's Collateral;
and
(i) all Proceeds and products of any or all of the foregoing.
If the grant, pledge, or collateral transfer or assignment of any rights of the
Debtor under any contract included in the Collateral is expressly prohibited by
such contract, then the security interest hereby granted therein nonetheless
remains effective to the extent allowed by UCC Section 9.318 or other applicable
law but is otherwise limited by that prohibition.
Section 2.2. Renewal of Obligations and Liens. The parties hereto
--------------------------------
acknowledge and agree that (i) the Obligations are in part in renewal,
extension, modification and rearrangement of, but not extinguishment of, the
Existing Indebtedness, and (ii) the Existing Indebtedness is secured by liens
and security interests granted by the Debtor pursuant to the Original Security
Agreement and the Existing Security Agreement, which liens and security
interests are not extinguished or released, but instead are hereby renewed,
extended, carried forward and continued in accordance with the terms of this
Agreement.
Section 2.3. Debtor Remains Liable. Notwithstanding anything to the
---------------------
contrary contained herein, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the Agent
of any of its rights hereunder shall not release the Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of the Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
ARTICLE III
Representations and Warranties
------------------------------
To induce the Agent to enter into this Agreement and the Agent and the
Banks to enter into the Loan Agreement, the Debtor represents and warrants to
the Agent that:
Section 3.1. Title. The Debtor is, and with respect to Collateral
-----
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any Lien, except Permitted Liens.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 6
<PAGE>
Section 3.2. Accounts. Unless the Debtor has given the Agent written
--------
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, the Debtor shall be deemed to have represented and
warranted to the Agent as to each and all of its Accounts that (a) each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by the Debtor or the sale or lease of goods
by the Debtor, (c) the amount of each Account represented as owing is the
correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (d) to the best of
Debtor's knowledge, no Account is subject to any offset, counterclaim, or other
defense.
Section 3.3. Financing Statements. No financing statement, security
--------------------
agreement, or other Lien instrument covering all or any part of the Collateral
is on file in any public office, except those filed in favor of the Agent
pursuant to the Original Security Agreement, the Existing Security Agreement,
this Agreement or with respect to any other Permitted Liens. Except as set forth
on Schedule 3 hereto, the Debtor has not within the past five (5) years done
business under any name or trade name other than its legal name set forth at the
beginning of this Agreement.
Section 3.4. Principal Place of Business. The principal place of
---------------------------
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown at the beginning of this Agreement.
Section 3.5. Location of Collateral. All Inventory and Equipment of the
----------------------
Debtor is located at the places specified on Schedule 1 hereto. The Debtor has
exclusive possession and control of its Inventory and Equipment. None of the
Inventory or Equipment is evidenced by a Document (including, without
limitation, a negotiable document of title). All Instruments and Chattel Paper
have been delivered to the Agent.
Section 3.6. Perfection. This Agreement creates a security interest in
----------
the Collateral, and ratifies and confirms the existing security interest granted
pursuant to the Original Security Agreement and the Existing Security Agreement,
in favor of the Agent. Upon the filing of UCC financing statements in favor of
the Agent in the jurisdictions listed on Schedule 2 attached hereto, and upon
the Agent's obtaining possession of all Documents and Instruments of the Debtor,
the security interest in favor of the Agent created herein is and will
constitute a valid and perfected Lien upon and security interest in the
Collateral (except Equipment and Inventory located in jurisdictions where
perfection is not required under Section 4.10(a) hereof), subject to no equal or
prior Lien, except the Permitted Liens.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 7
<PAGE>
ARTICLE IV
Covenants
---------
The Debtor covenants and agrees with the Agent that until the Obligations
are paid and performed in full and all Commitments have terminated:
Section 4.1. Encumbrances. The Debtor shall not create, permit, or
------------
suffer to exist, and shall defend the Collateral against, any Lien on the
Collateral, except the Permitted Liens, and shall defend the Debtor's rights in
the Collateral and the Agent's security interest in the Collateral against the
claims and demands of all Persons. The Debtor shall do nothing to impair the
rights of the Agent in the Collateral.
Section 4.2. Modification of Accounts. The Debtor shall, in accordance
------------------------
with prudent business practices, endeavor to collect or cause to be collected
from each account debtor under its Accounts, as and when due, any and all
amounts owing under such Accounts. Without the prior written consent of the
Agent, the Debtor shall not (a) grant any extension of time for any payment with
respect to any of the Accounts, except for extensions of time granted in the
ordinary course of Debtor's business for payment with respect to Accounts not
included in the Borrowing Base, (b) compromise, compound, or settle any of the
Accounts for less than the full amount thereof, except for compromise, compound
or settlement in the ordinary course of business of Accounts not included in the
Borrowing Base, (c) release, in whole or in part, any Person liable for payment
thereof, except in connection with settlements permitted by clause (b) above,
(d) allow any credit or discount for payment with respect to any Account other
than trade discounts granted in the ordinary course of business, or (e) release
any Lien or guaranty securing any Account, except in connection with settlements
permitted by clause (b) above.
Section 4.3. Disposition of Collateral. The Debtor shall not sell, lease
-------------------------
assign (by operation of law or otherwise), or otherwise dispose of, or grant any
option with respect to, the Collateral or any part thereof without the prior
written consent of the Agent, except as expressly permitted by the Loan
Agreement.
Section 4.4. Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of the Debtor, the Debtor
shall promptly execute and deliver all such further instruments, agreements, and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement. Without limiting the
generality of the foregoing, the Debtor shall (a) execute and deliver to the
Agent such financing statements as the Agent may from time to time require;(b)
deliver and pledge to the Agent all Documents (including, without limitation,
negotiable documents of title) evidencing Inventory or Equipment; (c) deliver
and pledge to the Agent all Instruments and Chattel Paper of the Debtor with any
necessary endorsements; and (d) execute and deliver to the Agent such other
documents, instruments, and agreements as the Agent may require to perfect and
maintain the validity, effectiveness, and priority of the Loan Documents and the
Liens intended to be created
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 8
<PAGE>
thereby. The Debtor authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relating to all or any part of
the Collateral without the signature of the Debtor where permitted by law. A
carbon, photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.
Section 4.5. Risk of Loss; Insurance. The Debtor shall be responsible
-----------------------
for any loss or damage to the Collateral. The Debtor shall, at is own expense,
maintain or cause to be maintained insurance with respect to the Collateral in
such amounts, against such risks, in such form, and with such insurers as shall
be satisfactory to the Agent from time to time. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Agent, for
the pro rata benefit of the Banks, and the Debtor as their interests may appear.
Each policy for property insurance shall contain loss payable clauses and a loss
payable endorsement in favor of the Agent, for the pro rata benefit of the
Banks, as its interest may appear. If the Debtor shall fail to maintain or cause
to be maintained the insurance required by this Agreement, the Agent shall have
the right (but shall be under no obligation) to obtain such insurance and the
Debtor shall reimburse the Agent for all costs and expenses incurred by the
Agent in obtaining such insurance. All such insurance shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless the Agent has received thirty (30) days prior written notice
thereof. The Debtor shall deliver to the Agent and each Bank copies of all
insurance policies required by this Agreement.
Section 4.6. Inspection Rights. The Debtor shall permit the Agent, each
-----------------
Bank and their respective representatives to examine, inspect, and audit the
Collateral and to examine, inspect, and copy the Debtor's books and records at
any reasonable time and as often as the Agent or any such Bank may desire during
normal business hours. The Agent and each Bank may at any time and from time to
time contact account debtors and other obligors to verify the existence,
amounts, and terms of the Debtor's Accounts.
Section 4.7. Mortgagee's and Landlord's Agreements. With respect to
-------------------------------------
each location of Inventory having an aggregate value of $100,000 or more, as
specified on Schedule 1 hereto, except as hereinafter provided, the Debtor shall
cause each mortgagee of real property owned by the Debtor and each landlord of
real property leased by the Debtor who has not previously done so to execute and
deliver to the Agent, on or before the date hereof, instruments satisfactory in
form and substance to the Agent by which such mortgagee or landlord waives or
subordinates to the Agent's satisfaction its rights, if any, in the Collateral
(each, a "Landlord's Agreement"); provided, however that with respect to
-------- -------
Collateral located at 8728 Westpark Drive, Houston, Texas, Debtor shall exert
its best efforts to obtain a Landlord's Agreement, but Debtor's failure to
obtain such a Landlord's Agreement with respect to such location shall not cause
the Inventory located at such location to be excluded from the Borrowing Base if
such Inventory otherwise constitutes Eligible Inventory. After the date hereof,
Debtor shall promptly deliver or cause to be delivered to the Agent Landlord's
Agreements in accordance with this Section for each location where the Inventory
hereafter has an aggregate value of $100,000 or more. At the
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 9
<PAGE>
request of the Agent, Debtor shall promptly deliver or cause to be delivered
Landlord's Agreements for any locations where any Collateral may now or
hereafter be located.
Section 4.8. Corporate Changes. The Debtor shall not change its name,
-----------------
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
the Debtor shall have given the Agent thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by the
Agent to make each financing statement not seriously misleading. The Debtor
shall not change its principal place of business, chief executive office, or the
place where it keeps its books and records unless it shall have given the Agent
thirty (30) days prior written notice thereof and shall have taken all action
deemed necessary or desirable by the Agent to cause its security interest in the
Collateral to be perfected with the priority required by this Agreement.
Section 4.9. Books and Records; Information. The Debtor shall keep
------------------------------
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with GAAP. The Debtor shall from
time to time at the request of the Agent deliver to the Agent such information
regarding the Collateral and the Debtor as the Agent may request, including,
without limitation, lists and descriptions of the Collateral and evidence of the
identity and existence of the Collateral. The Debtor shall mark its books and
records to reflect the security interest of the Agent under this Agreement.
Section 4.10. Equipment and Inventory.
-----------------------
(a) The Debtor shall keep the Equipment and Inventory at the
locations specified on Schedule 1 hereto or any other location within the
United States of America, provided that with respect to any location of
Equipment or Inventory not listed on Schedule 1 hereto, (i) if the
Inventory located at such location has an aggregate value of $100,000 or
more, the Debtor shall have given the Agent thirty (30) days prior written
notice of the transfer of Equipment or Inventory to or opening of such
location, and all action required to perfect the Agent's security interest
in such Equipment and Inventory with the priority required by this
Agreement shall have been taken, (ii) the Debtor shall deliver to the Agent
by the twenty-fifth (25th) day of each month a computer listing of all
locations of Equipment and Inventory not specified on Schedule 1 hereto or
any listing previously delivered hereunder, and (iii) the Debtor shall take
or cause to be taken all action necessary to perfect, with the same
priority required by this Agreement, the Agent's security interest in all
Equipment and Inventory located in each state where the Inventory located
in such state has an aggregate value of $100,000 or more.
(b) The Debtor shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear excepted). The Debtor shall
not permit any waste or destruction of the Equipment or Inventory or any
part thereof. The Debtor shall not permit the Equipment or Inventory to be
used in violation of any law, rule, or regulation or inconsistently with
the terms of any policy of insurance. The Debtor shall not use or
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 10
<PAGE>
permit any of the Equipment or Inventory to be used in any manner or for
any purpose that would impair its value or expose it to unusual risk.
Section 4.11. Warehouse Receipts Non-Negotiable. The Debtor agrees that
---------------------------------
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC as in effect in any relevant jurisdiction or under relevant
law), except for any negotiable warehouse receipts issued for inventory in a
bonded warehouse facility in a foreign trade zone listed on Schedule 1.
Section 4.12. Notification. The Debtor shall promptly, and in any event
------------
within five (5) days after the Debtor obtains knowledge or becomes aware of any
of the following, notify the Agent of (a) any Lien or claim that has attached to
or been made or asserted against any of the Collateral, (b) any material damage
to or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 4.13. Collection of Accounts. Except as otherwise provided in
----------------------
this Section, the Debtor shall have the right to collect and receive payments on
the Accounts. In connection with such collections, the Debtor may take (and, at
the Agent's direction, shall take) such actions as the Debtor or the Agent may
deem necessary or advisable to enforce collection of the Accounts. At any time,
if an Event of Default shall have occurred and be continuing, the Agent shall
have the right to, or upon the request of the Agent the Debtor shall, instruct
all account debtors and other Persons obligated in respect of the Accounts to
make all payments on the Accounts either (a) directly to the Agent, for the pro
rata benefit of the Banks (by instructing that such payments be remitted to a
post office box which shall be in the name and under the control of the Agent),
or (b) to one or more other banks in the United States of America (by
instructing that such payments be remitted to a post office box which shall be
in the name or under the control of the Agent) under arrangements in form and
substance satisfactory to the Agent pursuant to which the Debtor shall have
irrevocably instructed such other bank (and such other bank shall have agreed)
to remit all such payments directly to the Agent, for the pro rata benefit of
the Banks. In addition to the foregoing, the Debtor agrees that if any Proceeds
of any Collateral (including payments made in respect of Accounts) shall be
received by the Debtor while an Event of Default exists, the Debtor shall
promptly deliver such Proceeds to the Agent, for the pro rata benefit of the
Banks, with any necessary endorsements. Until such Proceeds are delivered to the
Agent, such Proceeds shall be held in trust by the Debtor for the benefit of the
Agent and shall not be commingled with any other funds or property of the
Debtor. All Proceeds of Collateral received by the Agent pursuant to this
Section may, at the option of the Required Banks in the exercise of their
absolute discretion, (i) be applied by the Agent and the Banks to their
respective Obligations in such order and manner as they may each elect in their
absolute discretion, or (ii) be deposited to the credit of Debtor and held as
collateral for the Obligations or permitted to be used by Debtor in the ordinary
course of its business.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 11
<PAGE>
ARTICLE V
Rights of the Agent
-------------------
Section 5.1. Power of Attorney. The Debtor hereby irrevocably
-----------------
constitutes and appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of the Debtor or in its own name, to
take any and all action and to execute any and all documents and instruments
which the Agent at any time and from time to time deems necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, the Debtor hereby gives the Agent the power and
right on behalf of the Debtor and in its own name to do any of the following,
without notice to or the consent of the Debtor, and whether or not an Event of
Default has occurred and is continuing (except as otherwise expressly provided
below):
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of the Debtor
or in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under
the Collateral or any policy of insurance;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) after the occurrence and during the continuance of an Event of
Default, to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Agent and to
receive, open, and dispose of mail addressed to the Debtor;
(iv) (A) after the occurrence and during the continuance of an
Event of Default, to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and all
monies due and to become due thereunder directly to the Agent or as the
Agent shall direct; (B) after the occurrence and during the continuance of
an Event of Default, to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (C) after the occurrence and
during the continuance of an Event of Default, to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, proxies, stock powers,
verifications, and notices in connection with accounts and other documents
relating to the Collateral; (D) after the occurrence and during the
continuance of an Event of Default, to commence and prosecute any suit,
action, or proceeding at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce
any other right in respect of any Collateral; (E) after the occurrence and
during the continuance of an Event of Default, to defend any suit, action,
or proceeding brought
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 12
<PAGE>
against the Debtor with respect to any Collateral; (F) after the occurrence
and during the continuance of an Event of Default, to settle, compromise,
or adjust any suit, action, or proceeding described above and, in
connection therewith, to give such discharges or releases as the Agent may
deem appropriate; (G) to exchange any of the Collateral for other property
upon any merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof and, in connection therewith, deposit
any of the Collateral with any committee, depositary, transfer agent,
registrar, or other designated agency upon such terms as the Agent may
determine;(H) to add or release any guarantor, indorser, surety, or other
party to any of the Collateral; (I) to renew, extend, or otherwise change
the terms and conditions of any of the Collateral; (J) to make, settle,
compromise, or adjust claims under any insurance policy covering any of the
Collateral; and (K) after the occurrence and during the continuance of an
Event of Default, to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Agent were the absolute owner thereof for all
purposes, and to do, at the Agent's option and the Debtor's expense, at any
time, or from time to time, all acts and things which the Agent deems
necessary to protect, preserve, or realize upon the Collateral and the
Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or in its capacity as attorney-in-fact except acts or
omissions resulting from its willful misconduct. This power of attorney is
conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent will exercise its best efforts to
notify Debtor of any action taken by the Agent in its capacity as attorney-in-
fact pursuant to this Section, promptly after such action is taken, provided
that any failure by the Agent to so notify Debtor shall not impose any liability
upon the Agent or affect its rights and remedies hereunder, at law or in equity.
The Agent shall not be responsible for any decline in the value of the
Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or Lien given to secure the Collateral.
Section 5.2. Setoff; Property Held by the Agent and the Banks. If an
------------------------------------------------
Event of Default shall have occurred and be continuing, the Agent and each Bank
shall have the right to set off and apply against the Obligations, at any time
and without notice to the Debtor, any and all deposits (general or special, time
or demand, provisional or final) or other sums at any time credited by or owing
from the Agent or any Bank to the Debtor whether or not the Obligations are then
due. As additional security for the Obligations, the Debtor hereby grants the
Agent and each Bank a security interest in all money, instruments, and other
property of the Debtor now or hereafter held by the Agent or any Bank, including
without limitation, property held in safekeeping. In addition to the Agent's or
any Bank's right of setoff and as further security for the Obligations, the
Debtor hereby grants the Agent and each Bank a security interest in all deposits
(general or special, time or demand, provisional or final) of the Debtor now or
hereafter
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 13
<PAGE>
on deposit with or held by the Agent or any Bank and all other sums at any time
credited by or owing from the Agent or any Bank to the Debtor. The rights and
remedies of the Agent and each Bank hereunder are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which the
Agent or any Bank may have.
Section 5.3. Performance by the Agent. If the Debtor shall fail to
------------------------
perform any covenant or agreement contained in this Agreement, the Agent may
perform or attempt to perform such covenant or agreement on behalf of the
Debtor. In such event, the Debtor shall, at the request of the Agent, promptly
pay any amount expended by the Agent in connection with such performance or
attempted performance to the Agent, together with interest thereon at the
Default Rate from and including the date of such expenditure to but excluding
the date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that the Agent shall not have any liability or responsibility
for the performance of any obligation of the Debtor under this Agreement.
Section 5.4. Subrogation. If any of the Obligations are given in renewal
-----------
or extension or applied toward the payment of indebtedness secured by any Lien,
the Agent and the Banks shall be, and are hereby, subrogated to all of the
rights, titles, interests and Liens securing the indebtedness so renewed,
extended, or paid.
Section 5.5. Agent's Duty of Care. Other than the exercise of reasonable
--------------------
Agent hereunder, the Agent shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including without limitation any
obligation or duty to collect any sums due in respect thereof or to protect or
preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Debtor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality of
the foregoing, the Agent shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if the Agent takes such action,
for purposes of preserving rights in the Collateral, as Debtor may reasonably
request in writing, but no failure or omission or delay by the Agent in
complying with any such request by Debtor, and no refusal by the Agent to comply
with any such request by Debtor, shall be deemed to be a failure to exercise
reasonable care.
ARTICLE VI
Default
-------
Section 6.1. Rights and Remedies. If an Event of Default shall have
-------------------
occurred and be continuing, the Agent shall have the following rights and
remedies:
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement or in any other Loan Document or by applicable law,
the Agent shall have all of the rights and remedies of a secured party
under the UCC (whether or not the UCC
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 14
<PAGE>
applies to the affected Collateral). Without limiting the generality of the
foregoing, the Agent may (A) without demand or notice to the Debtor,
collect, receive, or take possession of the Collateral or any part thereof
and for that purpose the Agent may enter upon any premises on which the
Collateral is located and remove the Collateral therefrom or render it
inoperable, and/or (B) sell, lease, or otherwise dispose of the Collateral,
or any part thereof, in one or more parcels at public or private sale or
sales, at the Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Agent may deem
commercially reasonable. The Agent shall have the right at any public sale
or sales, and, to the extent permitted by applicable law, at any private
sale or sales, to bid and become a purchaser of the Collateral or any part
thereof free of any right or equity of redemption on the part of the
Debtor, which right or equity of redemption is hereby expressly waived and
released by the Debtor. Upon the request of the Agent, the Debtor shall
assemble the Collateral and make it available to the Agent at any place
designated by the Agent that is reasonably convenient to the Debtor and the
Agent. The Debtor agrees that the Agent shall not be obligated to give more
than five (5) days written notice of the time and place of any public sale
or of the time after which any private sale may take place and that such
notice shall constitute reasonable notice of such matters. The Agent shall
not be obligated to make any sale of Collateral if it shall determine not
to do so, regardless of the fact that notice of sale of Collateral may have
been given. The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was
so adjourned. The Debtor shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all reasonable attorneys'
fees, legal expenses, and all other costs and expenses incurred by the
Agent or any Bank in connection with the collection of the Obligations and
the enforcement of the Agent's rights under this Agreement. The Debtor
shall remain liable for any deficiency if the Proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations in
full. The Agent and the Banks may apply the Collateral against the
Obligations in such order and manner as they may elect in their absolute
discretion. The Debtor waives all rights of marshalling, valuation, and
appraisal in respect of the Collateral.
(ii) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) On any sale of the Collateral, the Agent is hereby authorized
to comply with any limitation or restriction with which compliance is
necessary, in the view of the Agent's counsel, in order to avoid any
violation of applicable law or in order to obtain
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 15
<PAGE>
any required approval of the purchaser or purchasers by any applicable
Governmental Authority.
ARTICLE VII
Miscellaneous
-------------
Section 7.1. No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are cumulative
and not exclusive of any rights and remedies provided by law.
Section 7.2. Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the Debtor and the Agent and their respective
heirs, successors, and assigns, except that the Debtor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Agent.
Section 7.3. ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
--------------------------------------------------
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto. In the event any term or provision of this
Agreement expressly conflicts with any term or provision of the Loan Agreement,
the terms and provisions of the Loan Agreement shall govern and control.
Section 7.4. Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 16
<PAGE>
Section 7.5. GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY
--------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED
INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN
DALLAS COUNTY, TEXAS.
Section 7.6. Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.8. Waiver of Bond. In the event the Agent seeks to take
--------------
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.9. Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.10. Termination. If all of the Obligations shall have been paid
-----------
and performed in full and all Commitments shall have expired or terminated, the
Agent shall, upon the written request of the Debtor, execute and deliver to the
Debtor a proper instrument or instruments acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to the Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Agent and has not previously been sold or otherwise applied pursuant to
this Agreement.
Section 7.11. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, THE DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF
THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTOR:
------
NATIONAL AUTO CENTER, INC.
By:________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:________________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
AMENDED AND RESTATED SECURITY AGREEMENT - PAGE 18
<PAGE>
Schedule 1
Location of Inventory and Equipment
-----------------------------------
Locations of Inventory and Equipment
having an aggregate value of $100,000 or more
---------------------------------------------
1730 Briercroft Drive
Carrollton, Texas 75006
1728 Briercroft Drive
Carrollton, Texas 75006
605 W. Airport Freeway
Irving, Texas 75062
7899 East Frontage Road
Overland Park, Kansas 66204
7500 N. W. 25th Street, Unit 4
Miami, Florida 33122
1230 Santa Anita Avenue
Units A, C, D
S. El Monte, California 91733
31035 Genstar Road
Hayward, California 94544-7831
Locations of Inventory and Equipment
having an aggregate value of less than $100,000
-----------------------------------------------
1711 Briercroft Drive, Suite 127 2417 Front Street
Carrollton, Texas 75006 W. Sacramento, California 95691
4146 S. Cooper Street 4704 W. Jennifer, Suite #105
Arlington, Texas 76015 Fresno, California 93722
5937 Donnelly 2646 West Lane, #A
Fort Worth, Texas 76107 Stockton, California 95205-2661
4216 LBJ Freeway
Dallas, Texas 75244
SCHEDULE 1, Location of Inventory and Equipment - Page 1
<PAGE>
8728 Westpark Drive
Houston, Texas 77063
512 N. Central
Richardson, Texas 75080
19750 Gulf Freeway
Webster, Texas 77598
6943 FM 1960 W.
Houston, Texas 77069
404-A Baylor Street (S. Austin)
Austin, Texas 78703
9222 Burnett Road (N. Austin)
Austin, Texas 78758
6700 N. Oak Street Trafficway
Gladstone, Missouri 64118
504 S. Edgemoor
Wichita, KS 67208
13208 E. Highway 40, Suite C
Independence, Missouri 64055
9232 Miramar Road
San Diego, California 92126
SCHEDULE 1, Location of Inventory and Equipment - Page 2
<PAGE>
Sam's Club Locations where Inventory is Located
-----------------------------------------------
Sam's Communication Center Schedule attached.
SCHEDULE 1, Location of Inventory and Equipment - Page 3
<PAGE>
<TABLE>
<CAPTION>
COMMUNICATION CENTER SCHEDULE
- --------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING
DATE # CTR ADDRESS MANAGER RECEIVING
- --------------------------------------------------------------------------------------------------------------------------
ALABAMA
- --------------------------------------------------------------------------------------------------------------------------
FLORENCE AREA
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/1/95 8196 1734 364 Cox Creek Pkwy 205-767-9943
Florence, Al 35630
- --------------------------------------------------------------------------------------------------------------------------
10/29/95 8107 1736 3418 Memorial Pkwy NW 205-859-9434
Huntsville, AL 35810
- --------------------------------------------------------------------------------------------------------------------------
8/23/95 8247 1731 201 Lakeshore Pkwy 205-941-3335
Homewood, AL 35209
(Birmingham)
- --------------------------------------------------------------------------------------------------------------------------
8/24/95 8212 1732 3900 Kilgore Memorial Dr 205-956-5183
Irondale, AL 35210
(Birmingham)
- --------------------------------------------------------------------------------------------------------------------------
8/25/95 6435 1733 1401 Skyland Blvd East 205-750-0244
Tuscaloosa, AL 35405
- --------------------------------------------------------------------------------------------------------------------------
8/2/95 8102 1751 1100 S Beltline Hwy 205-343-5794
Mobile, AL 36609
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COMMUNICATION CENTER SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------
INSTALL DIRECTOR COMM. CTR AREA EMPLOYEE EMP.
DATE OPERATIONS NUMBERS MANAGER NAME ID#
- ------------------------------------------------------------------------------------------------------------------------
ALABAMA
- ------------------------------------------------------------------------------------------------------------------------
FLORENCE AREA
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/1/95 R)205-764-6756 2.5
F)205-764-5560
D)205-764-5828
- ------------------------------------------------------------------------------------------------------------------------
10/29/95 R)205-852-6446 2.5
R)205-852-6641
F)205-852-6743
D)205-852-7092
- ------------------------------------------------------------------------------------------------------------------------
8/23/95 R)205-941-3342 2.5
R)205-941-1038
F)205-941-3269
D)205-941-1572
- ------------------------------------------------------------------------------------------------------------------------
8/24/95 R)205-956-0900 2.5
R)205-956-0777
F)205-956-0142
D)205-956-0535
- ------------------------------------------------------------------------------------------------------------------------
8/25/95 R)205-391-9811 2.5
F)205-391-2740
D)205-391-2750
- ------------------------------------------------------------------------------------------------------------------------
8/2/95 R)334-344-1887 2.5
R)334-344-9573
F)334-344-2127
D)334-344-0382
- ------------------------------------------------------------------------------------------------------------------------
ALASKA
- ------------------------------------------------------------------------------------------------------------------------------------
ANCHORAGE AREA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/4/95 6601 1851 8801 Old Seward Hwy 907-344-5504 R)907-344-7674
Anchorage, AK 99515 F)907-344-2504
D)907-344-0413
- ---------------------------------------------------------------------------------------------------------------------------
10/5/95 6602 1852 3651 Penland Pkwy None R)907-272-7992
Anchorage, AK 99508 F)907-272-9941
D)907-272-1848
- ---------------------------------------------------------------------------------------------------------------------------
10/7/95 6603 1853 48 College Rd 907-451-9502 R)907-479-0670
Fairbanks, AK 99701 F)907-479-0673
D)907-479-0676
- ---------------------------------------------------------------------------------------------------------------------------
ARIZONA AREA
- ---------------------------------------------------------------------------------------------------------------------------
7/16/95 6604 1678 1851 E Butler Ave 602-774-3265 R)602-773-8580
Flagstaff AZ, 86001 F)602-773-8952
D)602-773-8988
- ---------------------------------------------------------------------------------------------------------------------------
7/20/95 6605 1676 1225 N Gilbert Rd. 602-497-5063 R)602-497-2770
Gilbert, AZ 85234 R)602-497-2791
F)602-497-2832
D)602-497-2843
- ---------------------------------------------------------------------------------------------------------------------------
7/17/95 6607 1674 317 S 48th St. 602-231-0702 R)602-275-6255
Phoenix AZ, 85034 R)602-275-6713
F)602-275-7548
D)602-275-8623
- ---------------------------------------------------------------------------------------------------------------------------
7/18/95 6608 1675 17401 N Holmes Blvd. 602-439-1096 R)602-547-8066
Phoenix AZ, 85023 F)602-547-8093
D)602-547-8112
- ---------------------------------------------------------------------------------------------------------------------------
7/19/95 6606 1673 8340 W McDowell 602-936-4302 R)602-907-0404
Phoenix, AZ 85037 F)602-907-0426
D)602-907-0427
<CAPTION>
- -------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- -------------------------------------------------------------
<S> <C> <C> <C>
10/4/95 3
- -------------------------------------------------------------
10/5/95 3
- -------------------------------------------------------------
10/7/95 3
- -------------------------------------------------------------
ARIZONA AREA
- -------------------------------------------------------------
7/16/95 3
- -------------------------------------------------------------
7/20/95 3
- -------------------------------------------------------------
7/17/95 3
- -------------------------------------------------------------
7/18/95 3
- -------------------------------------------------------------
7/19/95 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR
DATE # CTR ADDRESS MANGER RECEIVING OPERATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7/21/95 6692 1677 4701 N Stone Ave
Tucson AZ, 85704
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA
- ------------------------------------------------------------------------------------------------------------------------------------
LOS ANGELES AREA
- ------------------------------------------------------------------------------------------------------------------------------------
11/21/94 6609 1718 35780 Date Palm Drive
Cathedral City, Ca.
92234
- ------------------------------------------------------------------------------------------------------------------------------------
11/7/94 6610 1710 5459 Philadelphia Street
Chino, Ca 91710
- ------------------------------------------------------------------------------------------------------------------------------------
11/10/94 6611 1707 17835 E. Gale Ave.
City Of Industry, Ca.
91745
- ------------------------------------------------------------------------------------------------------------------------------------
11/8/94 6613 1705 11111 Florence Ave.
Downey, Ca 90240
- ------------------------------------------------------------------------------------------------------------------------------------
11/9/94 6614 1706 4901 N. Santa Anita Blvd.
El Monte, Ca. 91731
- ------------------------------------------------------------------------------------------------------------------------------------
11/17/94 6615 1704 17009 Brookhurst St.
Fountain Valley, CA.
92708
- ------------------------------------------------------------------------------------------------------------------------------------
11/6/94 6616 1703 629 S. Placentia Ave.
Fullerton, Ca 92613
- ------------------------------------------------------------------------------------------------------------------------------------
11/13/94 6617 1714 1399 Artesia Blvd.
Gardena, Ca. 90247
- ------------------------------------------------------------------------------------------------------------------------------------
11/5/94 6618 1701 16555 Von Karman Ave.
Irvine, Ca 92714
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INSTALL COMM.CTR AREA EMPLOYEE EMP
DATE NUMBERS MANAGER NAME ID#
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7/21/95 R)520-887-0441 3
F)520-887-1659
D)520-887-3122
- ---------------------------------------------------------------------------------------------------
CALIFORNIA
- ---------------------------------------------------------------------------------------------------
LOS ANGELES AREA
- ---------------------------------------------------------------------------------------------------
11/21/94 R)619-321-9860 2.5
F)619-321-9548
D)619-321-5937
- ---------------------------------------------------------------------------------------------------
11/7/94 R)909-591-8867 2.5
F)909-591-9448
D)909-591-7396
- ---------------------------------------------------------------------------------------------------
11/10/94 R)818-810-3977 2.5
F)818-810-4047
D)818-810-5867
- ---------------------------------------------------------------------------------------------------
11/8/94 R)310-863-9956 2.5
F)310-863-1668
D)310-863-3638
- ---------------------------------------------------------------------------------------------------
11/9/94 R)818-448-2093 2.5
F)818-448-2096
D)818-448-2095
- ---------------------------------------------------------------------------------------------------
11/17/94 R)714-963-7668 2.5
F)714-963-4978
D)714-962-9746
- ---------------------------------------------------------------------------------------------------
11/6/94 R)714-992-2708 2.5
F)714-992-5281
D)714-992-0193
- ---------------------------------------------------------------------------------------------------
11/13/94 R)310-532-4234 3
F)310-532-4280
D)310-532-4289
- ---------------------------------------------------------------------------------------------------
11/5/94 R)714-863-9121 2.5
F)714-863-9218
D)714-863-7027
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING
DATE # CTR ADDRESS MANAGER RECEIVING
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/12/94 6619 1709 8915 Monte Vista Ave
Montclair, Ca. 91763
- -----------------------------------------------------------------------------------------------------------------------------
11/20/94 6455 1717 2401 N. Rose Ave.
Oxnard, Ca. 93030
- -----------------------------------------------------------------------------------------------------------------------------
11/14/94 6378 1711 6363 Valley Springs Pwy
Riverside, Ca 92507
- -----------------------------------------------------------------------------------------------------------------------------
11/10/94 6624 1712 885 E. Harriman
San Bernardino, Ca
92408
- -----------------------------------------------------------------------------------------------------------------------------
11/19/94 6625 1716 12920 Foothill Blvd.
San Fernando, Ca.
91340
- -----------------------------------------------------------------------------------------------------------------------------
11/22/94 6626 1702 5871 Firestone Blvd.
Southgate, Ca. 90280
- -----------------------------------------------------------------------------------------------------------------------------
11/11/94 6627 1708 12540 Beach Blvd.
Stanton, Ca. 90680
- -----------------------------------------------------------------------------------------------------------------------------
11/15/94 6628 1713 2601 Skypark Drive
Torrence, Ca. 90505
- -----------------------------------------------------------------------------------------------------------------------------
11/18/94 6629 1715 6345 Variel Ave.
Woodland Hills, Ca.
91367
- -----------------------------------------------------------------------------------------------------------------------------
SACRAMENTO AREA
- -----------------------------------------------------------------------------------------------------------------------------
5/4/95 6612 1687 1225 Concord Ave.
Concord, CA 94520
- -----------------------------------------------------------------------------------------------------------------------------
11/19/94 6620 1682 2738 Sunrise Blvd.
Rancho Cordova, CA.
95670
- -----------------------------------------------------------------------------------------------------------------------------
11/20/94 6621 1683 384 N. Sunrise Blvd.
Roseville, CA. 95661
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INSTALL DIRECTOR COMM. CTR AREA EMPLOYEE EMP.
DATE OPERATIONS NUMBERS MANAGER NAME ID#
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/12/94 R)909-399-9950 2.5
F)909-399-9447
D)909-399-9216
- -----------------------------------------------------------------------------------------------------------------------------
11/20/94 R)805-278-1277 2.5
F)805-278-1296
D)909-653-1347
- -----------------------------------------------------------------------------------------------------------------------------
11/14/94 R)909-653-8386 2.5
F)909-653-3307
D)909-653-1347
- -----------------------------------------------------------------------------------------------------------------------------
11/10/94 R)909-889-6444 3
F)909-889-7043
D)909-3816579
- -----------------------------------------------------------------------------------------------------------------------------
11/19/94 R)818-361-8298 2.5
F)818-361-6978
D)818-361-6457
- -----------------------------------------------------------------------------------------------------------------------------
11/22/94 R)310-806-9409 2.5
F)310-806-1578
D)310-806-7167
- -----------------------------------------------------------------------------------------------------------------------------
11/11/94 R)714-891-9606 2.5
F)714-891-6707
D)714-891-6717
- -----------------------------------------------------------------------------------------------------------------------------
11/15/94 R)310-891-0892 2.5
F)310-891-0729
D)310-891-1896
- -----------------------------------------------------------------------------------------------------------------------------
11/18/94 R)818-348-5491 2.5
F)818-348-5887
D)818-348-5886
- -----------------------------------------------------------------------------------------------------------------------------
SACRAMENTO AREA
- -----------------------------------------------------------------------------------------------------------------------------
5/4/95 R)510-682-4101 3
F)510-682-4152
D)510-682-4153
- -----------------------------------------------------------------------------------------------------------------------------
11/19/94 R)916-851-9637 2.5
F)916-631-8891
D)916-851-9645
- -----------------------------------------------------------------------------------------------------------------------------
11/20/94 R)916-782-1675 3
F)916-782-3514
D)916-782-8387
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D)916-782-8387
- -----------------------------------------------------------------------------------------------------------------------------
11/21/94 6623 1684 3360 El Camino Ave. R)916-485-1362
Sacramento, CA. 95821 F)916-485-1531
(El Camino) D)916-485-1673
- -----------------------------------------------------------------------------------------------------------------------------
11/18/94 6622 1681 7660 Stockton Blvd. R)916-688-8678
Sacramento, CA. 95826 F)916-688-9378
SCOTT R)916-688-8720
- -----------------------------------------------------------------------------------------------------------------------------
5/3/95 6433 1686 1500 Helen Power Dr. R)707-451-8092
Vacaville, CA 95687 F)707-451-8094
D)707-451-8095
- -----------------------------------------------------------------------------------------------------------------------------
12/15/94 6405 1685 900 Walton Blvd. Ave. R)916-671-1956
Yuba City, CA. 95991 F)916-671-1468
D)916-671-1742
- -----------------------------------------------------------------------------------------------------------------------------
COLORADO
- -----------------------------------------------------------------------------------------------------------------------------
DENVER AREA
- -----------------------------------------------------------------------------------------------------------------------------
HOLD 6630 1405 7370 W. 52nd Ave.
Arvada, CO 80002
- -----------------------------------------------------------------------------------------------------------------------------
HOLD 6631 1403 1400 S. Abilene St
Aurora, CO 80012
- -----------------------------------------------------------------------------------------------------------------------------
HOLD 6632 1402 505 S. Broadway
Denver, CO 80209
- -----------------------------------------------------------------------------------------------------------------------------
HOLD 6634 1404 7817 Park Meadows Dr.
Littleton, CO 80124
- -----------------------------------------------------------------------------------------------------------------------------
HOLD 6635 1401 4827 S. Wadsworth
Littleton, CO 80123
- -----------------------------------------------------------------------------------------------------------------------------
CONNECTICUT
- ------------------------------------------------------------------------------------------------------------------------------------
22-Oct 6442 1635 2 Boston Road R)203-891-9100
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
11/21/94 3
- -----------------------------------------------------------------------------
11/18/94 2.5
- -----------------------------------------------------------------------------
5/3/95 2.5
- -----------------------------------------------------------------------------
12/15/94 2.5
- -----------------------------------------------------------------------------
COLORADO
- -----------------------------------------------------------------------------
DENVER AREA
- -----------------------------------------------------------------------------
HOLD
- ------------------------------------------------------------------------------
HOLD
- ------------------------------------------------------------------------------
HOLD
- ------------------------------------------------------------------------------
HOLD
- ------------------------------------------------------------------------------
22-OCT 2.5
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING
DATE # CTR ADDRESS MANAGER RECEIVING
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Orange, Ct 06477
- -----------------------------------------------------------------------------------------------------------------------
23-Oct 6636 1636 245 Wilbur Cross Hwy
Berlin, CT 06037
----------------------------------------------------------------------------------------------------------------------
24-Oct 8195 1637 69 Pavillions Drive
Manchester, CT 06040
- -----------------------------------------------------------------------------------------------------------------------
DELAWARE
- -----------------------------------------------------------------------------------------------------------------------
DOVER AREA
- -----------------------------------------------------------------------------------------------------------------------
8/25/95 6330 1797 1572 N Dupont Hwy
Dover, DE 19901
- -----------------------------------------------------------------------------------------------------------------------
FLORIDA
- -----------------------------------------------------------------------------------------------------------------------
MIAMI / FT LAUDERDALE AREA
- -----------------------------------------------------------------------------------------------------------------------
2/7/95 6637 1805 950 University Dr.
Coral Springs, FL.
33071
- -----------------------------------------------------------------------------------------------------------------------
2/6/95 8140 1804 7233 Seacrest Blvd.
Lantana, FL. 33462
- -----------------------------------------------------------------------------------------------------------------------
2/12/95 8173 1808 1900 University Drive
Miramar, FL. 33025
- -----------------------------------------------------------------------------------------------------------------------
2/5/95 8157 1803 4295 45th St.
W. Palm Beach FL.
33407
- -----------------------------------------------------------------------------------------------------------------------
2/9/95 6341 1807 13550 W. Sunrise Blvd.
Sunrise, FL. 33323
- -----------------------------------------------------------------------------------------------------------------------
ORLANDO / JACKSONVILLE AREA
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
INSTALL DIRECTOR COMM. CTR AREA EMPLOYEE EMP.
DATE OPERATIONS NUMBERS MANAGER NAME ID#
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
F)203-891-0820
D)203-891-0812
- ---------------------------------------------------------- -----------------------------------
23-Oct R)860-829-1833 2.5
F)860-829-1743
D)860-829-1753
- ---------------------------------------------------------- -----------------------------------
24-Oct R)860-648-0480 2.5
F)860-648-1381
D)860-648-1478
- -------------------------------------------------------------------------------------------------------------------------
DELAWARE
- -------------------------------------------------------------------------------------------------------------------------
DOVER AREA
- -------------------------------------------------------------------------------------------------------------------------
8/25/95 R)302-672-9060 2.5
F)302-672-9062
D)302-672-9063
- -------------------------------------------------------------------------------------------------------------------------
FLORIDA
- -------------------------------------------------------------------------------------------------------------------------
MIAMI / FT LAUDERDALE
- --------------------------------------------------------------------------------------------------------------------------
2/7/95 R)305-340-3700 2.5
F)305-340-3521
D)305-340-3523
- ---------------------------------------------------------- ------------------------------------
2/6/95 R)407-586-3011 3
F)407-586-6644
D)407-586-1271
- ---------------------------------------------------------- ------------------------------------
2/12/95 R)305-430-8588 2.5
R)305-430-8739
F)305-430-9343
D)305-430-8923
- --------------------------------------------------------------------------------------------------------------------------
2/5/95 R)407-640-9111 3
R)407-640-0907
F)407-640-7555
D)407-640-0900
- ---------------------------------------------------------------------------------------------------------------------------
2/9/95 R)305-845-0770 2.5
R)305-845-0661
F)305-845-0665
D)305-845-0663
- ---------------------------------------------------------------------------------------------------------------------------
ORLANDO / JACKSONVILLE AREA
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING
DATE CTR ADDRESS MANAGER RECEIVING
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3/12/95 8138 1823 11175 Bevill Rd.
Daytona Beach, FL. 32119
- ---------------------------------------------------------------------------------------------------------------------------------
1/9/95 8214 1802 355 E. State Rd. 436
Fern Park, FL. 32730
- ---------------------------------------------------------------------------------------------------------------------------------
3/7/95 8116 1822 10690 Beach Blvd.
Jacksonville, FL. 32216
- ---------------------------------------------------------------------------------------------------------------------------------
3/5/95 8253 1820 300 Busch Dr.
Jacksonville, FL. 32219
- ---------------------------------------------------------------------------------------------------------------------------------
3/6/95 6363 1821 6373 Youngerman Circle
Jacksonville, FL. 32244
- ---------------------------------------------------------------------------------------------------------------------------------
3/13/95 8141 1824 4255 W. New Haven
West ' Melbourne, FL. 32904
- ---------------------------------------------------------------------------------------------------------------------------------
1/10/95 8290 1801 9498 S. Orange Blossom
Orlando, FL. 32837
- ---------------------------------------------------------------------------------------------------------------------------------
TAMPA AREA
- ---------------------------------------------------------------------------------------------------------------------------------
2/27/95 6403 1812 2021 W. Brandon Blvd.
Brandon, FL. 33511
- ---------------------------------------------------------------------------------------------------------------------------------
2/20/95 6420 1813 2575 Gulf-to-Bay Blvd.
Clearwater, FL. 34625
- ---------------------------------------------------------------------------------------------------------------------------------
2/28/95 6441 1817 4600 N. U.S. Hwy 98
Lakeland, FL. 33809
- ---------------------------------------------------------------------------------------------------------------------------------
2/19/95 6448 1814 4330 US Hwy 19
New Port Richey, FL 34625
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DIRECTOR COMM. CTR AREA EMPLOYEE EMP.
OPERATIONS NUMBERS MANAGER NAME ID#
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3/12/95 R)904-761-7085 2.5
F)904-761-7571
D)904-761-7406
- ---------------------------------------------------------------------------------------------------------
1/9/95 R)407-260-9101 3
F)407-260-8621
D)407-260-1531
- --------------------------------------------------------------------------------------------------------
3/7/95 R)904-645-5050 2.5
F)904-645-9480
D)904-645-9417
- --------------------------------------------------------------------------------------------------------
3/5/95 R)904-696-9119 2.5
F)904-696-1954
D)904-696-1068
- --------------------------------------------------------------------------------------------------------
3/6/95 R)904-771-9500 2.5
F)904-771-9895
D)904-771-9970
- --------------------------------------------------------------------------------------------------------
3/13/95 R)407-725-0030 2.5
F)407-725-2264
D)407-725-6985
- --------------------------------------------------------------------------------------------------------
1/10/95 R)407-240-6693 3
F)407-859-3735
D)407-438-7266
- --------------------------------------------------------------------------------------------------------
TAMPA AREA
- --------------------------------------------------------------------------------------------------------
2/27/95 R)813-654-2748 2.5
F)813-654-6574
D)813-654-6879
- --------------------------------------------------------------------------------------------------------
2/20/95 R)813-669-0790 2.5
F)813-669-0990
D)813-669-0890
- --------------------------------------------------------------------------------------------------------
2/28/95 R)941-859-9147 2.5
F)941-859-7814
D)941-859-7903
- --------------------------------------------------------------------------------------------------------
2/19/95 R)813-842-2858 2.5
F)813-842-3724
D)813-842-2914
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2/22/95 6387 1819 7001 Park Blvd. R)813-547-8839
Pinellas Park, FL 33781 F)813-546-6828
(St. Petersburg) D)813-546-6726
- --------------------------------------------------------------------------------------------------------------------------------
CLOSED 6641 1815 10601 N. U.S. Hwy 19
- --------------------------------------------------------------------------------------------------------------------------------
3/1/95 8201 1818 8005 15th St. East R)941-359-9799
Sarasota, FL. 34243 F)941-359-9795
D)941-359-9796
- --------------------------------------------------------------------------------------------------------------------------------
2/26/95 6401 1811 15835 N. Dale Mabry R)813-960-2627
Tampa, FL. 33618 F)813-960-2510
(North Store) D)813-960-2851
- --------------------------------------------------------------------------------------------------------------------------------
2/23/95 6642 1816 8220 Dale Mabry R)813-886-9308
Tampa, FL. 33614 F)813-886-9605
(West Store) D)813-886-9704
- --------------------------------------------------------------------------------------------------------------------------------
9/12/95 6445 1828 17700 Murdock Circle R)941-255-3842
Port Charlotte, FL 33948 F)941-255-3845
D)941-255-3846
- --------------------------------------------------------------------------------------------------------------------------------
9/11/95 8130 1830 5170 Cleveland Ave. R)941-278-1868
Ft. Myers, FL 33907 F)941-278-1176
D)941-278-5685
- --------------------------------------------------------------------------------------------------------------------------------
9/10/95 6364 1829 255 Immokalee Road R)941-514-0947
Naples, FL 33942 F)941-514-0942
D)941-514-0938
- --------------------------------------------------------------------------------------------------------------------------------
9/8/95 8150 1831 3855 S. US Hwy. #1 R)407-461-7117
Ft. Pierce, FL 34982 R)407-461-0810
F)407-461-0115
D)407-461-0450
- --------------------------------------------------------------------------------------------------------------------------------
8/3/95 8119 1752 1250 Airport Blvd R)904-477-5994
Pensacola, FL 32504 R)904-477-5376
F)904-477-1878
D)904-477-1575
- --------------------------------------------------------------------------------------------------------------------------------
GEORGIA
- --------------------------------------------------------------------------------------------------------------------------------
ATLANTA AREA
- --------------------------------------------------------------------------------------------------------------------------------
3/13/95 8211 1902 150 Riverside Pkwy. R)770-944-7881
Austell, GA. 30001 R)770-944-7996
F)770-732-6277
D)770-732-9260
- --------------------------------------------------------------------------------------------------------------------------------
3/21/95 8194 1908 4365 Atlanta Hwy P)770-353-1153
Bogart, GA 30622 F)770-353-7040
D)770-353-0029
H)770-623-8954
<CAPTION>
- ----------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------
<S> <C> <C> <C>
2/22/95 2.5
- ----------------------------------------------------------
CLOSED CLOSED 2.5
- ----------------------------------------------------------
3/1/95 2.5
- ----------------------------------------------------------
2/26/95 2.5
- ----------------------------------------------------------
2/23/95 2.5
- ----------------------------------------------------------
9/12/95 2.5
- ----------------------------------------------------------
9/11/95 2.5
- ----------------------------------------------------------
9/10/95 2.5
- ----------------------------------------------------------
9/8/95 2.5
- ----------------------------------------------------------
8/3/95
- ----------------------------------------------------------
GEORGIA
- ----------------------------------------------------------
ATLANTA AREA
- ----------------------------------------------------------
3/13/95 3
- ----------------------------------------------------------
3/21/95 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST ADDRESS GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
3/14/95 6643 1903 515 Garson Dr. N.E. R)404-261-6168
Buckhead, GA. 30324 F)404-261-1394
D)404-261-3680
- --------------------------------------------------------------------------------------------------------------------------
3/20/95 8166 1907 3450 Steve Reynolds Blvd R)770-495-1404
Duluth, GA. 30136 F)770-495-1412
D)770-495-1428
- --------------------------------------------------------------------------------------------------------------------------
4/11/95 6644 1910 3137 Frontage Road R)770-535-0053
Gainsville, GA 30504 F)770-536-0403
D)770-536-0950
- --------------------------------------------------------------------------------------------------------------------------
3/16/95 8203 1905 150 S. Cobb Pwy R)770-424-0903
Marietta, GA. 30062 F)770-424-2015
D)770-424-2134
- --------------------------------------------------------------------------------------------------------------------------
3/12/95 8287 1901 7325 Jonesboro Road R)770-961-0009
Morrow, GA. 30260 R)770-961-0205
F)770-961-8777
D)770-961-0570
- --------------------------------------------------------------------------------------------------------------------------
3/19/95 6646 1906 11000 Alpharetta Hwy R)770-992-4342
Roswell, GA. 30076 F)770-992-4558
D)770-992-4847
- --------------------------------------------------------------------------------------------------------------------------
3/15/95 6409 1904 1940 Mountain Ind Blvd. R)770-270-0434
Tucker, GA. 30084 R)770-270-1374
F)770-270-0408
D)770-270-0930
- --------------------------------------------------------------------------------------------------------------------------
8/1/95 6509 1909 2550 Redmond Circle R)706-291-0946
Rome, GA 30165 F)706-291-0427
D)706-291-0174
- --------------------------------------------------------------------------------------------------------------------------
25-Oct 8225 1911 5171 Eisenhower Parkway R)912-477-1899
Macon, GA 31206 F)912-477-1615
D)912-477-1795
- --------------------------------------------------------------------------------------------------------------------------
26-Oct 8213 1912 2801 A Airport Throughway R)706-322-3121
Columbus, GA 31909 F)706-322-2377
D)706-322-1689
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------
3/14/95 2.5
- ----------------------------------------------------------------------
3/20/95 3
- ----------------------------------------------------------------------
4/11/95 3
- ----------------------------------------------------------------------
3/16/95 3
- ----------------------------------------------------------------------
3/12/95 3
- ----------------------------------------------------------------------
3/19/95 3
- ----------------------------------------------------------------------
3/15/95 3
- ----------------------------------------------------------------------
8/1/95 2.5
- ----------------------------------------------------------------------
25-Oct 3
- ----------------------------------------------------------------------
26-Oct 2.5
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- -------------------------------------------------------------------------------------------------------------------------
HAWAII
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/95 6410 1971 1000 Kamehameha Hwy 1 R)808-456-0422
Pearl City, HI 96782 F)808-456-0569
D)808-456-0367
- -------------------------------------------------------------------------------------------------------------------------
IDAHO
- -------------------------------------------------------------------------------------------------------------------------
24-Oct 6345 1845 700 E. 17th St. R)208-525-8990
Idaho Falls, ID 83401 F)208-525-9221
D)208-525-8839
- -------------------------------------------------------------------------------------------------------------------------
ILLINOIS
- -------------------------------------------------------------------------------------------------------------------------
CENTRAL ILLINOIS AREA
- -------------------------------------------------------------------------------------------------------------------------
10/23/94 8197 1652 915 W. Market View Dr. R)217-352-6794
Champaign, IL 61821 F)217-352-9652
D)217-355-8537
- -------------------------------------------------------------------------------------------------------------------------
10/24/94 6334 1653 8232 N. Prospect R)217-875-2288
Decatur, IL 62526 F)217-875-2293
D)217-875-2316
- -------------------------------------------------------------------------------------------------------------------------
10/22/94 8215 1651 2300 White Oaks Dv. R)217-787-5511
Springfield, IL 62704 F)217-787-5592
D)217-787-5628
- -------------------------------------------------------------------------------------------------------------------------
11/10/94 6487 1611 1006 Rohlwing Road R)847-889-9225
Addison, IL. 60101 F)847-889-9228
D)847-889-9227
- -------------------------------------------------------------------------------------------------------------------------
11/1/94 6339 1604 5670 N.W. Highway R)815-455-1891
Crystal Lake, IL 60014 R)815-455-1892
F)815-455-1893
D)815-455-1894
- -------------------------------------------------------------------------------------------------------------------------
11/11/94 6464 1612 101 W. Oakton St. R)847-298-2628
<CAPTION>
- ------------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAMES ID#
- ------------------------------------------------------------------------
HAWAII
- ------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------
11/19/95 3
- ------------------------------------------------------------------------
IDAHO
- ------------------------------------------------------------------------
24-Oct 2.5
- ------------------------------------------------------------------------
ILLINOIS
- ------------------------------------------------------------------------
CENTRAL ILLINOIS AREA
- ------------------------------------------------------------------------
10/23/94 2.5
- -------------------------------------------------------------------------
10/24/94 3
- ------------------------------------------------------------------------
10/22/94 2.5
- ------------------------------------------------------------------------
11/10/94 2.5
- ------------------------------------------------------------------------
11/1/94 2.5
- ------------------------------------------------------------------------
11/11/94 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTALL CLUB COST GENERAL SHIPPING
DATE # CTR ADDRESS MANAGER RECEIVING
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Des Plaines, IL. 60018
- ----------------------------------------------------------------------------------------------------------------------------------
11/2/94 6444 1605 2450 Main St.
Evanston, IL 60202
- ----------------------------------------------------------------------------------------------------------------------------------
10/31/94 8184 1603 6570 Grand Ave
Gurnee, IL 60031
- ----------------------------------------------------------------------------------------------------------------------------------
11/7/94 6358 1610 141 W. North Avenue
North Lake, IL. 60164
- ----------------------------------------------------------------------------------------------------------------------------------
10/29/94 8148 1601 900 South Barrington
Streamwood, IL 60107
- ----------------------------------------------------------------------------------------------------------------------------------
10/30/94 8198 1602 1055 McHenry Road
Wheeling, IL 60090
- ----------------------------------------------------------------------------------------------------------------------------------
8/23/95 8297 1618 7151 Walton St
Rockford, IL 61108
- ----------------------------------------------------------------------------------------------------------------------------------
3/5/95 6328 1617 2601 S. Cicero Avenue
Cicero, IL 60650
- ----------------------------------------------------------------------------------------------------------------------------------
11/12/94 6349 1613 9400 Southwestern Ave.
Evergreen Park, IL.
- ----------------------------------------------------------------------------------------------------------------------------------
11/4/94 6384 1607 9500 W. Joliet Rd.
Hodgkins, IL. 60525
- ----------------------------------------------------------------------------------------------------------------------------------
11/13/94 8298 1614 321 S. Larkin
<CAPTION>
INSTALL DIRECTOR COMM. CTR AREA EMPLOYEE EMP.
DATE OPERATIONS NUMBERS MANAGER NAME ID#
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
F)847-298-2630
D)847-298-2649
- ----------------------------------------------------------------------------------------------------------------------------------
11/2/94 R)847-328-9414 2.5
F)847-328-9475
D)847-328-9425
- ----------------------------------------------------------------------------------------------------------------------------------
10/31/94 R)847-244-9050 3
F)847-244-9070
D)847-244-9070
- ----------------------------------------------------------------------------------------------------------------------------------
11/7/94 R)847-531-0896 3
R)847-531-0896
F)847-531-0898
- ----------------------------------------------------------------------------------------------------------------------------------
10/29/94 R)847-483-9848 2.5
F)847-483-9859
D)847-483-9869
D)847-483-9869
- ----------------------------------------------------------------------------------------------------------------------------------
10/30/94 R)847-419-0211 2.5
F)847-419-0213
D)847-419-0214
- ----------------------------------------------------------------------------------------------------------------------------------
8/23/95 R)815-398-5416 3
F)815-398-5420
D)815-398-5421
- ----------------------------------------------------------------------------------------------------------------------------------
3/5/95 R)847-656-1976 2.5
F)847-656-1978
D)847-656-1979
- ----------------------------------------------------------------------------------------------------------------------------------
11/12/94 R)847-229-0294 2.5
F)847-229-0296 $50
D)847-229-0297
- ----------------------------------------------------------------------------------------------------------------------------------
11/4/94 R)847-387-2191 2.5
F)847-387-2194
D)847-387-2193
- ----------------------------------------------------------------------------------------------------------------------------------
11/13/94 R)815-744-0219 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joilet, IL. 60436
- ------------------------------------------------------------------------------------------------------------------------------------
11/14/94 8154 1615 21430 S. Cicero Ave.
Matteson, IL. 60443
- ------------------------------------------------------------------------------------------------------------------------------------
11/6/94 8143 1609 808 S. Rt. 59
Naperville, IL. 60540
- ------------------------------------------------------------------------------------------------------------------------------------
11/3/94 6485 1606 16100 Harlem Ave.
Tinley Park, IL. 60477
- ------------------------------------------------------------------------------------------------------------------------------------
11/5/94 6488 1608 7300 Woodward Ave.
Woodridge, IL. 60517
- ------------------------------------------------------------------------------------------------------------------------------------
8/24/95 6489 1619 17555 Torrence Ave
Lansing, IL 60438
- ------------------------------------------------------------------------------------------------------------------------------------
10/19/95 8180 1654 2709 Walton Way
Marion, IL 62959
- ------------------------------------------------------------------------------------------------------------------------------------
10/17/94 8285 1555 1350 W. Highway 50
O'Fallon, IL 62269
- ------------------------------------------------------------------------------------------------------------------------------------
INDIANA
- ------------------------------------------------------------------------------------------------------------------------------------
6/6/95 6437 1666 3205 West State Hwy 45
Bloomington, IN
47403
- ------------------------------------------------------------------------------------------------------------------------------------
6/5/95 8168 1663 8100 NE 96th St
Fishers, IN 46038
- ------------------------------------------------------------------------------------------------------------------------------------
7/19/95 6325 1665 1101 Windhorst Way
Greenwood, IN
46142
- ------------------------------------------------------------------------------------------------------------------------------------
7/18/95 6316 1661 1015 W 86th St
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INSTALL COMM.CTR AREA EMPLOYEE EMP.
DATE NUMBERS MANAGER NAME ID#
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
F)815-744-0319
D)815-744-0217 2.5
- ------------------------------------------------------------------------------------------------------------------------------------
11/14/94 R)847-481-2262 2.5
F)847-481-2292
D)847-481-2341
- ------------------------------------------------------------------------------------------------------------------------------------
11/6/94 R)847-778-0992 2.5
F)847-778-0994
D)847-778-9995
- ------------------------------------------------------------------------------------------------------------------------------------
11/3/94 R)847-532-0484 2.5
F)847-532-0866
D)847-532-0867
- ------------------------------------------------------------------------------------------------------------------------------------
11/5/94 R)847-810-1602 2.5
F)847-810-1767
D)847-810-1767
- ------------------------------------------------------------------------------------------------------------------------------------
8/24/95 R)847-474-2756 2.5
F)847-474-2646
D)847-474-2650
- ------------------------------------------------------------------------------------------------------------------------------------
10/19/95 R)618-993-8852 2.5
F)618-993-6599
D)618-993-8916
- ------------------------------------------------------------------------------------------------------------------------------------
10/17/94 R)618-632-6335 2.5
F)618-632-6378
D)618-632-6382
- ------------------------------------------------------------------------------------------------------------------------------------
INDIANA
- ------------------------------------------------------------------------------------------------------------------------------------
6/6/95 R)812-336-7595 2.5
F)812-336-7598
D)812-336-7635
- ------------------------------------------------------------------------------------------------------------------------------------
6/5/95 R)317-578-8533 2.5
R)317-578-8547
F)317-578-8573
D)317-578-8639
- ------------------------------------------------------------------------------------------------------------------------------------
7/19/95 R)317-889-8815 2.5
R)317-889-8825
F)317-889-8836
D)317-889-8841
- ------------------------------------------------------------------------------------------------------------------------------------
7-/18/95 R)317-471-8970 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Indianapolis, IN R)317-471-8971
46268 F)317-471-8972
D)317-471-8973
- --------------------------------------------------------------------------------------------------------------------------------
7/17/95 6304 1662 5805 Rockville Road R)317-487-9115
Indianapolis, IN 46224 R)317-487-9117
F)317-487-9128
D)317-487-9134
- --------------------------------------------------------------------------------------------------------------------------------
7/16/95 6301 1661 10859 E. Washington St. R)317-897-7377
Indianapolis, IN 46229 F)317-897-8763
D)317-897-8769
- --------------------------------------------------------------------------------------------------------------------------------
8/9/95 6424 1669 1917 E. Markland Ave R)317-868-8345
Kokomo, IN 46902 F)317-868-8352
D)317-868-8353
- --------------------------------------------------------------------------------------------------------------------------------
6/7/95 8169 1668 3819 State Rd 26E R)317-448-1588
Lafayette, IN 47905 R)317-448-1346
F)317-448-1046
D)317-448-1283
- --------------------------------------------------------------------------------------------------------------------------------
8/10/95 8135 1667 4350 South U.S. Hwy 41 R)812-232-2408
Terre Haute, IN R)812-232-2481
47802 F)812-232-1905
D)812-232-1573
- --------------------------------------------------------------------------------------------------------------------------------
15-Oct 6313 1670 6610 Lima Rd. R)219-497-8200
Fort Wayne, IN 46808 F)219-497-8300
D)219-497-7401
- --------------------------------------------------------------------------------------------------------------------------------
17-Oct 8123 1671 5101 vogel Rd. R)812-476-2899
Evansville, IN 47715 F)812-476-2945
D)812-476-2975
- --------------------------------------------------------------------------------------------------------------------------------
15-Nov 8174 1616 3134 E. 79th Avenue R)219-947-1788
Merrillville,IN 46410 F)219-942-8579
D)219-942-9057
- --------------------------------------------------------------------------------------------------------------------------------
IOWA
- --------------------------------------------------------------------------------------------------------------------------------
WATERLOO AREA
- --------------------------------------------------------------------------------------------------------------------------------
4/12/95 6514 1576 210 Park Tower Road R)319-235-1710
Waterloo, IA 50702 F)319-235-9918
D)319-235-9937
- --------------------------------------------------------------------------------------------------------------------------------
8/7/95 6344 1577 1101 73rd St R)515-277-1182
<CAPTION>
- ----------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------
7/17/95 2.5
- ----------------------------------------------------------------
7/16/95 2.5
- ----------------------------------------------------------------
8/9/95 2.5
- ----------------------------------------------------------------
6/7/95 2.5
- ----------------------------------------------------------------
8/10/95 2.5
- ----------------------------------------------------------------
15-Oct 2.5
- ----------------------------------------------------------------
17-Oct 2.5
- ----------------------------------------------------------------
15-Nov 2.5
- ----------------------------------------------------------------
IOWA
- ----------------------------------------------------------------
WATERLOO AREA
- ----------------------------------------------------------------
4/12/95 2.5
- -----------------------------------------------------------------
8/7/95 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Des Moines, IA 50310 F)515-277-1396
D)515-277-1394
- --------------------------------------------------------------------------------------------------------------------------------
8/6/95 8238 1578 3845 Elmore Ave R)319-355-3354
Davenport, IA 52807 F)319-355-3794
D)319-355-3817
- --------------------------------------------------------------------------------------------------------------------------------
10/5/95 6472 1579 3221 Manawa Sentre Dr. R)712-366-2830
Council Bluffs, IA 51503 F)712-366-6210
D)712-366-2325
- --------------------------------------------------------------------------------------------------------------------------------
9-Oct 6432 1844 4201 South York Street R)712-258-8411
Sioux City, IA 51106 R)712-258-8391
F)712-258-8511
D)712-258-8366
- --------------------------------------------------------------------------------------------------------------------------------
5/15/96 6568 1574 305 Airport Road R)515-233-8690
Ames, IA 50014 F)515-233-8691
D)515-233-8689
- --------------------------------------------------------------------------------------------------------------------------------
KANSAS
- --------------------------------------------------------------------------------------------------------------------------------
KANSAS CITY / WICHITA AREA
- --------------------------------------------------------------------------------------------------------------------------------
8/18/94 8208 1151 12200 West 95th St R)913-541-0080
Lenexa, KS 66215 F)913-541-1781
D)913-541-1784
- --------------------------------------------------------------------------------------------------------------------------------
4/20/95 6426 1160 2919 Market Place R)913-827-0768
Salina, KS 67401 F)913-827-5715
D)913-827-8344
- -------------------------------------------------------------------------------------------------------------------------------
11/2/91 8176 1154 1401 S.W. Wannamaker R)913-273-5878
Topeka, KS 66604 F)913-273-5793
D)913-273-5976
- --------------------------------------------------------------------------------------------------------------------------------
10/10/94 8254 1159 6200 W. Kellog R)316-943-7067
Wichita, KS 67209 F)316-943-7934
D)316-943-3014
- --------------------------------------------------------------------------------------------------------------------------------
9/30/94 6418 1158 3415 N. Rock Rd R)316-636-2482
Wichita, KS 67226 F)316-636-4062
D)316-636-5165
- --------------------------------------------------------------------------------------------------------------------------------
KENTUCKY
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- --------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------
8/6/95 2.5
- --------------------------------------------------------------------------
10/5/95 2.5
- --------------------------------------------------------------------------
9-Oct 2.5
- --------------------------------------------------------------------------
5/15/96
- --------------------------------------------------------------------------
KANSAS
- --------------------------------------------------------------------------
KANSAS CITY / WICHITA AREA
- --------------------------------------------------------------------------
8/18/94 3
- --------------------------------------------------------------------------
4/20/95 3
- --------------------------------------------------------------------------
11/2/91 2.5
- --------------------------------------------------------------------------
10/10/94 2.5
- --------------------------------------------------------------------------
9/30/94 2.5
- --------------------------------------------------------------------------
KENTUCKY
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8/3/95 8133 1430 4949 Houston Rd R)606-371-0180
Florence, KY 41042 F)606-371-0466
D)606-371-0620
- ------------------------------------------------------------------------------------------------------------------------------------
8/20/95 8188 1434 1063 New Circle Rd NE R)606-252-0599
Lexington, KY 40505 F)606-252-0874
D)606-252-1367
- ------------------------------------------------------------------------------------------------------------------------------------
8/21/95 8111 1435 11521 Bluegrass Pkwy R)502-261-9920
Jeffersontown, KY F)502-261-9924
40299 D)502-261-9927
-----------------------------------------------------------------------------------------------------------------------------------
2/18/96 8276 1436 6622 Preston Hwy R)502-962-9266
Louisville, KY 40219 F)502-962-9232
D)502-962-9274
- ------------------------------------------------------------------------------------------------------------------------------------
22-Oct 6449 1437 5009 Hinkleville Road R)502-442-4818
Paducah, KY 42001 F)502-442-4889
D)502-442-5127
- ------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA
- ------------------------------------------------------------------------------------------------------------------------------------
26-Oct 8181 1754 3805 N. Boulevard R)318-443-1903
Alexandria, LA 71301 F)318-443-2265
D)318-493-3749
- ------------------------------------------------------------------------------------------------------------------------------------
25-Oct 8273 1753 8810 Jewella R)318-688-1497
Shreveport, LA 71118 F)318-688-1536
D)318-688-1615
- ------------------------------------------------------------------------------------------------------------------------------------
27-Oct 8237 1755 5400 1-20 Frontage Road R)318-345-3691
Monroe, LA 71201 F)318-345-3778
D)318-345-3767
- ------------------------------------------------------------------------------------------------------------------------------------
11/12/95 8260 1758 6921 Bundy Road R)504-243-1703
New Orleans, LA 70127 F)504-243-1660
D)504-243-1857
- ------------------------------------------------------------------------------------------------------------------------------------
11/13/95 8221 1759 1527 Manhatten Blvd R)504-362-0455
Harvey, LA 70058 F)504-362-2395
D)504-361-4183
- ------------------------------------------------------------------------------------------------------------------------------------
11/14/95 8261 1761 455 31st Street R)504-466-8443
Kenner, LA 70065 F)504-466-8533
D)504-466-9015
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- -------------------------------------------------------------------
<S> <C> <C> <C>
8/3/95 2.5
- -------------------------------------------------------------------
8/20/95 2.5
- -------------------------------------------------------------------
8/21/95 2.5
- -------------------------------------------------------------------
2/18/96 2.5
- -------------------------------------------------------------------
22-Oct 2.5
- -------------------------------------------------------------------
LOUISIANA
- -------------------------------------------------------------------
26-Oct
- -------------------------------------------------------------------
25-Oct 2.5
- -------------------------------------------------------------------
27-Oct 2.5
- -------------------------------------------------------------------
11/12/95 2.5
- -------------------------------------------------------------------
11/13/95 2.5
- -------------------------------------------------------------------
11/14/95 2.5
- -------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/15/95 8204 1762 7685 Airline Hwy R)504-926-8241
Baton Rouge, LA 70815 F)504-926-8953
D)504-926-1011
- -------------------------------------------------------------------------------------------------------------------------------
10/30/95 8265 1764 3310 Broad Street R)318-433-2783
Lake Charles, LA 70601 F)318-433-2633
D)318-433-3163
- -------------------------------------------------------------------------------------------------------------------------------
MAINE
- -------------------------------------------------------------------------------------------------------------------------------
8/27/95 8186 1645 440 Payne Rd R)207-885-5076
Scarborough, ME 04101 F)207-885-5085
D)207-885-5178
- -------------------------------------------------------------------------------------------------------------------------------
8/28/95 6462 1646 197 Civic Center Dr R)207-623-6085
Augusta, ME 04330 F)207-623-6094
D)207-626-0628
- -------------------------------------------------------------------------------------------------------------------------------
8/29/95 6333 1647 47 Haskell Rd R)207-942-1962
Bangor, ME 04401 F)207-942-2151
D)207-942-2361
- -------------------------------------------------------------------------------------------------------------------------------
MARYLAND
- -------------------------------------------------------------------------------------------------------------------------------
BALTIMORE AREA
- -------------------------------------------------------------------------------------------------------------------------------
6/5/95 6357 1786 2100 Generals Hwy R)410-573-5941
Annapolis, MD R)410-573-5942
21401 F)410-573-5149
D)410-573-9052
- -------------------------------------------------------------------------------------------------------------------------------
7/24/95 6650 1787 8250 Eastern Ave R)410-288-5178
Baltimore, MD 21224 R)410-288-5184
F)410-288-5187
D)410-288-5191
- -------------------------------------------------------------------------------------------------------------------------------
6/6/95 6651 1788 1718 Woodlawn Dr R)410-944-3326
Baltimore, MD R)410-944-3328
21207 F)410-944-3256
D)410-944-3271
- -------------------------------------------------------------------------------------------------------------------------------
7/25/95 6652 1793 5604 Buckeyestown Pike R)301-631-5846
Frederick, MD 21701 R)301-631-5949
F)301-631-5851
D)301-631-5904
<CAPTION>
- ----------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------
<S> <C> <C> <C>
11/15/95 2.5
- ----------------------------------------------------------
10/30/95 2.5
- ----------------------------------------------------------
MAINE
- ----------------------------------------------------------
8/27/95 2.5
- ----------------------------------------------------------
8/28/95 2.5
- ----------------------------------------------------------
8/29/95 2.5
- ----------------------------------------------------------
MARYLAND
- ----------------------------------------------------------
BALTIMORE AREA
- ----------------------------------------------------------
6/5/95 3
- ----------------------------------------------------------
7/24/95 2.5
- ----------------------------------------------------------
6/6/95 2.5
- ----------------------------------------------------------
7/25/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
F)301-631-5851
D)301-631-5904
6/7/95 6653 1789 610 N. Fredrick Ave R)301-208-9281
Gaithersburg, MD R)301-208-9287
20879 F)301-208-9492
D)301-208-9776
7/23/95 8193 1794 1700 Wesel Road R)301-745-4838
Hagerstown, MD R)301-745-4855
21740 F)301-745-4952
D)301-745-4958
6/8/95 6654 1790 8511 Landover Rd R)301-772-2095
Hyattsville, MD R)301-772-3911
20785 F)301-772-3798
D)301-772-3024
6/11/95 6383 1791 2700 N. Salisbury R)410-860-6838
Salisbury, MD 21801 R)410-860-4730
F)410-860-4717
D)410-860-8265
8/24/95 6655 1792 2365 Crain Hwy R)301-870-0088
Waldorf , MD 20601 F)301-870-6977
D)301-374-9116
8/23/95 6434 1796 3535 Russett Green East R)301-490-0481
Laurel, MD 20724 F)301-490-8611
(Baltimore) D)301-490-8612
MASSACHUSETTS
BOSTON AREA
5/14/95 6647 1631 1225 Worchester R)508-650-3940
Natick MA 01760 F)508-650-4750
D)508-650-4892
5/15/95 6370 1632 564 Broadway R)617-233-9973
Saugus, MA 01906 F)617-233-9152
D)617-233-9082
5/16/95 6340 1633 338 Turnpike Road R)508-870-2979
Westborough MA 01581 F)508-870-2982
- ----------------------------------------------------------
AREA EMPLOYEE EMP.
MANAGER NAME ID#
- ----------------------------------------------------------
<C> <C> <C>
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D)508-870-2289
- --------------------------------------------------------------------------------------------------------------------------------
HOLD 6649 1634 301 Barber Ave
- --------------------------------------------------------------------------------------------------------------------------------
10/26/95 6648 1649 1098 Fall River Ave R)508-336-9377
Seekonk, MA 02771 F)508-336-9658
D)508-336-9479
- --------------------------------------------------------------------------------------------------------------------------------
MICHIGAN
- --------------------------------------------------------------------------------------------------------------------------------
DETROIT AREA
- ------------------------- -------------------------------------------------------------------------------------------------------
CLOSED 6656 1525 5901 Mercury Drive R)313-593-0716
Dearborn, MI 48126 F)313-593-3458
D)313-596369
- --------------------------------------------------------------------------------------------------------------------------------
4/10/95 6657 1524 24800 Haggerty Road R)810-476-4183
Farmington Hills, MI F)810-476-5739
48335 D)810-476-0742
- --------------------------------------------------------------------------------------------------------------------------------
5/25/95 6659 1529 800 E 14 Mile Road R)810-589-2838
Madison Heights, MI F)810-589-1225
48071 D)810-589-2208
- --------------------------------------------------------------------------------------------------------------------------------
5/26/95 6660 1530 1237 32nd Street R)810-987-6491
Port Huron, MI 48060 F)810-987-9796
D)810-987-9883
- --------------------------------------------------------------------------------------------------------------------------------
5/23/95 6662 1527 31940 Gratiot R)810-294-8758
Roseville, MI 48066 F)810-294-0512
D)810-294-1343
- --------------------------------------------------------------------------------------------------------------------------------
4/12/95 6454 1528 2500 Eight Mile Road R)810-354-3341
Southfield, MI 48034 F)707-424-2015
D)810-354-4057
- --------------------------------------------------------------------------------------------------------------------------------
6/8/95 6412 1526 15700 Northline Road R)313-281-4182
Southgate, MI 48195 R)313-281-4360
D)313-281-4488
- --------------------------------------------------------------------------------------------------------------------------------
4/5/95 6665 1521 496 Summit Drive R)313-281-4361
Waterford, MI 48095 R)313-281-4362
D)313-281-4490
- --------------------------------------------------------------------------------------------------------------------------------
4/6/95 6666 1522 35400 Central City Pkwy R)313-281-4363
Westland, MI 48185 R)313-281-4364
<CAPTION>
- ----------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------
HOLD
- ----------------------------------------------------------------------
10/26/95 2.5
- ----------------------------------------------------------------------
MICHIGAN
- ----------------------------------------------------------------------
DETROIT AREA
- ----------------------------------------------------------------------
CLOSED
- ----------------------------------------------------------------------
4/10/95 2.5
- ----------------------------------------------------------------------
5/25/95 2.5
- ----------------------------------------------------------------------
5/26/95 2.5
- ----------------------------------------------------------------------
5/23/95 2.5
- ----------------------------------------------------------------------
4/12/95 2.5
- ----------------------------------------------------------------------
6/8/95 2.5
- ----------------------------------------------------------------------
4/5/95 2.5
- ----------------------------------------------------------------------
4/6/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D)313-281-4492
- ----------------------------------------------------------------------------------------------------------------
4/9/95 6664 1523 45600 Utica Park Blvd R)313-281-4365
Utica, MI 48317 F)810-254-4388
D)810-254-5057
- ----------------------------------------------------------------------------------------------------------------
6/9/95 6667 1531 5450 Carpenter Rd. R)313-434-1795
Ypsilant,MI 48197 F)313-434-1387
D)313-434-2295
- ----------------------------------------------------------------------------------------------------------------
9/18/95 8291 1533 4373 Corumna Road R)810-732-4247
Flint, MI 48532 F)810-732-6132
D)810-732-6576
- ----------------------------------------------------------------------------------------------------------------
9/17/95 6663 1532 5417 Bay Road R)517-249-4031
Saginaw,MI 48604 F)517-249-4042
D)517-249-4027
- ----------------------------------------------------------------------------------------------------------------
9/20/95 6319 1516 4326 28th street S.E. R)616-975-9828
Kentwood,MI 49512 F)616-975-9823
(Grand Rapids) D)616-975-9832
- ----------------------------------------------------------------------------------------------------------------
R)616-785-1444
10/10/95 6359 1517 3901 Alpine Ave NW F)616-785-3440
Comstock Park,MI 49321 D)616-785-3453
- ----------------------------------------------------------------------------------------------------------------
4-Oct 6661 1518 665 Mall Drive R)616-324-2330
Portage,MI 49002 F)616-324-2397
D)616-324-2398
- ----------------------------------------------------------------------------------------------------------------
5-Oct 6429 1519 12737 CottonLake Road R)616-979-5291
Battle Creek,MI 49017 F)616-979-5416
D)616-979-5412
- ----------------------------------------------------------------------------------------------------------------
8-Oct 6658 1513 3600 O'Neill Drive R)517-788-8428
Jackson,MI 49202 F)517-784-7482
- ----------------------------------------------------------------------------------------------------------------
9-Oct 8137 1514 340 E. Edgewood Blvd R)517-393-9611
Lansing,MI 48911 R)517-393-9379
F)517-393-9491
D)517-393-9389
- ----------------------------------------------------------------------------------------------------------------
MINNESOTA
- ----------------------------------------------------------------------------------------------------------------
MINNEAPOLIS AREA
- ----------------------------------------------------------------------------------------------------------------
8/9/95 6311 1782 2200 W Highway R)612-882-8484
Burnsville MN,55337 F)612-882-8611
D)612-882-8536
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- -------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------
4/9/95 2.5
- -------------------------------------------------------------
6/9/95 2.5
- -------------------------------------------------------------
9/18/95 2.5
- -------------------------------------------------------------
9/17/95 2.5
- -------------------------------------------------------------
9/20/95 2.5
- -------------------------------------------------------------
10/10/95
- -------------------------------------------------------------
4-Oct 2.5
- -------------------------------------------------------------
5-Oct 2.5
- -------------------------------------------------------------
8-Oct 2.5
- -------------------------------------------------------------
9-Oct 2.5
- -------------------------------------------------------------
MINNESOTA
- -------------------------------------------------------------
MINNEAPOLIS AREA
- -------------------------------------------------------------
8/9/95 2.5
- -------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
7/18/95 6310 1778 8150 University Ave NE R)612-784-8897
Fridley MN, 55432 F)612-784-4666
D)612-784-9235
- --------------------------------------------------------------------------------------------------------------------------------
8/8/95 6312 1781 1300 Mendota Rd R)612-455-4127
Inver Grove Heights, F)612-455-4543
MN, 55077 D)612-455-4524
- --------------------------------------------------------------------------------------------------------------------------------
7/19/95 6318 1779 3745 Louisiana Ave. S R)612-922-3390
St Louis Park MN, F)612-922-8977
55426 D)612-922-3974
- --------------------------------------------------------------------------------------------------------------------------------
7/20/95 6309 1780 1850 Buerkle Rd R)612-779-7781
White Bear Lake, MN 55110 F)612-779-8183
D)612-779-8364
- --------------------------------------------------------------------------------------------------------------------------------
10/18/95 8183 1774 6301 2nd Street South R)612-654-6464
St. Cloud, MN 56301 F)612-654-6641
D)612-654-6532
- --------------------------------------------------------------------------------------------------------------------------------
10/19/95 6427 1776 3410 NW 55th Street R)507-287-8155
Rochester, MN 55901 F)507-287-8190
D)507-287-8245
- --------------------------------------------------------------------------------------------------------------------------------
10/20/95 6320 1773 4743 Maple Grove Rd. R)218-722-7712
Hermantown, MN 55811 F)218-722-7949
D)218-722-8056
- --------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI
- --------------------------------------------------------------------------------------------------------------------------------
TUPELO AREA
- --------------------------------------------------------------------------------------------------------------------------------
8/2/95 6329 1735 3833 N. Gloster St R)601-844-8333
Tupelo, MS 38801 F)601-844-4502
D)601-844-4651
- --------------------------------------------------------------------------------------------------------------------------------
10/29/95 8271 1756 6360 Ridgewood Ct. Dr. R)601-977-0013
Jackson, MS 39211 F)601-956-8800
D)601-956-0091
- --------------------------------------------------------------------------------------------------------------------------------
10/29/95 8236 1757 15065 Creosote Road R)601-863-0018
Gulfport, MS 39503 F)601-863-0188
D)601-863-1928
- --------------------------------------------------------------------------------------------------------------------------------
MISSOURI
- --------------------------------------------------------------------------------------------------------------------------------
10/20/94 8251 1551 2855 S. Service Road R)314-947-3838
<CAPTION>
- --------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- --------------------------------------------------------------
<S> <C> <C> <C>
7/18/95 2.5
- --------------------------------------------------------------
8/8/95 2.5
- --------------------------------------------------------------
7/19/95 2.5
- --------------------------------------------------------------
7/20/95 2.5
- --------------------------------------------------------------
10/18/95 2.5
- --------------------------------------------------------------
10/19/95 2.5
- --------------------------------------------------------------
10/20/95 2.5
- --------------------------------------------------------------
MISSISSIPPI
- --------------------------------------------------------------
TUPELO AREA
- --------------------------------------------------------------
8/2/95 2.5
- --------------------------------------------------------------
10/29/95 2.5
- --------------------------------------------------------------
10/29/9 2.5
- --------------------------------------------------------------
MISSOURI
- --------------------------------------------------------------
10/20/94 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
St. Charles, MO 63303 F)314-947-4716
D)314-925-3511
- --------------------------------------------------------------------------------------------------------------------------------
4/16/96 8205 1558 4512 Lemay Ferry Road R)314-845-7577
St. Louis, MO 63129 F)314-845-7344
D)314-845-6261
- --------------------------------------------------------------------------------------------------------------------------------
10/18/94 8182 1552 13455 Manchester Road R)314-965-6677
St. Louis, MO 63131 F)314-965-6070
- --------------------------------------------------------------------------------------------------------------------------------
9/26/88 8207 11525110 N. Oak Trafficway R)816-452-8245
Gladstone, MO 64118 F)816-452-3098
D)816-452-4197
- --------------------------------------------------------------------------------------------------------------------------------
10/4/94 8243 1157 12420 S. 71 Hwy R)816-765-9530
Grandview, MO 64030 F)816-765-9519
D)816-765-
- --------------------------------------------------------------------------------------------------------------------------------
6/18/87 8293 1153 4800 Noland Road South R)816-478-0357
Kansas City, MO 64136 F)816-478-0628
(Independence) D)816-478-0628
- --------------------------------------------------------------------------------------------------------------------------------
11/1/95 6474 1559 6700 Manchester Road R)314-644-2600
St. Louis, MO 63139 F)314-644-1829
East D)314-644-1299
- --------------------------------------------------------------------------------------------------------------------------------
9/29/95 8163 1556 101 N. Conley Road R)573-815-1030
Columbia, MO 65201 F)573-815-1032
D)573-815-1033
- --------------------------------------------------------------------------------------------------------------------------------
9/30/95 6415 1557 3536 Hammons Blvd. R)417-626-8850
Joplin, MO 64804 F)417-626-8856
D)417-626-8857
- --------------------------------------------------------------------------------------------------------------------------------
MONTANA
- --------------------------------------------------------------------------------------------------------------------------------
6/25/95 6379 1835 401 N W Bypass R)406-771-7851
Great Falls, MT 59404 F)406-771-7904
D)406-771-7938
<CAPTION>
- -----------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- -----------------------------------------------------------------
<S> <C> <C> <C>
---------------------------
4/16/96
---------------------------
10/18/94 2.5
- -----------------------------------------------------------------
9/26/88 3
---------------------------
10/4/94 2.5
- -----------------------------------------------------------------
6/18/87 2.5
- -----------------------------------------------------------------
11/1/95 2.5
- -----------------------------------------------------------------
9/29/95 3
- -----------------------------------------------------------------
9/30/95 2.5
- -----------------------------------------------------------------
MONTANA
- -----------------------------------------------------------------
6/25/95
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
NEBRASKA
- --------------------------------------------------------------------------------------------------------------------------------
10/4/95 8146 1581 11911 "I" Street R)402-334-3170
Omaha, NE 68137 F)402-334-9386
D)402-334-5890
- --------------------------------------------------------------------------------------------------------------------------------
9/13/95 6413 1582 4900 N. 27th Street R)402-476-3550
Lincoln, NE 68521 R)402-476-3719
F)402-476-3551
D)402-476-6183
- --------------------------------------------------------------------------------------------------------------------------------
9/14/95 6461 1583 1510 North Diers Drive R)308-382-4760
Grand Island, NE 68803 R)308-382-4775
F)308-382-1872
D)308-382-1934
- --------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE
- --------------------------------------------------------------------------------------------------------------------------------
5/24/95 6386 1644 304 Sheep Davis Rd R)603-225-4282
Concord, NH 03301 R)603-225-4378
F)603-225-4393
D)603-225-4551
- --------------------------------------------------------------------------------------------------------------------------------
5/22/95 6352 1642 7 Wal-Mart Blvd R)603-881-8485
Hudson, NH 03051 R)603-881-7483
F)603-881-8687
D)603-881-7554
- --------------------------------------------------------------------------------------------------------------------------------
5/21/95 6669 1641 200 John E Devine Dr. R)603-624-5282
Manchester NH 03103 R)603-624-5384
F)603-624-5478
D)603-624-5562
- --------------------------------------------------------------------------------------------------------------------------------
5/23/95 6337 1643 11 Batchelder Rd. R)603-474-2775
Seabrook, NH 03874 R)603-474-2821
F)603-474-5006
D)603-474-5131
- --------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY
- --------------------------------------------------------------------------------------------------------------------------------
6/23/95 8144 1629 1075 N. Albany Avenue R)609-344-4648
Atlantic City, NJ 08401 R)609-344-4637
F)609-344-4679
<CAPTION>
- ----------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------
NEBRASKA
- ----------------------------------------------------------
10/4/95 2.5
- ----------------------------------------------------------
9/13/95 2.5
- ----------------------------------------------------------
9/14/95 2.5
- ----------------------------------------------------------
NEW HAMPSHIRE
- ----------------------------------------------------------
5/24/95 2.5
- ----------------------------------------------------------
5/22/95 2.5
- ----------------------------------------------------------
5/21/95 2.5
- ----------------------------------------------------------
5/23/95 3
- ----------------------------------------------------------
NEW JERSEY
- ----------------------------------------------------------
6/23/95
- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
6/21/95 6369 636 290 Highway 18
East Brunswick, NJ 08816
- ----------------------------------------------------------------------------------------------------------------------------
10/7/95 6671 1628 100 Trotters Way
Freehold, NJ 07728
- ----------------------------------------------------------------------------------------------------------------------------
5/15/95 6541 1621 301 Nassau Park Blvd
Princeton, NJ 08540
- ----------------------------------------------------------------------------------------------------------------------------
NEW MEXICO
11/6/95 6672 1679 300 Eubank Blvd. NE
Albuquerque, NM 87128
- ----------------------------------------------------------------------------------------------------------------------------
NEW YORK
- ----------------------------------------------------------------------------------------------------------------------------
3/29/95 6483 1592 141 Washington Ave
Albany, NY 12203
- ----------------------------------------------------------------------------------------------------------------------------
3/22/95 6673 1586 3735 Union Road
Cheektowaga, NY 14225
- ----------------------------------------------------------------------------------------------------------------------------
3/28/95 6440 1591 579 Troy/Schenectady Rd
Colonie, NY 12110
- ----------------------------------------------------------------------------------------------------------------------------
3/25/95 8179 1589 1600 Marketplace Drive
Henrietta, NY 14623
- ----------------------------------------------------------------------------------------------------------------------------
3/23/95 6406 1587 5535 Porter Road
Niagara Falls, NY 14304
- ----------------------------------------------------------------------------------------------------------------------------
3/24/95 8178 1588 3780 West. Ridge Road
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------
INSTALL COMM. CTR AREA EMPLOYEE EMP.
DATE NUMBERS MANAGER NAME ID#
- -----------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
- --------------------------- --------------------------------
6/21/95 R)908-651-2783 2.5
F)908-651-2786
D)908-651-2785
- -----------------------------------------------------------------------------------------
10/7/95 R)908-577-1460 2.5
R)908-577-1567
F)908-577-7027
D)908-577-6918
- -----------------------------------------------------------------------------------------
5/15/95 R)609-734-9001 2.5
R)609-734-9142
F)609-734-9171
D)609-734-9176
- -----------------------------------------------------------------------------------------
NEW MEXICO
11/6/95 R)505-298-1895 3
F)505-298-5467
D)505-298-0350
- -----------------------------------------------------------------------------------------
NEW YORK
- -----------------------------------------------------------------------------------------
3/29/95 R)518-869-4171 2.5
R)518-869-4138
D)518-869-3638
F)518-869-3529
- -----------------------------------------------------------------------------------------
3/22/95 R)716-685-8605 2.5
D)716-685-7954
F)716-685-7953
- -----------------------------------------------------------------------------------------
3/28/95 R)518-783-7650 2.5
R)518-783-7629
D)518-783-7808
F)518-783-7801
- -----------------------------------------------------------------------------------------
3/25/95 D)716-292-6450 2.5
F)716-292-0913
D)716-292-0897
- --------------------------- ------------------------------
3/23/95 R)716-297-5650 2.5
D)716-297-6123
F)716-297-6046
- -----------------------------------------------------------------------------------------
3/24/95 R)716-227-2060 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rochester, NY 14626 F)716-227-7688
(Greece) D)716-227-6682
- --------------------------------------------------------------------------------------------------------------------------------
12/15/94 8171 1598 2649 Erie Blvd. East R)315-449-1656
Syracuse, NY. 13224 F)315-449-1828
D)315-449-1715
- --------------------------------------------------------------------------------------------------------------------------------
3/27/95 6539 1590 21341 Sam's Drive R)315-786-7855
Watertown, NY 13601 D)315-786-7943
F)315-786-7915
- ---------------------------------------------------------------------------------------------------------------
12/14/94 6438 1597 3895 Rt. #31 R)315-652-4633
Clay, NY. 13041 F)315-652-4667
D)315-652-4669
- --------------------------------------------------------------------------------------------------------------------------------
21-Oct 5326 1959 720 Fairmont Drive R)716-664-1116
Jamestown, NY 14701 F)716-664-3601
(W. Ellicott) D)716-664-3898
- -------------------------------------------------------------------------------------------------------------------------------
19-Oct 6431 1961 6438 County Rt 64 Bldg 2 R)607-739-2913
Big Flats NY, 14903 F)607-739-3004
D)607-739-3225
- --------------------------------------------------------------------------------------------------------------------------------
18-Oct 6366 1962 2441 Vestal Parkway E. R)607-797-0380
Vestal, NY 13850 F)607-797-0583
D)607-797-0631
- --------------------------------------------------------------------------------------------------------------------------------
11/5/95 6423 1593 300 N. Galleria Drive R)914-692-0059
Wallkill (Middletown)NY F)914-692-8654
10940 D)914-692-0136
- --------------------------------------------------------------------------------------------------------------------------------
11/6/95 6356 1594 2430 Route # 9 R)914-897-5090
Fishkill, NY 12524 F)914-897-5106
D)914-897-5107
- --------------------------------------------------------------------------------------------------------------------------------
11/7/95 6674 1595 333 Sawmill River Road R)914-347-8086
Elmsford, NY 10523 F)914-347-8197
D)914-347-8254
- --------------------------------------------------------------------------------------------------------------------------------
11/8/95 6428 1596 2950 Horse Block Road R)516-289-9380
Medford, NY 11763 F)516-289-9376
D)516-289-9391
- --------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA
- --------------------------------------------------------------------------------------------------------------------------------
9/30/95 6540 1861 8909 J W Clay Blvd. R)704-548-3551
Charlotte, NC 28262 F)704-548-1660
<CAPTION>
- --------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- --------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------
12/15/94 2.5
- --------------------------------------------------------------------
3/27/95 2.5
- --------------------------------------------------------------------
12/14/94 2.5
- --------------------------------------------------------------------
21-Oct 2.5
- --------------------------------------------------------------------
19-Oct 2.5
- --------------------------------------------------------------------
18-Oct 2.5
- --------------------------------------------------------------------
11/5/95 2.5
- --------------------------------------------------------------------
11/6/95 2.5
- --------------------------------------------------------------------
11/7/95 2.5
- --------------------------------------------------------------------
11/8/95 2.5
- --------------------------------------------------------------------
NORTH COROLINA
- --------------------------------------------------------------------
9/30/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D)704-548-1742
- --------------------------------------------------------------------------------------------------------------------------------
9/31/95 6452 1862 645 Patton R)704-252-3099
Asheville, NC 28806 R)704-252-3599
F)704-252-4469
D)704-252-4304
- --------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA
- --------------------------------------------------------------------------------------------------------------------------------
10/4/95 6385 1841 2501 32nd Ave. South R)701-780-8420
Grand Forks, ND 58201 R)701-780-8856
F)701-780-8843
D)701-780-8907
- --------------------------------------------------------------------------------------------------------------------------------
10/22/95 8172 1842 4831 13th Avenue SW R)701-277-8362
Fargo, ND 58103 R)701-277-8227
F)701-277-8295
D)701-277-8683
- --------------------------------------------------------------------------------------------------------------------------------
OHIO
- --------------------------------------------------------------------------------------------------------------------------------
CINCINNATI AREA
- --------------------------------------------------------------------------------------------------------------------------------
8/1/95 6528 1427 815 Clepper Lane R)513-752-8722
Cincinnati OH, 45245 R)513-752-8741
(Cincinnati) F)513-752-8825
D)513-752-8830
- --------------------------------------------------------------------------------------------------------------------------------
5/26/95 8132 1428 800 Kemper Commons Blvd R)513-671-4169
Cincinnati, OH 45246 R)513-671-4759
(Cincinnati north) F)513-671-4168
D)513-671-4649
- --------------------------------------------------------------------------------------------------------------------------------
8/2/95 6450 1429 5375 North Bend R)513-481-1707
Cincinnati OH, 45247 R)513-481-1748
(Cincinnati west) F)513-481-1772
D)513-481-1779
- --------------------------------------------------------------------------------------------------------------------------------
7/31/95 8131 1426 5445 Ridge Ave R)513-396-6640
Cincinnati OH, 45213 F)513-396-6658
(Cincinnati east) D)513-396-6659
- --------------------------------------------------------------------------------------------------------------------------------
CLEVELAND AREA
- --------------------------------------------------------------------------------------------------------------------------------
5/8/95 6302 1441 23300 Broadway Ave R)216-232-9604
Bedford, OH 44146 R)216-232-9679
F)216-232-9679
<CAPTION>
- ----------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------------------
<S> <C> <C> <C>
- ------------- --------------------------
2.5
9/31/95
- ----------------------------------------------------------------------
NORTH DAKOTA
- ----------------------------------------------------------------------
10/4/95 2.5
- ----------------------------------------------------------------------
10/22/95 2.5
- ----------------------------------------------------------------------
OHIO
- ----------------------------------------------------------------------
CINCINNATI AREA
- ----------------------------------------------------------------------
8/1/95 2.5
- -------------- --------------------------
5/26/95 2.5
- ----------------------------------------------------------------------
8/2/95 2.5
- ----------------------------------------------------------------------
7/31/95 2.5
- ----------------------------------------------------------------------
CLEVELAND AREA
- ----------------------------------------------------------------------
5/8/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D)216-232-9686
- ---------------------------------------------------------------------------------------------------------------------------
9/14/95 6305 1445 10200 Brookpark Rd R)216-265-8436
Brooklyn, OH 44130 R)216-265-8601
F)216-265-8724
D)216-265-8958
- ---------------------------------------------------------------------------------------------------------------------------
5/9/95 6314 1442 825 Leona R)216-324-7702
Elyria OH 44035 R)216-324-4180
F)216-324-2345
D)216-324-2345
- ---------------------------------------------------------------------------------------------------------------------------
5/10/95 6404 1443 3750 J. West Market St. R)216-666-5699
Fairlawn, OH 44313 R)216-666-6480
(Akron) F)216-666-6731
D)216-666-2685
- ---------------------------------------------------------------------------------------------------------------------------
9/13/95 6306 1444 27853 Chardon Rd R)216-516-1301
Willoughby Hills, OH R)216-516-1302
44092 F)216-516-1303
- ---------------------------------------------------------------------------------------------------------------------------
9/27/95 6317 1449 6299 Dressler R)216-497-8589
North Canton, OH 44720 R)216-497-8590
F)216-497-8638
D)216-497-8640
- ---------------------------------------------------------------------------------------------------------------------------
DAYTON AREA
- ---------------------------------------------------------------------------------------------------------------------------
8/6/95 6517 1431 3446 New Germany Trebin R)513-427-2335
Beavercreek OH 45431 F)513-427-9104
D)513-427-9105
- ---------------------------------------------------------------------------------------------------------------------------
8/7/95 8136 1432 1111 Miamisburgh R)513-438-2239
Dayton, OH 45458 F)513-438-2241
D)513-438-2242
- ---------------------------------------------------------------------------------------------------------------------------
8/8/95 6380 1433 6955 Miller Road R)513-264-1795
Dayton, OH 45414 F)513-264-1798
D)513-264-1799
- ---------------------------------------------------------------------------------------------------------------------------
COLUMBUS AREA
- ---------------------------------------------------------------------------------------------------------------------------
9/24/95 6308 1446 5225 Westpointe Plaza R)614-876-1025
Columbus, OH 43228 F)614-876-7376
D)614-876-7721
- ---------------------------------------------------------------------------------------------------------------------------
11/5/95 6307 1447 3950 Morse Road R)614-475-9242
Columbus, OH 43219 F)614-475-4994
North D)614-475-4832
- ---------------------------------------------------------------------------------------------------------------------------
11/6/95 6326 1448 6300 Tussing Road R)614-751-1084
<CAPTION>
- ----------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------
Brookpark.OH 44142
- ----------------------------------------------------------
<S> <C> <C> <C>
9/14/95 2.5
- ----------------------------------------------------------
5/9/95 2.5
- ----------------------------------------------------------
5/10/95 2.5
- ----------------------------------------------------------
9/13/95 2.5
- ----------------------------------------------------------
9/27/95 2.5
- ----------------------------------------------------------
DAYTON AREA
- ----------------------------------------------------------
8/6/95 2.5
- ----------------------------------------------------------
8/7/95 2.5
- ----------------------------------------------------------
8/8/95 2.5
- ----------------------------------------------------------
COLUMBUS AREA
- ----------------------------------------------------------
9/24/95 2.5
- ----------------------------------------------------------
11/5/95 2.5
- ----------------------------------------------------------
11/6/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Reynoldsburg, OH 43068 F)614)751-1086
D)614-751-1087
- -----------------------------------------------------------------------------------------------------------------------
10/29/95 8152 1438 Rt 4, Box 141 R)614-894-3331
South Point, OH 45680 F)614-894-5900
D)614-894-6056
- -----------------------------------------------------------------------------------------------------------------------
OKLAHOMA
- -----------------------------------------------------------------------------------------------------------------------
4/17/95 8239 1184 802 N W Sheridan Rd. R)405-351-0011
Lawton Ok 73505 F)405-351-0018
D)405-351-0019
- -----------------------------------------------------------------------------------------------------------------------
12/1/94 8241 1183 6521 S.E. 29th Street R)405-733-2091
Midwest City, OK. 73110 F)405-733-2113
D)405-733-2114
- -----------------------------------------------------------------------------------------------------------------------
11/30/94 8289 1182 5510 S.W. 5th St. R)405-943-8196
Oklahoma City, OK. F)405-943-8198
(Meridian) 73128 D)405-943-8199
- -----------------------------------------------------------------------------------------------------------------------
11/29/94 8117 1181 1111 E. Memorial Road R)405-478-0741
Oklahoma City, OK. F)405-478-0743
(Edmond) 73013 D)405-478-0744
- -----------------------------------------------------------------------------------------------------------------------
4/19/95 6342 1186 6922 S. Mingo Road R)918-252-4212
Tulsa, OK 74133 F)918-252-0933
D)918-252-2665
- -----------------------------------------------------------------------------------------------------------------------
4/18/95 8263 1185 4420 S. Sheridan R)918-622-3794
Tulsa, OK 74145 F)918-622-3565
D)918-622-3569
- -----------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA
PHILADELPHIA AREA
- -----------------------------------------------------------------------------------------------------------------------
9/29/95 6676 1626 1001 S. York St. R)215-957-2760
Hatboro, PA 19040 R)215-957-2761
F)215-957-2762
D)215-957-2763
- -----------------------------------------------------------------------------------------------------------------------
11/6/95 6693 1623 1717 E. Lincoln Hwy R)215-949-9460
Langhorne, PA 19047 F)215-949-9464
D)215-949-9465
- -----------------------------------------------------------------------------------------------------------------------
11/5/95 6332 1622 1000 Franklin Mills Cir R)215-637-6811
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------
10/29/95 2.5
- ------------------------------------------------------------------
OKLAHOMA
- ------------------------------------------------------------------
4/17/95 2.5
- ------------------------------------------------------------------
12/1/94 2.5
- ------------------------------------------------------------------
11/30/94 2.5
- ------------------------------------------------------------------
11/29/94 2.5
- ------------------------------------------------------------------
4/19/95 2.5
- ------------------------------------------------------------------
4/18/95 2.5
- ------------------------------------------------------------------
PENNSYLVANIA
- ------------------------------------------------------------------
PHILADELPHIA AREA
- ------------------------------------------------------------------
9/29/95 2.5
- ---------------
11/6/95 2.5
- ------------------------------------------------------------------
11/5/95 2.5
- ------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Philadelphia, PA 19154 637-632-2299 F)215-637--6813
D)215-637-3814
- --------------------------------------------------------------------------------------------------------------------------------
4/3/96 6567 1964 3756 Easton Nazareth Rd R)610-923-7102
Easton, PA 18045 F)610-923-7103
D)610-923-7104
- --------------------------------------------------------------------------------------------------------------------------------
PITTSBURGH AREA
- --------------------------------------------------------------------------------------------------------------------------------
8/16/95 6678 1951 7207 McKnight Rd R)412-364-6449
Pittsburgh, PA 15237 R)412-364-6749
F)412-364-6989
D)412-364-7286
- --------------------------------------------------------------------------------------------------------------------------------
8/17/95 6677 1952 3621 William Penn Hwy R)412-856-2220
Monroeville, PA 15146 F)412-856-4372
D)412-856-4927
- --------------------------------------------------------------------------------------------------------------------------------
11/9/95 6679 1953 2932 Lebanon Church Rd R)412-466-9262
West Mifflin, PA 15122 F)412-466-9275
D)412-466-9276
- --------------------------------------------------------------------------------------------------------------------------------
8/18/95 6460 1954 2500 Plank Rd Commons R)814-944-2144
Altoona, PA 16602 F)814-944-2213
D)814-944-2218
- --------------------------------------------------------------------------------------------------------------------------------
8/28/95 6533 1955 381 Benner Pike R)814-234-3385
State College, PA 16801 F)814-234-5072
D)814-234-5247
- --------------------------------------------------------------------------------------------------------------------------------
10/14/95 6536 1960 2595 MacArthur Rd R)610-266-5826
Whitehall, PA 18052 R)610-266-5827
F)610-266-5828
D)610-266-5829
- --------------------------------------------------------------------------------------------------------------------------------
8/31/95 8191 1956 441 Wilkes-Barre Twnsp Blvd R)717-821-5594
Wilkes-Barre, PA 18702 F)717-821-5592
D)717-821-5602
- --------------------------------------------------------------------------------------------------------------------------------
9/1/95 8160 1957 5314 Allentown Pike R)610-929-6977
Temple, PA 19560 R)610-929-6978
F)610-929-6979
D)610-929-7823
- --------------------------------------------------------------------------------------------------------------------------------
11-Oct 6675 1958 7200 Peach Street R)814-866-1193
Erie, PA 16509 R)814-866-1452
F)814-866-2711
D)814-866-1364
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------
4/3/96
- ------------------------------------------------------------------
PITTSBURGH AREA
- ------------------------------------------------------------------
8/16/95 2.5
- ---------------- ------------------------
8/17/95 2.5
- ------------------------------------------------------------------
11/9/95 2.5
- ------------------------------------------------------------------
8/18/95 2.5
- ------------------------------------------------------------------
8/28/95 2.5
- ------------------------------------------------------------------
10/14/95 2.5
- ------------------------------------------------------------------
8/31/95 3
- ------------------------------------------------------------------
9/1/95 2.5
- ------------------------------------------------------------------
10/11/95 2.5
- ------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
2/22/96 6547 1963 200 Lycoming Mall R)717-546-9410
Muncy, PA 17756 F)717-546-9436
D)717-546-2097
- ---------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND
- ---------------------------------------------------------------------------------------------------------------------------------
10/25/95 6681 1648 25 Pace Blvd R)401-828-5380
Warwick, RI 02886 R)401-828-5310
F)401-828-6020
D)401-828-7450
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA
- ---------------------------------------------------------------------------------------------------------------------------------
5/31/95 8283 1537 1401 Sunset R)803-799-2433
Columbia, SC 29203 R)803-799-2137
F)803-799-2635
D)803-799-2649
- ---------------------------------------------------------------------------------------------------------------------------------
5/22/95 6571 1536 200 Beltline Dr. R)803-665-8393
Florence, SC 29501 R)803-665-7997
F)803-665-8396
D)803-665-9198
- ---------------------------------------------------------------------------------------------------------------------------------
7/28/95 6353 1538 1946 10th Ave. North R)803-448-7901
Myrtle Beach, SC 29577 R)803-448-7904
F)803-448-7914
D)803-448-7924
- ---------------------------------------------------------------------------------------------------------------------------------
7/26/95 6582 1539 95 Mathews Dr Ste A1 R)803-681-7704
Hilton Head Island, R)803-681-7048
SC 29926
F)803-681-3192
D)803-681-3729
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA
- ---------------------------------------------------------------------------------------------------------------------------------
8-Oct 8165 1843 3201 S. Louise Avenue R)605-361-8020
Sioux Falls, SD 57166 R)605-361-8048
F)605-361-8004
D)605-361-8242
2/21/96 6565 1846 1020 La Crosse R)605-355-4551
Rapid City, SD 57701 F)605-355-4564
D)605-355-4565
- ---------------------------------------------------------------------------------------------------------------------------------
TENNESSEE
- ---------------------------------------------------------------------------------------------------------------------------------
MEMPHIS AREA
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------------------
<S> <C> <C> <C>
2/22/96 2.5
- ----------------------------------------------------------------------
RHODE ISLAND
- ----------------------------------------------------------------------
10/25/95 2.5
- ----------------------------------------------------------------------
SOUTH CAROLINA
- ----------------------------------------------------------------------
5/31/95 2.5
- ----------------------------------------------------------------------
5/22/95 3
- ----------------- ------------------------
7/28/95 2.5
- ----------------------------------------------------------------------
7/26/95 2.5
- ----------------------------------------------------------------------
SOUTH DAKOTA
- ----------------------------------------------------------------------
8-Oct 2.5
- ----------------- ------------------------
2/21/96 2.5
- ----------------------------------------------------------------------
TENNESSEE
- ----------------------------------------------------------------------
MEMPHIS AREA
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5/18/95 8292 1512 2150 Covington Pike R)901-386-8271
Memphis, TN 38128 F)901-387-0299
D)901-387-0142
- ----------------------------------------------------------------------------------------------------------------------
5/17/95 8258 1511 1805 Getwell Rd. R)901-743-4775
Memphis, TN 38111 F)901-744-3340
D)901-744-7660
- ----------------------------------------------------------------------------------------------------------------------
NASHVILLE AREA
- ----------------------------------------------------------------------------------------------------------------------
5/30/95 8257 1501 2240 Gallatin Pike North R)615-859-3352
Madison, TN 37118 F)615-859-3599
D)615-859-3973
- ----------------------------------------------------------------------------------------------------------------------
7/14/95 6501 1504 125 John R. Rice Blvd. R)615-896-6359
Murfreesboro, TN 37129 F)615-896-6580
D)615-896-6484
- ----------------------------------------------------------------------------------------------------------------------
7/12/95 8294 1502 1300 Antioch Pike R)615-781-2142
Nashville, TN 37211 F)615-781-2406
D)615-781-2608
- ----------------------------------------------------------------------------------------------------------------------
7/13/95 6447 1503 615 Old Hickory R)615-352-3094
Nashville, TN 37209 F)615-352-0394
D)615-352-6108
- ----------------------------------------------------------------------------------------------------------------------
10/30/95 8256 1505 301 Walker Spring Rd R)615-690-4119
Knoxville, TN 37923 F)615-690-4425
D)615-690-4549
- ----------------------------------------------------------------------------------------------------------------------
10/29/95 8112 1506 6401 Lee Hwy F)423-499-2645
Chattanooga, TN 37421 D)423-499-6237
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- --------------------------------------------------------------
<S> <C> <C> <C>
5/18/95 2.5
- ---------------------------------------------------------------
5/17/95 2.5
- --------------------------------------------------------------
NASHVILLE AREA
- --------------------------------------------------------------
5/30/95 2.5
- --------------------------------------------------------------
7/14/95 2.5
- --------------------------------------------------------------
7/12/95 2.5
- --------------------------------------------------------------
7/13/95 2.5
- --------------------------------------------------------------
10/30/95 2.5
- --------------------------------------------------------------
10/29/95 2.5
- --------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D)915-390-1215
- ------------------------------------------------------------------------------------------------------------------------
UTAH
- ------------------------------------------------------------------------------------------------------------------------
SALT LAKE CITY AREA
- ------------------------------------------------------------------------------------------------------------------------
4/24/95 6682 1413 1055 W. Hillfield R)801-497-0544
Layton, UT 84041 F)801-497-9549
D)801-497-0944
- ------------------------------------------------------------------------------------------------------------------------
4/25/95 6683 1414 6525 S. State St. R)801-281-3310
Murray, UT 84107 F)801-281-3372
D)801-281-3414
- ------------------------------------------------------------------------------------------------------------------------
4/27/95 6684 1416 3421 Wall Ave R)801-394-9115
Ogden, UT 84401 F)801-394-9118
D)801-934-9066
- ------------------------------------------------------------------------------------------------------------------------
4/26/95 6685 1415 1313 University Ave R)801-375-8520
Provo, UT 84601 F)801-375-0302
D)801-375-3415
- ------------------------------------------------------------------------------------------------------------------------
4/23/95 6686 1412 3280 S 900 West R)801-977-1120
Salt Lake City, UT 84119 F)801-977-3713
D)801-977-3752
- ------------------------------------------------------------------------------------------------------------------------
VIRGINIA
- ------------------------------------------------------------------------------------------------------------------------
7/26/95 6371 1795 14050 Worth Ave R)703-491-0204
Woodbridge, VA 22192 R)703-491-0310
F)703-491-0409
D)703-491-8618
- ------------------------------------------------------------------------------------------------------------------------
HOLD 8220 1798 1455 Town Square Blvd. R)703-563-3080
Roanoke, VA 24012 F)703-563-3082
D)703-563-3079
- ------------------------------------------------------------------------------------------------------------------------
9/20/95 6343 1799 9440 W. Broad Street R)804-346-9169
Richmond, VA 23294 F)804-346-9034
D)804-346-9541
- ------------------------------------------------------------------------------------------------------------------------
9/21/95 6354 1784 901 Wal-Mart Way R)804-378-2858
Midlothian, VA 23113 F)804-378-3359
D)804-378-3384
H)804-272-4563
- ------------------------------------------------------------------------------------------------------------------------
10/3/95 6569 1783 601 Commerce Drive Steve Havlin R)540-322-2667
<CAPTION>
- -------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- -------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------
UTAH
- -------------------------------------------------------------------
SALT LAKE CITY AREA
- -------------------------------------------------------------------
4/24/95 2.5
- -------------------------------------------------------------------
4/25/95 2.5
- -------------- ----------------------------
4/27/95 2.5
- -------------------------------------------------------------------
4/26/95 2.5
- -------------------------------------------------------------------
4/23/95 2.5
- -------------------------------------------------------------------
VIRGINIA
- -------------------------------------------------------------------
7/26/95 2.5
F)410-288-5181
- -------------------------------------------------------------------
HOLD 2.5
- -------------------------------------------------------------------
9/20/95 2.5
- -------------- --------------------------
9/21/95 2.5
- -------------------------------------------------------------------
10/3/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bluefield, VA 24605 F)540-322-4530
D)540-326-3649
- -------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA
- -------------------------------------------------------------------------------------------------------------------------------
0/30/95 6457 1772 2500 Mountaineer Blvd. R)304-746-0328
Charleston, WV 25309 F)304-746-0361
D)304-746-0363
- -------------------------------------------------------------------------------------------------------------------------------
0/31/95 6373 1771 1100 Grand Central Ave R)304-295-3254
Vienna, WV 26105 F)304-295-3295
D)304-295-4182
- -------------------------------------------------------------------------------------------------------------------------------
11/1/95 8189 1770 #1 Tygart Valley Mall R)304-368-0526
Fairmont, WV 26554 F)304-368-0649
D)304-368-0736
- -------------------------------------------------------------------------------------------------------------------------------
WASHINGTON
- -------------------------------------------------------------------------------------------------------------------------------
8/9/95 6687 1931 13550 Aurora Ave R)206-362-2380
Seattle, WA 98133 R)206-362-2267
F)206-362-3835
D)206-362-3820
- -------------------------------------------------------------------------------------------------------------------------------
8/10/95 6688 1932 3900 20th St E R)206-922-4240
Fife, WA 98424 R)206-922-4242
F)206-922-4243
D)206-922-4244
- -------------------------------------------------------------------------------------------------------------------------------
WISCONSIN
- -------------------------------------------------------------------------------------------------------------------------------
MILWAUKEE AREA
- -------------------------------------------------------------------------------------------------------------------------------
6/22/95 8167 1892 6705 S. 27th St R)414-761-8232
Franklin, WI 53132 F)414-761-8235
D)414-761-8236
- -------------------------------------------------------------------------------------------------------------------------------
6/28/95 8255 1896 7050 Watts Rd R)608-277-8614
Madison, WI 53717 F)608-277-8633
D)608-277-8636
- -------------------------------------------------------------------------------------------------------------------------------
9/21/95 6324 1893 7701 West Calumet Rd R)414-357-8567
Milwaukee, WI 53223 F)414-357-9376
D)414-357-9438
- -------------------------------------------------------------------------------------------------------------------------------
6/27/95 6331 1895 6200 Regency West Dr. R)414-598-0366
Racine, WI 53406 F)414-598-0491
<CAPTION>
- ----------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------
WEST VIRGINIA
- ----------------------------------------------------------------
0/30/95 2.5
- ----------------------------------------------------------------
0/31/95 2.5
- ----------------------------------------------------------------
11/1/95 2.5
- ----------------------------------------------------------------
WASHINGTON
- ----------------------------------------------------------------
8/9/95 2.5
- -------------- --------------------------
8/10/95 2.5
- ----------------------------------------------------------------
WISCONSIN
- ----------------------------------------------------------------
MILWAUKEE AREA
- ----------------------------------------------------------------
6/22/95 2.5
- -------------- --------------------------
6/28/95 2.5
- ----------------------------------------------------------------
9/21/95 2.5
- ----------------------------------------------------------------
6/27/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D)414-598-0492
- ---------------------------------------------------------------------------------------------------------------------------
6/21/95 8164 1891 600 N. Springdale Rd R)414-798-9726
Waukesha, WI 53186 F)414-798-9806
D)414-798-0187
- ---------------------------------------------------------------------------------------------------------------------------
6/26/95 6303 1894 801 S. 60th St R)414-453-8073
West Allis, WI 53214 F)414-453-8469
D)414-453-8476
- ---------------------------------------------------------------------------------------------------------------------------
10/15/95 8149 1888 2470 W. Mason R)414-497-9655
Green Bay, WI 54303 F)414-497-9367
D)414-497-9644
- ---------------------------------------------------------------------------------------------------------------------------
10/16/95 6321 1889 4895 Integrity Way R)414-731-9499
Appleton, WI 54915 F)414-731-0798
D)414-731-1288
- ---------------------------------------------------------------------------------------------------------------------------
10/17/95 6535 1886 4000 Rib Mountain Drive P)715-355-6816
F)715-355-7054
Wausau, WI 54401 D)715-355-6912
- ---------------------------------------------------------------------------------------------------------------------------
9/22/95 8185 1887 4001 Gateway Drive R)715-839-9594
Eau Claire, WI 54701 F)715-839-9860
D)715-839-9867
- ---------------------------------------------------------------------------------------------------------------------------
WYOMING
- ---------------------------------------------------------------------------------------------------------------------------
6/27/95 6425 6494 4600 East 2nd St R)307-237-1667
Casper WY, 82604 R)307-237-1668
F)307-237-1671
D)307-237-1672
- ---------------------------------------------------------------------------------------------------------------------------
10/12/95 6430 1837 1948 Dell Range Rd R)307-638-7610
Cheyenne wy,82009 R)307-638-7792
F)307-638-7794
D)307-638-7796
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- --------------------------------------------------------------
<S> <C> <C> <C>
6/21/95 2.5
- --------------------------------------------------------------
6/26/95 2.5
- --------------------------------------------------------------
10/15/95 2.5
- --------------------------------------------------------------
10/16/95 2.5
- --------------------------------------------------------------
10/17/95 2.5
- --------------------------------------------------------------
9/22/95 2.5
- --------------------------------------------------------------
WYOMING
- --------------------------------------------------------------
6/27/95 2.5
- --------------------------------------------------------------
10/12/95 2.5
- --------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 2
Jurisdictions for Filing
UCC-1 Financing Statements
--------------------------
Secretary of State of Texas
Secretary of State of Alabama
Secretary of State of Arizona
Secretary of State of California
Department of State of Florida
Fulton County, Georgia
Secretary of State of Illinois
Secretary of State of Indiana
Secretary of State of Iowa
Secretary of State of Kansas
Secretary of State of Kentucky
Orleans Parish, Louisiana
Secretary of State of Maine
Maryland State Department of Assessments and Taxation
Secretary of State of Massachusetts
Secretary of State of Michigan
Secretary of State of Minnesota
Secretary of State of Missouri
Clay County, Missouri
Jackson County, Missouri
Secretary of State of Nevada
Secretary of State of New Hampshire
Secretary of State of New Jersey
Secretary of State of New York
Onondaga County, New York
Secretary of State of Ohio
Oklahoma County, Oklahoma
Secretary of State of Pennsylvania
Secretary of State of South Carolina
Secretary of State of Tennessee
Division of Corporations and Commercial Code of Utah
State Corporation Commission of Virginia
Secretary of State of Wisconsin
SCHEDULE 2, Jurisdictions for Filing UCC-1 Financing Statements - Solo Page
<PAGE>
SCHEDULE 3
ADDITIONAL NAMES AND TRADE NAMES
--------------------------------
NATIONAL AUTO CELLULAR
COMMUNICATION CENTER
CELLULAR COMMUNICATION CENTER
NAC COMMUNICATION CENTER
P.C. CELLULAR
CELLSTAR COMMUNICATION CENTER
CELLULAR ACCESSORIES
TELSTAR COMMUNICATIONS
C-MART
CELLSTAR WEST
SCHEDULE 3, Additional Names and Trade Names - Solo Page
<PAGE>
ANNEX 4
Exhibit "E-2" (Parent Security Agreement)
-----------------------------------------
<PAGE>
AMENDED AND RESTATED SECURITY AGREEMENT
---------------------------------------
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement") dated as of
July 31, 1996, is by and between CELLSTAR CORPORATION, a Delaware corporation
(the "Debtor"), whose address is 1730 Briercroft, Carrollton, Texas 75006, and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association
("TCB"), not in its individual capacity but solely as agent for itself and each
of the other banks or lending institutions (each, a "Bank" and, collectively,
the "Banks") which is or may from time to time become a signatory to the Loan
Agreement (hereinafter defined) or any successor or permitted assignee thereof
(TCB in such capacity, together with its successors in such capacity, the
"Agent"), whose address is 2200 Ross Avenue, Post Office Box 660197, Dallas,
Texas 75266-0197.
R E C I T A L S:
- - - - - - - -
A. National Auto Center, Inc., a Texas corporation (the "Borrower"), the
Debtor, the Agent and the Banks heretofore entered into that certain Loan
Agreement dated as of November 9, 1994, as amended by that certain First
Amendment to Loan Agreement dated as of February 28, 1995, and as further
amended by that certain Second Amendment to Loan Agreement dated as of June 28,
1995 (such Loan Agreement, as amended, being hereinafter referred to as the
"Original Loan Agreement").
B. Pursuant to the Original Loan Agreement, certain of the Banks made
loans to Borrower (the existing indebtedness of Borrower to such Banks under the
Original Loan Agreement being hereinafter referred to as the "Existing
Indebtedness").
C. Pursuant to the Original Loan Agreement, Debtor executed and delivered
to the Agent that certain Security Agreement dated as of November 9, 1994 (the
"Original Security Agreement"), granting a security interest in the Collateral
to the Agent to secure the Existing Indebtedness.
D. The Borrower, the Debtor, the Agent and the Banks are parties to that
certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996 (such Loan Agreement, as the same has been and may
be amended, supplemented or modified from time to time, being hereinafter
referred to as the "Loan Agreement"), pursuant to which, among other things, (i)
the Original Loan Agreement was amended and restated in its entirety, and (ii)
the Existing Indebtedness was renewed, extended, modified and rearranged, but
not extinguished.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 1
<PAGE>
E. Pursuant to that Loan Agreement, the Debtor executed and delivered to
the Agent that certain Amended and Restated Security Agreement dated as of July
20, 1995 (the "Existing Security Agreement"), pursuant to which the Original
Security Agreement was amended and restated in its entirety.
F. Concurrently herewith, the Debtor, the Parent, the Banks and the Agent
are entering into that certain Second Amendment to Amended and Restated Loan
Agreement of even date herewith (the "Second Amendment").
G. The parties hereto now desire to amend the Existing Security Agreement
as hereinafter provided and have agreed, for purposes of clarity and ease of
administration, to carry out the agreed upon amendments by amending the
pertinent provisions of the Existing Security Agreement and then restating the
Existing Security Agreement in its entirety by means of this Agreement.
H. The Agent and the Banks have conditioned their obligations under the
Loan Agreement and the effectiveness of the Second Amendment on the execution
and delivery by the Debtor of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows, and the Existing Security
Agreement is hereby amended and restated in its entirety as follows:
ARTICLE I
Definitions
-----------
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
have the following meanings:
"Accounts" means any "account", as such term is defined in
--------
Section 9.106 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased or
services rendered, whether or not earned by performance, (b) all
accounts receivable of the Debtor, (c) all rights of the Debtor to
receive any payment of money or other form of consideration, (d) all
security pledged, assigned, or granted to or held by the Debtor to
secure any of the foregoing, (e) all guaranties of, or
indemnifications with respect to, any of the foregoing, and (f) all
rights of the Debtor as an unpaid seller of goods or services,
including, but not limited to, all rights of stoppage in transit,
replevin, reclamation, and resale.
"BNP Collateral" means the Sam's Collateral, except proceeds of
--------------
Inventory (including pagers), pager customer lists and Accounts.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 2
<PAGE>
"Chattel Paper" means any "chattel paper", as such term is
-------------
defined in Section 9.105(a)(2) of the UCC, now owned or hereafter
acquired by the Debtor.
"Collateral" has the meaning specified in Section 2.1 of this
----------
Agreement.
"Document" means any "document", as such term is defined in
--------
Section 9.105(a)(6) of the UCC, now owned or hereafter acquired by the
Debtor, including, without limitation, all documents of title and
warehouse receipts of the Debtor.
"Equipment" means any "equipment", as such term is defined in
---------
Section 9.109(2) of the UCC, now owned or hereafter acquired by the
Debtor and, in any event, shall include, without limitation, all
machinery, equipment, furnishings, fixtures and vehicles now owned or
hereafter acquired by the Debtor and any and all additions,
substitutions, and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment,
and accessories installed thereon or affixed thereto.
"General Intangibles" means any "general intangibles", as such
-------------------
term is defined in Section 9.106 of the UCC, now owned or hereafter
acquired by the Debtor and, in any event, shall include, without
limitation, each of the following, whether now owned or hereafter
acquired by the Debtor: (a) all of the Debtor's patents, patent
applications, patent rights, service marks, trademarks, trade names,
trade secrets, intellectual property, registrations, goodwill,
copyrights, franchises, licenses, permits, proprietary information,
customer lists, designs, and inventions, (b) all of the Debtor's
books, records, data, plans, manuals, computer software, and computer
programs, (c) all of the Debtor's contract rights, partnership
interests, joint venture interests, securities, deposit accounts,
investment accounts, and certificates of deposit, (d) all rights of
the Debtor to payment under letters of credit and similar agreements,
(e) all tax refunds and tax refund claims of the Debtor, (f) all
choses in action and causes of action of the Debtor (whether arising
in contract, tort, or otherwise and whether or not currently in
litigation) and all judgments in favor of the Debtor, (g) all rights
and claims of the Debtor under warranties and indemnities, and (h) all
rights of the Debtor under any insurance, surety, or similar contract
or arrangement.
"Instrument" means any "instrument", as such term is defined in
----------
Section 9.105(a)(9) of the UCC, now owned or hereafter acquired by the
Debtor, other than stock and other securities.
"Inventory" means any "inventory", as such term is defined in
---------
Section 9.109(4) of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all goods and other personal property of
AMENDED AND RESTATED SECURITY AGREEMENT - Page 3
<PAGE>
the Debtor that are held for sale or lease or to be furnished under
any contract of service, (b) all raw materials, work-in-process,
finished goods, inventory, supplies, and materials of the Debtor, (c)
all wrapping, packaging, advertising, and shipping materials of the
Debtor, (d) all goods that have been returned to, repossessed by, or
stopped in transit by the Debtor, and (e) all Documents evidencing any
of the foregoing.
"Letter of Intent" means that certain letter of intent dated May
----------------
6, 1996, among the Borrower, the Debtor, CellStar, Ltd. and the Buyer
named therein.
"Obligations" means:
-----------
(a) the indebtedness, liabilities and obligations of the
Borrower to the Banks evidenced by those certain Promissory Notes
of even date herewith, executed by Borrower and payable to the
order of the Banks in the aggregate principal amount of
$90,000,000.00;
(b) the indebtedness, liabilities and obligations of the
Debtor to the Agent and the Banks under that certain Amended and
Restated Guaranty dated as of July 20, 1995, executed by Debtor
in favor of the Agent and the Banks;
(c) the "Obligations", as such term is defined in the Loan
Agreement;
(d) all future Advances by the Agent or any Bank to Borrower
and Debtor, or either of them;
(e) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the
Agent or any Bank to preserve and maintain the Collateral,
collect the obligations herein described and enforce this
Agreement;
(f) all other obligations, indebtedness and liabilities of
Borrower and Debtor, or either of them, to the Agent or any Bank
under any of the Loan Documents, now existing or hereafter
arising, regardless of whether such obligations, indebtedness and
liabilities are similar, dissimilar, related, unrelated, direct,
indirect, fixed, contingent, primary, secondary, joint, several,
or joint and several; and
(g) all extensions, renewals and modifications of any of the
foregoing.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 4
<PAGE>
"Permitted Liens" means (a) the security interests granted
---------------
hereby, (b) Liens expressly permitted by Section 10.2 of the Loan
Agreement, and (c) the Lien of BNP in the BNP Collateral securing the
BNP Term Loan.
"Proceeds" means any "proceeds", as such term is defined in
--------
Section 9.306 of the UCC and, in any event, shall include, but not be
limited to, (a) any and all proceeds of any insurance, indemnity,
warranty, or guaranty payable to the Debtor from time to time with
respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the Debtor from time to
time in connection with any requisition, confiscation, condemnation,
seizure, or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any person acting under color of
Governmental Authority), and (c) any and all other amounts from time
to time paid or payable under or in connection with any of the
Collateral.
"Sam's Collateral" means any contract or agreement which exists
----------------
or may exist with respect to the sale or other transfer of the Sam's
Operations, including without limitation any contract or agreement
which arises as a result of or in connection with the Letter of
Intent, together with all proceeds from any sale or transfer pursuant
to such contract or agreement.
"UCC" means the Uniform Commercial Code as in effect in the State
---
of Texas or, if so required with respect to any particular Collateral
by mandatory provisions of applicable law, as in effect in the
jurisdiction in which such Collateral is located.
Section 1.2 Terms Defined in Loan Agreement. All capitalized terms used
-------------------------------
and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
ARTICLE II
Security Interest
-----------------
Section 2.1 Security Interest. As collateral security for the prompt
-----------------
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), the Debtor hereby grants, and ratifies
and confirms the prior grant made pursuant to the Original Security Agreement
and the Existing Security Agreement, to the Agent, for the pro rata benefit of
the Banks, a first priority lien on and security interest in all of the Debtor's
right, title, and interest in and to the following, whether now owned or
hereafter arising or acquired and wherever located (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
AMENDED AND RESTATED SECURITY AGREEMENT - Page 5
<PAGE>
(c) all Instruments;
(d) all General Intangibles;
(e) all Documents;
(f) all Inventory;
(g) all Equipment;
(h) without in any way limiting the foregoing, the Sam's Collateral;
and
(i) all Proceeds and products of any or all of the foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Agent or any Bank but for the fact that they are unenforceable
or not allowable due to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower. If the grant, pledge, or collateral
transfer or assignment of any rights of the Debtor under any contract included
in the Collateral is expressly prohibited by such contract, then the security
interest hereby granted therein nonetheless remains effective to the extent
allowed by UCC Section 9.318 or other applicable law but is otherwise limited by
that prohibition.
Section 2.2 Renewal of Obligations and Liens. The parties hereto
--------------------------------
acknowledge and agree that (i) the Obligations are in part in renewal,
extension, modification and rearrangement of, but not extinguishment of, the
Existing Indebtedness, and (ii) the Existing Indebtedness is secured by liens
and security interests granted by the Debtor pursuant to the Original Security
Agreement and the Existing Security Agreement, which liens and security
interests are not extinguished or released, but instead are hereby renewed,
extended, carried forward and continued in accordance with the terms of this
Agreement.
Section 2.3 Debtor Remains Liable. Notwithstanding anything to the
---------------------
contrary contained herein, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the Agent
of any of its rights hereunder shall not release the Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of the Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 6
<PAGE>
ARTICLE III
Representations and Warranties
------------------------------
To induce the Agent to enter into this Agreement and the Agent and the
Banks to enter into the Loan Agreement, the Debtor represents and warrants to
the Agent that:
Section 3.1 Title. The Debtor is, and with respect to Collateral acquired
-----
after the date hereof the Debtor will be, the legal and beneficial owner of the
Collateral free and clear of any Lien, except Permitted Liens.
Section 3.2 Accounts. Unless the Debtor has given the Agent written
--------
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, the Debtor shall be deemed to have represented and
warranted to the Agent as to each and all of its Accounts that (a)each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by the Debtor or the sale or lease of goods
by the Debtor, (c) the amount of each Account represented as owing is the
correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (d) to the best of
Debtor's knowledge, no Account is subject to any offset, counterclaim, or other
defense.
Section 3.3 Financing Statements. No financing statement, security
--------------------
agreement, or other Lien instrument covering all or any part of the Collateral
is on file in any public office, except those filed in favor of the Agent
pursuant to the Original Security Agreement, the Existing Security Agreement,
this Agreement or with respect to any other Permitted Liens. Except as set
forth on Schedule 3 hereto, the Debtor has not within the past five (5) years
done business under any name or trade name other than its legal name set forth
at the beginning of this Agreement.
Section 3.4 Principal Place of Business. The principal place of business
---------------------------
and chief executive office of the Debtor, and the office where the Debtor keeps
its books and records, is located at the address of the Debtor shown at the
beginning of this Agreement.
Section 3.5 Location of Collateral. All Inventory and Equipment of the
----------------------
Debtor is located at the places specified on Schedule 1 hereto. The Debtor has
exclusive possession and control of its Inventory and Equipment. None of the
Inventory or Equipment is evidenced by a Document (including, without
limitation, a negotiable document of title). All Instruments and Chattel Paper
have been delivered to the Agent.
Section 3.6 Perfection. This Agreement creates a security interest in the
----------
Collateral, and ratifies and confirms the existing security interest granted
pursuant to the Original Security Agreement and the Existing Security Agreement,
in favor of the Agent. Upon the filing of UCC financing statements in favor of
the Agent in the jurisdictions listed on Schedule 2 attached hereto, and upon
the Agent's obtaining possession of all Documents and Instruments of the
AMENDED AND RESTATED SECURITY AGREEMENT - Page 7
<PAGE>
Debtor, the security interest in favor of the Agent created herein is and will
constitute a valid and perfected Lien upon and security interest in the
Collateral, subject to no equal or prior Lien, except the Permitted Liens.
Section 3.7 Benefit to Debtor. The value of the consideration received and
-----------------
to be received by the Debtor as a result of the Borrower, the Debtor, the Agent
and the Banks entering into the Loan Agreement and the Second Amendment and the
Debtor executing and delivering this Agreement is reasonably worth at least as
much as the liability and obligation of the Debtor hereunder, and such liability
and obligation and the Borrower's entering into the Loan Agreement and the
Second Amendment have benefited and may reasonably be expected to benefit the
Debtor directly and indirectly.
ARTICLE IV
Covenants
---------
The Debtor covenants and agrees with the Agent that until the Obligations
are paid and performed in full and all Commitments have terminated:
Section 4.1 Encumbrances. The Debtor shall not create, permit, or suffer
------------
to exist, and shall defend the Collateral against, any Lien on the Collateral,
except the Permitted Liens, and shall defend the Debtor's rights in the
Collateral and the Agent's security interest in the Collateral against the
claims and demands of all Persons. The Debtor shall do nothing to impair the
rights of the Agent in the Collateral.
Section 4.2 Modification of Accounts. The Debtor shall, in accordance with
------------------------
prudent business practices, endeavor to collect or cause to be collected from
each account debtor under its Accounts, as and when due, any and all amounts
owing under such Accounts. Without the prior written consent of the Agent, the
Debtor shall not (a) grant any extension of time for any payment with respect to
any of the Accounts, except for extensions of time granted in the ordinary
course of Debtor's business for payment with respect to Accounts not included in
the Borrowing Base, (b) compromise, compound, or settle any of the Accounts for
less than the full amount thereof, except for compromise, compound or settlement
in the ordinary course of business of Accounts not included in the Borrowing
Base, (c) release, in whole or in part, any Person liable for payment thereof,
except in connection with settlements permitted by clause (b) above, (d) allow
any credit or discount for payment with respect to any Account other than trade
discounts granted in the ordinary course of business, or (e) release any Lien or
guaranty securing any Account, except in connection with settlements permitted
by clause (b) above.
Section 4.3 Disposition of Collateral. The Debtor shall not sell, lease,
-------------------------
assign (by operation of law or otherwise), or otherwise dispose of, or grant any
option with respect to, the Collateral or any part thereof without the prior
written consent of the Agent, except as expressly permitted by the Loan
Agreement.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 8
<PAGE>
Section 4.4 Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of the Debtor, the Debtor
shall promptly execute and deliver all such further instruments, agreements, and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement. Without limiting the
generality of the foregoing, the Debtor shall (a) execute and deliver to the
Agent such financing statements as the Agent may from time to time require; (b)
deliver and pledge to the Agent all Documents (including, without limitation,
negotiable documents of title) evidencing Inventory or Equipment; (c) deliver
and pledge to the Agent all Instruments and Chattel Paper of the Debtor with any
necessary endorsements; and (d) execute and deliver to the Agent such other
documents, instruments, and agreements as the Agent may require to perfect and
maintain the validity, effectiveness, and priority of the Loan Documents and the
Liens intended to be created thereby. The Debtor authorizes the Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of the
Debtor where permitted by law. A carbon, photographic, or other reproduction of
this Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement.
Section 4.5 Risk of Loss; Insurance. The Debtor shall be responsible for
-----------------------
any loss or damage to the Collateral. The Debtor shall, at is own expense,
maintain or cause to be maintained insurance with respect to the Collateral in
such amounts, against such risks, in such form, and with such insurers as shall
be satisfactory to the Agent from time to time. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Agent, for
the pro rata benefit of the Banks, and the Debtor as their interests may appear.
Each policy for property insurance shall contain loss payable clauses and a loss
payable endorsement in favor of the Agent, for the pro rata benefit of the
Banks, as its interest may appear. If the Debtor shall fail to maintain or cause
to be maintained the insurance required by this Agreement, the Agent shall have
the right (but shall be under no obligation) to obtain such insurance and the
Debtor shall reimburse the Agent for all costs and expenses incurred by the
Agent in obtaining such insurance. All such insurance shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless the Agent has received thirty (30) days prior written notice
thereof. The Debtor shall deliver to the Agent and each Bank copies of all
insurance policies required by this Agreement.
Section 4.6 Inspection Rights. The Debtor shall permit the Agent, each
-----------------
Bank and their respective representatives to examine, inspect, and audit the
Collateral and to examine, inspect, and copy the Debtor's books and records at
any reasonable time and as often as the Agent or any such Bank may desire during
normal business hours. The Agent and each Bank may at any time and from time to
time contact account debtors and other obligors to verify the existence,
amounts, and terms of the Debtor's Accounts.
Section 4.7 Mortgagee's and Landlord's Agreements. With respect to each
-------------------------------------
location of Inventory having an aggregate value of $100,000 or more, as
specified on Schedule 1 hereto, the Debtor shall cause each mortgagee of real
property owned by the Debtor and each landlord of
AMENDED AND RESTATED SECURITY AGREEMENT - Page 9
<PAGE>
real property leased by the Debtor who has not previously done so to execute and
deliver to the Agent, on or before the date hereof, instruments satisfactory in
form and substance to the Agent by which such mortgagee or landlord waives its
rights, if any, in the Collateral (each, a "Landlord's Agreement"). After the
date hereof, Debtor shall promptly deliver or cause to be delivered to the Agent
Landlord's Agreements in accordance with this Section for each location where
the Inventory hereafter has an aggregate value of $100,000 or more. At the
request of the Agent, Debtor shall promptly deliver or cause to be delivered
Landlord's Agreements for any locations where any Collateral may now or
hereafter be located.
Section 4.8 Corporate Changes. The Debtor shall not change its name,
-----------------
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
the Debtor shall have given the Agent thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by the
Agent to make each financing statement not seriously misleading. The Debtor
shall not change its principal place of business, chief executive office, or the
place where it keeps its books and records unless it shall have given the Agent
thirty (30) days prior written notice thereof and shall have taken all action
deemed necessary or desirable by the Agent to cause its security interest in the
Collateral to be perfected with the priority required by this Agreement.
Section 4.9 Books and Records; Information. The Debtor shall keep
------------------------------
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with GAAP. The Debtor shall from
time to time at the request of the Agent deliver to the Agent such information
regarding the Collateral and the Debtor as the Agent may request, including,
without limitation, lists and descriptions of the Collateral and evidence of the
identity and existence of the Collateral. The Debtor shall mark its books and
records to reflect the security interest of the Agent under this Agreement.
Section 4.10 Equipment and Inventory.
-----------------------
(a) The Debtor shall keep the Equipment and Inventory at the locations
specified on Schedule 1 hereto or, upon thirty (30) days prior written
notice to the Agent, at such other places within the United States of
America where all action required to perfect the Agent's security interest
in the Equipment and Inventory with the priority required by this Agreement
shall have been taken.
(b) The Debtor shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear excepted). The Debtor shall
not permit any waste or destruction of the Equipment or Inventory or any
part thereof. The Debtor shall not permit the Equipment or Inventory to be
used in violation of any law, rule, or regulation or inconsistently with
the terms of any policy of insurance. The Debtor shall not use or permit
any of the Equipment or Inventory to be used in any manner or for any
purpose that would impair its value or expose it to unusual risk.
Section 4.11 Warehouse Receipts Non-Negotiable. The Debtor agrees that
---------------------------------
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of
AMENDED AND RESTATED SECURITY AGREEMENT - Page 10
<PAGE>
the Collateral, such warehouse receipt or receipt in the nature thereof shall
not be "negotiable" (as such term is used in Section 7.104 of the UCC as in
effect in any relevant jurisdiction or under relevant law).
Section 4.12 Notification. The Debtor shall promptly, and in any event
------------
within five (5) days after the Debtor obtains knowledge or becomes aware of any
of the following, notify the Agent of (a) any Lien or claim that has attached to
or been made or asserted against any of the Collateral, (b) any material damage
to or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 4.13 Collection of Accounts. Except as otherwise provided in
----------------------
this Section, the Debtor shall have the right to collect and receive payments on
the Accounts. In connection with such collections, the Debtor may take (and, at
the Agent's direction, shall take) such actions as the Debtor or the Agent may
deem necessary or advisable to enforce collection of the Accounts. At any time,
if an Event of Default shall have occurred and be continuing, the Agent shall
have the right to, or upon the request of the Agent the Debtor shall, instruct
all account debtors and other Persons obligated in respect of the Accounts to
make all payments on the Accounts either (a) directly to the Agent, for the pro
rata benefit of the Banks (by instructing that such payments be remitted to a
post office box which shall be in the name and under the control of the Agent),
or (b) to one or more other banks in the United States of America (by
instructing that such payments be remitted to a post office box which shall be
in the name or under the control of the Agent) under arrangements in form and
substance satisfactory to the Agent pursuant to which the Debtor shall have
irrevocably instructed such other bank (and such other bank shall have agreed)
to remit all such payments directly to the Agent. In addition to the foregoing,
the Debtor agrees that if any Proceeds of any Collateral (including payments
made in respect of Accounts) shall be received by the Debtor while an Event of
Default exists, the Debtor shall promptly deliver such Proceeds to the Agent,
for the pro rata benefit of the Banks, with any necessary endorsements. Until
such Proceeds are delivered to the Agent, such Proceeds shall be held in trust
by the Debtor for the benefit of the Agent and shall not be commingled with any
other funds or property of the Debtor. All Proceeds of Collateral received by
the Agent pursuant to this Section may at the option of the Required Banks in
the exercise of their absolute discretion, (i) be applied by the Agent and the
Banks to their respective Obligations in such order and manner as they may each
elect in their absolute discretion, or (ii) be deposited to the credit of Debtor
and held as collateral for the Obligations or permitted to be used by Debtor in
the ordinary course of its business.
ARTICLE V
Rights of the Agent
-------------------
Section 5.1 Power of Attorney. The Debtor hereby irrevocably
-----------------
constitutes and appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of the Debtor or in its own name, to
take any and all action and to execute any and all documents and instruments
which the
AMENDED AND RESTATED SECURITY AGREEMENT - Page 11
<PAGE>
Agent at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, the Debtor hereby gives the Agent the power and right on
behalf of the Debtor and in its own name to do any of the following, without
notice to or the consent of the Debtor, and whether or not an Event of Default
has occurred and is continuing (except as otherwise expressly provided below).
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of the Debtor
or in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under
the Collateral or any policy of insurance;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) after the occurrence and during the continuance of an Event of
Default, to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Agent and to
receive, open, and dispose of mail addressed to the Debtor;
(iv) (A) after the occurrence and during the continuance of an
Event of Default, to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and all
monies due and to become due thereunder directly to the Agent or as the
Agent shall direct; (B) after the occurrence and during the continuance of
an Event of Default, to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (C) after the occurrence and
during the continuance of an Event of Default, to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, proxies, stock powers,
verifications, and notices in connection with accounts and other documents
relating to the Collateral; (D) after the occurrence and during the
continuance of an Event of Default, to commence and prosecute any suit,
action, or proceeding at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce
any other right in respect of any Collateral; (E) after the occurrence and
during the continuance of an Event of Default, to defend any suit, action,
or proceeding brought against the Debtor with respect to any Collateral;
(F) after the occurrence and during the continuance of an Event of Default,
to settle, compromise, or adjust any suit, action, or proceeding described
above and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; (G) to exchange any of the Collateral for
other property upon any merger, consolidation, reorganization,
recapitalization, or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any committee,
depositary, transfer agent, registrar, or other designated agency upon such
terms as the Agent may determine; (H) to add or release any guarantor,
indorser, surety, or other party to any of the Collateral; (I) to renew,
extend, or otherwise
AMENDED AND RESTATED SECURITY AGREEMENT - Page 12
<PAGE>
change the terms and conditions of any of the Collateral; (J) to make,
settle, compromise, or adjust claims under any insurance policy covering
any of the Collateral; and (K) after the occurrence and during the
continuance of an Event of Default, to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Agent were the absolute owner thereof
for all purposes, and to do, at the Agent's option and the Debtor's
expense, at any time, or from time to time, all acts and things which the
Agent deems necessary to protect, preserve, or realize upon the Collateral
and the Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or in its capacity as attorney-in-fact except
acts or omissions resulting from its willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent will exercise its best efforts
to notify Debtor of any action taken by the Agent in its capacity as attorney-
in-fact pursuant to this Section, promptly after such action is taken, provided
that any failure by the Agent to so notify Debtor shall not impose any liability
upon the Agent or affect its rights and remedies hereunder, at law or in equity.
The Agent shall not be responsible for any decline in the value of the
Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or Lien given to secure the Collateral.
Section 5.2 Setoff; Property Held by the Agent and the Banks. If an
------------------------------------------------
Event of Default shall have occurred and be continuing, the Agent and each Bank
shall have the right to set off and apply against the Obligations, at any time
and without notice to the Debtor, any and all deposits (general or special, time
or demand, provisional or final) or other sums at any time credited by or owing
from the Agent or any Bank to the Debtor whether or not the Obligations are then
due. As additional security for the Obligations, the Debtor hereby grants the
Agent and each Bank a security interest in all money, instruments, and other
property of the Debtor now or hereafter held by the Agent or any Bank, including
without limitation, property held in safekeeping. In addition to the Agent's or
any Bank's right of setoff and as further security for the Obligations, the
Debtor hereby grants the Agent and each Bank a security interest in all deposits
(general or special, time or demand, provisional or final) of the Debtor now or
hereafter on deposit with or held by the Agent or any Bank and all other sums at
any time credited by or owing from the Agent or any Bank to the Debtor. The
rights and remedies of the Agent and each Bank hereunder are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which the Agent or any Bank may have.
Section 5.3 Performance by the Agent. If the Debtor shall fail to
------------------------
perform any covenant or agreement contained in this Agreement, the Agent may
perform or attempt to perform such covenant or agreement on behalf of the
Debtor. In such event, the Debtor shall, at the request of the Agent, promptly
pay any amount expended by the Agent in connection with such performance or
attempted performance to the Agent, together with interest thereon at the
Default
AMENDED AND RESTATED SECURITY AGREEMENT - Page 13
<PAGE>
Rate from and including the date of such expenditure to but excluding the date
such expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Agent shall not have any liability or responsibility for the
performance of any obligation of the Debtor under this Agreement.
Section 5.4 Subrogation. If any of the Obligations are given in renewal
-----------
or extension or applied toward the payment of indebtedness secured by any Lien,
the Agent and the Banks shall be, and are hereby, subrogated to all of the
rights, titles, interests and Liens securing the indebtedness so renewed,
extended, or paid.
Section 5.5 Agent's Duty of Care. Other than the exercise of reasonable
--------------------
care and the physical custody of the Collateral while held by the Agent
hereunder, the Agent shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto, including without limitation any obligation or duty
to collect any sums due in respect thereof or to protect or preserve any rights
against prior parties or any other rights pertaining thereto, it being
understood and agreed that Debtor shall be responsible for preservation of all
rights in the Collateral. Without limiting the generality of the foregoing, the
Agent shall be conclusively deemed to have exercised reasonable care in the
custody of the Collateral if the Agent takes such action, for purposes of
preserving rights in the Collateral, as Debtor may reasonably request in
writing, but no failure or omission or delay by the Agent in complying with any
such request by Debtor, and no refusal by the Agent to comply with any such
request by Debtor, shall be deemed to be a failure to exercise reasonable care.
ARTICLE VI
Default
-------
Section 6.1 Rights and Remedies. If an Event of Default shall have
-------------------
occurred and be continuing, the Agent shall have the following rights and
remedies:
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement or in any other Loan Document or by applicable law,
the Agent shall have all of the rights and remedies of a secured party
under the UCC (whether or not the UCC applies to the affected Collateral).
Without limiting the generality of the foregoing, the Agent may (1) without
demand or notice to the Debtor, collect, receive, or take possession of the
Collateral or any part thereof and for that purpose the Agent may enter
upon any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (2) sell, lease, or
otherwise dispose of the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at the Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Agent may deem commercially reasonable. The Agent shall have
the right at any public sale or sales, and, to the extent permitted by
applicable law, at any private sale or sales, to bid and become a purchaser
of the Collateral or any part thereof free of any right or equity of
redemption on the part of the Debtor, which right or equity of redemption
AMENDED AND RESTATED SECURITY AGREEMENT - Page 14
<PAGE>
is hereby expressly waived and released by the Debtor. Upon the request of
the Agent, the Debtor shall assemble the Collateral and make it available
to the Agent at any place designated by the Agent that is reasonably
convenient to the Debtor and the Agent. The Debtor agrees that the Agent
shall not be obligated to give more than five (5) days written notice of
the time and place of any public sale or of the time after which any
private sale may take place and that such notice shall constitute
reasonable notice of such matters. The Agent shall not be obligated to make
any sale of Collateral if it shall determine not to do so, regardless of
the fact that notice of sale of Collateral may have been given. The Agent
may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. The
Debtor shall be liable for all expenses of retaking, holding, preparing for
sale, or the like, and all reasonable attorneys' fees, legal expenses, and
all other costs and expenses incurred by the Agent or any Bank in
connection with the collection of the Obligations and the enforcement of
the Agent's rights under this Agreement. The Debtor shall remain liable for
any deficiency if the Proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations in full. The Agent and
the Banks may apply the Collateral against the Obligations in such order
and manner as they may elect in their absolute discretion. The Debtor
waives all rights of marshalling, valuation, and appraisal in respect of
the Collateral.
(ii) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) On any sale of the Collateral, the Agent is hereby authorized
to comply with any limitation or restriction with which compliance is
necessary, in the view of the Agent's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval of
the purchaser or purchasers by any applicable Governmental Authority.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights
AMENDED AND RESTATED SECURITY AGREEMENT - Page 15
<PAGE>
and remedies provided for in this Agreement are cumulative and not exclusive of
any rights and remedies provided by law.
Section 7.2 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the Debtor and the Agent and their respective
heirs, successors, and assigns, except that the Debtor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Agent.
Section 7.3 ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
--------------------------------------------------
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto. In the event any term or provision of
this Agreement expressly conflicts with any term or provision of the Loan
Agreement, the terms and provisions of the Loan Agreement shall govern and
control.
Section 7.4 Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
Section 7.5 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED INTO IN
DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN DALLAS
COUNTY, TEXAS.
Section 7.6 Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 16
<PAGE>
Section 7.8 Waiver of Bond. In the event the Agent seeks to take
--------------
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.9 Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.10 Termination. If all of the Obligations shall have been paid
-----------
and performed in full and all Commitments shall have expired or terminated, the
Agent shall, upon the written request of the Debtor, execute and deliver to the
Debtor a proper instrument or instruments acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to the Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Agent and has not previously been sold or otherwise applied pursuant to
this Agreement.
Section 7.11 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, THE DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF
THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTOR:
------
CELLSTAR CORPORATION
By:____________________________________________
Alan H. Goldfield
Chairman and
Chief Executive Officer
AMENDED AND RESTATED SECURITY AGREEMENT - Page 17
<PAGE>
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:__________________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
AMENDED AND RESTATED SECURITY AGREEMENT - Page 18
<PAGE>
Schedule 1
Location of Inventory and Equipment
-----------------------------------
Locations of Inventory and Equipment
------------------------------------
having an aggregate Inventory value of $100,000 or more
-------------------------------------------------------
NONE
Locations of Inventory and Equipment
------------------------------------
having an aggregate Inventory value of less than $100,000
---------------------------------------------------------
NONE
SCHEDULE 1, Location of Inventory and Equipment - Solo Page
<PAGE>
Schedule 2
Jurisdictions for Filing
UCC-1 Financing Statements
--------------------------
Secretary of State of Texas
Department of State of Florida
Secretary of State of Kansas
Secretary of State of Maine
Secretary of State of California
Secretary of State of Missouri
Clay County, Missouri
Jackson County, Missouri
Secretary of State of Illinois
Secretary of State of Michigan
Secretary of State of New York
Onondaga County, New York
SCHEDULE 2, Jurisdictions for
Filing UCC-1 Financing Statements - Solo Page
<PAGE>
SCHEDULE 3
TRADE NAMES AND PREVIOUS NAMES
------------------------------
NONE
SCHEDULE 3, Additional Names
and Trade Names - Solo Page
<PAGE>
ANNEX 5
Exhibit "E-3" (Partnership Security Agreements)
-----------------------------------------------
<PAGE>
AMENDED AND RESTATED SECURITY AGREEMENT
---------------------------------------
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement") dated as of
July 31, 1996, is by and between CELLSTAR, LTD., a Texas limited partnership
(the "Debtor"), whose address is 1730 Briercroft, Carrollton, Texas 75006, and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association
("TCB"), not in its individual capacity but solely as agent for itself and each
of the other banks or lending institutions (each, a "Bank" and, collectively,
the "Banks") which is or may from time to time become a signatory to the Loan
Agreement (hereinafter defined) or any successor or permitted assignee thereof
(TCB in such capacity, together with its successors in such capacity, the
"Agent"), whose address is 2200 Ross Avenue, Post Office Box 660197, Dallas,
Texas 75266-0197.
R E C I T A L S:
- - - - - - - -
A. National Auto Center, Inc., a Texas corporation (the "Borrower"),
CellStar Corporation, a Delaware corporation (the "Parent"), the Agent and the
Banks heretofore entered into that certain Loan Agreement dated as of November
9, 1994, as amended by that certain First Amendment to Loan Agreement dated as
of February 28, 1995, and as further amended by that certain Second Amendment to
Loan Agreement dated as of June 28, 1995 (such Loan Agreement, as amended, being
hereinafter referred to as the "Original Loan Agreement").
B. Pursuant to the Original Loan Agreement, certain of the Banks made
loans to Borrower (the existing indebtedness of Borrower to such Banks under the
Original Loan Agreement being hereinafter referred to as the "Existing
Indebtedness").
C. Pursuant to the Original Loan Agreement, Debtor executed and delivered
to the Agent that certain Security Agreement dated as of February 28, 1995 (the
"Original Security Agreement"), granting a security interest in the Collateral
to the Agent to secure the Existing Indebtedness.
D. The Borrower, the Parent, the Banks and the Agent are parties to that
certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996 (such Loan Agreement, as the same has been and may
be amended, supplemented or modified from time to time, being hereinafter
referred to as the "Loan Agreement"), pursuant to which, among other things, (i)
the Original Loan Agreement was amended and restated in its entirety, and (ii)
the Existing Indebtedness was renewed, extended, modified and rearranged, but
not extinguished.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 1
<PAGE>
E. Pursuant to the Loan Agreement, the Debtor executed and delivered to
the Agent that certain Amended and Restated Security Agreement dated as of July
20, 1995 (the "Existing Security Agreement"), pursuant to which the Original
Security Agreement was amended and restated in its entirety.
F. Concurrently herewith, the Borrower, the Parent, the Banks and the
Agent are entering into that certain Second Amendment to Amended and Restated
Loan Agreement of even date herewith (the "Second Amendment").
G. The parties hereto now desire to amend the Existing Security Agreement
as hereinafter provided and have agreed, for purposes of clarity and ease of
administration, to carry out the agreed upon amendments by amending the
pertinent provisions of the Existing Security Agreement and then restating the
Existing Security Agreement in its entirety by means of this Agreement.
H. The Agent and the Banks have conditioned their obligations under the
Loan Agreement and the effectiveness of the Second Amendment on the execution
and delivery by the Debtor of this Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows, and the Existing Security Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE I
Definitions
-----------
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
have the following meanings:
"Accounts" means any "account", as such term is defined in
--------
Section 9.106 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased or
services rendered, whether or not earned by performance, (b) all
accounts receivable of the Debtor, (c) all rights of the Debtor to
receive any payment of money or other form of consideration, (d) all
security pledged, assigned, or granted to or held by the Debtor to
secure any of the foregoing, (e) all guaranties of, or
indemnifications with respect to, any of the foregoing, and (f) all
rights of the Debtor as an unpaid seller of goods or services,
including, but not limited to, all rights of stoppage in transit,
replevin, reclamation, and resale.
"BNP Collateral" means the Sam's Collateral, except proceeds of
--------------
Inventory (including pagers), pager customer lists and Accounts.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 2
<PAGE>
"Chattel Paper" means any "chattel paper", as such term is
-------------
defined in Section 9.105(a)(2) of the UCC, now owned or hereafter
acquired by the Debtor.
"Collateral" has the meaning specified in Section 2.1 of this
----------
Agreement.
"Document" means any "document", as such term is defined in
--------
Section 9.105(a)(6) of the UCC, now owned or hereafter acquired by the
Debtor, including, without limitation, all documents of title and
warehouse receipts of the Debtor.
"Equipment" means any "equipment", as such term is defined in
---------
Section 9.109(2) of the UCC, now owned or hereafter acquired by the
Debtor and, in any event, shall include, without limitation, all
machinery, equipment, furnishings, fixtures, and vehicles now owned or
hereafter acquired by the Debtor and any and all additions,
substitutions, and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment,
and accessories installed thereon or affixed thereto, provided that
the Equipment shall not include the FIBOT Collateral so long as FIBOT
has a prior perfected security interest therein.
"General Intangibles" means any "general intangibles", as such
-------------------
term is defined in Section 9.106 of the UCC, now owned or hereafter
acquired by the Debtor and, in any event, shall include, without
limitation, each of the following, whether now owned or hereafter
acquired by the Debtor: (a) all of the Debtor's patents, patent
applications, patent rights, service marks, trademarks, trade names,
trade secrets, intellectual property, registrations, goodwill,
copyrights, franchises, licenses, permits, proprietary information,
customer lists, designs, and inventions, (b) all of the Debtor's
books, records, data, plans, manuals, computer software, and computer
programs, (c) all of the Debtor's contract rights, partnership
interests, joint venture interests, securities, deposit accounts,
investment accounts, and certificates of deposit, (d) all rights of
the Debtor to payment under letters of credit and similar agreements,
(e) all tax refunds and tax refund claims of the Debtor, (f) all
choses in action and causes of action of the Debtor (whether arising
in contract, tort, or otherwise and whether or not currently in
litigation) and all judgments in favor of the Debtor, (g) all rights
and claims of the Debtor under warranties and indemnities, and (h) all
rights of the Debtor under any insurance, surety, or similar contract
or arrangement.
"Instrument" means any "instrument", as such term is defined in
----------
Section 9.105(a)(9) of the UCC, now owned or hereafter acquired by
the Debtor.
"Inventory" means any "inventory", as such term is defined in
---------
Section 9.109(4) of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all goods and other personal property of
AMENDED AND RESTATED SECURITY AGREEMENT - Page 3
<PAGE>
the Debtor that are held for sale or lease or to be furnished under
any contract of service, (b) all raw materials, work-in-process,
finished goods, inventory, supplies, and materials of the Debtor, (c)
all wrapping, packaging, advertising, and shipping materials of the
Debtor, (d) all goods that have been returned to, repossessed by, or
stopped in transit by the Debtor, and (e) all Documents evidencing any
of the foregoing.
"Letter of Intent" means that certain letter of intent dated May
----------------
6, 1996, among the Debtor, the Parent, CellStar, Ltd. and the Buyer
named therein.
"Obligations" means:
-----------
(a) the indebtedness, liabilities and obligations of the
Borrower to the Banks evidenced by those certain Promissory Notes
of even date herewith, executed by Borrower and payable to the
order of the Banks in the aggregate principal amount of
$90,000,000.00;
(b) the indebtedness, liabilities and obligations of the
Debtor to the Agent and the Banks under that certain Amended and
Restated Guaranty dated as of July 20, 1995, executed by Debtor
in favor of the Agent and the Banks;
(c) the "Obligations", as such term is defined in the Loan
Agreement;
(d) all future Advances by the Agent or any Bank to Borrower
and Debtor, or either of them;
(e) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the
Agent or any Bank to preserve and maintain the Collateral,
collect the obligations herein described and enforce this
Agreement;
(f) all other obligations, indebtedness and liabilities of
Borrower and Debtor, or either of them, to the Agent or any Bank
under any of the Loan Documents, now existing or hereafter
arising, regardless of whether such obligations, indebtedness and
liabilities are similar, dissimilar, related, unrelated, direct,
indirect, fixed, contingent, primary, secondary, joint, several,
or joint and several; and
(g) all extensions, renewals and modifications of any of the
foregoing.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 4
<PAGE>
"Permitted Liens" means (a) the security interests granted
---------------
hereby, (b) Liens expressly permitted by Section 10.2 of the Loan
Agreement, and (c) the Lien of BNP in the BNP Collateral securing the
BNP Term Loan.
"Proceeds" means any "proceeds", as such term is defined in
--------
Section 9.306 of the UCC and, in any event, shall include, but not be
limited to, (a) any and all proceeds of any insurance, indemnity,
warranty, or guaranty payable to the Debtor from time to time with
respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the Debtor from time to
time in connection with any requisition, confiscation, condemnation,
seizure, or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any person acting under color of
Governmental Authority), and (c) any and all other amounts from time
to time paid or payable under or in connection with any of the
Collateral.
"Sam's Collateral" means any contract or agreement which exists
----------------
or may exist with respect to the sale or other transfer of the Sam's
Operations, including without limitation any contract or agreement
which arises as a result of or in connection with the Letter of
Intent, together with all proceeds from any sale or transfer pursuant
to such contract or agreement.
"UCC" means the Uniform Commercial Code as in effect in the State
---
of Texas or, if so required with respect to any particular Collateral
by mandatory provisions of applicable law, as in effect in the
jurisdiction in which such Collateral is located.
Section 1.2 Terms Defined in Loan Agreement. All capitalized terms
-------------------------------
used and not otherwise defined herein shall have their respective meanings
as specified in the Loan Agreement.
ARTICLE II
Security Interest
-----------------
Section 2.1 Security Interest. As collateral security for the prompt
-----------------
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), the Debtor hereby grants, and ratifies
and confirms the prior grant made pursuant to the Original Security Agreement
and the Existing Security Agreement, to the Agent, for the pro rata benefit of
the Banks, a first priority lien on and security interest in all of the Debtor's
right, title, and interest in and to the following, whether now owned or
hereafter arising or acquired and wherever located (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
AMENDED AND RESTATED SECURITY AGREEMENT - Page 5
<PAGE>
(c) all Instruments;
(d) all General Intangibles;
(e) all Documents;
(f) all Inventory;
(g) all Equipment;
(h) without in any way limiting the foregoing, the Sam's Collateral;
and
(i) all Proceeds and products of any or all of the foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Agent or any Bank but for the fact that they are unenforceable
or not allowable due to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower. If the grant, pledge, or collateral
transfer or assignment of any rights of the Debtor under any contract included
in the Collateral is expressly prohibited by such contract, then the security
interest hereby granted therein nonetheless remains effective to the extent
allowed by UCC Section 9.318 or other applicable law but is otherwise limited by
that prohibition.
Section 2.2 Renewal of Obligations and Liens. The parties hereto
--------------------------------
acknowledge and agree that (i) the Obligations are in part in renewal,
extension, modification and rearrangement of, but not extinguishment of, the
Existing Indebtedness, and (ii) the Existing Indebtedness is secured by liens
and security interests granted by Debtor pursuant to the Original Security
Agreement and the Existing Security Agreement, which liens and security
interests are not extinguished or released, but instead are hereby renewed,
extended, carried forward and continued in accordance with the terms of this
Agreement.
Section 2.3 Debtor Remains Liable. Notwithstanding anything to the
---------------------
contrary contained herein, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the Agent
of any of its rights hereunder shall not release the Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of the Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 6
<PAGE>
ARTICLE III
Representations and Warranties
------------------------------
The Debtor represents and warrants to the Agent that:
Section 3.1 Title. The Debtor is, and with respect to Collateral
-----
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any Lien, except Permitted Liens.
Section 3.2 Accounts. Unless the Debtor has given the Agent written
--------
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, the Debtor shall be deemed to have represented and
warranted to the Agent as to each and all of its Accounts that (a) each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by the Debtor or the sale or lease of goods
by the Debtor, (c) the amount of each Account represented as owing is the
correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (d) to the best of
Debtor's knowledge, no Account is subject to any offset, counterclaim, or other
defense.
Section 3.3 Financing Statements. No financing statement, security
--------------------
agreement, or other Lien instrument covering all or any part of the Collateral
is on file in any public office, except those filed in favor of the Agent
pursuant to the Original Security Agreement, the Existing Security Agreement,
this Agreement or with respect to any other Permitted Liens. Except as set forth
on Schedule 3 hereto, the Debtor has not within the past five (5) years done
business under any name or trade name other than its legal name set forth at the
beginning of this Agreement.
Section 3.4 Principal Place of Business. The principal place of
---------------------------
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown at the beginning of this Agreement.
Section 3.5 Location of Collateral. All Inventory and Equipment of the
----------------------
Debtor is located at the places specified on Schedule 1 hereto. The Debtor has
exclusive possession and control of its Inventory and Equipment. None of the
Inventory or Equipment is evidenced by a Document (including, without
limitation, a negotiable document of title). All Instruments and Chattel Paper
have been delivered to the Agent.
Section 3.6 Perfection. This Agreement creates a security interest in
----------
the Collateral, and ratifies and confirms the existing security interest granted
pursuant to the Original Security Agreement and the Existing Security Agreement,
in favor of the Agent. Upon the filing of UCC financing statements in favor of
the Agent in the jurisdictions listed on Schedule 2 attached hereto, and upon
the Agent's obtaining possession of all Documents and Instruments of the Debtor,
the security interest in favor of the Agent created herein is and will
constitute a valid and perfected Lien upon and security interest in the
Collateral (except Equipment and Inventory
AMENDED AND RESTATED SECURITY AGREEMENT - Page 7
<PAGE>
located in jurisdictions where perfection is not required under Section
4.10(a) hereof), subject to no equal or prior Lien, except the Permitted
Liens.
Section 3.7 Benefit to Debtor. The value of the consideration received
-----------------
and to be received by the Debtor as a result of the Borrower, the Parent, the
Agent and the Banks entering into the Loan Agreement and the Second Amendment
and the Debtor executing and delivering this Agreement is reasonably worth at
least as much as the liability and obligation of the Debtor hereunder, and such
liability and obligation and the Borrower's entering into the Loan Agreement and
the Second Amendment have benefited and may reasonably be expected to benefit
the Debtor directly and indirectly. Reference is hereby made to the Guaranty of
the Debtor for a more complete description of the value and consideration
received and to be received by the Debtor in connection with the execution and
delivery of this Agreement and such Guaranty.
Section 3.8 Loan Agreement. Each and every representation and warranty
--------------
contained in the Loan Agreement is true and correct in all respects.
ARTICLE IV
Covenants
---------
The Debtor covenants and agrees with the Agent that until the Obligations
are paid and performed in full and all Commitments have terminated:
Section 4.1 Encumbrances. The Debtor shall not create, permit, or
------------
suffer to exist, and shall defend the Collateral against, any Lien on the
Collateral, except the Permitted Liens, and shall defend the Debtor's rights in
the Collateral and the Agent's security interest in the Collateral against the
claims and demands of all Persons. The Debtor shall do nothing to impair the
rights of the Agent in the Collateral.
Section 4.2 Modification of Accounts. The Debtor shall, in accordance
------------------------
with prudent business practices, endeavor to collect or cause to be collected
from each account debtor under its Accounts, as and when due, any and all
amounts owing under such Accounts. Without the prior written consent of the
Agent, the Debtor shall not (a) grant any extension of time for any payment with
respect to any of the Accounts, except for extensions of time granted in the
ordinary course of Debtor's business for payment with respect to Accounts not
included in the Borrowing Base, (b) compromise, compound, or settle any of the
Accounts for less than the full amount thereof, except for compromise, compound
or settlement in the ordinary course of business of Accounts not included in the
Borrowing Base, (c) release, in whole or in part, any Person liable for payment
thereof, except in connection with settlements permitted by clause (b) above,
(d) allow any credit or discount for payment with respect to any Account other
than trade discounts granted in the ordinary course of business, or (e) release
any Lien or guaranty securing any Account, except in connection with settlements
permitted by clause (b) above.
Section 4.3 Disposition of Collateral. The Debtor shall not sell,
-------------------------
lease, assign (by operation of law or otherwise), or otherwise dispose of, or
grant any option with respect to, the
AMENDED AND RESTATED SECURITY AGREEMENT - Page 8
<PAGE>
Collateral or any part thereof without the prior written consent of the
Agent, except as expressly permitted by the Loan Agreement.
Section 4.4 Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of the Debtor, the Debtor
shall promptly execute and deliver all such further instruments, agreements, and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement. Without limiting the
generality of the foregoing, the Debtor shall (a) execute and deliver to the
Agent such financing statements as the Agent may from time to time require; (b)
deliver and pledge to the Agent all Documents (including, without limitation,
negotiable documents of title) evidencing Inventory or Equipment; (c) deliver
and pledge to the Agent all Instruments and Chattel Paper of the Debtor with any
necessary endorsements; and (d) execute and deliver to the Agent such other
documents, instruments, and agreements as the Agent may require to perfect and
maintain the validity, effectiveness, and priority of the Loan Documents and the
Liens intended to be created thereby. The Debtor authorizes the Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of the
Debtor where permitted by law. A carbon, photographic, or other reproduction of
this Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement.
Section 4.5 Risk of Loss; Insurance. The Debtor shall be responsible
-----------------------
for any loss or damage to the Collateral. The Debtor shall, at is own expense,
maintain or cause to be maintained insurance with respect to the Collateral in
such amounts, against such risks, in such form, and with such insurers as shall
be satisfactory to the Agent from time to time. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Agent, for
the pro rata benefit of the Banks, and the Debtor as their interests may appear.
Each policy for property insurance shall contain loss payable clauses and a loss
payable endorsement in favor of the Agent, for the pro rata benefit of the
Banks, as its interest may appear. If the Debtor shall fail to maintain or
cause to be maintained the insurance required by this Agreement, the Agent shall
have the right (but shall be under no obligation) to obtain such insurance and
the Debtor shall reimburse the Agent for all costs and expenses incurred by the
Agent in obtaining such insurance. All such insurance shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless the Agent has received thirty (30) days prior written notice
thereof. The Debtor shall deliver to the Agent and each Bank copies of all
insurance policies required by this Agreement.
Section 4.6 Inspection Rights. The Debtor shall permit the Agent, each
-----------------
Bank and their respective representatives to examine, inspect, and audit the
Collateral and to examine, inspect, and copy the Debtor's books and records at
any reasonable time and as often as the Agent or any such Bank may desire during
normal business hours. The Agent and each Bank may at any time and from time to
time contact account debtors and other obligors to verify the existence,
amounts, and terms of the Debtor's Accounts.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 9
<PAGE>
Section 4.7 Mortgagee's and Landlord's Agreements. With respect to each
-------------------------------------
location of Inventory having an aggregate value of $100,000 or more, as
specified on Schedule 1 hereto, the Debtor shall cause each mortgagee of real
property owned by the Debtor and each landlord of real property leased by the
Debtor who has not previously done so to execute and deliver to the Agent, on or
before the date hereof, instruments satisfactory in form and substance to the
Agent by which such mortgagee or landlord waives its rights, if any, in the
Collateral (each, a "Landlord's Agreement"); provided, however, that with
-------- -------
respect to Collateral located at 8728 Westpark Drive, Houston, Texas, Debtor
shall exert its best efforts to obtain a Landlord's Agreement, but Debtor's
failure to obtain such a Landlord's Agreement with respect to such location
shall not cause the Inventory located at such location to be excluded from the
Borrowing Base if such Inventory otherwise constitutes Eligible Inventory.
After the date hereof, Debtor shall promptly deliver or cause to be delivered to
the Agent Landlord's Agreements in accordance with this Section for each
location where the Inventory hereafter has an aggregate value of $100,000 or
more. At the request of the Agent, Debtor shall promptly deliver or cause to be
delivered Landlord's Agreements for any locations where any Collateral may now
or hereafter be located.
Section 4.8 Corporate and Partnership Changes. The Debtor shall not
---------------------------------
change its name, identity, or corporate or partnership structure in any manner
that might make any financing statement filed in connection with this Agreement
seriously misleading unless the Debtor shall have given the Agent thirty (30)
days prior written notice thereof and shall have taken all action deemed
necessary or desirable by the Agent to make each financing statement not
seriously misleading. The Debtor shall not change its principal place of
business, chief executive office, or the place where it keeps its books and
records unless it shall have given the Agent thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
the Agent to cause its security interest in the Collateral to be perfected with
the priority required by this Agreement.
Section 4.9 Books and Records; Information. The Debtor shall keep
------------------------------
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with GAAP. The Debtor shall from
time to time at the request of the Agent deliver to the Agent such information
regarding the Collateral and the Debtor as the Agent may request, including,
without limitation, lists and descriptions of the Collateral and evidence of the
identity and existence of the Collateral. The Debtor shall mark its books and
records to reflect the security interest of the Agent under this Agreement.
Section 4.10 Equipment and Inventory.
-----------------------
(a) The Debtor shall keep the Equipment and Inventory at the
locations specified on Schedule 1 hereto or at such other places
within the United States of America, provided that with respect to any
location of Equipment or Inventory not listed on Schedule 1 hereto,
(i) if the Inventory located at such location has an aggregate value
of $100,000 or more, the Debtor shall have given the Agent thirty (30)
days prior written notice of the transfer of Equipment or Inventory to
or opening of such location, and all action required to perfect the
Agent's security interest in such Equipment and Inventory
AMENDED AND RESTATED SECURITY AGREEMENT - Page 10
<PAGE>
with the priority required by this Agreement shall have been taken, (ii)
the Debtor shall deliver to the Agent by the twenty-fifth (25th) day of
each month a computer listing of all locations of Equipment and Inventory
not specified on Schedule 1 hereto or any listing previously delivered
hereunder, and (iii) the Debtor shall take or cause to be taken all action
necessary to perfect, with the same priority required by this Agreement,
the Agent's security interest in all Equipment and Inventory located in
each state where the Inventory located in such state has an aggregate value
of $100,000 or more.
(b) The Debtor shall maintain the Equipment and Inventory in
good condition and repair (ordinary wear and tear excepted). The
Debtor shall not permit any waste or destruction of the Equipment or
Inventory or any part thereof. The Debtor shall not permit the
Equipment or Inventory to be used in violation of any law, rule, or
regulation or inconsistently with the terms of any policy of
insurance. The Debtor shall not use or permit any of the Equipment or
Inventory to be used in any manner or for any purpose that would
impair its value or expose it to unusual risk.
Section 4.11 Warehouse Receipts Non-Negotiable. The Debtor agrees that
---------------------------------
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC as in effect in any relevant jurisdiction or under relevant
law).
Section 4.12 Notification. The Debtor shall promptly, and in any event
------------
within five (5) days after the Debtor obtains knowledge or becomes aware of any
of the following, notify the Agent of (a) any Lien or claim that has attached to
or been made or asserted against any of the Collateral, (b) any material damage
to or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 4.13 Collection of Accounts. Except as otherwise provided in
----------------------
this Section, the Debtor shall have the right to collect and receive payments on
the Accounts. In connection with such collections, the Debtor may take (and, at
the Agent's direction, shall take) such actions as the Debtor or the Agent may
deem necessary or advisable to enforce collection of the Accounts. At any time,
if an Event of Default shall have occurred and be continuing, the Agent shall
have the right to, or upon the request of the Agent the Debtor shall, instruct
all account debtors and other Persons obligated in respect of the Accounts to
make all payments on the Accounts either (a) directly to the Agent, for the pro
rata benefit of the Banks (by instructing that such payments be remitted to a
post office box which shall be in the name and under the control of the Agent),
or (b) to one or more other banks in the United States of America (by
instructing that such payments be remitted to a post office box which shall be
in the name or under the control of the Agent) under arrangements in form and
substance satisfactory to the Agent pursuant to which the Debtor shall have
irrevocably instructed such other bank (and such other bank shall have agreed)
to remit all such payments directly to the Agent. In addition to the foregoing,
the Debtor agrees that if any Proceeds of any Collateral (including payments
made in respect of Accounts) shall be received by the Debtor while an Event of
Default exists, the Debtor shall promptly deliver
AMENDED AND RESTATED SECURITY AGREEMENT - Page 11
<PAGE>
such Proceeds to the Agent, for the pro rata benefit of the Banks, with any
necessary endorsements. Until such Proceeds are delivered to the Agent,
such Proceeds shall be held in trust by the Debtor for the benefit of the
Agent and shall not be commingled with any other funds or property of the
Debtor. All Proceeds of Collateral received by the Agent pursuant to this
Section may at the option of the Required Banks in the exercise of their
absolute discretion, (i) be applied by the Agent and the Banks to their
respective Obligations in such order and manner as they may each elect in
their absolute discretion, or (ii) be deposited to the credit of Debtor and
held as collateral for the Obligations or permitted to be used by Debtor in
the ordinary course of its business.
ARTICLE V
Rights of the Agent
-------------------
Section 5.1 Power of Attorney. The Debtor hereby irrevocably
-----------------
constitutes and appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of the Debtor or in its own name, to
take any and all action and to execute any and all documents and instruments
which the Agent at any time and from time to time deems necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, the Debtor hereby gives the Agent the power and
right on behalf of the Debtor and in its own name to do any of the following,
without notice to or the consent of the Debtor, and whether or not an Event of
Default has occurred and is continuing (except as otherwise expressly provided
below).
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of the Debtor
or in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under
the Collateral or any policy of insurance;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) after the occurrence and during the continuance of an
Event of Default, to notify post office authorities to change the
address for delivery of mail of the Debtor to an address designated by
the Agent and to receive, open, and dispose of mail addressed to the
Debtor;
(iv) (A) after the occurrence and during the continuance of an Event
of Default, to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to the Agent or as the Agent
shall direct; (B) after the occurrence and during the continuance of
an Event of Default, to receive payment of and receipt for anyand all
monies, claims, and other amounts due and to become due at any time in
respect of or
AMENDED AND RESTATED SECURITY AGREEMENT - Page 12
<PAGE>
arising out of any Collateral; (C) after the occurrence and during
the continuance of an Event of Default, to sign and endorse any
invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, proxies,
stock powers, verifications, and notices in connection with accounts
and other documents relating to the Collateral; (D) after the
occurrence and during the continuance of an Event of Default, to
commence and prosecute any suit, action, or proceeding at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (E) after the occurrence and during the
continuance of an Event of Default, to defend any suit, action, or
proceeding brought against the Debtor with respect to any Collateral;
(F) after the occurrence and during the continuance of an Event of
Default, to settle, compromise, or adjust any suit, action, or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Agent may deem appropriate; (G) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar,
or other designated agency upon such terms as the Agent may determine;
(H) to add or release any guarantor, indorser, surety, or other party
to any of the Collateral; (I) to renew, extend, or otherwise change
the terms and conditions of any of the Collateral; (J) to make,
settle, compromise, or adjust claims under any insurance policy
covering any of the Collateral; and (K) after the occurrence and
during the continuance of an Event of Default, to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's
option and the Debtor's expense, at any time, or from time to time,
all acts and things which the Agent deems necessary to protect,
preserve, or realize upon the Collateral and the Agent's security
interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or in its capacity as attorney-in-fact except
acts or omissions resulting from its willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent will exercise its best efforts
to notify Debtor of any action taken by the Agent in its capacity as attorney-
in-fact pursuant to this Section, promptly after such action is taken, provided
that any failure by the Agent to so notify Debtor shall not impose any liability
upon the Agent or affect its rights and remedies hereunder, at law or in equity.
The Agent shall not be responsible for any decline in the value of the
Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or Lien given to secure the Collateral.
Section 5.2 Setoff; Property Held by the Agent and the Banks. If an
------------------------------------------------
Event of Default shall have occurred and be continuing, the Agent and each
Bank shall have the right to set off and apply against the Obligations, at
any time and without notice to the Debtor, any and all
AMENDED AND RESTATED SECURITY AGREEMENT - Page 13
<PAGE>
deposits (general or special, time or demand, provisional or final) or
other sums at any time credited by or owing from the Agent or any Bank to
the Debtor whether or not the Obligations are then due. As additional
security for the Obligations, the Debtor hereby grants the Agent and each
Bank a security interest in all money, instruments, and other property of
the Debtor now or hereafter held by the Agent or any Bank, including
without limitation, property held in safekeeping. In addition to the
Agent's or any Bank's right of setoff and as further security for the
Obligations, the Debtor hereby grants the Agent and each Bank a security
interest in all deposits (general or special, time or demand, provisional
or final) of the Debtor now or hereafter on deposit with or held by the
Agent or any Bank and all other sums at any time credited by or owing from
the Agent or any Bank to the Debtor. The rights and remedies of the Agent
and each Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Agent or
any Bank may have.
Section 5.3 Performance by the Agent. If the Debtor shall fail to
------------------------
perform any covenant or agreement contained in this Agreement, the Agent
may perform or attempt to perform such covenant or agreement on behalf of
the Debtor. In such event, the Debtor shall, at the request of the Agent,
promptly pay any amount expended by the Agent in connection with such
performance or attempted performance to the Agent, together with interest
thereon at the Default Rate from and including the date of such expenditure
to but excluding the date such expenditure is paid in full. Notwithstanding
the foregoing, it is expressly agreed that the Agent shall not have any
liability or responsibility for the performance of any obligation of the
Debtor under this Agreement.
Section 5.4 Subrogation. If any of the Obligations are given in
-----------
renewal or extension or applied toward the payment of indebtedness secured
by any Lien, the Agent and the Banks shall be, and are hereby, subrogated
to all of the rights, titles, interests and Liens securing the indebtedness
so renewed, extended, or paid.
Section 5.5 Agent's Duty of Care. Other than the exercise of
--------------------
reasonable care and the physical custody of the Collateral while held by
the Agent hereunder, the Agent shall have no responsibility for or
obligation or duty with respect to all or any part of the Collateral or any
matter or proceeding arising out of or relating thereto, including without
limitation any obligation or duty to collect any sums due in respect
thereof or to protect or preserve any rights against prior parties or any
other rights pertaining thereto, it being understood and agreed that Debtor
shall be responsible for preservation of all rights in the Collateral.
Without limiting the generality of the foregoing, the Agent shall be
conclusively deemed to have exercised reasonable care in the custody of the
Collateral if the Agent takes such action, for purposes of preserving
rights in the Collateral, as Debtor may reasonably request in writing, but
no failure or omission or delay by the Agent in complying with any such
request by Debtor, and no refusal by the Agent to comply with any such
request by Debtor, shall be deemed to be a failure to exercise reasonable
care.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 14
<PAGE>
ARTICLE VI
Default
-------
Section 6.1 Rights and Remedies. If an Event of Default shall have
-------------------
occurred and be continuing, the Agent shall have the following rights and
remedies:
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement or in any other Loan Document or by applicable
law, the Agent shall have all of the rights and remedies of a secured
party under the UCC (whether or not the UCC applies to the affected
Collateral). Without limiting the generality of the foregoing, the
Agent may (1) without demand or notice to the Debtor, collect,
receive, or take possession of the Collateral or any part thereof and
for that purpose the Agent may enter upon any premises on which the
Collateral is located and remove the Collateral therefrom or render it
inoperable, and/or (2) sell, lease, or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at the Agent's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the
Agent may deem commercially reasonable. The Agent shall have the right
at any public sale or sales, and, to the extent permitted by
applicable law, at any private sale or sales, to bid and become a
purchaser of the Collateral or any part thereof free of any right or
equity of redemption on the part of the Debtor, which right or equity
of redemption is hereby expressly waived and released by the Debtor.
Upon the request of the Agent, the Debtor shall assemble the
Collateral and make it available to the Agent at any place designated
by the Agent that is reasonably convenient to the Debtor and the
Agent. The Debtor agrees that the Agent shall not be obligated to give
more than five (5) days written notice of the time and place of any
public sale or of the time after which any private sale may take place
and that such notice shall constitute reasonable notice of such
matters. The Agent shall not be obligated to make any sale of
Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of Collateral may have been given. The Agent may,
without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at
the time and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so
adjourned. The Debtor shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all reasonable
attorneys' fees, legal expenses, and all other costs and expenses
incurred by the Agent or any Bank in connection with the collection of
the Obligations and the enforcement of the Agent's rights under this
Agreement. The Debtor shall remain liable for any deficiency if the
Proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Obligations in full. The Agent and the Banks
may apply the Collateral against the Obligations in such order and
manner as they may elect in their absolute discretion. The Debtor
waives all rights of marshalling, valuation, and appraisal in respect
of the Collateral.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 15
<PAGE>
(ii) The Agent may cause any or all of the Collateral held by it
to be transferred into the name of the Agent or the name or names of
the Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) On any sale of the Collateral, the Agent is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Agent's counsel, in order
to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable
Governmental Authority.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 Expenses. The Debtor hereby agrees to pay on demand: (a) all
--------
reasonable costs and out-of-pocket expenses of the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent, (b) all costs
and out-of-pocket expenses of the Agent and the Banks, or any of them in
connection with any Default and the enforcement of this Agreement or any other
Loan Document, including, without limitation, the reasonable fees and expenses
of legal counsel for the Agent and the Banks, or any of them, (c) all transfer,
stamp, documentary, or other similar taxes, assessments, or charges levied by
any Governmental Authority in respect of this Agreement or any of the other Loan
Documents, (d) all reasonable costs, out-of-pocket expenses, assessments, and
other charges incurred in connection with any filing, registration, recording,
or perfection of any security interest or Lien contemplated by this Agreement or
any other Loan Document, and (e) all other reasonable costs and out-of-pocket
expenses incurred by the Agent in connection with this Agreement or any other
Loan Document, including, without limitation, all fees, costs, out-of-pocket
expenses, and other charges incurred in connection with performing or obtaining
any audit or appraisal in respect of the Collateral.
SECTION 7.2 INDEMNIFICATION. THE DEBTOR HEREBY AGREES TO INDEMNIFY THE
---------------
AGENT AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AGENTS, AND PARTICIPANTS FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, INTEREST,
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), AND AMOUNTS PAID IN
SETTLEMENT TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION ,
AMENDED AND RESTATED SECURITY AGREEMENT - Page 16
<PAGE>
DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C)
ANY BREACH BY THE BORROWER OR THE DEBTOR OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES
OR ASSETS OF THE BORROWER, THE DEBTOR OR ANY SUBSIDIARY, (E) THE USE OR PROPOSED
USE OF ANY LETTER OF CREDIT, (F) ANY AND ALL TAXES, LEVIES, DEDUCTIONS, AND
CHARGES IMPOSED ON THE AGENT OR ANY BANK OR ANY OF THEIR RESPECTIVE
CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE
FOREGOING; PROVIDED, HOWEVER THAT NO PERSON TO BE INDEMNIFIED HEREUNDER SHALL
HAVE THE RIGHT TO BE INDEMNIFIED FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD
HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES)
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH
PERSON.
Section 7.3 Limitation of Liability. None of the Agent, any Bank, or any
-----------------------
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and the Debtor hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Debtor in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. The Debtor hereby waives,
releases, and agrees not to sue the Agent or any Bank or any of their respective
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Section 7.4 No Fiduciary Relationship. The relationship between the
-------------------------
Debtor and each Bank with respect to the Loan Documents and the
transactions governed thereby is solely that of debtor and creditor, and
neither the Agent nor any Bank has any fiduciary or other special
relationship with the Debtor with respect to the Loan Documents and the
transactions governed thereby, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between the
Debtor and any Bank with respect to the Loan Documents and the transactions
governed thereby to be other than that of debtor and creditor.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 17
<PAGE>
Section 7.5 No Waiver Cumulative Remedies. No failure on the part of the
-----------------------------
Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.
Section 7.6 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the Debtor and the Agent and their
respective heirs, successors, and assigns, except that the Debtor may not
assign any of its rights or obligations under this Agreement without the
prior written consent of the Agent.
Section 7.7 ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
--------------------------------------------------
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto. In the event any term or provision of
this Agreement expressly conflicts with any term or provision of the Loan
Agreement, the terms and provisions of the Loan Agreement shall govern and
control.
Section 7.8 Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made in writing and telecopied, mailed
by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in
accordance with this Section. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given
when transmitted by telecopy, subject to telephone confirmation of receipt,
or when personally delivered or, in the case of a mailed notice, when duly
deposited in the mails, in each case given or addressed as aforesaid.
Section 7.9 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY
--------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN
ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL
PURPOSES IN DALLAS COUNTY, TEXAS.
Section 7.10 Headings. The headings, captions, and arrangements used
--------
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 18
<PAGE>
Section 7.11 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Agreement shall survive the
execution and delivery of this Agreement, and no investigation by the Agent
or any Bank shall affect the representations and warranties of Debtor
herein or the right of the Agent or any Bank to rely upon them.
Section 7.12 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 7.13 Waiver of Bond. In the event the Agent seeks to take
--------------
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating
thereto that may be required by applicable law as an incident to such
possession, and waives any demand for possession prior to the commencement
of any such suit or action.
Section 7.14 Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.15 Construction. Debtor and Agent acknowledge that each of them
------------
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by Debtor and the Agent.
Section 7.16 Termination. If all of the Obligations shall have been
-----------
paid and performed in full and all Commitments shall have expired or
terminated, the Agent shall, upon the written request of the Debtor,
execute and deliver to the Debtor a proper instrument or instruments
acknowledging the release and termination of the security interests created
by this Agreement, and shall duly assign and deliver to the Debtor (without
recourse and without any representation or warranty) such of the Collateral
as may be in the possession of the Agent and has not previously been sold
or otherwise applied pursuant to this Agreement.
Section 7.17 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, THE DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR:
------
CELLSTAR, LTD.
By: National Auto Center, Inc.,
general partner
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:__________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
AMENDED AND RESTATED SECURITY AGREEMENT -Page 20
<PAGE>
Schedule 1
Location of Inventory and Equipment
-----------------------------------
Locations of Inventory and Equipment
having an aggregate value of $100,000 or more
---------------------------------------------
1730 Briercroft Drive 605 W. Airport Freeway
Carrollton, Texas 75006 Irving, Texas 75062
1728 Briercroft Drive
Carrollton, Texas 75006
Locations of Inventory and Equipment
having an aggregate value of less than $100,000
-----------------------------------------------
1711 Briercroft Drive, Suite 127 9222 Burnett Road
Carrollton, Texas 75006 Austin, Texas 78758
4146 S. Cooper Street
Arlington, Texas 76015
5937 Donnelly
Fort Worth, Texas 76107
4216 LBJ Freeway
Dallas, Texas 75244
512 N. Central
Richardson, Texas 75080
8728 Westpark Drive
Houston, Texas 77063
19750 Gulf Freeway
Webster, Texas 77598
6943 FM 1960 W.
Houston, Texas 77069
404-A Baylor Street (S. Austin)
Austin, Texas 78703
Sam's Club Locations where Inventory is Located
-----------------------------------------------
Sam's Communication Center Schedule for stores located in Texas is attached
hereto.
SCHEDULE 1, Location of Inventory and Equipment - Solo Page
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------------
TEXAS
- --------------------------------------------------------------------------------------------------------------------------------
AUSTIN AREA
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/21/94 6453 1352 9700 Capital of Texas R)512-338-9358
Hwy. Austin TX 78759 R)512-338-9359
F)512-338-4207
D)512-338-4252
- --------------------------------------------------------------------------------------------------------------------------------
9/22/94 8259 1353 5107 1-35 South R)512-326-2208
Austin, TX 78744 R)512-326-2209
F)512-326-5976
D)512-326-3258
- --------------------------------------------------------------------------------------------------------------------------------
11/15/95 6338 1354 1405 E. Bypass R)409-693-2202
College Station, TX 77840 R)409-696-5879
F)409-693-0378
D)409-693-1339
- --------------------------------------------------------------------------------------------------------------------------------
DALLAS AREA
- --------------------------------------------------------------------------------------------------------------------------------
6/6/94 6376 1054 4150 Beltline R)214-385-1516
Addison, TX 75244 R)214-385-1062
F)214-385-0668
D)214-385-1461
- --------------------------------------------------------------------------------------------------------------------------------
6/5/94 8242 1055 12000 McCree Road R)214-343-9405
Dallas, TX 75238 R)214-343-9134
(Garland Road) F)214-343-8960
D)214-385-1461
- --------------------------------------------------------------------------------------------------------------------------------
6/10/94 6372 1052 8282 Park Lane R)214-739-5255
Dallas, TX 75231 R)214-739-5167
F)214-739-5263
D)214-739-5302
- --------------------------------------------------------------------------------------------------------------------------------
11/19/94 8248 1064 1959 West NW Hwy. R)214-869-0806
Dallas, Tx 75220 R)214-869-9370
F)214-869-9264
D)214-869-9153
- --------------------------------------------------------------------------------------------------------------------------------
7/31/94 8282 1056 2900 Wheatland Road R)214-296-4820
Dallas, TX 75247 R)214-296-5039
(Duncanville) F)214-296-5630
D)214-296-6014
- --------------------------------------------------------------------------------------------------------------------------------
5/24/95 8269 1061 2625 W Hwy 303 R)214-988-1221
Grand Prairie, TX 75051 F)214-988-1072
D)214-988-1241
- --------------------------------------------------------------------------------------------------------------------------------
10/13/94 6381 1058 751 W. Main St. R)214-436-3417
Lewisville, TX 75067 F)214-436-3519
D)214-436-3836
M)214-434-3636
- --------------------------------------------------------------------------------------------------------------------------------
6/16/94 8299 1057 301 Coit Road R)214-596-8484
Plano, TX 75075 R)214-596-4479
F)214-596-3680
D)214-596-7527
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME #
- ---------------------------------------------------------------
TEXAS
- ---------------------------------------------------------------
AUSTIN AREA
- ---------------------------------------------------------------
<S> <C> <C> <C>
9/21/94 2.5
- ---------------------------------------------------------------
9/22/94 2.5
- ---------------------------------------------------------------
11/15/95 2.5
- ---------------------------------------------------------------
DALLAS AREA
- ---------------------------------------------------------------
6/6/94 2.5
- ---------------------------------------------------------------
6/5/94 3
- ---------------------------------------------------------------
6/10/94 2.5
- ---------------------------------------------------------------
11/19/94 2.5
- ---------------------------------------------------------------
7/31/94 2.5
- ---------------------------------------------------------------
5/24/95
- ---------------------------------------------------------------
10/13/94 2.5
- ---------------------------------------------------------------
6/16/94 2.5
- ---------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6/30/94 8268 1051 7500 Baker Blvd. R)817-589-0607
Richland Hills, TX 76118 F)817-589-0532
D)817-284-7610
- ---------------------------------------------------------------------------------------------------------------------------------
11/17/94 6350 1062 3333 Hwy. 75 N. R)903-813-1313
----------------------------------------------------------------------------------------------------------
Sherman, TX 75090 R)903-813-1312
F)903-813-1314
D)903-813-1315
- ---------------------------------------------------------------------------------------------------------------------------------
6/1/94 8277 1053 1451 S. Cherry Lane R)817-246-0487
White Settlement, TX R)817-246-0687
76108 F)817-246-0682
D)817-246-0564
- ---------------------------------------------------------------------------------------------------------------------------------
4/16/95 8224 1066 3801 Kell Blvd R)817-692-9841
Witchita Falls, TX 76308 R)817-692-9796
F)817-692-0696
D)817-692-0846
- ---------------------------------------------------------------------------------------------------------------------------------
11/17/95 8295 8295 3610 St. Michael Drive R)903-831-5944
Texarkana, TX 75503 F)903-831-5853
D)903-831-5745
- ---------------------------------------------------------------------------------------------------------------------------------
HOUSTON AREA
- ---------------------------------------------------------------------------------------------------------------------------------
1/26/95 8275 1256 1516 IH 10South R)409-842-9616
Beaumont, TX 77700 F)409-842-6895
D)409-842-8104
- ---------------------------------------------------------------------------------------------------------------------------------
6421 1255 2000 Westview Blvd R)409-756-0580
Conroe, TX 77304 F)409-756-0582
- ---------------------------------------------------------------------------------------------------------------------------------
1/25/94 6465 1258 2827 Dunvale Rd. R)713-266-0737
Houston, TX. 77063 R)713-266-0917
F)713-266-0953
D)713-266-5219
- ---------------------------------------------------------------------------------------------------------------------------------
9/26/94 8245 1253 325 East Richey Rd. R)713-443-2640
Houston, TX 77073 F)713-443-8857
D)713-443-8452
- ---------------------------------------------------------------------------------------------------------------------------------
9/24/94 8244 1251 1101 Fuqua St. R)713-910-0060
Houston, TX 77089 F)713-910-0191
D)713-910-4641
- ---------------------------------------------------------------------------------------------------------------------------------
1/23/95 6346 1261 1025 Hwy 6th North R)713-579-9226
Houston, TX 77079 F)713-579-2761
D)713-579-3208
- ---------------------------------------------------------------------------------------------------------------------------------
1/22/95 8217 1259 1615 South Loop West R)713-799-8584
<CAPTION>
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME #
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
6/30/94 3
- ------------------------------------------------------------------------------
11/17/94 2.5
- ------------------------------------------------------------------------------
6/1/94 2.5
- ------------------------------------------------------------------------------
4/16/95 3
- ------------------------------------------------------------------------------
11/17/95 2.5
- ------------------------------------------------------------------------------
HOUSTON AREA
- ------------------------------------------------------------------------------
1/26/95 2.5
2.5
- ------------------------------------------------------------------------------
1/25/94 2.5
- ------------------------------------------------------------------------------
9/26/94 2.5
- ------------------------------------------------------------------------------
9/24/94 2.5
- ------------------------------------------------------------------------------
1/23/95 2.5
- ------------------------------------------------------------------------------
1/22/95 2.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Houston, TX 77045 F)713-799-8661
D)713799-8664
- ----------------------------------------------------------------------------------------------------------------------------------
1/24/95 8274 1257 12205 West Road R)713-890-8991
Houston, TX. 77065 F)713-894-6890
D)713-894-4023
- ----------------------------------------------------------------------------------------------------------------------------------
9/27/94 6367 1254 9665 FM 1960 Bypass R)713-548-0777
Humble, TX 77338 F)713-319-4530
D)713-548-1422
- ----------------------------------------------------------------------------------------------------------------------------------
9/25/94 8246 1252 12002 S.W. Freeway R)713-240-0606
Meadows, TX 77477 F)713-240-0676
D)713-240-3488
- ----------------------------------------------------------------------------------------------------------------------------------
SAN ANTONIO / CORPUS CHRISTI AREA
- ----------------------------------------------------------------------------------------------------------------------------------
10/14/94 8227 1382 5055 Loop 410 West R)210-520-2623
San Antonio, TX 78229 F)210-520-2627
D)210-520-2629
- ----------------------------------------------------------------------------------------------------------------------------------
10/16/94 8264 1384 3150 S. W. Military Hwy R)210-977-9798
San Antonio, TX 78224 F)210-977-8508
D)210-977-8264
- ----------------------------------------------------------------------------------------------------------------------------------
10/15/94 8262 1383 12349 I-35 North R)210-590-8990
San Antonio, Tx 78233 F)210-590-9082
D)210-590-9084
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/94 6416 1381 12919 San Pedro R)210-545-7008
San Antonio, TX 78216 F)210-545-6821
D)210-545-6818
- ----------------------------------------------------------------------------------------------------------------------------------
SOUTH TEXAS AREA
- ----------------------------------------------------------------------------------------------------------------------------------
11/30/94 8126 1291 1601 Price Road R)210-542-7600
Brownsville, TX. 78521 F)210-542-8986
D)210-542-8862
- ----------------------------------------------------------------------------------------------------------------------------------
12/1/94 8250 1292 1400 E. Jackson Ave. R)210-687-1241
McAllen, TX. 78503 F)210-687-1539
D)210-687-3544
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- --------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------
1/24/95 2.5
- --------------------------------------------------------------------
9/27/94 2.5
- --------------------------------------------------------------------
9/25/94 2.5
- --------------------------------------------------------------------
SAN ANTONIO / CORPUS CHRISTI AREA
- --------------------------------------------------------------------
10/14/94 3
- --------------------------------------------------------------------
10/16/94 3
- --------------------------------------------------------------------
10/15/94 3
- --------------------------------------------------------------------
10/13/94 2.5
- --------------------------------------------------------------------
SOUTH TEXAS AREA
- --------------------------------------------------------------------
11/30/94 2.5
- --------------------------------------------------------------------
12/1/94 2.5
- --------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INSTALL CLUB COST GENERAL SHIPPING DIRECTOR COMM. CTR
DATE # CTR ADDRESS MANAGER RECEIVING OPERATIONS NUMBERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
10/29/95 8156 1293 4810 San Bernardo R)210-725-0016
Laredo, Tx 78041 F)210-725-0148
D)210-725-0156
- --------------------------------------------------------------------------------------------------------------------------------
10/30/95 6471 1294 9202 N. Navarro R)512-573-2228
Victoria, Tx 77901 F)512-573-2218
D)512-573-2164
- --------------------------------------------------------------------------------------------------------------------------------
10/17/94 8267 1281 4949 Greenwood Dr R)512-855-7965
Corpus Christi, TX F)512-855-7963
78416 D)512-855-7964
- --------------------------------------------------------------------------------------------------------------------------------
WEST TEXAS AREA
- --------------------------------------------------------------------------------------------------------------------------------
1/31/95 8226 1173 5301 S. First R)915-695-2310
Abilene, TX 79604 F)915-695-1602
D)915-695-2409
- --------------------------------------------------------------------------------------------------------------------------------
1/9/95 8279 1172 2201 Ross-Osage Dr. R)806-376-4700
Amarillo, TX. 79102 F)806-376-6608
D)806-376-6533
- --------------------------------------------------------------------------------------------------------------------------------
12/13/94 8270 1171 4303 W. Loop 289 R)806-791-1004
Lubbock, TX. 79407 F)806-792-0407
D)806-791-1925
- --------------------------------------------------------------------------------------------------------------------------------
2/6/95 8288 1175 1500 N. Trade Winds R)915-520-4883
Midland, TX. 79703 F)915-689-2716
D)915-689-2817
- --------------------------------------------------------------------------------------------------------------------------------
2/7/95 6439 1174 4230 John Sheppard Pwy. R)915-362-6106
Odessa, TX. 79762 F)915-363-8362
D)915-367-7506
- --------------------------------------------------------------------------------------------------------------------------------
9/13/95 6502 1541 7001 Gateway Blvd. W. R)915-772-1225
El Paso, TX 79925 F)915-772-2469
D)915-772-2823
- --------------------------------------------------------------------------------------------------------------------------------
9/14/95 8153 1542 7970 N. Mesa R)915-590-1592
El Paso, TX 79912 D)915-590-1885
F)915-590-1215
- --------------------------------------------------------------------------------------------------------------------------------
9/15/95 8280 1543 11360 Pellicano Drive R)915-581-1112
El Paso, TX 79936 F)915-590-1885
D)915-590-1215
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------
INSTALL AREA EMPLOYEE EMP.
DATE MANAGER NAME ID#
- ----------------------------------------------------------
<S> <C> <C> <C>
10/29/95 2.5
- ----------------------------------------------------------
10/30/95 2.5
- ----------------------------------------------------------
10/17/94 3
- ----------------------------------------------------------
WEST TEXAS AREA
- ----------------------------------------------------------
1/31/95 3
- ----------------------------------------------------------
1/9/95 2.5
- ----------------------------------------------------------
12/13/94 2.5
- ----------------------------------------------------------
2/6/95 2.5
- ----------------------------------------------------------
2/7/95 2.5
- ----------------------------------------------------------
9/13/95 2.5
- ----------------------------------------------------------
9/14/95 2.5
- ----------------------------------------------------------
9/15/95 2.5
- ----------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2
JURISDICTIONS FOR FILING
UCC-1 FINANCING STATEMENTS
--------------------------
Secretary of State of Texas
SCHEDULE 2, Jurisdiction for Filing UCC-1 Financing Statements - Solo Page
<PAGE>
Schedule 3
ADDITIONAL NAMES AND TRADE NAMES
--------------------------------
NATIONAL AUTO CELLULAR
P C CELLULAR
CELLSTAR
COMMUNICATION CENTER
SCHEDULE 3, Additional Names and Trade Names - Solo Page
<PAGE>
AMENDED AND RESTATED SECURITY AGREEMENT
---------------------------------------
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement") dated as of
July 31, 1996, is by and between CELLSTAR FULFILLMENT, LTD, a Texas limited
partnership (the "Debtor"), whose address is 1730 Briercroft, Carrollton, Texas
75006, and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association ("TCB"), not in its individual capacity but solely as agent for
itself and each of the other banks or lending institutions (each, a "Bank" and,
collectively, the "Banks") which is or may from time to time become a signatory
to the Loan Agreement (hereinafter defined) or any successor or permitted
assignee thereof (TCB in such capacity, together with its successors in such
capacity, the "Agent"), whose address is 2200 Ross Avenue, Post Office Box
660197, Dallas, Texas 75266-0197.
R E C I T A L S:
- - - - - - - -
A. National Auto Center, Inc., a Texas corporation (the "Borrower"),
CellStar Corporation, a Delaware corporation (the "Parent"), the Agent and the
Banks heretofore entered into that certain Loan Agreement dated as of November
9, 1994, as amended by that certain First Amendment to Loan Agreement dated as
of February 28, 1995, and as further amended by that certain Second Amendment to
Loan Agreement dated as of June 28, 1995 (such Loan Agreement, as amended, being
hereinafter referred to as the "Original Loan Agreement").
B. Pursuant to the Original Loan Agreement, certain of the Banks made
loans to Borrower (the existing indebtedness of Borrower to such Banks under the
Original Loan Agreement being hereinafter referred to as the "Existing
Indebtedness").
C. Pursuant to the Original Loan Agreement, Debtor executed and delivered
to the Agent that certain Security Agreement dated as of February 28, 1995 (the
"Original Security Agreement"), granting a security interest in the Collateral
to the Agent to secure the Existing Indebtedness.
D. The Borrower, the Parent, the Banks and the Agent are parties to that
certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996 (such Loan Agreement, as the same has been and may
be amended, supplemented or modified from time to time, being hereinafter
referred to as the "Loan Agreement"), pursuant to which, among other things, (i)
the Original Loan Agreement was amended and restated in its entirety, and (ii)
the Existing Indebtedness was renewed, extended, modified and rearranged, but
not extinguished.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 1
<PAGE>
E. Pursuant to the Loan Agreement, the Debtor executed and delivered to
the Agent that certain Amended and Restated Security Agreement dated as of July
20, 1995 (the "Existing Security Agreement"), pursuant to which the Original
Security Agreement was amended and restated in its entirety.
F. Concurrently herewith, the Borrower, the Parent, the Banks and the
Agent are entering into that certain Second Amendment to Amended and Restated
Loan Agreement of even date herewith (the "Second Amendment").
G. The parties hereto now desire to amend the Existing Security Agreement
as hereinafter provided and have agreed, for purposes of clarity and ease of
administration, to carry out the agreed upon amendments by amending the
pertinent provisions of the Existing Security Agreement and then restating the
Existing Security Agreement in its entirety by means of this Agreement.
H. The Agent and the Banks have conditioned their obligations under the
Loan Agreement and the effectiveness of the Second Amendment on the execution
and delivery by the Debtor of this Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows, and the Existing Security Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE I
Definitions
-----------
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
have the following meanings:
"Accounts" means any "account", as such term is defined in Section
--------
9.106 of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by the Debtor: (a) all rights of
the Debtor to payment for goods sold or leased or services rendered,
whether or not earned by performance, (b) all accounts receivable of the
Debtor, (c) all rights of the Debtor to receive any payment of money or
other form of consideration, (d) all security pledged, assigned, or granted
to or held by the Debtor to secure any of the foregoing, (e) all guaranties
of, or indemnifications with respect to, any of the foregoing, and (f) all
rights of the Debtor as an unpaid seller of goods or services, including,
but not limited to, all rights of stoppage in transit, replevin,
reclamation, and resale.
"Chattel Paper" means any "chattel paper", as such term is defined in
-------------
Section 9.105(a)(2) of the UCC, now owned or hereafter acquired by the
Debtor.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 2
<PAGE>
"Collateral" has the meaning specified in Section 2.1 of this
----------
Agreement.
"Document" means any "document", as such term is defined in Section
--------
9.105(a)(6) of the UCC, now owned or hereafter acquired by the Debtor,
including, without limitation, all documents of title and warehouse
receipts of the Debtor.
"Equipment" means any "equipment", as such term is defined in Section
---------
9.109(2) of the UCC, now owned or hereafter acquired by the Debtor and, in
any event, shall include, without limitation, all machinery, equipment,
furnishings, fixtures, and vehicles now owned or hereafter acquired by the
Debtor and any and all additions, substitutions, and replacements of any of
the foregoing, wherever located, together with all attachments, components,
parts, equipment, and accessories installed thereon or affixed thereto.
"General Intangibles" means any "general intangibles", as such term is
-------------------
defined in Section 9.106 of the UCC, now owned or hereafter acquired by the
Debtor and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by the Debtor: (a) all
of the Debtor's patents, patent applications, patent rights, service marks,
trademarks, trade names, trade secrets, intellectual property,
registrations, goodwill, copyrights, franchises, licenses, permits,
proprietary information, customer lists, designs, and inventions, (b) all
of the Debtor's books, records, data, plans, manuals, computer software,
and computer programs, (c) all of the Debtor's contract rights, partnership
interests, joint venture interests, securities, deposit accounts,
investment accounts, and certificates of deposit, (d) all rights of the
Debtor to payment under letters of credit and similar agreements, (e) all
tax refunds and tax refund claims of the Debtor, (f) all choses in action
and causes of action of the Debtor (whether arising in contract, tort, or
otherwise and whether or not currently in litigation) and all judgments in
favor of the Debtor, (g) all rights and claims of the Debtor under
warranties and indemnities, and (h) all rights of the Debtor under any
insurance, surety, or similar contract or arrangement.
"Instrument" means any "instrument", as such term is defined in
----------
Section 9.105(a)(9) of the UCC, now owned or hereafter acquired by the
Debtor.
"Inventory" means any "inventory", as such term is defined in Section
---------
9.109(4) of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by the Debtor: (a) all goods and
other personal property of the Debtor that are held for sale or lease or to
be furnished under any contract of service, (b) all raw materials, work-in-
process, finished goods, inventory, supplies, and materials of the Debtor,
(c) all wrapping, packaging, advertising, and shipping materials of the
Debtor, (d) all goods that have been returned to, repossessed by,
AMENDED AND RESTATED SECURITY AGREEMENT - Page 3
<PAGE>
or stopped in transit by the Debtor, and (e) all Documents evidencing any
of the foregoing.
"Obligations" means:
-----------
(a) the indebtedness, liabilities and obligations of the
Borrower to the Banks evidenced by those certain Promissory Notes of
even date herewith, executed by Borrower and payable to the order of
the Banks in the aggregate principal amount of $90,000,000.00;
(b) the indebtedness, liabilities and obligations of the Debtor
to the Agent and the Banks under that certain Amended and Restated
Guaranty dated as of July 20, 1995, executed by Debtor in favor of the
Agent and the Banks;
(c) the "Obligations", as such term is defined in the Loan
Agreement;
(d) all future Advances by the Agent or any Bank to Borrower and
Debtor, or either of them;
(e) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the Agent
or any Bank to preserve and maintain the Collateral, collect the
obligations herein described and enforce this Agreement;
(f) all other obligations, indebtedness and liabilities of
Borrower and Debtor, or either of them, to the Agent or any Bank under
any of the Loan Documents, now existing or hereafter arising,
regardless of whether such obligations, indebtedness and liabilities
are similar, dissimilar, related, unrelated, direct, indirect, fixed,
contingent, primary, secondary, joint, several, or joint and several;
and
(g) all extensions, renewals and modifications of any of the
foregoing.
"Permitted Liens" means the security interests granted hereby and
---------------
Liens expressly permitted by Section 10.2 of the Loan Agreement.
"Proceeds" means any "proceeds", as such term is defined in Section
--------
9.306 of the UCC and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty, or guaranty
payable to the Debtor from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to the Debtor from time to time in connection with any
requisition, confiscation, condemnation, seizure, or
AMENDED AND RESTATED SECURITY AGREEMENT - Page 4
<PAGE>
forfeiture of all or any part of the Collateral by any Governmental
Authority (or any person acting under color of Governmental Authority), and
(c) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"UCC" means the Uniform Commercial Code as in effect in the State of
---
Texas or, if so required with respect to any particular Collateral by
mandatory provisions of applicable law, as in effect in the jurisdiction in
which such Collateral is located.
Section 1.2 Terms Defined in Loan Agreement. All capitalized terms used
-------------------------------
and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
ARTICLE II
Security Interest
-----------------
Section 2.1 Security Interest. As collateral security for the prompt
-----------------
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), the Debtor hereby grants, and ratifies
and confirms the prior grant made pursuant to the Original Security Agreement
and the Existing Security Agreement, to the Agent, for the pro rata benefit of
the Banks, a first priority lien on and security interest in all of the Debtor's
personal property, including without limitation all of the Debtor's right,
title, and interest in and to the following, whether now owned or hereafter
arising or acquired and wherever located (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments;
(d) all General Intangibles;
(e) all Documents;
(f) all Inventory;
(g) all Equipment; and
(h) all Proceeds and products of any or all of the foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Agent or any Bank but for the fact that they are unenforceable
or not allowable due to the existence of bankruptcy,
AMENDED AND RESTATED SECURITY AGREEMENT - Page 5
<PAGE>
reorganization, or similar proceedings involving the Borrower. If the grant,
pledge, or collateral transfer or assignment of any rights of the Debtor under
any contract included in the Collateral is expressly prohibited by such
contract, then the security interest hereby granted therein nonetheless remains
effective to the extent allowed by UCC Section 9.318 or other applicable law but
is otherwise limited by that prohibition.
Section 2.2 Renewal of Obligations and Liens. The parties hereto
--------------------------------
acknowledge and agree that (i) the Obligations are in part in renewal,
extension, modification and rearrangement of, but not extinguishment of, the
Existing Indebtedness, and (ii) the Existing Indebtedness is secured by liens
and security interests granted by Debtor pursuant to the Original Security
Agreement and the Existing Security Agreement, which liens and security
interests are not extinguished or released, but instead are hereby renewed,
extended, carried forward and continued in accordance with the terms of this
Agreement.
Section 2.3 Debtor Remains Liable. Notwithstanding anything to the
---------------------
contrary contained herein, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the Agent
of any of its rights hereunder shall not release the Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of the Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
ARTICLE III
Representations and Warranties
------------------------------
The Debtor represents and warrants to the Agent that:
Section 3.1 Title. The Debtor is, and with respect to Collateral
-----
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any Lien, except Permitted Liens.
Section 3.2 Accounts. Unless the Debtor has given the Agent written
--------
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, the Debtor shall be deemed to have represented and
warranted to the Agent as to each and all of its Accounts that (a) each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by the Debtor or the sale or lease of goods
by the Debtor, (c) the amount of each Account represented as owing is the
correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (d) to the best of
Debtor's knowledge, no Account is subject to any offset, counterclaim, or other
defense.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 6
<PAGE>
Section 3.3 Financing Statements. No financing statement, security
--------------------
agreement, or other Lien instrument covering all or any part of the Collateral
is on file in any public office, except those filed in favor of the Agent
pursuant to the Original Security Agreement, the Existing Security Agreement,
this Agreement or with respect to any other Permitted Liens. Except as set forth
on Schedule 3 hereto, the Debtor has not within the past five (5) years done
business under any name or trade name other than its legal name set forth at the
beginning of this Agreement.
Section 3.4 Principal Place of Business. The principal place of
---------------------------
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown at the beginning of this Agreement.
Section 3.5 Location of Collateral. All Inventory and Equipment of the
----------------------
Debtor is located at the places specified on Schedule 1 hereto. The Debtor has
exclusive possession and control of its Inventory and Equipment. None of the
Inventory or Equipment is evidenced by a Document (including, without
limitation, a negotiable document of title). All Instruments and Chattel Paper
have been delivered to the Agent.
Section 3.6 Perfection. This Agreement creates a security interest in
----------
the Collateral, and ratifies and confirms the existing security interest granted
pursuant to the Original Security Agreement and the Existing Security Agreement,
in favor of the Agent. Upon the filing of UCC financing statements in favor of
the Agent in the jurisdictions listed on Schedule 2 attached hereto, and upon
the Agent's obtaining possession of all Documents and Instruments of the Debtor,
the security interest in favor of the Agent created herein is and will
constitute a valid and perfected Lien upon and security interest in the
Collateral (except Equipment and Inventory located in jurisdictions where
perfection is not required under Section 4.10(a) hereof), subject to no equal or
prior Lien, except the Permitted Liens.
Section 3.7 Benefit to Debtor. The value of the consideration received
-----------------
and to be received by the Debtor as a result of the Borrower, the Parent, the
Agent and the Banks entering into the Loan Agreement and the Second Amendment
and the Debtor executing and delivering this Agreement is reasonably worth at
least as much as the liability and obligation of the Debtor hereunder, and such
liability and obligation and the Borrower's entering into the Loan Agreement and
the Second Amendment have benefited and may reasonably be expected to benefit
the Debtor directly and indirectly. Reference is hereby made to the Guaranty of
the Debtor for a more complete description of the value and consideration
received and to be received by the Debtor in connection with the execution and
delivery of this Agreement and such Guaranty.
Section 3.8 Loan Agreement. Each and every representation and warranty
--------------
contained in the Loan Agreement is true and correct in all respects.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 7
<PAGE>
ARTICLE IV
Covenants
---------
The Debtor covenants and agrees with the Agent that until the Obligations
are paid and performed in full and all Commitments have terminated:
Section 4.1 Encumbrances. The Debtor shall not create, permit, or
------------
suffer to exist, and shall defend the Collateral against, any Lien on the
Collateral, except the Permitted Liens, and shall defend the Debtor's rights in
the Collateral and the Agent's security interest in the Collateral against the
claims and demands of all Persons. The Debtor shall do nothing to impair the
rights of the Agent in the Collateral.
Section 4.2 Modification of Accounts. The Debtor shall, in accordance
------------------------
with prudent business practices, endeavor to collect or cause to be collected
from each account debtor under its Accounts, as and when due, any and all
amounts owing under such Accounts. Without the prior written consent of the
Agent, the Debtor shall not (a) grant any extension of time for any payment with
respect to any of the Accounts, except for extensions of time granted in the
ordinary course of Debtor's business for payment with respect to Accounts not
included in the Borrowing Base, (b) compromise, compound, or settle any of the
Accounts for less than the full amount thereof, except for compromise, compound
or settlement in the ordinary course of business of Accounts not included in the
Borrowing Base, (c) release, in whole or in part, any Person liable for payment
thereof, except in connection with settlements permitted by clause (b) above,
(d) allow any credit or discount for payment with respect to any Account other
than trade discounts granted in the ordinary course of business, or (e) release
any Lien or guaranty securing any Account, except in connection with settlements
permitted by clause (b) above.
Section 4.3 Disposition of Collateral. The Debtor shall not
-------------------------
sell, lease, assign (by operation of law or otherwise), or otherwise dispose of,
or grant any option with respect to, the Collateral or any part thereof without
the prior written consent of the Agent, except as expressly permitted by the
Loan Agreement.
Section 4.4 Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of the Debtor, the Debtor
shall promptly execute and deliver all such further instruments, agreements, and
documents and take such further action as the Agent may deem necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement. Without limiting the
generality of the foregoing, the Debtor shall (a) execute and deliver to the
Agent such financing statements as the Agent may from time to time require; (b)
deliver and pledge to the Agent all Documents (including, without limitation,
negotiable documents of title) evidencing Inventory or Equipment; (c) deliver
and pledge to the Agent all Instruments and Chattel Paper of the Debtor with any
necessary endorsements; and (d) execute and deliver to the Agent such other
documents, instruments, and agreements as the Agent may require to perfect and
maintain the validity, effectiveness, and priority of the Loan Documents and the
Liens intended to be created thereby. The Debtor authorizes the Agent to file
one or more financing or continuation
AMENDED AND RESTATED SECURITY AGREEMENT - Page 8
<PAGE>
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Debtor where permitted by law. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement.
Section 4.5 Risk of Loss; Insurance. The Debtor shall be responsible
-----------------------
for any loss or damage to the Collateral. The Debtor shall, at is own expense,
maintain or cause to be maintained insurance with respect to the Collateral in
such amounts, against such risks, in such form, and with such insurers as shall
be satisfactory to the Agent from time to time. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Agent, for
the pro rata benefit of the Banks, and the Debtor as their interests may appear.
Each policy for property insurance shall contain loss payable clauses and a loss
payable endorsement in favor of the Agent, for the pro rata benefit of the
Banks, as its interest may appear. If the Debtor shall fail to maintain or cause
to be maintained the insurance required by this Agreement, the Agent shall have
the right (but shall be under no obligation) to obtain such insurance and the
Debtor shall reimburse the Agent for all costs and expenses incurred by the
Agent in obtaining such insurance. All such insurance shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless the Agent has received thirty (30) days prior written notice
thereof. The Debtor shall deliver to the Agent and each Bank copies of
all insurance policies required by this Agreement.
Section 4.6 Inspection Rights. The Debtor shall permit the Agent, each
-----------------
Bank and their respective representatives to examine, inspect, and audit the
Collateral and to examine, inspect, and copy the Debtor's books and records at
any reasonable time and as often as the Agent or any such Bank may desire during
normal business hours. The Agent and each Bank may at any time and from time to
time contact account debtors and other obligors to verify the existence,
amounts, and terms of the Debtor's Accounts.
Section 4.7 Mortgagee's and Landlord's Agreements. With respect to each
-------------------------------------
location of Inventory having an aggregate value of $100,000 or more, as
specified on Schedule 1 hereto, the Debtor shall cause each mortgagee of real
property owned by the Debtor and each landlord of real property leased by the
Debtor who has not previously done so to execute and deliver to the Agent, on or
before the date hereof, instruments satisfactory in form and substance to the
Agent by which such mortgagee or landlord waives its rights, if any, in the
Collateral (each, a "Landlord's Agreement"); provided, however, that with
-------- -------
respect to Collateral located at 8728 Westpark Drive, Houston, Texas, Debtor
shall exert its best efforts to obtain a Landlord's Agreement, but Debtor's
failure to obtain such a Landlord's Agreement with respect to such location
shall not cause the Inventory located at such location to be excluded from the
Borrowing Base if such Inventory otherwise constitutes Eligible Inventory. After
the date hereof, Debtor shall promptly deliver or cause to be delivered to the
Agent Landlord's Agreements in accordance with this Section for each location
where the Inventory hereafter has an aggregate value of $100,000 or more. At the
request of the Agent, Debtor shall promptly deliver or cause to be delivered
Landlord's Agreements in accordance with this Section for any locations where
any Collateral may now or hereafter be located.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 9
<PAGE>
Section 4.8 Corporate and Partnership Changes. The Debtor shall not
---------------------------------
change its name, identity, or corporate or partnership structure in any manner
that might make any financing statement filed in connection with this Agreement
seriously misleading unless the Debtor shall have given the Agent thirty (30)
days prior written notice thereof and shall have taken all action deemed
necessary or desirable by the Agent to make each financing statement not
seriously misleading. The Debtor shall not change its principal place of
business, chief executive office, or the place where it keeps its books and
records unless it shall have given the Agent thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
the Agent to cause its security interest in the Collateral to be perfected with
the priority required by this Agreement.
Section 4.9 Books and Records; Information. The Debtor shall keep
------------------------------
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with GAAP. The Debtor shall from
time to time at the request of the Agent deliver to the Agent such information
regarding the Collateral and the Debtor as the Agent may request, including,
without limitation, lists and descriptions of the Collateral and evidence of the
identity and existence of the Collateral. The Debtor shall mark its books and
records to reflect the security interest of the Agent under this Agreement.
Section 4.10 Equipment and Inventory.
-----------------------
(a) The Debtor shall keep the Equipment and Inventory at the
locations specified on Schedule 1 hereto or at such other places within the
United States of America, provided that with respect to any location of
Equipment or Inventory not listed on Schedule 1 hereto, (i) if the
Inventory located at such location has an aggregate value of $100,000 or
more, the Debtor shall have given the Agent thirty (30) days prior written
notice of the transfer of Equipment or Inventory to or opening of such
location, and all action required to perfect the Agent's security interest
in such Equipment and Inventory with the priority required by this
Agreement shall have been taken, (ii) the Debtor shall deliver to the Agent
by the twenty-fifth (25th) day of each month a computer listing of all
locations of Equipment and Inventory not specified on Schedule 1 hereto or
any listing previously delivered hereunder, and (iii) the Debtor shall take
or cause to be taken all action necessary to perfect, with the same
priority required by this Agreement, the Agent's security interest in all
Equipment and Inventory located in each state where the Inventory located
in such state has an aggregate value of $100,000 or more.
(b) The Debtor shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear excepted). The Debtor shall
not permit any waste or destruction of the Equipment or Inventory or any
part thereof. The Debtor shall not permit the Equipment or Inventory to be
used in violation of any law, rule, or regulation or inconsistently with
the terms of any policy of insurance. The Debtor shall not use or permit
any of the Equipment or Inventory to be used in any manner or for any
purpose that would impair its value or expose it to unusual risk.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 10
<PAGE>
Section 4.11 Warehouse Receipts Non-Negotiable. The Debtor agrees that
---------------------------------
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC as in effect in any relevant jurisdiction or under relevant
law).
Section 4.12 Notification. The Debtor shall promptly, and in any event
------------
within five (5) days after the Debtor obtains knowledge or becomes aware of any
of the following, notify the Agent of any Lien or claim that has attached to or
been made or asserted against any of the Collateral, any material damage to or
loss of any of the Collateral, the occurrence of any other event that could have
a material adverse effect on the Collateral or the security interest created
hereunder, and the occurrence or existence of any Default.
Section 4.13 Collection of Accounts. Except as otherwise provided in
----------------------
this Section, the Debtor shall have the right to collect and receive payments on
the Accounts. In connection with such collections, the Debtor may take (and, at
the Agent's direction, shall take) such actions as the Debtor or the Agent may
deem necessary or advisable to enforce collection of the Accounts. At any time,
if an Event of Default shall have occurred and be continuing, the Agent shall
have the right to, or upon the request of the Agent the Debtor shall, instruct
all account debtors and other Persons obligated in respect of the Accounts to
make all payments on the Accounts either directly to the Agent, for the pro rata
benefit of the Banks (by instructing that such payments be remitted to a post
office box which shall be in the name and under the control of the Agent), or to
one or more other banks in the United States of America (by instructing that
such payments be remitted to a post office box which shall be in the name or
under the control of the Agent) under arrangements in form and substance
satisfactory to the Agent pursuant to which the Debtor shall have irrevocably
instructed such other bank (and such other bank shall have agreed) to remit all
such payments directly to the Agent. In addition to the foregoing, the Debtor
agrees that if any Proceeds of any Collateral (including payments made in
respect of Accounts) shall be received by the Debtor while an Event of Default
exists, the Debtor shall promptly deliver such Proceeds to the Agent, for the
pro rata benefit of the Banks, with any necessary endorsements. Until such
Proceeds are delivered to the Agent, such Proceeds shall be held in trust by the
Debtor for the benefit of the Agent and shall not be commingled with any other
funds or property of the Debtor. All Proceeds of Collateral received by the
Agent pursuant to this Section may at the option of the Required Banks in the
exercise of their absolute discretion, (i) be applied by the Agent and the Banks
to their respective Obligations in such order and manner as they may each elect
in their absolute discretion, or (ii) be deposited to the credit of Debtor and
held as collateral for the Obligations or permitted to be used by Debtor in the
ordinary course of its business.
ARTICLE V
Rights of the Agent
-------------------
Section 5.1 Power of Attorney. The Debtor hereby irrevocably
-----------------
constitutes and appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful
AMENDED AND RESTATED SECURITY AGREEMENT - Page 11
<PAGE>
attorney-in-fact with full irrevocable power and authority in the name of the
Debtor or in its own name, to take any and all action and to execute any and all
documents and instruments which the Agent at any time and from time to time
deems necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, the Debtor hereby gives the
Agent the power and right on behalf of the Debtor and in its own name to do any
of the following, without notice to or the consent of the Debtor, and whether or
not an Event of Default has occurred and is continuing (except as otherwise
expressly provided below).
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of the Debtor
or in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under
the Collateral or any policy of insurance;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) after the occurrence and during the continuance of an Event of
Default, to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Agent and to
receive, open, and dispose of mail addressed to the Debtor;
(iv) (A) after the occurrence and during the continuance of an Event
of Default, to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to the Agent or as the Agent
shall direct; (B) after the occurrence and during the continuance of an
Event of Default, to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral; (C) after the occurrence and during the
continuance of an Event of Default, to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, proxies, stock powers, verifications,
and notices in connection with accounts and other documents relating to the
Collateral; (D) after the occurrence and during the continuance of an Event
of Default, to commence and prosecute any suit, action, or proceeding at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of
any Collateral; (E) after the occurrence and during the continuance of an
Event of Default, to defend any suit, action, or proceeding brought against
the Debtor with respect to any Collateral; (F) after the occurrence and
during the continuance of an Event of Default, to settle, compromise, or
adjust any suit, action, or proceeding described above and, in connection
therewith, to give such discharges or releases as the Agent may deem
appropriate; (G) to exchange any of the Collateral for other property upon
any merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof and, in connection therewith, deposit
any of the Collateral with any committee, depositary, transfer agent,
registrar, or other designated
AMENDED AND RESTATED SECURITY AGREEMENT - Page 12
<PAGE>
agency upon such terms as the Agent may determine; (H) to add or release
any guarantor, indorser, surety, or other party to any of the Collateral;
(I) to renew, extend, or otherwise change the terms and conditions of any
of the Collateral; (J) to make, settle, compromise, or adjust claims under
any insurance policy covering any of the Collateral; and (K) after the
occurrence and during the continuance of an Event of Default, to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's option
and the Debtor's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve, or realize
upon the Collateral and the Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or in its capacity as attorney-in-fact except acts or
omissions resulting from its willful misconduct. This power of attorney is
conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent will exercise its best efforts to
notify Debtor of any action taken by the Agent in its capacity as attorney-in-
fact pursuant to this Section, promptly after such action is taken, provided
that any failure by the Agent to so notify Debtor shall not impose any liability
upon the Agent or affect its rights and remedies hereunder, at law or in equity.
The Agent shall not be responsible for any decline in the value of the
Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or Lien given to secure the Collateral.
Section 5.2 Setoff; Property Held by the Agent and the Banks. If an
------------------------------------------------
Event of Default shall have occurred and be continuing, the Agent and each Bank
shall have the right to set off and apply against the Obligations, at any time
and without notice to the Debtor, any and all deposits (general or special, time
or demand, provisional or final) or other sums at any time credited by or owing
from the Agent or any Bank to the Debtor whether or not the Obligations are then
due. As additional security for the Obligations, the Debtor hereby grants the
Agent and each Bank a security interest in all money, instruments, and other
property of the Debtor now or hereafter held by the Agent or any Bank, including
without limitation, property held in safekeeping. In addition to the Agent's or
any Bank's right of setoff and as further security for the Obligations, the
Debtor hereby grants the Agent and each Bank a security interest in all deposits
(general or special, time or demand, provisional or final) of the Debtor now or
hereafter on deposit with or held by the Agent or any Bank and all other sums at
any time credited by or owing from the Agent or any Bank to the Debtor. The
rights and remedies of the Agent and each Bank hereunder are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which the Agent or any Bank may have.
Section 5.3 Performance by the Agent. If the Debtor shall fail to
------------------------
perform any covenant or agreement contained in this Agreement, the Agent may
perform or attempt to perform such covenant or agreement on behalf of the
Debtor. In such event, the Debtor shall, at the request
AMENDED AND RESTATED SECURITY AGREEMENT - Page 13
<PAGE>
of the Agent, promptly pay any amount expended by the Agent in connection with
such performance or attempted performance to the Agent, together with interest
thereon at the Default Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that the Agent shall not have any liability or
responsibility for the performance of any obligation of the Debtor under this
Agreement.
Section 5.4 Subrogation. If any of the Obligations are given in renewal
-----------
or extension or applied toward the payment of indebtedness secured by any Lien,
the Agent and the Banks shall be, and are hereby, subrogated to all of the
rights, titles, interests and Liens securing the indebtedness so renewed,
extended, or paid.
Section 5.5 Agent's Duty of Care. Other than the exercise of reasonable
--------------------
care and the physical custody of the Collateral while held by the Agent
hereunder, the Agent shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto, including without limitation any obligation or duty
to collect any sums due in respect thereof or to protect or preserve any rights
against prior parties or any other rights pertaining thereto, it being
understood and agreed that Debtor shall be responsible for preservation of all
rights in the Collateral. Without limiting the generality of the foregoing, the
Agent shall be conclusively deemed to have exercised reasonable care in the
custody of the Collateral if the Agent takes such action, for purposes of
preserving rights in the Collateral, as Debtor may reasonably request in
writing, but no failure or omission or delay by the Agent in complying with any
such request by Debtor, and no refusal by the Agent to comply with any such
request by Debtor, shall be deemed to be a failure to exercise reasonable care.
ARTICLE VI
Default
-------
Section 6.1 Rights and Remedies. If an Event of Default shall have
-------------------
occurred and be continuing, the Agent shall have the following rights and
remedies:
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement or in any other Loan Document or by applicable law,
the Agent shall have all of the rights and remedies of a secured party
under the UCC (whether or not the UCC applies to the affected Collateral).
Without limiting the generality of the foregoing, the Agent may (1) without
demand or notice to the Debtor, collect, receive, or take possession of the
Collateral or any part thereof and for that purpose the Agent may enter
upon any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (2) sell, lease, or
otherwise dispose of the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at the Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Agent may deem commercially reasonable. The Agent shall have
the right at any public sale or sales, and, to the extent permitted by
applicable law, at any private sale or
AMENDED AND RESTATED SECURITY AGREEMENT - Page 14
<PAGE>
sales, to bid and become a purchaser of the Collateral or any part thereof
free of any right or equity of redemption on the part of the Debtor, which
right or equity of redemption is hereby expressly waived and released by
the Debtor. Upon the request of the Agent, the Debtor shall assemble the
Collateral and make it available to the Agent at any place designated by
the Agent that is reasonably convenient to the Debtor and the Agent. The
Debtor agrees that the Agent shall not be obligated to give more than five
(5) days written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. The Agent shall not be
obligated to make any sale of Collateral if it shall determine not to do
so, regardless of the fact that notice of sale of Collateral may have been
given. The Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was
so adjourned. The Debtor shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all reasonable attorneys'
fees, legal expenses, and all other costs and expenses incurred by the
Agent or any Bank in connection with the collection of the Obligations and
the enforcement of the Agent's rights under this Agreement. The Debtor
shall remain liable for any deficiency if the Proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations in
full. The Agent and the Banks may apply the Collateral against the
Obligations in such order and manner as they may elect in their absolute
discretion. The Debtor waives all rights of marshalling, valuation, and
appraisal in respect of the Collateral.
(ii) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) On any sale of the Collateral, the Agent is hereby authorized
to comply with any limitation or restriction with which compliance is
necessary, in the view of the Agent's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval of
the purchaser or purchasers by any applicable Governmental Authority.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 Expenses. The Debtor hereby agrees to pay on demand: (a)
--------
all reasonable costs and out-of-pocket expenses of the Agent in connection with
the preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all
AMENDED AND RESTATED SECURITY AGREEMENT - Page 15
<PAGE>
amendments, modifications, renewals, extensions, and supplements thereof and
thereto, including, without limitation, the reasonable fees and expenses of
legal counsel for the Agent, (b) all costs and out-of-pocket expenses of the
Agent and the Banks, or any of them in connection with any Default and the
enforcement of this Agreement or any other Loan Document, including, without
limitation, the reasonable fees and expenses of legal counsel for the Agent and
the Banks, or any of them, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Loan Documents, (d) all reasonable
costs, out-of-pocket expenses, assessments, and other charges incurred in
connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by this Agreement or any other Loan
Document, and (e) all other reasonable costs and out-of-pocket expenses incurred
by the Agent in connection with this Agreement or any other Loan Document,
including, without limitation, all fees, costs, out-of-pocket expenses, and
other charges incurred in connection with performing or obtaining any audit or
appraisal in respect of the Collateral.
SECTION 7.2 INDEMNIFICATION. THE DEBTOR HEREBY AGREES TO INDEMNIFY
---------------
THE AGENT AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AGENTS, AND PARTICIPANTS FROM, AND
HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, INTEREST, EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES), AND AMOUNTS PAID IN SETTLEMENT TO WHICH
ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE
TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR THE DEBTOR
OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY
OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER, THE DEBTOR OR ANY
SUBSIDIARY, (E) THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (F) ANY AND ALL
TAXES, LEVIES, DEDUCTIONS, AND CHARGES IMPOSED ON THE AGENT OR ANY BANK OR ANY
OF THEIR RESPECTIVE CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G)
ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
RELATING TO ANY OF THE FOREGOING; PROVIDED, HOWEVER THAT NO PERSON TO BE
INDEMNIFIED HEREUNDER SHALL HAVE THE RIGHT TO BE INDEMNIFIED FOR ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING ANY PROVISION OF THIS
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY
AMENDED AND RESTATED SECURITY AGREEMENT - Page 16
<PAGE>
AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 7.3 Limitation of Liability. None of the Agent, any Bank, or
-----------------------
any Affiliate, officer, director, employee, attorney, or agent thereof shall
have any liability with respect to, and the Debtor hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Debtor in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. The Debtor hereby waives,
releases, and agrees not to sue the Agent or any Bank or any of their respective
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Section 7.4 No Fiduciary Relationship. The relationship between the
-------------------------
Debtor and each Bank with respect to the Loan Documents and the transactions
governed thereby is solely that of debtor and creditor, and neither the Agent
nor any Bank has any fiduciary or other special relationship with the Debtor
with respect to the Loan Documents and the transactions governed thereby, and no
term or condition of any of the Loan Documents shall be construed so as to deem
the relationship between the Debtor and any Bank with respect to the Loan
Documents and the transactions governed thereby to be other than that of debtor
and creditor.
Section 7.5 No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are cumulative
and not exclusive of any rights and remedies provided by law.
Section 7.6 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the Debtor and the Agent and their respective
heirs, successors, and assigns, except that the Debtor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Agent.
Section 7.7 ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
--------------------------------------------------
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
AMENDED AND RESTATED SECURITY AGREEMENT - Page 17
<PAGE>
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO. The provisions of this Agreement may be amended or waived only
by an instrument in writing signed by the parties hereto. In the event any term
or provision of this Agreement expressly conflicts with any term or provision of
the Loan Agreement, the terms and provisions of the Loan Agreement shall govern
and control.
Section 7.8 Notices. All notices and other communications provided
-------
for in this Agreement shall be given or made in writing and telecopied, mailed
by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof; or, as to any party at such other address as shall be designated
by such party in a notice to the other party given in accordance with this
Section. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
Section 7.9 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED
--------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED
INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN
DALLAS COUNTY, TEXAS.
Section 7.10 Headings. The headings, captions, and arrangements used
--------
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 7.11 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Agreement shall survive the
execution and delivery of this Agreement, and no investigation by the Agent or
any Bank shall affect the representations and warranties of Debtor herein or the
right of the Agent or any Bank to rely upon them.
Section 7.12 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 7.13 Waiver of Bond. In the event the Agent seeks to take
--------------
possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.14 Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
AMENDED AND RESTATED SECURITY AGREEMENT - Page 18
<PAGE>
Section 7.15 Construction. Debtor and Agent acknowledge that each of
------------
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Debtor and the Agent.
Section 7.16 Termination. If all of the Obligations shall have been
-----------
paid and performed in full and all Commitments shall have expired or terminated,
the Agent shall, upon the written request of the Debtor, execute and deliver to
the Debtor a proper instrument or instruments acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to the Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Agent and has not previously been sold or otherwise applied pursuant to
this Agreement.
Section 7.17 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
--------------------
BY APPLICABLE LAW, THE DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR
THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTOR:
------
CELLSTAR FULFILLMENT, LTD
By: CellStar Fulfillment, Inc.,
general partner
By:____________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AMENDED AND RESTATED SECURITY AGREEMENT - Page 19
<PAGE>
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:______________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
<PAGE>
Schedule 1
LOCATION OF EQUIPMENT AND INVENTORY
-----------------------------------
Locations of Equipment and Inventory
having an aggregate value of $100,000 or more
---------------------------------------------
1728 Briercroft Court
Carrollton, Texas 75006
Locations of Equipment and Inventory
having an aggregate value of less than $100,000
-----------------------------------------------
None
SCHEDULE 1, Location of Equipment and Inventory - Solo Page
<PAGE>
SCHEDULE 2
JURISDICTIONS FOR FILING
UCC-1 FINANCING STATEMENTS
--------------------------
Secretary of State of Texas
Secretary of State of Maine
SCHEDULE 2, Jurisdictions for Filing UCC-1 Financing Statements - Solo Page
<PAGE>
SCHEDULE 3
ADDITIONAL NAMES AND TRADE NAMES
--------------------------------
CELLULAR ACCESSORIES
CELLSTAR
SCHEDULE 3, Additional Names and Trade Names - Solo Page
<PAGE>
ANNEX 6
Exhibit "E-4" (Borrower Pledge Agreement)
-----------------------------------------
<PAGE>
AMENDED AND RESTATED PLEDGE AGREEMENT
-------------------------------------
THIS AMENDED AND RESTATED PLEDGE AGREEMENT ("Agreement") dated as of July
31, 1996, is by and between NATIONAL AUTO CENTER, INC., a Texas corporation (the
"Pledgor"), whose address is 1730 Briercroft, Carrollton, Texas 75006, and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association ("TCB"), not
in its individual capacity but solely as agent for itself and each of the other
banks or lending institutions (each, a "Bank" and collectively, the "Banks")
which is or may from time to time become a signatory to the Loan Agreement
(hereinafter defined) or any successor or permitted assignee thereof (TCB in
such capacity, together with its successors in such capacity, the "Agent"),
whose address is 2200 Ross Avenue, Post Office Box 660197, Dallas, Texas 75266-
0197.
R E C I T A L S:
- - - - - - - -
A. Pledgor, CellStar Corporation, a Delaware corporation (the "Parent"),
the Agent, and the Banks are parties to that certain Amended and Restated Loan
Agreement dated as of July 20, 1995, as amended by that certain First Amendment
to Amended and Restated Loan Agreement dated as of February 29, 1996 (such
Amended and Restated Loan Agreement, as the same has been and may be amended,
supplemented or modified from time to time, the "Loan Agreement").
B. Pursuant to the Loan Agreement, Pledgor executed and delivered to the
Agent that certain Amended and Restated Pledge Agreement dated as of July 20,
1995 (the "Existing Pledge Agreement"), wherein the Pledgor pledged and granted
to the Agent a security interest in, among other things, (i) Pledgor's interest
as the sole general partner in CellStar, Ltd., a Texas limited partnership (the
"Partnership"), (ii) all of Pledgor's stock in NAC Holdings, Inc., a Nevada
corporation ("Holdings"), and (iii) all of Pledgor's stock in CellStar
Fulfillment, Inc., a Delaware corporation ("Fulfillment").
C. Concurrently herewith, Pledgor, the Parent, the Agent, and the Banks
are entering into that certain Second Amendment to Amended and Restated Loan
Agreement of even date herewith (the "Second Amendment"), pursuant to which,
among other things, (a) the revolving credit facility established under the Loan
Agreement is reinstated, and (b) certain additional stock is to be pledged to
the Agent.
D. The parties hereto now desire to amend the Existing Pledge Agreement
as hereinafter provided and have agreed, for purposes of clarity and ease of
administration, to carry out the agreed upon amendments by amending the
pertinent provisions of the Existing Pledge
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 1
<PAGE>
Agreement and then restating the Existing Pledge Agreement in its entirety by
means of this Agreement.
E. As a condition to the Second Amendment, the Pledgor is required to
execute and deliver this Agreement.
A G R E E M E N T:
- - - - - - - - -
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows, and the Existing Pledge Agree ment is hereby
amended and restated in its entirety as follows:
ARTICLE I
Security Interest and Pledge
----------------------------
Section 1.1. Terms Defined in Loan Agreement. All capitalized terms
-------------------------------
used and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
Section 1.2. Security Interest and Pledge. Subject to the terms of
----------------------------
this Agreement, Pledgor hereby pledges and grants, and ratifies and confirms the
prior pledge and grant made pursuant to the Existing Pledge Agreement, to the
Agent, for the pro rata benefit of the Banks, a first priority (except as
hereinafter provided) security interest in the following property (such property
being hereinafter sometimes called the "Collateral"):
(a) All of Pledgor's rights, titles and interests (whether legal,
equitable or beneficial) but not obligations or liabilities (collectively,
the "Partnership Interest") as a general partner of the Partnership, and
all of Pledgor's rights, titles and interests in, to and under that certain
partnership agreement forming the Partnership by and between Pledgor and
Holdings, including, without limitation, the Pledgor's undivided interest
in partnership properties and assets and any and all rights to receive
distributions, whether in cash or in kind, draws, proceeds, income, or any
other payment of any nature whatsoever, or assignment or conveyance of
undivided interests in assets, whether real or personal, made or required
to be made with respect to the Partnership Interest, whether upon
dissolution or termination of the Partnership or otherwise, including
without limitation all interests of Pledgor in all payments, gross
receipts, accounts, accounts receivable, notes and other rights to the
payment of money and all property and assets of the Partnership, together
with any and all evidence of the Partnership Interest and any and all
certificates, options, rights, or other interests or distributions issued
in addition to, in substitution or exchange for, or on account of, the
Partnership Interest, and any and all exchanges and substitutions for,
increases, products and proceeds of the foregoing, all of the foregoing
whether now owned or hereafter acquired by Pledgor;
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 2
<PAGE>
(b) All present and future issued and outstanding shares of capital
stock or other equity or investment securities issued by Holdings, now
owned or hereafter acquired by Pledgor, including without limitation 100
shares of common capital stock of Holdings evidenced by certificate number
001;
(c) All present and future issued and outstanding shares of capital
stock or other equity or investment securities issued by Fulfillment, now
owned or hereafter acquired by Pledgor, including without limitation 100
shares of common capital stock of Fulfillment evidenced by certificate
number 001;
(d) All present and future issued and outstanding shares of capital
stock or other equity or investment securities issued by CellStar West,
Inc., a Delaware corporation ("CWI"), now owned or hereafter acquired by
Pledgor, including without limitation 800 shares of common capital stock of
CWI evidenced by certificate no. 1;
(e) (i) Sixty-five percent (65%) of all present and future issued and
outstanding shares of voting capital stock or other voting equity or
investment securities issued by CellStar International Corporation/SA, a
Delaware corporation ("CellStar SA"), now owned or hereafter acquired by
Pledgor, including without limitation 65,000 shares of common capital stock
of CellStar SA evidenced by certificate no. 004, and (ii) one hundred
percent (100%) of all present and future issued and outstanding shares of
non-voting preferred stock or other non-voting equity or investment
securities issued by CellStar SA, now owned or hereafter acquired by
Pledgor;
(f) (i) Sixty-five percent (65%) of all present and future issued and
outstanding shares of voting capital stock or other voting equity or
investment securities issued by AudioMex Export Corporation, a Texas
corporation ("AudioMex"), now owned or hereafter acquired by Pledgor,
including without limitation 13 shares of common capital stock of AudioMex
evidenced by certificate no. 003, and (ii) one hundred percent (100%) of
all present and future issued and outstanding shares of non-voting
preferred stock or other non-voting equity or investment securities issued
by AudioMex, now owned or hereafter acquired by Pledgor;
(g) (i) Sixty-five percent (65%) of all present and future issued and
outstanding shares of voting capital stock or other voting equity or
investment securities issued by CellStar International Corporation/Asia, a
Delaware corporation ("Asia"), now owned or hereafter acquired by Pledgor,
including without limitation 65,000 shares of common capital stock of Asia
evidenced by certificate no. 003, and (ii) one hundred percent (100%) of
all present and future issued and outstanding shares of non-voting
preferred stock or other non-voting equity or investment securities issued
by Asia, now owned or hereafter acquired by Pledgor;
(h) All present and future issued and outstanding shares of capital
stock or other equity or investment securities issued by any Subsidiary of
Pledgor not named
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 3
<PAGE>
above, except Foreign Subsidiaries and holding companies of Foreign
Subsidiaries, now owned or hereafter acquired by Pledgor;
(i) All present and future issued and outstanding shares of non-
voting capital stock or other non-voting equity or investment securities
issued by any Subsidiary of Pledgor not named above which is a holding
company of any Foreign Subsidiary, now owned or hereafter acquired by
Pledgor;
(j) Sixty-five percent (65%) of all present and future issued and
outstanding shares of voting capital stock or other voting equity or
investment securities issued by any Subsidiary of Pledgor not named above
which is a holding company of any Foreign Subsidiary, now owned or
hereafter acquired by Pledgor;
(k) All present and future increases, profits, combinations,
reclassifications of, and substitutes and replacements for, all or part of
the foregoing, and all present and future accounts, contract rights,
general intangibles, chattel paper, documents, instruments, cash and
noncash proceeds, and other rights arising from or by virtue of, or from
the voluntary or involuntary sale, lease, or other disposition of, or
collections with respect to, all or any part of the foregoing; and
(l) All products, proceeds, revenues, distributions, dividends, stock
dividends, securities, and other property, rights, and interests that
Pledgor receives or is at any time entitled to receive on account of any of
the foregoing.
Section 1.3. Obligations. The security interest granted, ratified
-----------
and confirmed hereby is to secure the payment or performance of the following
obligations, indebtedness, and liabilities of Pledgor, now existing or hereafter
arising (all of such obligations, indebtedness, and liabilities being
hereinafter sometimes called the "Obligations"):
(a) the indebtedness, liabilities and obligations of Pledgor to the
Banks evidenced by those certain Promissory Notes executed by Pledgor
pursuant to the Loan Agreement and payable to the order of the Banks in the
aggregate principal amount of $90,000,000.00;
(b) the indebtedness, liabilities and obligations of Pledgor to the
Agent and the Banks pursuant to the Loan Agreement;
(c) all of the "Obligations," as such term is defined in the Loan
Agreement;
(d) all future Advances by the Agent or any Bank to Pledgor;
(e) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the Agent or any
Bank to preserve and
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 4
<PAGE>
maintain the Collateral, collect the obligations herein described and
enforce this Agreement;
(f) all other obligations, indebtedness and liabilities of Pledgor to
the Agent or any Bank under any of the Loan Documents, now existing or
hereafter arising, regardless of whether such obligations, indebtedness and
liabilities are similar, dissimilar, related, unrelated, direct, indirect,
fixed, contingent, primary, secondary, joint, several, or joint and
several; and
(g) all extensions, renewals and modifications of any of the
foregoing.
ARTICLE II
Representations and Warranties
------------------------------
Pledgor represents and warrants to the Agent that:
Section 2.1. Title. Pledgor owns, and with respect to Collateral
-----
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any Lien or claim or any right or option on the
part of any third Person to purchase or otherwise acquire the Collateral or any
part thereof, except for the security interest granted hereunder and the prior
Lien of BNP in the stock of CellStar SA securing the BNP Term Loan. The
Collateral is not subject to any restriction on transfer or assignment except
for (a) compliance with applicable federal and state securities laws and
regulations promulgated thereunder, and (b) with regard to stock of CWI, that
certain Shareholders Agreement dated as of January 22, 1996, among CWI, CPD,
Inc., Pledgor and the other Shareholders (as defined therein). Pledgor has the
unrestricted right to pledge the Collateral as contemplated hereby. All of the
Collateral has been duly and validly issued and is fully paid and nonassessable.
Pledgor is the sole general partner of the Partnership.
Section 2.2. Financing Statements. No financing statement covering any
--------------------
of the Collateral or its proceeds, except financing statements naming the Agent
or BNP as secured party, is on file in any public office. So long as any amount
remains unpaid on any Obligations or the Agent has any Commitment, Pledgor will
not execute or file, or consent to or permit the filing of, any such financing
statement or statements in any public office, except the financing statement
filed or to be filed with respect to the security interest hereby granted.
Section 2.3. Principal Place of Business. The principal place of
---------------------------
business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at the address of Pledgor shown at the
beginning of this Agreement.
Section 2.4. Percentage of Stock. The shares of capital stock included
-------------------
in the Collateral constitute (a) one hundred percent (100%) of the issued and
outstanding shares of capital stock of Holdings and Fulfillment, (b) eighty
percent (80%) of the issued and outstanding shares of capital stock of CWI, (c)
sixty-five percent (65%) of the issued and outstanding shares of voting
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 5
<PAGE>
capital stock of CellStar SA, AudioMex and Asia, and (d) one hundred percent
(100%) of the issued and outstanding shares of non-voting capital stock of
CellStar SA, AudioMex and Asia.
Section 2.5. First Priority Perfected Security Interest. Upon the filing
------------------------------------------
of UCC financing statements and Agent's taking possession of the certificates
representing the stock included in the Collateral, this Agreement creates in
favor of the Agent a first priority perfected security interest in the
Collateral, provided that the Agent's security interest in the stock of CellStar
SA is subject in priority to the prior security interest of BNP securing the BNP
Term Loan. There are no conditions precedent to the effectiveness of this
Agreement that have not been fully and permanently satisfied.
ARTICLE III
Affirmative and Negative Covenants
----------------------------------
Pledgor covenants and agrees with the Agent that until the Obligations are
paid and performed in full and all Commitments have terminated:
Section 3.1. Delivery. Prior to or concurrently with the execution and
--------
delivery of this Agreement, Pledgor shall deliver to the Agent all certificates
identified in subsections (b), (c), (d), (e), (f) and (g) of Section 1.2 hereof,
and all other certificates evidencing any other Collateral existing on the date
hereof, accompanied by undated stock powers duly executed in blank.
Section 3.2. Encumbrances. Pledgor shall not create, permit, or suffer
------------
to exist, and shall defend the Collateral against, any Lien on the Collateral
except the Permitted Liens and the Lien of BNP on the Stock of CellStar SA
securing the BNP Term Loan, and shall defend Pledgor's rights in the Collateral
and the Agent's security interest in the Collateral against the claims and
demands of all Persons. Pledgor shall do nothing to impair the rights of the
Agent in the Collateral.
Section 3.3. Disposition of Collateral. Pledgor shall not sell, assign
-------------------------
(by operation of law or otherwise), or otherwise dispose of, or grant any option
with respect to the Collateral or any part thereof without the prior written
consent of the Agent.
Section 3.4. Distributions. If Pledgor shall become entitled to receive
-------------
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as the Agent's agent and to hold the same in trust for the
Agent, and to deliver the same forthwith to the Agent in the exact form
received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by the Agent
as additional Collateral for the Obligations, subject to the terms hereof. Any
sums paid upon or in respect of the Collateral upon the liquidation, dissolution
or winding up of any issuer
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 6
<PAGE>
of Collateral shall be paid over to the Agent to be held by it as additional
Collateral for the Obligations subject to the terms hereof; and in case any
distribution of capital shall be made on or in respect of the Collateral or any
property shall be distributed upon or with respect to the Collateral pursuant to
any recapitalization or reclassification of the capital of any issuer of
Collateral or pursuant to any reorganization of any issuer of Collateral, the
property so distributed shall be delivered to the Agent to be held by it, as
additional Collateral for the Obligations, subject to the terms hereof. All sums
of money and property so paid or distributed in respect of the Collateral that
are received by Pledgor shall, until paid or delivered to the Agent, be held by
Pledgor in trust as additional security for the Obligations.
Section 3.5. Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of Pledgor, Pledgor shall
promptly execute and deliver all such further instruments and documents and take
such further action as the Agent may deem necessary or desirable to preserve and
perfect its security interest in the Collateral and carry out the provisions and
purposes of this Agreement, including, without limitation, the execution and
filing of such financing statements as the Agent may require. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement. Subject to the
right of Pledgor to receive cash dividends and distributions under Section 4.3
hereof, in the event any Collateral is ever received by Pledgor, Pledgor shall
promptly transfer and deliver to the Agent such Collateral so received by
Pledgor (together with any necessary endorsements in blank or undated stock
powers duly executed in blank), which Collateral shall thereafter be held by the
Agent pursuant to the terms of this Agreement. The Agent shall at all times have
the right to exchange any certificates representing Collateral for certificates
of smaller or larger denominations for any purpose consistent with this
Agreement.
Section 3.6. Inspection Rights. Pledgor shall permit the Agent and its
-----------------
representatives to examine, inspect, and copy Pledgor's books and records at any
reasonable time and as often as the Agent may desire during normal business
hours.
Section 3.7. Notification. Pledgor shall promptly, and in any event
------------
within five (5) days after Pledgor obtains knowledge or becomes aware of any of
the following, notify the Agent of (a) any Lien or claim that has attached to or
been made or asserted against any of the Collateral, (b) any material damage to
or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 3.8. Books and Records; Information. Pledgor shall keep accurate
------------------------------
and complete books and records of the Collateral and Pledgor's business and
financial condition in accordance with GAAP. Pledgor shall from time to time at
the request of the Agent deliver to the Agent such information regarding the
Collateral and Pledgor as the Agent may request. Pledgor shall mark its books
and records to reflect the security interest of the Agent under this Agreement.
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 7
<PAGE>
Section 3.9. Additional Securities. Pledgor shall not consent to or
---------------------
approve the issuance of any additional shares of any class of capital stock of
any issuer of Collateral, or any securities convertible into, or exchangeable
for, any such shares or any warrants, options, rights, or other commitments
entitling any Person to purchase or otherwise acquire any such shares.
ARTICLE IV
Rights of Agent and Pledgor
---------------------------
Section 4.1. Power of Attorney. Pledgor hereby irrevocably constitutes
-----------------
and appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, to take any and all action and to execute any and all documents and
instruments which the Agent at any time and from time to time deems necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, Pledgor hereby gives the Agent the power and right
on behalf of Pledgor and in its own name to do any of the following (subject to
the rights of Pledgor under Sections 4.2 and 4.3 hereof), without notice to or
the consent of Pledgor, and whether or not an Event of Default has occurred or
is continuing (except as otherwise expressly provided below):
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of Pledgor or
in its own name, any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or any
other instruments for the payment of money under the Collateral;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) (A) after the occurrence and during the continuance of an Event
of Default, to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to the Agent or as the Agent
shall direct; (B) after the occurrence and during the continuance of an
Event of Default, to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral; (C) after the occurrence and during the
continuance of an Event of Default, to sign and endorse any drafts,
assignments, proxies, stock powers, verifications, notices, and other
documents relating to the Collateral; (D) after the occurrence and during
the continuance of an Event of Default, to commence and prosecute any suit,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce
any other right in respect of any Collateral; (E) after the occurrence and
during the continuance of an Event of Default, to defend any suit, action,
or proceeding brought against Pledgor with respect to any Collateral; (F)
after the occurrence and during the continuance of an Event of
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 8
<PAGE>
Default, to settle, compromise, or adjust any suit, action, or proceeding
described above and, in connection therewith, to give such discharges or
releases as the Agent may deem appropriate; (G) to exchange any of the
Collateral for other property upon any merger, consolidation,
reorganization, recapitalization, or other readjustment of any issuer of
Collateral and, in connection therewith, deposit any of the Collateral with
any committee, depositary, transfer agent, registrar, or other designated
agency upon such terms as the Agent may determine; (H) to add or release
any guarantor, indorser, surety, or other party to any of the Collateral or
the Obligations; (I) to renew, extend, or otherwise change the terms and
conditions of any of the Collateral or Obligations; and (J) after the
occurrence and during the continuance of an Event of Default, to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's option
and Pledgor's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve, or realize
upon the Collateral and the Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or in its capacity as attorney-in-fact except acts or
omissions resulting from its willful misconduct. This power of attorney is
conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent will exercise its best efforts to
notify Pledgor of any action taken by the Agent in its capacity as attorney-in-
fact pursuant to this Section, promptly after such action is taken provided that
any failure by the Agent to so notify Pledgor shall not impose any liability
upon the Agent or affect its rights and remedies hereunder, at law or in equity.
The Agent shall not be responsible for any decline in the value of the
Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or Lien given to secure the Collateral.
Section 4.2. Voting Rights. Unless and until an Event of Default shall
-------------
have occurred and be continuing, Pledgor shall be entitled to exercise any and
all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Loan Agreement.
Section 4.3. Dividends and Distributions. Unless and until an Event of
---------------------------
Default shall have occurred and be continuing, Pledgor shall be entitled to
receive and retain any dividends and distributions on the Collateral paid in
cash to the extent and only to the extent that such dividends and distributions
are permitted by the Loan Agreement, except as provided in Section 3.4 hereof.
Section 4.4. Setoff; Property Held by Agent and the Banks. If an Event
--------------------------------------------
of Default shall have occurred and be continuing, the Agent and each Bank shall
have the right to set off and
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 9
<PAGE>
apply against the Obligations, at any time and without notice to Pledgor, any
and all deposits (general or special, time or demand, provisional or final) or
other sums at any time credited by or owing from the Agent or any Bank to
Pledgor whether or not the Obligations are then due. As additional security for
the Obligations, Pledgor hereby grants the Agent and each Bank a security
interest in all money, instruments, and other property of Pledgor now or
hereafter held by the Agent or any Bank, including, without limitation, property
held in safekeeping. In addition to the Agent's or any Bank's right of setoff
and as further security for the Obligations, Pledgor hereby grants the Agent and
each Bank a security interest in all deposits (general or special, time or
demand, provisional or final) and other accounts of Pledgor now or hereafter on
deposit with or held by the Agent or any Bank and all other sums at any time
credited by or owing from the Agent or any Bank to Pledgor. The rights and
remedies of the Agent and each Bank hereunder are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which the
Agent or any Bank may have.
Section 4.5. Performance by Agent. If Pledgor shall fail to perform any
--------------------
covenant or agreement contained in this Agreement, the Agent may perform or
attempt to perform such covenant or agreement on behalf of Pledgor. In such
event, Pledgor shall, at the request of the Agent, promptly pay any amount
expended by the Agent in connection with such performance or attempted
performance to the Agent, together with interest thereon at the Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Agent shall not have any liability or responsibility for the
performance of any obligation of Pledgor under this Agreement.
Section 4.6. Agent's Duty of Care. Other than the exercise of reasonable
--------------------
care in the physical custody of the Collateral while held by the Agent
hereunder, the Agent shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto, including, without limitation, any obligation or
duty to collect any sums due in respect thereof or to protect or preserve any
rights against prior parties or any other rights pertaining thereto, it being
understood and agreed that Pledgor shall be responsible for preservation of all
rights in the Collateral. Without limiting the generality of the foregoing, the
Agent shall be conclusively deemed to have exercised reasonable care in the
custody of the Collateral if the Agent takes such action, for purposes of
preserving rights in the Collateral, as Pledgor may reasonably request in
writing, but no failure or omission or delay by the Agent in complying with any
such request by Pledgor, and no refusal by the Agent to comply with any such
request by Pledgor, shall be deemed to be a failure to exercise reasonable care.
ARTICLE V
Default
-------
Section 5.1. Rights and Remedies. If any Event of Default shall occur,
-------------------
the Agent shall have the following rights and remedies:
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 10
<PAGE>
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement and in any other Loan Document or by applicable
law, the Agent shall have all of the rights and remedies of a secured party
under the UCC. Without limiting the generality of the foregoing, the Agent
may (A) without demand or notice to Pledgor, collect, receive, or take
possession of the Collateral or any part thereof, (B) sell or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels at
public or private sale or sales, at the Agent's offices or elsewhere, for
cash, on credit, or for future delivery, and/or (C) bid and become a
purchaser at any sale free of any right or equity of redemption in Pledgor,
which right or equity is hereby expressly waived and released by Pledgor.
Upon the request of the Agent, Pledgor shall assemble the Collateral and
make it available to the Agent at any place designated by the Agent that is
reasonably convenient to Pledgor and the Agent. Pledgor agrees that the
Agent shall not be obligated to give more than five (5) days written notice
of the time and place of any public sale or of the time after which any
private sale may take place and that such notice shall constitute
reasonable notice of such matters. The Agent shall not be obligated to make
any sale of the Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Pledgor shall be liable for all expenses of retaking, holding,
preparing for sale, or the like, and all attorneys' fees and other expenses
incurred by the Agent in connection with the collection of the Obligations
and the enforcement of the Agent's rights under this Agreement, all of
which expenses and fees shall constitute additional Obligations secured by
this Agreement. The Agent may apply the Collateral against the Obligations
in such order and manner as the Agent may elect in its sole discretion.
Pledgor shall remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay the Obligations.
Pledgor waives all rights of marshalling in respect of the Collateral.
(ii) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) The Agent shall have the right, but shall not be obligated to,
exercise or cause to be exercised all voting, consensual, and other powers
of ownership pertaining to the Collateral, including, without limitation,
all rights, titles and interests of Pledgor as general partner of the
Partnership, and Pledgor shall deliver to the Agent, if requested by the
Agent, irrevocable proxies with respect to the Collateral in form
satisfactory to the Agent.
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 11
<PAGE>
(v) The Agent may notify or require Pledgor to notify parties
obligated under any accounts, instruments, contracts or agreements which
are part of the Collateral, including without limitation the Partnership
Agreements, to make payment directly to the Agent, and the Agent may take
possession of all proceeds of any such instruments and contracts in
Pledgor's possession. Any such payments or distributions received by
Pledgor after an Event of Default shall, until paid or delivered to the
Agent, be held by Pledgor in trust as additional security for the
Obligations.
(vi) Pledgor hereby acknowledges and confirms that the Agent may be
unable to effect a public sale of any or all of the Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended,
and applicable state securities laws and may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers who will
be obligated to agree, among other things, to acquire any shares of the
Collateral for their own respective accounts for investment and not with a
view to distribution or resale thereof. Pledgor further acknowledges and
confirms that any such private sale may result in prices or other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner, and the
Agent shall be under no obligation to take any steps in order to permit the
Collateral to be sold at a public sale. The Agent shall be under no
obligation to delay a sale of any of the Collateral for any period of time
necessary to permit any issuer thereof to register such Collateral for
public sale under the Securities Act of 1933, as amended, or under
applicable state securities laws.
(vii) On any sale of the Collateral, the Agent is hereby authorized
to comply with any limitation or restriction with which compliance is
necessary, in the view of the Agent's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval of
the purchaser or purchasers by any applicable governmental authority.
(viii) The Agent may subrogate to all of Pledgor's interests, rights,
and remedies with respect to any of the Collateral.
ARTICLE VI
Miscellaneous
-------------
Section 6.1. No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are cumulative
and not exclusive of any rights and remedies provided by law.
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 12
<PAGE>
Section 6.2. Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Pledgor and the Agent and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Agent.
Section 6.3. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
---------------------------
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 6.4. Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
Section 6.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED INTO IN
DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN DALLAS
COUNTY, TEXAS.
Section 6.6. Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 6.7. Survival. All representations and warranties made in this
--------
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by the Agent or any Bank shall affect the representations and
warranties of Pledgor herein or the right of the Agent or any Bank to rely upon
them.
Section 6.8. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 13
<PAGE>
Section 6.9. Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 6.10. Construction. Pledgor and the Agent acknowledge that each
------------
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and the
Agent.
Section 6.11. Termination. If all of the Obligations shall have been paid
-----------
and performed in full and all Commitments shall have expired or terminated, the
Agent shall, upon the written request of Pledgor, execute and deliver to Pledgor
a proper instrument or instruments acknowledging the release and termination of
the security interests created by this Agreement, and shall duly assign and
deliver to Pledgor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Agent and has not
previously been sold or otherwise applied pursuant to this Agreement.
Section 6.12. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
PLEDGOR:
-------
NATIONAL AUTO CENTER, INC.
By:__________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 14
<PAGE>
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:_______________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
AMENDED AND RESTATED PLEDGE AGREEMENT - Page 15
<PAGE>
ANNEX 7
Exhibit "H" (Borrowing Base Report)
-----------------------------------
<PAGE>
BORROWING BASE REPORT
TO: Texas Commerce Bank National Association, as Agent
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Attention: Allen K. King
Ladies and Gentlemen:
This Borrowing Base Report for the month ending ___________, 19___, is
executed and delivered by NATIONAL AUTO CENTER, INC., a Texas corporation (the
"Borrower"), pursuant to that certain Amended and Restated Loan Agreement dated
as of July 20, 1995, among the Borrower, CellStar Corporation, a Delaware
corporation (the "Parent"), each of the banks or other lending institutions
which is or may from time to time become a signatory thereto and any successors
or permitted assigns thereof (each a "Bank" and, collectively, the "Banks"), and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, as
agent for itself and the other Banks and as issuer of Letters of Credit
thereunder (in such capacity, together with its successors in such capacity, the
"Agent"), as amended by that certain First Amendment to Amended and Restated
Loan Agreement dated as of February 29, 1996, and as further amended by that
certain Second Amendment to Amended and Restated Loan Agreement dated as of July
31, 1996 (such Amended and Restated Loan Agreement, as the same has been and may
be amended, supplemented or modified from time to time, the "Loan Agreement").
All terms used herein shall have the meanings assigned to them in the Loan
Agreement.
The Borrower represents and warrants to the Agent that all information
contained herein is true, correct, and complete, and that the total Eligible
Domestic Accounts, Eligible Foreign Accounts and Eligible Inventory referred to
below represent the Eligible Domestic Accounts, Eligible Foreign Accounts and
Eligible Inventory that qualify for purposes of determining the Borrowing Base
under the Loan Agreement.
<TABLE>
<CAPTION>
DOMESTIC ACCOUNTS RECEIVABLE (WHOLESALE AND RETAIL) OF THE BORROWER:
<S> <C> <C>
1. Gross Domestic Accounts (Wholesale and Retail) of the Borrower (ending
balance for period ended ______________, 19__) ................................................... $____________
2. Less: Ineligible Accounts (Wholesale and Retail) (determined pursuant to the definition of
Eligible Accounts in the Loan Agreement, without duplication):
(a) Accounts not complying with applicable law .................................................. $____________
(b) Accounts outstanding for more than 90 days past the original date of invoice ................ $____________
(c) Accounts created outside of the ordinary course of business ................................. $____________
(d) Accounts from unenforceable contracts or contracts not fully completed by the Borrower ...... $____________
(e) Accounts including progress billings ........................................................ $____________
(f) Accounts from sales on bill-and-hold, guaranteed sale, sale-and-return, etc ................. $____________
(g) Accounts subject to a lien other than liens held by the Agent or permitted by
Section 10.2 of the Loan Agreement .......................................................... $____________
(h) Accounts as to which the Borrower does not have good and indefeasible title
(i) Accounts subject to anti-assignment provisions .............................................. $____________
(j) Accounts subject to setoff, dispute, etc .................................................... $____________
(k) Accounts owed by account debtors subject to bankruptcy, etc ................................. $____________
(l) Accounts evidenced by chattel paper or instruments .......................................... $____________
(m) Accounts subject to default by any party thereto ............................................ $____________
(n) Accounts owed by Foreign Subsidiaries ....................................................... $____________
(o) Accounts owed by Foreign Affiliates ......................................................... $____________
(p) Accounts owed by other Affiliates of the Borrower, except for accounts owed by Audiovox
Corporation and its wholly-owned subsidiaries for sales of inventory in the ordinary course
of Borrower's business ...................................................................... $____________
(q) Accounts owed by employees of the Borrower .................................................. $____________
(r) Accounts owed by other foreign account debtors .............................................. $____________
(s) Accounts not payable in Dollars ............................................................. $____________
(t) Accounts owed by each account debtor with over 20% of the balances owed by such
account debtor and its Affiliates to the Companies on a consolidated basis
outstanding for more than 90 days past the original date of invoice ......................... $____________
(u) All accounts owed by each account debtor (except accounts owed by SBMS, AirTouch,
GTE and McCaw) if balances owed by such account debtor and its Affiliates constitute
more than 10% of the total accounts receivable of the Companies on a consolidated basis ..... $____________
(v) With respect to accounts owed by SBMS, AirTouch, GTE and McCaw, all accounts owed
by each such account debtor if balances owed by such account debtor constitute more
than 15% of the total accounts receivable of the Companies on a consolidated basis .......... $____________
(w) Accounts owed by the United States of America or any agency thereof for
which the Federal Assignment of Claims Act of 1940, as amended, has not been complied with .. $____________
(x) Contra accounts owed by any Company to the account debtor which are payable pursuant
to terms which are not ordinary and customary ............................................... $____________
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(y) Contra accounts owed by any Company to the account debtor which are past
due or otherwise in default ................................................................. $____________
(z) Past due credits ............................................................................ $____________
3. Total Ineligible Domestic Accounts of the Borrower (sum of Lines 2(a)-(z)) ....................... $____________
4. Total Eligible Domestic Accounts of the Borrower (Line 1 minus Line 3) ........................... $____________
DOMESTIC ACCOUNTS RECEIVABLE (WHOLESALE AND RETAIL) OF CELLSTAR, LTD.:
5. Gross Domestic Accounts (Wholesale and Retail) of CellStar, Ltd. (ending
balance for period ended ______________, 19__) ................................................... $____________
6. Less: Ineligible Accounts (Wholesale and Retail) (determined pursuant to the definition of
Eligible Accounts in the Loan Agreement, without duplication):
(a) Accounts not complying with applicable law ................................................... $____________
(b) Accounts outstanding for more than 90 days past the original date of invoice ................. $____________
(c) Accounts created outside of the ordinary course of business .................................. $____________
(d) Accounts from unenforceable contracts or contracts not fully completed by CellStar, Ltd ...... $____________
(e) Accounts including progress billings ......................................................... $____________
(f) Accounts from sales on bill-and-hold, guaranteed sale, sale-and-return, etc .................. $____________
(g) Accounts subject to a lien other than liens held by the Agent or permitted
by Section 10.2 of the Loan Agreement ........................................................ $____________
(h) Accounts as to which CellStar, Ltd. does not have good and indefeasible title ................ $____________
(i) Accounts subject to anti-assignment provisions ............................................... $____________
(j) Accounts subject to setoff, dispute, etc ..................................................... $____________
(k) Accounts owed by account debtors subject to bankruptcy, etc .................................. $____________
(l) Accounts evidenced by chattel paper or instruments ........................................... $____________
(m) Accounts subject to default by any party thereto ............................................. $____________
(n) Accounts owed by Foreign Subsidiaries ........................................................ $____________
(o) Accounts owed by Foreign Affiliates .......................................................... $____________
(p) Accounts owed by other Affiliates of CellStar, Ltd., except for accounts owed by Audiovox
Corporation and its wholly-owned subsidiaries for sales of inventory in the
ordinary course of CellStar, Ltd.'s business ................................................. $____________
(q) Accounts owed by employees of CellStar, Ltd................................................... $____________
(r) Accounts owed by other foreign account debtors................................................ $____________
(s) Accounts not payable in Dollars............................................................... $____________
(t) Accounts owed by each account debtor with over 20% of the balances owed by such
account debtor and its Affiliates to the Companies on a consolidated
basis outstanding for more than 90 days past the original date of invoice .................... $____________
(u) All accounts owed by each account debtor (except accounts owed by SBMS,
AirTouch, constitute more than 10% of the total accounts receivable of the Companies on a
consolidated basis ........................................................................... $____________
(v) With respect to accounts owed by SBMS, AirTouch, GTE and McCaw, all accounts
owed by each such account debtor if balances owed by such
account debtor constitute more than 15% of the total accounts receivable
of the Companies on a consolidated basis ..................................................... $____________
(w) Accounts owed by the United States of America or any agency thereof for
which the Federal Assignment of Claims Act of 1940, as amended, has not been complied with ... $____________
(x) Contra accounts owed by any Company to the account debtor which are payable pursuant
to terms which are not ordinary and customary ................................................ $____________
(y) Contra accounts owed by any Company to the account debtor which are past
due or otherwise in default .................................................................. $____________
(z) Past due credits ............................................................................. $____________
7. Total Ineligible Domestic Accounts of CellStar, Ltd. (sum of Lines 6(a)-(z)) ...................... $____________
8. Total Eligible Domestic Accounts of CellStar, Ltd. (Line 5 minus Line 7) .......................... $____________
DOMESTIC ACCOUNTS RECEIVABLE (WHOLESALE AND RETAIL) OF CELLSTAR FULFILLMENT,LTD.:
9. Gross Domestic Accounts (Wholesale and Retail) of CellStar Fulfillment,
Ltd. (ending balance for period ended ______________, 19__) ....................................... $____________
10. Less: Ineligible Accounts (Wholesale and Retail) (determined pursuant to
the definition of Eligible Accounts in the Loan Agreement, without duplication):
(a) Accounts not complying with applicable law ................................................... $____________
(b) Accounts outstanding for more than 90 days past the original date of invoice ................. $____________
(c) Accounts created outside of the ordinary course of business .................................. $____________
(d) Accounts from unenforceable contracts or contracts not fully completed by
CellStar Fulfillment, Ltd. ................................................................... $____________
(e) Accounts including progress billings ......................................................... $____________
(f) Accounts from sales on bill-and-hold, guaranteed sale, sale-and-return, etc. ................. $____________
(g) Accounts subject to a lien other than liens held by the Agent or permitted
by Section 10.2 of the Loan Agreement ........................................................ $____________
(h) Accounts as to which CellStar Fulfillment, Ltd. does not have good and indefeasible title .... $____________
(i) Accounts subject to anti-assignment provisions................................................ $____________
(j) Accounts subject to setoff, dispute, etc...................................................... $____________
(k) Accounts owed by account debtors subject to bankruptcy, etc................................... $____________
(l) Accounts evidenced by chattel paper or instruments............................................ $____________
(m) Accounts subject to default by any party thereto.............................................. $____________
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(n) Accounts owed by Foreign Subsidiaries........................................................ $____________
(o) Accounts owed by Foreign Affiliates.......................................................... $____________
(p) Accounts owed by other Affiliates of CellStar Fulfillment, Ltd., except for
accounts owed by Audiovox Corporation and its wholly-owned subsidiaries
for sales of inventory in the ordinary course of CellStar Fulfillment, Ltd.'s
business..................................................................................... $____________
(q) Accounts owed by employees of CellStar Fulfillment, Ltd...................................... $____________
(r) Accounts owed by other foreign account debtors............................................... $____________
(s) Accounts not payable in Dollars.............................................................. $____________
(t) Accounts owed by each account debtor with over 20% of the balances owed by such
account debtor and its Affiliates to the Companies on a consolidated basis
outstanding for more than 90 days past the original date of invoice.......................... $____________
(u) All accounts owed by each account debtor (except accounts owed by SBMS,
AirTouch, GTE and McCaw) if balances owed by such account debtor and its Affiliates
constitute more than 10% of the total accounts receivable of the Companies on
a consolidated basis ........................................................................ $____________
(v) With respect to accounts owed by SBMS, AirTouch, GTE and McCaw, all accounts
owed by each such account debtor if balances owed by such account debtor
constitute more than 15% of the total accounts receivable of the Companies
on a consolidated basis ..................................................................... $____________
(w) Accounts owed by the United States of America or any agency thereof for
which the Federal Assignment of Claims Act of 1940, as amended, has not
been complied with .......................................................................... $____________
(x) Contra accounts owed by any Company to the account debtor which are
payable pursuant to terms which are not ordinary and customary .............................. $____________
(y) Contra accounts owed by any Company to the account debtor which are past
due or otherwise in default ................................................................. $____________
(z) Past due credits ............................................................................ $____________
11. Total Ineligible Domestic Accounts of CellStar Fulfillment, Ltd.
(sum of Lines 10(a)-(z)).......................................................................... $____________
12. Total Eligible Domestic Accounts of CellStar Fulfillment, Ltd. (Line 9 minus Line 11)............. $____________
FOREIGN ACCOUNTS RECEIVABLE:
13. Foreign Accounts of the Borrower which are not ineligible under any category specified
in Line 2 (except (r) and (s)), are secured by a satisfactory transferable letter of credit which
has been transferred, assigned and delivered to the Agent by a Person with power
and authority to do so, and have been approved by the Banks ...................................... $____________
14. Foreign Accounts of CellStar, Ltd. which are not ineligible under any
category specified in Line 6 (except (r) and (s)), are secured by a
satisfactory transferable letter of credit which has been transferred,
assigned and delivered to the Agent by a Person with power and authority to
do so,and have been approved by the Banks ........................................................ $____________
15. Foreign Accounts of CellStar Fulfillment, Ltd. which are not ineligible under any category
specified in Line 10 (except (r) and (s)), are secured by a satisfactory transferable letter
of credit which has been transferred, assigned and delivered to the Agent by a Person with
power and authority to do so, and have been approved by the Banks ................................ $____________
16. Foreign Accounts of the Foreign Subsidiaries and Foreign Affiliates which
are not ineligible under any category specified in Line 2 (except, (r), (s), (t), (u),
(v), (x), (y) and (z)), /1/ are secured by a satisfactory transferable letter of credit which
has been transferred, assigned and delivered to the Agent by a Person with power and authority
to do so, and have been approved by the Banks .................................................... $____________
17. Foreign Accounts which are not ineligible under any category specified in Line 2 (except (r),
(s), (t), (u), (v), (x), (y) and (z)), /1/ are supported by a satisfactory policy of insurance
which has been transferred, assigned and delivered to the Agent by a Person with power and
authority to do so, and have been approved by the Banks .......................................... $____________
18. Total Eligible Foreign Accounts (sum of Lines 13 through 17) ..................................... $____________
INVENTORY OF THE BORROWER:
19. Total Inventory of the Borrower (valued at lesser of actual cost for
purchase from original wholesale supplier or fair market value) .................................. $____________
20. Less: Ineligible Inventory (determined pursuant to the definition of
Eligible Inventory in the Loan Agreement, without duplication)
(a) Work-in-process inventory ................................................................... $____________
(b) Value of obsolescence reserve (expressed as a positive number) .............................. $____________
(c) Inventory shipped or delivered on consignment, sale or return, or similar terms ............. $____________
(d) Inventory in transit (except inventory in transit from Motorola to the Companies'
main warehouse in Carrollton, Texas or the Companies' warehouse in Miami,
Florida which is properly documented and insured pursuant to shipping documents and
insurance, and proof thereof, satisfactory to the Agent) .................................... $____________
(e) Inventory which is offsite, except offsite inventory covered by a waiver
and agreement satisfactory to Agent ......................................................... $____________
(f) Service or repair parts or equipment......................................................... $____________
(g) Inventory located at location for which required landlord's waiver not received ............. $____________
(h) Inventory subject to dispute as to the Borrower's title or right to possession .............. $____________
</TABLE>
____________________________________
/1/ For purpose of determining the elilgibility of any
Foreign Account owned by any Foreign Subsidiary or
Foreign Affiliate, each reference to the Borrower in Line 2
shall be deemed to be a reference to such Foreign Subsidiary
of Foreign Affiliate.
<PAGE>
<TABLE>
<S> <C> <C>
(i) Inventory located outside of the United States of America ................................... $____________
(j) Inventory not in good condition or that does not comply with any applicable law or
governmental standard for manufacture, use, or sale ......................................... $____________
(k) Inventory determined to be unmarketable by the Agent ........................................ $____________
(l) Inventory subject to a lien other than liens held by the Agent or permitted by
Section 10.2 of the Loan Agreement .......................................................... $____________
21. Total Ineligible Inventory of the Borrower (sum of Lines 20(a)-(l)) .............................. $____________
22. Total Eligible Inventory of the Borrower (Line 19 minus Line 21) ................................. $____________
INVENTORY OF CELLSTAR, LTD.:
23. Total Inventory of CellStar, Ltd. (valued at lesser of actual cost for purchase from original
wholesale supplier or fair market value) ......................................................... $____________
24. Less: Ineligible Inventory (determined pursuant to the definition of Eligible Inventory in
the Loan Agreement, without duplication)
(a) Work-in-process inventory ................................................................... $____________
(b) Value of obsolescence reserve (expressed as a positive number) .............................. $____________
(c) Inventory shipped or delivered on consignment, sale or return, or similar terms ............. $____________
(d) Inventory in transit (except inventory in transit from Motorola to the Companies'
main warehouse in Carrollton, Texas or the Companies' warehouse in Miami,
Florida which is properly documented and insured pursuant to shipping documents and
insurance, and proof thereof, satisfactory to the Agent) .................................... $____________
(e) Inventory which is offsite, except offsite inventory covered by a waiver
and agreement satisfactory to Agent ......................................................... $____________
(f) Service or repair parts or equipment ........................................................ $____________
(g) Inventory located at location for which required landlord's waiver not received ............. $____________
(h) Inventory subject to dispute as to CellStar, Ltd.'s title or right to possession ............ $____________
(i) Inventory located outside of the United States of America ................................... $____________
(j) Inventory not in good condition or that does not comply with any applicable law or
governmental standard for manufacture, use, or sale ......................................... $____________
(k) Inventory determined to be unmarketable by the Agent ........................................ $____________
(l) Inventory subject to a lien other than liens held by the Agent or permitted by
Section 10.2 of the Loan Agreement .......................................................... $____________
25. Total Ineligible Inventory of CellStar, Ltd. (sum of Lines 24(a)-(l)) ............................ $____________
26. Total Eligible Inventory of CellStar, Ltd. (Line 23 minus Line 25) ............................... $____________
INVENTORY OF CELLSTAR FULFILLMENT, LTD.:
27. Total Inventory of CellStar Fulfillment, Ltd. (valued at lesser of actual
cost for purchase from original wholesale supplier or fair market value) ......................... $____________
28. Less: Ineligible Inventory (determined pursuant to the definition of
Eligible Inventory in the Loan Agreement, without duplication)
(a) Work-in-process inventory ................................................................... $____________
(b) Value of obsolescence reserve (expressed as a positive number) .............................. $____________
(c) Inventory shipped or delivered on consignment, sale or return, or similar terms ............. $____________
(d) Inventory in transit (except inventory in transit from Motorola to the Companies'
main warehouse in Carrollton, Texas or the Companies' warehouse in Miami,
Florida which is properly documented and insured pursuant to shipping documents
and insurance, and proof thereof, satisfactory to the Agent) ................................ $____________
(e) Inventory which is offsite, except offsite inventory covered by a waiver and agree-
ment satisfactory to Agent .................................................................. $____________
(f) Service or repair parts or equipment......................................................... $____________
(g) Inventory located at location for which required landlord's waiver not received.............. $____________
(h) Inventory subject to dispute as to CellStar Fulfillment, Ltd.'s title or right to possession $____________
(i) Inventory located outside of the United States of America................................... $____________
(j) Inventory not in good condition or that does not comply with any applicable law or
governmental standard for manufacture, use, or sale ........................................ $____________
(k) Inventory determined to be unmarketable by the Agent ....................................... $____________
(l) Inventory subject to a lien other than liens held by the Agent or
permitted by Section 10.2 of the Loan Agreement ............................................ $____________
29. Total Ineligible Inventory of CellStar Fulfillment, Ltd. (sum of Lines 28(a)-(l)) ............... $____________
30. Total Eligible Inventory of CellStar Fulfillment, Ltd. (Line 27 minus Line 29) .................. $____________
BORROWING BASE:
31. Total Eligible Domestic Accounts (sum of Lines 4, 8 and 12)....................................... $____________
32. Total Eligible Foreign Accounts (Line 18)......................................................... $____________
33. Total Eligible Inventory (sum of Lines 22, 26 and 30)............................................. $____________
34. Amount of Eligible Inventory that is Price Protected Inventory.................................... $____________
35. Percentage of Eligible Inventory that is Price Protected Inventory.................................... ________%
36. ___%/2/ of Line 31 ................................................................................. $____________
37. 90% of Line 32 ................................................................................... $____________
</TABLE>
_________________________
/2/ At all times other than during any Exception Period, this
percentage shall be 80%. During each Exception Period, this
percentage shall be a percentage selected by Borrower in the
Notice of Election for such Exception Period, but not to exceed
85%.
<PAGE>
<TABLE>
<S> <C> <C>
38. Inventory Cap (1/2 of aggregate amount of Commitments) .......................................... $____________
39. Lesser of Line 38 or ___%/3/ of Line 33........................................................... $____________
40. Borrowing Base: Sum of Line 36 plus Line 37 plus Line 39......................................... $____________
41. Outstanding Principal Amount of Advances.......................................................... $____________
42. Outstanding Letter of Credit Liabilities.......................................................... $____________
43. Sum of Line 41 plus Line 42....................................................................... $____________
44. Available Credit Amount or amount to be paid if negative
(the lesser of the Commitments or Line 40, minus Line 43): ....................................... $____________
</TABLE>
The Borrower further represents and warrants to the Agent and the Banks that
the representations and warranties contained in Article VIII of the Loan
Agreement are true and correct on and as of the date of this Borrowing Base
Report as if made on and as of the date hereof, and that no Default has occurred
and is continuing.
Date: _______________ NATIONAL AUTO CENTER, INC.
By:____________________________________
Name:_______________________________
Title:______________________________
_________________________________________
/3/ At all times other than during any Exception Period, this percentage
shall be 50%. During each Exception Period, this percentage shall be a
percentage selected by Borrower in the Notice of Election for such
Exception Period, but not to exceed (a) 65% during the period from and
including the date of the Loan Agreement to and including August 30,
1996, and (b) 60% during the period from and including August 31, 1996
through the end of the Exception Period. If Line 35 is less than 65%,
this percentage shall be 50%.
<PAGE>
ANNEX 8
Exhibit "L" (Contribution Agreement)
------------------------------------
<PAGE>
AMENDED AND RESTATED
CONTRIBUTION AND INDEMNIFICATION AGREEMENT
THIS AMENDED AND RESTATED CONTRIBUTION AND INDEMNIFICATION AGREEMENT
("Agreement"), dated as of July 31, 1996, is entered into by and among National
Auto Center, Inc., a Texas corporation ("Borrower"), CellStar Corporation, a
Delaware corporation ("Parent"), CellStar, Ltd. and CellStar Fulfillment, Ltd.,
each a Texas limited partnership (each a "Partnership" and, collectively, the
"Partnerships"), CellStar West, Inc., a Delaware corporation ("CWI"), CellStar
Air Services, Inc., a Delaware corporation ("CAS"), A & S Air Services, Inc., a
Delaware corporation ("A & S"), CellStar International Corporation/SA, a
Delaware corporation ("CellStar SA"), AudioMex Export Corporation, a Texas
corporation ("AudioMex"), CellStar International Corporation/Asia, a Delaware
corporation ("CellStar International"), CellStar Fulfillment, Inc., a Delaware
corporation ("Fulfillment"), and NAC Holdings, Inc., a Nevada corporation
("NAC," and together with Borrower, the Partnerships, CWI, CAS, A & S, CellStar
SA, AudioMex, CellStar International, and Fulfillment, each a "Company" and,
collectively, the "Companies").
R E C I T A L S:
- - - - - - - -
A. Borrower, Parent, certain banks, and Texas Commerce Bank National
Association, as agent for such banks (the "Agent"), have entered into that
certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996 (such Amended and Restated Loan Agreement, as the
same has been and may be amended, supplemented or modified from time to time,
the "Loan Agreement"), providing for loans and extensions of credit to the
Borrower.
B. The Parent and the Partnerships have each executed and delivered
certain guaranties (collectively, the "Existing Guaranties"), pursuant to which
each such party has guaranteed the full and prompt payment and performance of
the Guaranteed Indebtedness, as such term is defined in the Existing Guaranties.
C. Concurrently herewith, CWI, CAS, A & S, CellStar SA, AudioMex, CellStar
International, Fulfillment, and NAC (each a "New Guarantor" and, collectively,
the "New Guarantors") are executing and delivering a Guaranty (the "New
Guaranty," and together with the Existing Guaranties, each a "Guaranty" and,
collectively, the "Guaranties"), pursuant to which the New Guarantors jointly
and severally guarantee the full and prompt payment and performance of the
Guaranteed Indebtedness.
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 1
<PAGE>
D. Borrower, Parent and the Partnerships heretofore entered into that
certain Amended and Restated Contribution and Indemnification Agreement dated as
of July 20, 1995 (the "Existing Agreement"), to effect an equitable sharing of
their risk in respect of the Guaranteed Indebtedness.
E. The parties hereto desire to amend the Existing Agreement to add each
of the New Guarantors as a party thereto and have agreed, for purposes of
clarity and ease of administration, to carry out the agreed upon amendments by
amending the pertinent provisions of the Existing Agreement and then restating
the Existing Agreement in its entirety by means of this Agreement.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows, and the Existing Agreement is
hereby amended and restated in its entirety as follows:
1. Capitalized terms used in this Agreement to the extent not otherwise
defined herein shall have the same meanings as in the Loan Agreement. The
Companies other than Borrower shall be referred to herein collectively as the
"Subsidiary Guarantors" and each as a "Subsidiary Guarantor."
2. If any Subsidiary Guarantor makes a payment in respect of the
Guaranteed Indebtedness, it shall have the rights of contribution and
reimbursement set forth below against the other Companies and Parent, and shall
be indemnified as set forth below; provided that no Subsidiary Guarantor shall
--------
enforce its rights to any payment by exercising its rights of contribution,
reimbursement or indemnification unless and until all the Guaranteed
Indebtedness shall have been paid in full.
3. If any Subsidiary Guarantor makes a payment in respect of the
Guaranteed Indebtedness that is greater than its Pro Rata Percentage
(hereinafter defined) of the Guaranteed Indebtedness, calculated as of the date
such payment is made, the Subsidiary Guarantor making such payment shall have
the right to receive from each of the other Companies, and the other Companies
jointly and severally agree to pay to such Subsidiary Guarantor, when permitted
by paragraph 2 hereof, an amount such that the net payments made by the
Companies in respect of the Guaranteed Indebtedness shall be shared among the
Companies pro rata in proportion to their respective Pro Rata Percentages of the
Guaranteed Indebtedness. The Companies hereby jointly and severally indemnify
each of the Subsidiary Guarantors and jointly and severally agree to hold each
of them harmless from and against any and all amounts which any such Subsidiary
Guarantor shall ever be required to pay in respect of the Guaranteed
Indebtedness in excess of such Subsidiary Guarantor's respective Pro Rata
Percentage of the Guaranteed Indebtedness. Notwithstanding anything to the
contrary contained in this paragraph or in this Agreement, no
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 2
<PAGE>
liability or obligation of any Company that shall accrue pursuant to this
Agreement shall be paid nor shall it be deemed owed pursuant to this Agreement
or any Loan Documents unless and until all of the Guaranteed Indebtedness shall
be paid in full. As used herein, the term "Pro Rata Percentage" shall mean, for
each Company, the percentage derived by dividing (a) the amount by which the
fair saleable value of its assets on May 31, 1996 exceeds its liabilities
(without giving effect to its Guaranty) (such excess for each Company, its "Net
Worth"), by (b) the Net Worth of all of the Companies.
4. If any Subsidiary Guarantor makes any payment in respect of the
Guaranteed Indebtedness, the Subsidiary Guarantor making such payment shall have
the right to receive from the Parent, and the Parent agrees to pay to such
Subsidiary Guarantor, when permitted by paragraph 2 hereof, an amount equal to
such payment. The Parent hereby indemnifies each of the Subsidiary Guarantors
and agrees to hold each of them harmless from and against any and all amounts
which any such Subsidiary Guarantor shall ever be required to pay in respect of
the Guaranteed Indebtedness. Notwithstanding anything to the contrary contained
in this paragraph or in this Agreement, no liability or obligation of the Parent
that shall accrue pursuant to this Agreement shall be paid or shall be deemed
owed pursuant to this Agreement or any Loan Documents unless and until all of
the Guaranteed Indebtedness shall be paid in full.
5. Each party hereto represents and warrants to each other party hereto
and to their respective successors and assigns that:
(a) the execution, delivery and performance by each party hereto of
this Agreement are within such party's corporate or partnership powers,
have been duly authorized by all necessary corporate or partnership action,
as the case may be, require no action by or in respect of, or filing with,
any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation
or of the articles or certificate of incorporation or bylaws or other
organizing document of such party or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such party or
result in the creation or imposition of any lien, security interest or
other charge or encumbrance on any asset of such party;
(b) this Agreement constitutes a legal, valid and binding agreement of
each party hereto, enforceable against such party in accordance with its
terms; and
(c) such party has adequate capital to conduct its business as a going
concern, as presently conducted and as proposed to be conducted, will be
able to meet its obligations hereunder and in respect of its other existing
and future indebtedness and liabilities as and when the same shall be due
and payable, and is not insolvent (as that term is defined in 11 U.S.C. (S)
101 or applicable law) and will not be rendered insolvent by its
obligations hereunder, and the foregoing representation is supported by
such party's internal projections and forecasts.
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 3
<PAGE>
6. No failure or delay by any Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and non-exclusive of any rights or remedies
provided by law.
7. Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the parties hereto
and consented to by the Agent.
8. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
9. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS.
10. This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when a counterpart hereof shall have been signed by all the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
--------
NATIONAL AUTO CENTER, INC.
By:______________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
AMENDED AND RESTATED CONTRIBUTIN AND
INDEMNIFICATION AGREEMENT - Page 4
<PAGE>
PARENT:
------
CELLSTAR CORPORATION
By:____________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
PARTNERSHIPS:
------------
CELLSTAR, LTD.
By: National Auto Center, Inc.,
its general partner
By:____________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR FULFILLMENT, LTD.
By: CellStar Fulfillment, Inc.,
its general partner
By:____________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
AMENDED AND RESTATED CONTRIBUTIN AND
INDEMNIFICATION AGREEMENT - Page 5
<PAGE>
NEW GUARANTORS:
--------------
CELLSTAR WEST, INC.
By:________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR AIR SERVICES, INC.
By:________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
A & S AIR SERVICES, INC.
By:_______________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR INTERNATIONAL
CORPORATION/SA
By:________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
AUDIOMEX EXPORT CORPORATION
By:________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 6
<PAGE>
CELLSTAR INTERNATIONAL
CORPORATION/ASIA
By:_______________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR FULFILLMENT, INC.
By:_______________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
NAC HOLDINGS, INC.
By:________________________________________
Name:___________________________________
Title:__________________________________
AMENDED AND RESTATED CONTRIBUTION AND
INDEMNIFICATION AGREEMENT - Page 7
<PAGE>
ANNEX 9
Exhibit "E-10" (Security Agreement of New Guarantors)
-----------------------------------------------------
<PAGE>
NEW GUARANTORS SECURITY AGREEMENT
---------------------------------
THIS NEW GUARANTORS SECURITY AGREEMENT (this "Agreement") dated as of July
31, 1996, is by and between the undersigned debtors (collectively, the "Debtors"
and each a "Debtor") and Texas Commerce Bank National Association, a national
banking association ("TCB"), not in its individual capacity but solely as agent
for itself and each of the other banks or lending institutions (each, a "Bank"
and, collectively, the "Banks") which is or may from time to time become a
signatory to the Loan Agreement (hereinafter defined) or any successor or
permitted assignee thereof (TCB in such capacity, together with its successors
in such capacity, the "Agent").
R E C I T A L S:
- - - - - - - -
A. National Auto Center, Inc., a Texas corporation (the "Borrower"),
CellStar Corporation, a Delaware corporation (the "Parent"), the Agent and the
Banks heretofore entered into that certain Amended and Restated Loan Agreement
dated as of July 20, 1995, as amended by that certain First Amendment to Amended
and Restated Loan Agreement dated as of February 29, 1996 (such Amended and
Restated Loan Agreement, as the same has been and may be amended, supplemented
or modified from time to time, the "Loan Agreement").
B. Pursuant to the Loan Agreement, the Agent and the Banks have extended
credit to the Borrower.
C. Concurrently herewith, the Borrower, the Parent, the Agent and the
Banks are entering into that certain Second Amendment to Amended and Restated
Loan Agreement of even date herewith (the "Second Amendment").
D. The Agent and the Banks have conditioned their obligations to extend
further credit under the Loan Agreement and the effectiveness of the Second
Amendment upon the execution and delivery by each Debtor of this Agreement.
A G R E E M E N T
- - - - - - - - -
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
<PAGE>
ARTICLE I
Definitions
-----------
Section 1.1. Definitions. As used in this Agreement, the following terms
-----------
have the following meanings:
"Accounts" means any "account", as such term is defined in Section
--------
9.106 of the UCC, now owned or hereafter acquired by any Debtor, and, in
any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by any Debtor: (a) all rights of
any Debtor to payment for goods sold or leased or services rendered,
whether or not earned by performance, (b) all accounts receivable of any
Debtor, (c) all rights of any Debtor to receive any payment of money or
other form of consideration, (d) all security pledged, assigned, or granted
to or held by any Debtor to secure any of the foregoing, (e) all guaranties
of, or indemnifications with respect to, any of the foregoing, and (f) all
rights of any Debtor as an unpaid seller of goods or services, including,
but not limited to, all rights of stoppage in transit, replevin,
reclamation, and resale.
"Chattel Paper" means any "chattel paper", as such term is defined in
-------------
Section 9.105(a)(2) of the UCC, now owned or hereafter acquired by any
Debtor.
"Collateral" has the meaning specified in Section 2.1 of this
----------
Agreement.
"Document" means any "document", as such term is defined in Section
--------
9.105(a)(6) of the UCC, now owned or hereafter acquired by any Debtor,
including, without limitation, all documents of title and warehouse
receipts of any Debtor.
"Equipment" means any "equipment", as such term is defined in Section
---------
9.109(2) of the UCC, now owned or hereafter acquired by any Debtor and, in
any event, shall include, without limitation, all machinery, equipment,
furnishings, fixtures, and vehicles now owned or hereafter acquired by any
Debtor and any and all additions, substitutions, and replacements of any of
the foregoing, wherever located, together with all attachments, components,
parts, equipment, and accessories installed thereon or affixed thereto.
"General Intangibles" means any "general intangibles", as such term is
-------------------
defined in Section 9.106 of the UCC, now owned or hereafter acquired by any
Debtor and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by any Debtor: (a) all
patents, patent applications, patent rights, service marks, trademarks,
trade names, trade secrets, intellectual property, registrations, goodwill,
copyrights, franchises, licenses, permits, proprietary information,
customer lists, designs, and inventions of any
-2-
<PAGE>
Debtor, (b) all books, records, data, plans, manuals, computer software,
and computer programs of any Debtor, (c) all contract rights, partnership
interests, joint venture interests, securities, deposit accounts,
investment accounts, and certificates of deposit of any Debtor, (d) all
rights of any Debtor to payment under letters of credit and similar
agreements, (e) all tax refunds and tax refund claims of any Debtor, (f)
all choses in action and causes of action of any Debtor (whether arising in
contract, tort, or otherwise and whether or not currently in litigation)
and all judgments in favor of any Debtor, (g) all rights and claims of any
Debtor under warranties and indemnities, and (h) all rights of any Debtor
under any insurance, surety, or similar contract or arrangement.
"Instrument" means any "instrument", as such term is defined in
----------
Section 9.105(a)(9) of the UCC, now owned or hereafter acquired by any
Debtor.
"Inventory" means any "inventory", as such term is defined in Section
---------
9.109(4) of the UCC, now owned or hereafter acquired by any Debtor, and, in
any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by any Debtor: (a) all goods and
other personal property of any Debtor that are held for sale or lease or to
be furnished under any contract of service, (b) all raw materials, work-in-
process, finished goods, inventory, supplies, and materials of any Debtor,
(c) all wrapping, packaging, advertising, and shipping materials of any
Debtor, (d) all goods that have been returned to, repossessed by, or
stopped in transit by any Debtor, and (e) all Documents evidencing any of
the foregoing.
"Obligations" means:
-----------
(a) the indebtedness, liabilities and obligations of the Borrower to
the Banks evidenced by those certain Promissory Notes of even date
herewith, executed by the Borrower and payable to the order of the Banks in
the aggregate principal amount of $90,000,000.
(b) the indebtedness, liabilities and obligations of each Debtor to
the Agent and the Banks under the Guaranty executed by each Debtor in favor
of the Agent and the Banks;
(c) the "Obligations" as such term is defined in the Loan Agreement;
(d) all future Advances by the Agent or any Bank to the Borrower and
the Debtors, or any of them;
(e) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the Agent or any
Bank to preserve and maintain the Collateral, collect the obligations
herein described and enforce this Agreement;
-3-
<PAGE>
(f) all other obligations, indebtedness and liabilities of the
Borrower and the Debtors, or any of them, to the Agent or any Bank under
any of the Loan Documents, now existing or hereafter arising, regardless of
whether such obligations, indebtedness and liabilities are similar,
dissimilar, related, unrelated, direct, indirect, fixed, contingent,
primary, secondary, joint, several, or joint and several; and
(g) all extensions, renewals and modifications of any of the
foregoing.
"Permitted Liens" means the security interests granted hereby and
---------------
Liens expressly permitted by Section 10.2 of the Loan Agreement.
"Proceeds" means any "proceeds", as such term is defined in Section
--------
9.306 of the UCC and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty, or guaranty
payable to any Debtor from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Debtor from time to time in connection with any
requisition, confiscation, condemnation, seizure, or forfeiture of all or
any part of the Collateral by any Governmental Authority (or any person
acting under color of Governmental Authority), and (c) any and all other
amounts from time to time paid or payable under or in connection with any
of the Collateral.
"UCC" means the Uniform Commercial Code as in effect in the State of
---
Texas or, if so required with respect to any particular Collateral by
mandatory provisions of applicable law, as in effect in the jurisdiction in
which such Collateral is located.
Section 1.2. Terms Defined in Loan Agreement. All capitalized terms used
-------------------------------
and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
ARTICLE II
Security Interest
-----------------
Section 2.1. Security Interest. As collateral security for the prompt
-----------------
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), each Debtor hereby grants to the
Agent, for the pro rata benefit of the Banks, a first priority lien on and
security interest in all of its personal property, including without limitation
all of its right, title, and interest in and to the following, whether now owned
or hereafter arising or acquired and wherever located (collectively, the
"Collateral"):
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(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments;
(d) all General Intangibles;
(e) all Documents;
(f) all Inventory;
(g) all Equipment; and
(h) all Proceeds and products of any or all of the foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Agent or any Bank but for the fact that they are unenforceable
or not allowable due to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower. If the grant, pledge, or collateral
transfer or assignment of any rights of any Debtor under any contract included
in the Collateral is expressly prohibited by such contract, then the security
interest hereby granted nonetheless remains effective to the extent allowed by
Section 9.318 of the UCC or other applicable law but is otherwise limited by
that prohibition.
Section 2.2. Debtors Remain Liable. Notwithstanding anything to the
---------------------
contrary contained herein, (a) each Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the Agent
of any of its rights hereunder shall not release any Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of any Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
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ARTICLE III
Representations and Warranties
------------------------------
Each Debtor represents and warrants to the Agent that:
Section 3.1. Title. The Debtors are, and with respect to Collateral
-----
acquired after the date hereof the Debtors will be, the legal and beneficial
owners of their respective Collateral free and clear of any Lien, except
Permitted Liens.
Section 3.2. Accounts. Unless a Debtor has given the Agent written
--------
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, each Debtor shall be deemed to have represented and
warranted to the Agent as to each and all of its Accounts that (a) each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by such Debtor or the sale or lease of
goods by such Debtor, (c) the amount of each Account represented as owing is the
correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (d) to the best of
Debtor's knowledge, no Account is subject to any offset, counterclaim, or other
defense.
Section 3.3. Financing Statements. No financing statement, security
--------------------
agreement, or other Lien instrument covering all or any part of the Collateral
is on file in any public office, except those filed in favor of the Agent
pursuant to this Agreement or with respect to any other Permitted Liens. Except
as set forth on Schedule 3 hereto, no Debtor has within the past five (5) years
done business under any name or trade name other than its legal name set forth
at the beginning of this Agreement.
Section 3.4. Principal Place of Business. The principal place of
---------------------------
business and chief executive office of each Debtor, and the office where each
Debtor keeps its books and records, is located at the address specified below
the name of such Debtor on the signature pages hereof.
Section 3.5. Location of Collateral. All Inventory and Equipment of
----------------------
each Debtor are located at the places specified on Schedule 1 hereto. Each
Debtor has exclusive possession and control of its Inventory and Equipment.
None of the Inventory or Equipment of any Debtor is evidenced by a Document
(including, without limitation, a negotiable document of title). All
Instruments and Chattel Paper of each Debtor have been delivered to the Agent.
Section 3.6. Perfection. This Agreement creates a security interest
----------
in the Collateral in favor of the Agent. Upon the filing of UCC financing
statements in favor of the Agent in the jurisdictions listed on Schedule 2
attached hereto, and upon the Agent's obtaining possession of all Documents and
Instruments of each Debtor, the security interest in favor of the Agent created
herein will constitute a valid and perfected Lien upon and security interest in
the Collateral, subject to no equal or prior Lien, except the Permitted Liens.
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<PAGE>
Section 3.7. Benefit to Debtors. The value of the consideration
------------------
received and to be received by each Debtor as a result of the Borrower, the
Parent, the Agent and the Banks entering into and obtaining credit under the
Loan Agreement and the Second Amendment and the Debtors executing and delivering
this Agreement is reasonably worth at least as much as the liability and
obligation of such Debtor hereunder, and such liability and obligation and the
Borrower's entering into and obtaining credit under the Loan Agreement and the
Second Amendment have benefited and may reasonably be expected to benefit each
Debtor directly and indirectly.
Section 3.8. Loan Agreement. Each and every representation and
--------------
warranty contained in the Loan Agreement is true and correct in all respects.
ARTICLE IV
Covenants
---------
The Debtors jointly and severally covenant and agree with the Agent
that until the Obligations are paid and performed in full and all Commitments
have terminated:
Section 4.1. Encumbrances. No Debtor shall create, permit, or suffer
------------
to exist, and each Debtor shall defend the Collateral against, any Lien on the
Collateral, except the Permitted Liens, and each Debtor shall defend its rights
in the Collateral and the Agent's security interest in the Collateral against
the claims and demands of all Persons. No Debtor shall do anything to impair
the rights of the Agent in the Collateral.
Section 4.2. Modification of Accounts. Each Debtor shall, in
------------------------
accordance with prudent business practices, endeavor to collect or cause to be
collected from each account debtor under its Accounts, as and when due, any and
all amounts owing under such Accounts. Without the prior written consent of the
Agent, no Debtor shall (a) grant any extension of time for any payment with
respect to any of the Accounts, except for extensions of time granted in the
ordinary course of such Debtor's business for payment with respect to Accounts
not included in the Borrowing Base, (b) compromise, compound, or settle any of
the Accounts for less than the full amount thereof, except for compromise,
compound or settlement in the ordinary course of business of Accounts not
included in the Borrowing Base, (c) release, in whole or in part, any Person
liable for payment thereof, except in connection with settlements permitted by
clause (b) above, (d) allow any credit or discount for payment with respect to
any Account other than trade discounts granted in the ordinary course of
business, or (e) release any Lien or guaranty securing any Account, except in
connection with settlements permitted by clause (b) above.
Section 4.3. Disposition of Collateral. No Debtor shall sell, lease,
-------------------------
assign (by operation of law or otherwise), or otherwise dispose of, or grant any
option with respect to, the Collateral or any part thereof without the prior
written consent of the Agent, except as expressly permitted by the Loan
Agreement.
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<PAGE>
Section 4.4. Further Assurances. At any time and from time to time,
------------------
upon the request of the Agent, and at the sole expense of the Debtors, each
Debtor shall promptly execute and deliver all such further instruments,
agreements, and documents and take such further action as the Agent may deem
necessary or desirable to preserve and perfect its security interest in the
Collateral and carry out the provisions and purposes of this Agreement. Without
limiting the generality of the foregoing, each Debtor shall (a) execute and
deliver to the Agent such financing statements as the Agent may from time to
time require; (b) deliver and pledge to the Agent all Documents (including,
without limitation, negotiable documents of title) evidencing Inventory or
Equipment; (c) deliver and pledge to the Agent all Instruments and Chattel Paper
of such Debtor with any necessary endorsements; and (d) execute and deliver to
the Agent such other documents, instruments, and agreements as the Agent may
require to perfect and maintain the validity, effectiveness, and priority of the
Loan Documents and the Liens intended to be created thereby. Each Debtor
authorizes the Agent to file one or more financing or continuation statements,
and amendments thereto, relating to all or any part of the Collateral without
the signature of such Debtor where permitted by law. A carbon, photographic, or
other reproduction of this Agreement or of any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement and
may be filed as a financing statement.
Section 4.5. Risk of Loss; Insurance. The Debtors shall be
-----------------------
responsible for any loss or damage to the Collateral. The Debtors shall, at
their own expense, maintain or cause to be maintained insurance with respect to
the Collateral in such amounts, against such risks, in such form, and with such
insurers as shall be satisfactory to the Agent from time to time. Each policy
for liability insurance shall provide for all losses to be paid on behalf of the
Agent, for the pro rata benefit of the Banks and the Debtor as their interests
may appear. Each policy for property insurance shall contain loss payable
clauses and a loss payable endorsement in favor of the Agent, for the pro rata
benefit of the Banks, as its interest may appear. If the Debtors shall fail to
maintain or cause to be maintained the insurance required by this Agreement, the
Agent shall have the right (but shall be under no obligation) to obtain such
insurance and the Debtors jointly and severally agree to reimburse the Agent for
all costs and expenses incurred by the Agent in obtaining such insurance. All
such insurance shall provide that no cancellation, reduction in amount, or
change in coverage thereof shall be effective unless the Agent has received
thirty (30) days prior written notice thereof. The Debtors shall deliver to the
Agent and each Bank copies of all insurance policies required by this Agreement.
Section 4.6. Inspection Rights. Each Debtor shall permit the Agent,
-----------------
each Bank and their respective representatives to examine, inspect, and audit
the Collateral and to examine, inspect, and copy such Debtor's books and records
at any reasonable time and as often as the Agent or any such Bank may desire
during normal business hours. The Agent and each Bank may at any time and from
time to time contact account debtors and other obligors to verify the existence,
amounts, and terms of any Debtor's Accounts.
Section 4.7. Mortgagee's and Landlord's Agreements. With respect to
-------------------------------------
each location of Inventory having an aggregate value of $100,000 or more, as
specified on Schedule 1 hereto, each Debtor shall cause each mortgagee of real
property owned by such Debtor and each landlord
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<PAGE>
of real property leased by such Debtor who has not previously done so to execute
and deliver to the Agent, on or before the date hereof, instruments satisfactory
in form and substance to the Agent by which such mortgagee or landlord waives
its rights, if any, in the Collateral (each, a "Landlord's Agreement");
provided, however that CellStar West, Inc. shall exert its best efforts to cause
CPD, Inc. and each landlord of the location at 31035 Genstar Road, Hayward,
California 94544, to execute and deliver to the Agent, on or before September
30, 1996, Landlord's Agreements (or a similar agreement with respect to CPD,
Inc.). After the date hereof, each Debtor shall promptly deliver or cause to be
delivered to the Agent Landlord's Agreements in accordance with this Section for
each location where the Inventory hereafter has an aggregate value of $100,000
or more. At the request of the Agent, each Debtor shall promptly deliver or
cause to be delivered Landlord's Agreements for any locations where any
Collateral may now or hereafter be located.
Section 4.8. Corporate Changes. No Debtor shall change its name,
-----------------
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
such Debtor shall have given the Agent thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by the
Agent to make each financing statement not seriously misleading. No Debtor
shall change its principal place of business, chief executive office, or the
place where it keeps its books and records unless it shall have given the Agent
thirty (30) days prior written notice thereof and shall have taken all action
deemed necessary or desirable by the Agent to cause its security interest in the
Collateral to be perfected with the priority required by this Agreement.
Section 4.9. Books and Records; Information. The Debtors shall keep
------------------------------
accurate and complete books and records of the Collateral and the Debtors'
business and financial condition in accordance with GAAP. Each Debtor shall
from time to time at the request of the Agent deliver to the Agent such
information regarding the Collateral and such Debtor as the Agent may request,
including, without limitation, lists and descriptions of the Collateral and
evidence of the identity and existence of the Collateral. Each Debtor shall
mark its books and records to reflect the security interest of the Agent under
this Agreement.
Section 4.10. Equipment and Inventory.
-----------------------
(a) The Debtors shall keep the Equipment and Inventory at the
locations specified on Schedule 1 hereto or, upon thirty (30) days prior
written notice to the Agent, at such other places within the United States
of America where all action required to perfect the Agent's security
interest in the Equipment and Inventory with the priority required by this
Agreement shall have been taken.
(b) The Debtors shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear excepted). None of the
Debtors shall permit any waste or destruction of the Equipment or Inventory
or any part thereof. None of the Debtors shall permit the Equipment or
Inventory to be used in violation of any law, rule, or regulation or
inconsistently with the terms of any policy of insurance. None of the
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<PAGE>
Debtors shall use or permit any of the Equipment or Inventory to be used in
any manner or for any purpose that would impair its value or expose it to
unusual risk.
Section 4.11. Warehouse Receipts Non-Negotiable. Each Debtor agrees that
---------------------------------
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC as in effect in any relevant jurisdiction or under relevant
law).
Section 4.12. Notification. The Debtors shall promptly, and in any event
------------
within five (5) days after any Debtor obtains knowledge or becomes aware of any
of the following, notify the Agent of (a) any Lien or claim that has attached to
or been made or asserted against any of the Collateral, (b) any material damage
to or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 4.13. Collection of Accounts. Except as otherwise provided in
----------------------
this Section, the Debtors shall have the right to collect and receive payments
on the Accounts. In connection with such collections, the Debtors may take
(and, at the Agent's direction, shall take) such actions as the Debtors or the
Agent may deem necessary or advisable to enforce collection of the Accounts. At
any time, if an Event of Default shall have occurred and be continuing, the
Agent shall have the right to, or upon the request of the Agent the Debtors
shall, instruct all account debtors and other Persons obligated in respect of
the Accounts to make all payments on the Accounts either (a) directly to the
Agent (by instructing that such payments be remitted to a post office box which
shall be in the name and under the control of the Agent), or (b) to one or more
other banks in the United States of America (by instructing that such payments
be remitted to a post office box which shall be in the name or under the control
of the Agent) under arrangements in form and substance satisfactory to the Agent
pursuant to which the Debtors shall have irrevocably instructed such other bank
(and such other bank shall have agreed) to remit all such payments directly to
the Agent. In addition to the foregoing, each Debtor agrees that if any
Proceeds of any Collateral (including payments made in respect of Accounts)
shall be received by such Debtor while an Event of Default exists, such Debtor
shall promptly deliver such Proceeds to the Agent, for the pro rata benefit of
the Banks, with any necessary endorsements. Until such Proceeds are delivered to
the Agent, such Proceeds shall be held in trust by such Debtor for the benefit
of the Agent and shall not be commingled with any other funds or property of any
Debtor. All Proceeds of Collateral received by the Agent pursuant to this
Section may at the option of the Required Banks in the exercise of their
absolute discretion, (i) be applied by the Agent and the Banks to their
respective Obligations in such order and manner as they may elect in their
absolute discretion, or (ii) be deposited to the credit of any Debtor and held
as collateral for the Obligations or permitted to be used by such Debtor in the
ordinary course of its business.
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ARTICLE V
Rights of the Agent
-------------------
Section 5.1. Power of Attorney. Each Debtor hereby irrevocably
-----------------
constitutes and appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of such Debtor or in its own name,
to take any and all action and to execute any and all documents and instruments
which the Agent at any time and from time to time deems necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, each Debtor hereby gives the Agent the power and
right on behalf of such Debtor and in its own name to do any of the following,
without notice to or the consent of such Debtor and whether or not an Event of
Default has occurred and is continuing (except as otherwise expressly provided
below).
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of any Debtor
or in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under
the Collateral or any policy of insurance;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) after the occurrence and during the continuance of an Event of
Default, to notify post office authorities to change the address for
delivery of mail of any Debtor to an address designated by the Agent and to
receive, open, and dispose of mail addressed to any Debtor;
(iv) (A) after the occurrence and during the continuance of an Event
of Default, to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to the Agent or as the Agent
shall direct; (B) after the occurrence and during the continuance of an
Event of Default, to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral; (C) after the occurrence and during the
continuance of an Event of Default, to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, proxies, stock powers, verifications,
and notices in connection with accounts and other documents relating to the
Collateral; (D) after the occurrence and during the continuance of an Event
of Default, to commence and prosecute any suit, action, or proceeding at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of
any Collateral; (E) after the occurrence and during the
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<PAGE>
continuance of an Event of Default, to defend any suit, action, or
proceeding brought against any Debtor with respect to any Collateral; (F)
after the occurrence and during the continuance of an Event of Default, to
settle, compromise, or adjust any suit, action, or proceeding described
above and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; (G) to exchange any of the Collateral for
other property upon any merger, consolidation, reorganization,
recapitalization, or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any committee,
depositary, transfer agent, registrar, or other designated agency upon such
terms as the Agent may determine; (H) to add or release any guarantor,
indorser, surety, or other party to any of the Collateral; (I) to renew,
extend, or otherwise change the terms and conditions of any of the
Collateral; (J) to make, settle, compromise, or adjust claims under any
insurance policy covering any of the Collateral; and (K) after the
occurrence and during the continuance of an Event of Default, to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's option
and the Debtors' expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve, or realize
upon the Collateral and the Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or in its capacity as attorney-in-fact except acts or
omissions resulting from its willful misconduct. This power of attorney is
conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent shall not be responsible for any
decline in the value of the Collateral and shall not be required to take any
steps to preserve rights against prior parties or to protect, preserve, or
maintain any security interest or Lien given to secure the Collateral.
Section 5.2. Setoff; Property Held by the Agent and the Banks. If an Event
------------------------------------------------
of Default shall have occurred and be continuing, the Agent and each Bank shall
have the right to set off and apply against the Obligations, at any time and
without notice to any Debtor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from the Agent or any Bank to such Debtor whether or not the Obligations are
then due. As additional security for the Obligations, each Debtor hereby grants
the Agent and each Bank a security interest in all money, instruments, and other
property of such Debtor now or hereafter held by the Agent or any Bank,
including without limitation, property held in safekeeping. In addition to the
Agent's or any Bank's right of setoff and as further security for the
Obligations, each Debtor hereby grants the Agent and each Bank a security
interest in all deposits (general or special, time or demand, provisional or
final) of such Debtor now or hereafter on deposit with or held by the Agent or
any Bank and all other sums at any time credited by or owing from the Agent or
any Bank to such Debtor. The rights and remedies of
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<PAGE>
the Agent and each Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Agent or any
Bank may have.
Section 5.3. Performance by the Agent. If any Debtor shall fail to perform
------------------------
any covenant or agreement contained in this Agreement, the Agent may perform or
attempt to perform such covenant or agreement on behalf of such Debtor. In such
event, the Debtors shall, at the request of the Agent, promptly pay any amount
expended by the Agent in connection with such performance or attempted
performance to the Agent, together with interest thereon at the Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Agent shall not have any liability or responsibility for the
performance of any obligation of any Debtor under this Agreement.
Section 5.4. Subrogation. If any of the Obligations are given in renewal
-----------
or extension or applied toward the payment of indebtedness secured by any Lien,
Agent and the Banks shall be, and are hereby, subrogated to all of the rights,
titles, interests and Liens securing the indebtedness so renewed, extended, or
paid.
Section 5.5. Agent's Duty of Care. Other than the exercise of reasonable
--------------------
care and the physical custody of the Collateral while held by the Agent
hereunder, the Agent shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto, including without limitation any obligation or duty
to collect any sums due in respect thereof or to protect or preserve any rights
against prior parties or any other rights pertaining thereto, it being
understood and agreed that each Debtor shall be responsible for preservation of
all rights in the Collateral. Without limiting the generality of the foregoing,
the Agent shall be conclusively deemed to have exercised reasonable care in the
custody of the Collateral if the Agent takes such action, for purposes of
preserving rights in the Collateral, as any Debtor may reasonably request in
writing, but no failure or omission or delay by the Agent in complying with any
such request by any Debtor, and no refusal by the Agent to comply with any such
request by any Debtor, shall be deemed to be a failure to exercise reasonable
care.
ARTICLE VI
Default
-------
Section 6.1. Rights and Remedies. If an Event of Default shall have
-------------------
occurred and be continuing, the Agent shall have the following rights and
remedies:
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement or in any other Loan Document or by applicable law,
the Agent shall have all of the rights and remedies of a secured party
under the UCC (whether or not the UCC applies to the affected Collateral).
Without limiting the generality of the foregoing, the Agent may (1) without
demand or notice to any Debtor, collect, receive, or take
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<PAGE>
possession of the Collateral or any part thereof and for that purpose
the Agent may enter upon any premises on which the Collateral is located
and remove the Collateral therefrom or render it inoperable, and/or (2)
sell, lease, or otherwise dispose of the Collateral, or any part thereof,
in one or more parcels at public or private sale or sales, at the Agent's
offices or elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Agent may deem commercially reasonable. The Agent
shall have the right at any public sale or sales, and, to the extent
permitted by applicable law, at any private sale or sales, to bid and
become a purchaser of the Collateral or any part thereof free of any right
or equity of redemption on the part of any Debtor, which right or equity of
redemption is hereby expressly waived and released by each Debtor. Upon
the request of the Agent, each Debtor shall assemble the Collateral and
make it available to the Agent at any place designated by the Agent that is
reasonably convenient to such Debtor and the Agent. Each Debtor agrees
that the Agent shall not be obligated to give more than five (5) days
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. The Agent shall not be
obligated to make any sale of Collateral if it shall determine not to do
so, regardless of the fact that notice of sale of Collateral may have been
given. The Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was
so adjourned. The Debtors shall be jointly and severally liable for all
expenses of retaking, holding, preparing for sale, or the like, and all
attorneys' fees, legal expenses, and all other costs and expenses incurred
by the Agent in connection with the collection of the Obligations and the
enforcement of the Agent's rights under this Agreement. The Debtors shall
remain liable for any deficiency if the Proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations in
full. The Agent and the Banks may apply the Collateral against the
Obligations in such order and manner as the Agent may elect in its sole
discretion. Each Debtor waives all rights of marshalling, valuation, and
appraisal in respect of the Collateral.
(ii) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) On any sale of the Collateral, the Agent is hereby authorized
to comply with any limitation or restriction with which compliance is
necessary, in the view of the Agent's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval of
the purchaser or purchasers by any applicable Governmental Authority.
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ARTICLE VII
Miscellaneous
-------------
Section 7.1. Expenses. The Debtors hereby jointly and severally agree to
--------
pay on dema nd: (a) all reasonable costs and out-of-pocket expenses of the Agent
in connection with the preparation, negotiation, execution, and delivery of this
Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto,
including, without limitation, the reasonable fees and expenses of legal counsel
for the Agent, (b) all costs and out-of-pocket expenses of the Agent and the
Banks, or any of them in connection with any Default and the enforcement of this
Agreement or any other Loan Document, including, without limitation, the
reasonable fees and expenses of legal counsel for the Agent and the Banks, or
any of them, (c) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of this
Agreement or any of the other Loan Documents, (d) all reasonable costs, out-of-
pocket expenses, assessments, and other charges incurred in connection with any
filing, registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (e) all other
reasonable costs and out-of-pocket expenses incurred by the Agent in connection
with this Agreement or any other Loan Document, including, without limitation,
all fees, costs, out-of-pocket expenses, and other charges incurred in
connection with performing or obtaining any audit or appraisal in respect of the
Collateral.
Section 7.2. INDEMNIFICATION. THE DEBTORS HEREBY JOINTLY AND SEVERALLY
---------------
AGREE TO INDEMNIFY THE AGENT AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AGENTS, AND PARTICIPANTS
FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, INTEREST, EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES), AND AMOUNTS PAID IN SETTLEMENT TO WHICH
ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE
TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY DEBTOR
OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY
OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,
REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER, ANY DEBTOR OR ANY
SUBSIDIARY, (E) THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (F) ANY AND ALL
TAXES, LEVIES, DEDUCTIONS, AND CHARGES IMPOSED ON THE AGENT OR ANY BANK OR ANY
OF THEIR RESPECTIVE CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G)
ANY INVESTIGATION, LITIGATION, OR OTHER
-15-
<PAGE>
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING; PROVIDED,
HOWEVER THAT NO PERSON TO BE INDEMNIFIED HEREUNDER SHALL HAVE THE RIGHT TO BE
INDEMNIFIED FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING
ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 7.3. Limitation of Liability. None of the Agent, any Bank, or any
-----------------------
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and each Debtor hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by such Debtor in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. Each Debtor hereby waives,
releases, and agrees not to sue the Agent or any Bank or any of their respective
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Section 7.4. No Fiduciary Relationship. The relationship between each
-------------------------
Debtor and each Bank with respect to the Loan Documents and the transactions
governed thereby is solely that of debtor and creditor, and neither the Agent
nor any Bank has any fiduciary or other special relationship with any Debtor
with respect to the Loan Documents and the transactions governed thereby, and no
term or condition of any of the Loan Documents shall be construed so as to deem
the relationship between the Debtor and any Bank with respect to the Loan
Documents and the transactions governed thereby to be other than that of debtor
and creditor.
Section 7.5. No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are cumulative
and not exclusive of any rights and remedies provided by law.
Section 7.6. Successors and Assigns; Parties Bound. This Agreement shall
-------------------------------------
be binding upon and inure to the benefit of the Debtors and the Agent and their
respective heirs, successors, and assigns, except that the Debtors may not
assign any of their rights or obligations under this
-16-
<PAGE>
Agreement without the prior written consent of the Agent. The Debtors'
obligations and agreements hereunder are joint and several. The provisions of
this Agreement shall apply to each Debtor, individually and collectively.
Section 7.7. ENTIRE AGREEMENT; AMENDMENT; CONTROLLING AGREEMENT. THIS
--------------------------------------------------
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto. In the event any term or provision of this
Agreement expressly conflicts with any term or provision of the Loan Agreement,
the terms and provisions of the Loan Agreement shall govern and control.
Section 7.8. Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the address specified below its name on the signature pages hereof; or, as to
any party at such other address as shall be designated by such party in a notice
to the other party given in accordance with this Section. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed notice, when
duly deposited in the mails, in each case given or addressed as aforesaid.
Section 7.9. GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY
--------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED
INTO IN DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN
DALLAS COUNTY, TEXAS.
Section 7.10. Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.11. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Agreement shall survive the
execution and delivery of this Agreement, and no investigation by the Agent or
any Bank shall affect the representations and warranties of any Debtor herein or
the right of the Agent or any Bank to rely upon them.
Section 7.12. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
-17-
<PAGE>
Section 7.13. Waiver of Bond. In the event the Agent seeks to take
--------------
possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.14. Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.15. Termination. If all of the Obligations shall have been paid
-----------
and performed in full and all Commitments shall have expired or terminated, the
Agent shall, upon the written request of the Borrower, execute and deliver to
the Debtors a proper instrument or instruments acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to the Debtors (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Agent and has not previously been sold or otherwise applied pursuant to
this Agreement.
Section 7.16. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, EACH DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF
THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTORS:
-------
CELLSTAR AIR SERVICES, INC.,
a Delaware corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
A&S AIR SERVICES, INC.,
a Delaware corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
CELLSTAR INTERNATIONAL
CORPORATION/SA,
a Delaware corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
-19-
<PAGE>
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M . Gozia
AUDIOMEX EXPORT CORPORATION,
a Texas corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
CELLSTAR INTERNATIONAL
CORPORATION/ASIA,
a Delaware corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
-20-
<PAGE>
CELLSTAR FULFILLMENT, INC.,
a Delaware corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
NAC HOLDINGS, INC.,
a Nevada corporation
By:__________________________________________
Name:_____________________________________
Title:____________________________________
Address: 1325 Airmotive Way
Reno, Nevada 89502
Fax No.: (702) 322 8808
Phone No.: (702) 322-3221
Attention: Secretary
CELLSTAR WEST, INC.,
a Delaware corporation
By:__________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
-21-
<PAGE>
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:_________________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
-22-
<PAGE>
Schedule 1
LOCATION OF EQUIPMENT AND INVENTORY
-----------------------------------
Locations of Equipment and Inventory
having an aggregate value of $100,000 or more
---------------------------------------------
Debtor Locations
------ ---------
CellStar West, Inc. 31035 Genstar Road
Hayward, California 94544
Locations of Equipment and Inventory
having an aggregate value of less than $100,000
-----------------------------------------------
Debtor Locations
------ ---------
CellStar West, Inc. 2417 Front Street
W. Sacramento, California 95691
4704 W. Jennifer, Suite 105
Fresno, California 93722
2646 West Lane, #A
Stockton, California 95205
<PAGE>
Schedule 2
Jurisdictions for Filing
UCC-1 Financing Statements
--------------------------
<TABLE>
<CAPTION>
Debtor Jurisdiction
- ------ ------------
<S> <C>
CellStar Air Services,Inc. Secretary of State of Texas
A&S Air Services, Inc. Secretary of State of Texas
CellStar International Corporation/SA Secretary of State of Texas
Audiomex Export Corporation Secretary of State of Texas
CellStar International Corporation/Asia Secretary of State of Texas
CellStar Fulfillment, Inc. Secretary of State of Texas
CellStar Fulfillment, Inc. Secretary of State of Maine
NAC Holdings, Inc. Secretary of State of Texas
NAC HOldings, Inc. Secretary of State of Nevada
CellStar West, Inc. Secretary of State of Texas
CellStar West, Inc. Secretary of State of California
</TABLE>
SCHEDULE 2, Jurisdictions for Filing UCC-1 Financing Statements - Solo Page
<PAGE>
SCHEDULE 3
TRADE NAMES AND PREVIOUS NAMES
------------------------------
NONE
SCHEDULE 3, Additional Names and Trade Names - Solo Page
<PAGE>
ANNEX 10
Exhibit "E-11" (Parent Pledge Agreement)
----------------------------------------
<PAGE>
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT ("Agreement") dated as of July 31, 1996, is by and
between CELLSTAR CORPORATION, a Delaware corporation (the "Pledgor"), whose
address is 1730 Briercroft, Carrollton, Texas 75006, and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association ("TCB"), not in its
individual capacity but solely as agent for itself and each of the other banks
or lending institutions (each, a "Bank" and collectively, the "Banks") which is
or may from time to time become a signatory to the Loan Agreement (hereinafter
defined) or any successor or permitted assignee thereof (TCB in such capacity,
together with its successors in such capacity, the "Agent"), whose address is
2200 Ross Avenue, Post Office Box 660197, Dallas, Texas 75266-0197.
R E C I T A L S:
- - - - - - - -
A. National Auto Center, Inc., a Texas corporation (the "Borrower"),
Pledgor, the Agent, and the Banks are parties to that certain Amended and
Restated Loan Agreement dated as of July 20, 1995, as amended by that certain
First Amendment to Amended and Restated Loan Agreement dated as of February 29,
1996 (such Amended and Restated Loan Agreement, as the same has been and may be
amended, supplemented or modified from time to time, being hereinafter referred
to as the "Loan Agreement").
B. Concurrently herewith, the Borrower, Pledgor, the Agent, and the Banks
are entering into that certain Second Amendment to Amended and Restated Loan
Agreement of even date herewith (the "Second Amendment").
C. As a condition to the Second Amendment, Pledgor is required to execute
and deliver this Agreement.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
PLEDGE AGREEMENT - Page 1
<PAGE>
ARTICLE I
Security Interest and Pledge
----------------------------
Section 1.1. Terms Defined in Loan Agreement. All capitalized terms
-------------------------------
used and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
Section 1.2. Security Interest and Pledge. Subject to the terms of
----------------------------
this Agreement, Pledgor hereby pledges and grants to the Agent, for the pro rata
benefit of the Banks, a first priority security interest in the following
property (such property being hereinafter sometimes called the "Collateral"):
(a) All present and future issued and outstanding shares of
capital stock or other equity or investment securities
issued by the Borrower, now owned or hereafter acquired by
Pledgor, including without limitation 100 shares of common
capital stock of the Borrower evidenced by certificate no.
003;
(b) All present and future issued and outstanding shares of
capital stock or other equity or investment securities
issued by CellStar Air Services, Inc., a Delaware
corporation ("CAS"), now owned or hereafter acquired by
Pledgor, including without limitation 100,000 shares of
common capital stock of CAS evidenced by certificate no.
001;
(c) All present and future issued and outstanding shares of
capital stock or other equity or investment securities
issued by any Subsidiary of Pledgor not named above, except
Foreign Subsidiaries and holding companies of Foreign
Subsidiaries, now owned or hereafter acquired by Pledgor;
(d) All present and future issued and outstanding shares of non-
voting capital stock or other non-voting equity or
investment securities issued by any Subsidiary of Pledgor
not named above which is a holding company of any Foreign
Subsidiary, now owned or hereafter acquired by Pledgor;
(e) Sixty-five percent (65%) of all present and future issued
and outstanding shares of voting capital stock or other
voting equity or investment securities issued by any
Subsidiary of Pledgor not named above which is a holding
company of any Foreign Subsidiary, now owned or hereafter
acquired by Pledgor;
(f) All present and future increases, profits, combinations,
reclassifications of, and substitutes and replacements for,
all or part of the foregoing, and all present and future
accounts, contract rights, general intangibles, chattel
paper, documents, instruments, cash and noncash proceeds,
and other rights arising from or by virtue of, or from the
voluntary or involuntary sale, lease, or other disposition
of, or collections with respect to, all or any part of the
foregoing; and
PLEDGE AGREEMENT - Page 2
<PAGE>
(g) All products, proceeds, revenues, distributions, dividends,
stock dividends, securities, and other property, rights, and
interests that Pledgor receives or is at any time entitled
to receive on account of any of the foregoing.
Section 1.3. Obligations. The security interest granted, ratified and
-----------
confirmed hereby is to secure the payment or performance of the following
obligations, indebtedness, and liabilities of Borrower and Pledgor, or either of
them, to the Agent, now existing or hereafter arising (all of such obligations,
indebtedness, and liabilities being hereinafter sometimes called the
"Obligations"):
(a) the indebtedness, liabilities and obligations of the
Borrower to the Banks evidenced by those certain Promissory Notes executed
by the Borrower pursuant to the Loan Agreement and payable to the order of
the Banks in the aggregate principal amount of $90,000,000.00;
(b) the indebtedness, liabilities and obligations of the Pledgor
to the Agent and the Banks under that certain Guaranty of even date
herewith, executed by the Pledgor and the other guarantors named therein
in favor of the Agent and the Banks;
(c) the indebtedness, liabilities and obligations of the
Borrower to the Agent and the Banks pursuant to the Loan Agreement;
(d) all of the "Obligations," as such term is defined in the
Loan Agreement;
(e) all future Advances by the Agent or any Bank to the Borrower
and Pledgor, or either of them;
(f) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the Agent or
any Bank to preserve and maintain the Collateral, collect the obligations
herein described and enforce this Agreement;
(g) all other obligations, indebtedness and liabilities of the
Borrower and Pledgor, or either of them, to the Agent or any Bank under
any of the Loan Documents, now existing or hereafter arising, regardless
of whether such obligations, indebtedness and liabilities are similar,
dissimilar, related, unrelated, direct, indirect, fixed, contingent,
primary, secondary, joint, several, or joint and several; and
(h) all extensions, renewals and modifications of any of the
foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Agent or any Bank but for the fact that they are unenforceable
or not allowable due to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower.
PLEDGE AGREEMENT - Page 3
<PAGE>
ARTICLE II
Representations and Warranties
------------------------------
Pledgor represents and warrants to the Agent that:
Section 2.1. Title. Pledgor owns, and with respect to Collateral
-----
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any Lien or claim or any right or option on the
part of any third Person to purchase or otherwise acquire the Collateral or any
part thereof, except for the security interest granted hereunder. The
Collateral is not subject to any restriction on transfer or assignment except
for compliance with applicable federal and state securities laws and regulations
promulgated thereunder. Pledgor has the unrestricted right to pledge the
Collateral as contemplated hereby. All of the Collateral has been duly and
validly issued and is fully paid and nonassessable.
Section 2.2. Financing Statements. No financing statement covering any of
--------------------
the Collateral or its proceeds, except financing statements naming the Agent as
secured party, is on file in any public office. So long as any amount remains
unpaid on any Obligations or the Agent has any Commitment, Pledgor will not
execute or file, or consent to or permit the filing of, any such financing
statement or statements in any public office, except the financing statement
filed or to be filed with respect to the security interest hereby granted.
Section 2.3. Principal Place of Business. The principal place of
---------------------------
business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at the address of Pledgor shown at the
beginning of this Agreement.
Section 2.4. Percentage of Stock. The shares of capital stock
-------------------
included in the Collateral constitute one hundred percent (100%) of the issued
and outstanding shares of capital stock of the Borrower and CAS.
Section 2.5. First Priority Perfected Security Interest. Upon the
------------------------------------------
filing of UCC financing statements and Agent's taking possession of the
certificates representing the stock included in the Collateral, this Agreement
creates in favor of the Agent a first priority perfected security interest in
the Collateral. There are no conditions precedent to the effectiveness of this
Agreement that have not been fully and permanently satisfied.
Section 2.6. Benefit to Pledgor. The value of the consideration
------------------
received and to be received by the Pledgor as a result of the Borrower, the
Pledgor, the Agent and the Banks entering into the Loan Agreement and the Second
Amendment and the Pledgor executing and delivering this Agreement is reasonably
worth at least as much as the liability and obligation of the Pledgor hereunder.
Such liability and obligation and the Borrower's entering into the Loan
Agreement and the Second Amendment have benefitted and may reasonably be
expected to benefit the Pledgor directly and indirectly.
PLEDGE AGREEMENT - Page 4
<PAGE>
ARTICLE III
Affirmative and Negative Covenants
----------------------------------
Pledgor covenants and agrees with the Agent that until the Obligations are
paid and performed in full and all Commitments have terminated:
Section 3.1. Delivery. Prior to or concurrently with the execution and
--------
delivery of this Agreement, Pledgor shall deliver to the Agent all certificates
identified in subsections (a) and (b) of Section 1.2 hereof and all other
certificates evidencing any other Collateral existing on the date hereof,
accompanied by undated stock powers duly executed in blank.
Section 3.2. Encumbrances. Pledgor shall not create, permit, or suffer to
------------
exist, and shall defend the Collateral against, any Lien on the Collateral
except the Permitted Liens, and shall defend Pledgor's rights in the Collateral
and the Agent's security interest in the Collateral against the claims and
demands of all Persons. Pledgor shall do nothing to impair the rights of the
Agent in the Collateral.
Section 3.3. Disposition of Collateral. Pledgor shall not sell, assign
-------------------------
(by operation of law or otherwise), or otherwise dispose of, or grant any option
with respect to the Collateral or any part thereof without the prior written
consent of the Agent.
Section 3.4. Distributions. If Pledgor shall become entitled to receive
-------------
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as the Agent's agent and to hold the same in trust for the
Agent, and to deliver the same forthwith to the Agent in the exact form
received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by the Agent
as additional Collateral for the Obligations, subject to the terms hereof. Any
sums paid upon or in respect of the Collateral upon the liquidation, dissolution
or winding up of any issuer of Collateral shall be paid over to the Agent to be
held by it as additional Collateral for the Obligations subject to the terms
hereof; and in case any distribution of capital shall be made on or in respect
of the Collateral or any property shall be distributed upon or with respect to
the Collateral pursuant to any recapitalization or reclassification of the
capital of any issuer of Collateral or pursuant to any reorganization of any
issuer of Collateral, the property so distributed shall be delivered to the
Agent to be held by it, as additional Collateral for the Obligations, subject to
the terms hereof. All sums of money and property so paid or distributed in
respect of the Collateral that are received by Pledgor shall, until paid or
delivered to the Agent, be held by Pledgor in trust as additional security for
the Obligations.
Section 3.5. Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of Pledgor, Pledgor shall
promptly execute and deliver all such further instruments and documents and take
such further action as the Agent may deem necessary or desirable to preserve and
perfect its security interest in the Collateral and carry out the provisions and
purposes of this Agreement, including, without limitation, the execution and
PLEDGE AGREEMENT - Page 5
<PAGE>
filing of such financing statements as the Agent may require. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement. Subject to the
right of Pledgor to receive cash dividends and distributions under Section 4.3
hereof, in the event any Collateral is ever received by Pledgor, Pledgor shall
promptly transfer and deliver to the Agent such Collateral so received by
Pledgor (together with any necessary endorsements in blank or undated stock
powers duly executed in blank), which Collateral shall thereafter be held by the
Agent pursuant to the terms of this Agreement. The Agent shall at all times
have the right to exchange any certificates representing Collateral for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
Section 3.6. Inspection Rights. Pledgor shall permit the Agent and its
-----------------
representatives to examine, inspect, and copy Pledgor's books and records at any
reasonable time and as often as the Agent may desire during normal business
hours.
Section 3.7. Notification. Pledgor shall promptly, and in any event
------------
within five (5) days after Pledgor obtains knowledge or becomes aware of any of
the following, notify the Agent of (a) any Lien or claim that has attached to or
been made or asserted against any of the Collateral, (b) any material damage to
or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 3.8. Books and Records; Information. Pledgor shall keep
------------------------------
accurate and complete books and records of the Collateral and Pledgor's business
and financial condition in accordance with GAAP. Pledgor shall from time to
time at the request of the Agent deliver to the Agent such information regarding
the Collateral and Pledgor as the Agent may request. Pledgor shall mark its
books and records to reflect the security interest of the Agent under this
Agreement.
Section 3.9. Additional Securities. Pledgor shall not consent to or
---------------------
approve the issuance of any additional shares of any class of capital stock of
any issuer of Collateral, or any securities convertible into, or exchangeable
for, any such shares or any warrants, options, rights, or other commitments
entitling any Person to purchase or otherwise acquire any such shares.
ARTICLE IV
Rights of Agent and Pledgor
---------------------------
Section 4.1. Power of Attorney. Pledgor hereby irrevocably constitutes
-----------------
and appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, to take any and all action and to execute any and all documents and
instruments which the Agent at any time and from time to time deems necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, Pledgor hereby gives the Agent the power and right
on behalf of Pledgor and in its own name to do any of the following (subject to
the rights of Pledgor under Sections 4.2 and 4.3 hereof), without notice to or
the consent of Pledgor, and whether or not an Event of Default has occurred or
is continuing (except as otherwise expressly provided below):
PLEDGE AGREEMENT - Page 6
<PAGE>
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of Pledgor or
in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or
any other instruments for the payment of money under the Collateral;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
(iii) (A) after the occurrence and during the continuance of an Event
of Default, to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to the Agent or as the Agent
shall direct; (B) after the occurrence and during the continuance of an
Event of Default, to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (C) after the occurrence and
during the continuance of an Event of Default, to sign and endorse any
drafts, assignments, proxies, stock powers, verifications, notices, and
other documents relating to the Collateral; (D) after the occurrence and
during the continuance of an Event of Default, to commence and prosecute
any suit, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and
to enforce any other right in respect of any Collateral; (E) after the
occurrence and during the continuance of an Event of Default, to defend
any suit, action, or proceeding brought against Pledgor with respect to
any Collateral; (F) after the occurrence and during the continuance of an
Event of Default, to settle, compromise, or adjust any suit, action, or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Agent may deem appropriate; (G) to exchange
any of the Collateral for other property upon any merger, consolidation,
reorganization, recapitalization, or other readjustment of any issuer of
Collateral and, in connection therewith, deposit any of the Collateral
with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms as the Agent may determine; (H) to add
or release any guarantor, indorser, surety, or other party to any of the
Collateral or the Obligations; (I) to renew, extend, or otherwise change
the terms and conditions of any of the Collateral or Obligations; and (J)
after the occurrence and during the continuance of an Event of Default, to
sell, transfer, pledge, make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the
Agent were the absolute owner thereof for all purposes, and to do, at the
Agent's option and Pledgor's expense, at any time, or from time to time,
all acts and things which the Agent deems necessary to protect, preserve,
or realize upon the Collateral and the Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or in its capacity as attorney-in-fact except acts or
omissions resulting from its willful misconduct. This power of attorney is
conferred on the Agent solely to protect, preserve, and
PLEDGE AGREEMENT - Page 7
<PAGE>
realize upon its security interest in the Collateral. The Agent will exercise
its best efforts to notify Pledgor of any action taken by the Agent in its
capacity as attorney-in-fact pursuant to this Section, promptly after such
action is taken provided that any failure by the Agent to so notify Pledgor
shall not impose any liability upon the Agent or affect its rights and remedies
hereunder, at law or in equity. The Agent shall not be responsible for any
decline in the value of the Collateral and shall not be required to take any
steps to preserve rights against prior parties or to protect, preserve, or
maintain any security interest or Lien given to secure the Collateral.
Section 4.2. Voting Rights. Unless and until an Event of Default shall
-------------
have occurred and be continuing, Pledgor shall be entitled to exercise any and
all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Loan Agreement.
Section 4.3. Dividends and Distributions. Unless and until an Event of
---------------------------
Default shall have occurred and be continuing, Pledgor shall be entitled to
receive and retain any dividends and distributions on the Collateral paid in
cash to the extent and only to the extent that such dividends and distributions
are permitted by the Loan Agreement, except as provided in Section 3.4 hereof.
Section 4.4. Setoff; Property Held by Agent and the Banks. If an Event
--------------------------------------------
of Default shall have occurred and be continuing, the Agent and each Bank shall
have the right to set off and apply against the Obligations, at any time and
without notice to Pledgor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from the Agent or any Bank to Pledgor whether or not the Obligations are then
due. As additional security for the Obligations, Pledgor hereby grants the Agent
and each Bank a security interest in all money, instruments, and other property
of Pledgor now or hereafter held by the Agent or any Bank, including, without
limitation, property held in safekeeping. In addition to the Agent's or any
Bank's right of setoff and as further security for the Obligations, Pledgor
hereby grants the Agent and each Bank a security interest in all deposits
(general or special, time or demand, provisional or final) and other accounts of
Pledgor now or hereafter on deposit with or held by the Agent or any Bank and
all other sums at any time credited by or owing from the Agent or any Bank to
Pledgor. The rights and remedies of the Agent and each Bank hereunder are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Agent or any Bank may have.
Section 4.5. Performance by Agent. If Pledgor shall fail to perform any
--------------------
covenant or agreement contained in this Agreement, the Agent may perform or
attempt to perform such covenant or agreement on behalf of Pledgor. In such
event, Pledgor shall, at the request of the Agent, promptly pay any amount
expended by the Agent in connection with such performance or attempted
performance to the Agent, together with interest thereon at the Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Agent shall not have any liability or responsibility for the
performance of any obligation of Pledgor under this Agreement.
Section 4.6. Agent's Duty of Care. Other than the exercise of reasonable
--------------------
care in the physical custody of the Collateral while held by the Agent
hereunder, the Agent shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any
PLEDGE AGREEMENT - Page 8
<PAGE>
matter or proceeding arising out of or relating thereto, including, without
limitation, any obligation or duty to collect any sums due in respect thereof or
to protect or preserve any rights against prior parties or any other rights
pertaining thereto, it being understood and agreed that Pledgor shall be
responsible for preservation of all rights in the Collateral. Without limiting
the generality of the foregoing, the Agent shall be conclusively deemed to have
exercised reasonable care in the custody of the Collateral if the Agent takes
such action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by the Agent
in complying with any such request by Pledgor, and no refusal by the Agent to
comply with any such request by Pledgor, shall be deemed to be a failure to
exercise reasonable care.
ARTICLE V
Default
-------
Section 5.1. Rights and Remedies. If any Event of Default shall occur,
-------------------
the Agent shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted to the
Agent in this Agreement and in any other Loan Document or by applicable
law, the Agent shall have all of the rights and remedies of a secured
party under the UCC. Without limiting the generality of the foregoing, the
Agent may (A) without demand or notice to Pledgor, collect, receive, or
take possession of the Collateral or any part thereof, (B) sell or
otherwise dispose of the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at the Agent's offices or
elsewhere, for cash, on credit, or for future delivery, and/or (C) bid and
become a purchaser at any sale free of any right or equity of redemption
in Pledgor, which right or equity is hereby expressly waived and released
by Pledgor. Upon the request of the Agent, Pledgor shall assemble the
Collateral and make it available to the Agent at any place designated by
the Agent that is reasonably convenient to Pledgor and the Agent. Pledgor
agrees that the Agent shall not be obligated to give more than five (5)
days written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice
shall constitute reasonable notice of such matters. The Agent shall not be
obligated to make any sale of the Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned. Pledgor shall be liable for all expenses of
retaking, holding, preparing for sale, or the like, and all attorneys'
fees and other expenses incurred by the Agent in connection with the
collection of the Obligations and the enforcement of the Agent's rights
under this Agreement, all of which expenses and fees shall constitute
additional Obligations secured by this Agreement. The Agent may apply the
Collateral against the Obligations in such order and manner as the Agent
may elect in its sole discretion. Pledgor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay the Obligations. Pledgor waives all rights of
marshalling in respect of the Collateral.
PLEDGE AGREEMENT - Page 9
<PAGE>
(ii) The Agent may cause any or all of the Collateral held by it
to be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at
any time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
(iv) The Agent shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting, consensual, and other
powers of ownership pertaining to the Collateral, and Pledgor shall
deliver to the Agent, if requested by the Agent, irrevocable proxies with
respect to the Collateral in form satisfactory to the Agent.
(v) The Agent may notify or require Pledgor to notify parties
obligated under any accounts, instruments, contracts or agreements which
are part of the Collateral to make payment directly to the Agent, and the
Agent may take possession of all proceeds of any such instruments and
contracts in Pledgor's possession. Any such payments or distributions
received by Pledgor after an Event of Default shall, until paid or
delivered to the Agent, be held by Pledgor in trust as additional security
for the Obligations.
(vi) Pledgor hereby acknowledges and confirms that the Agent may
be unable to effect a public sale of any or all of the Collateral by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire
any shares of the Collateral for their own respective accounts for
investment and not with a view to distribution or resale thereof. Pledgor
further acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to the seller than if such sale were
a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner, and the Agent shall be under no obligation to take any
steps in order to permit the Collateral to be sold at a public sale. The
Agent shall be under no obligation to delay a sale of any of the
Collateral for any period of time necessary to permit any issuer thereof
to register such Collateral for public sale under the Securities Act of
1933, as amended, or under applicable state securities laws.
(vii) On any sale of the Collateral, the Agent is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Agent's counsel, in order to
avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.
(viii)The Agent may subrogate to all of Pledgor's interests,
rights, and remedies with respect to any of the Collateral.
PLEDGE AGREEMENT - Page 10
<PAGE>
ARTICLE VI
Miscellaneous
-------------
Section 6.1. No Waiver; Cumulative Remedies. No failure on the part
------------------------------
of the Agent or any Bank to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.
Section 6.2. Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Pledgor and the Agent and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Agent.
Section 6.3. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES
---------------------------
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 6.4. Notices. All notices and other communications provided
-------
for in this Agreement shall be given or made in writing and telecopied, mailed
by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof; or, as to any party at such other address as shall be designated
by such party in a notice to the other party given in accordance with this
Section. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
Section 6.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED INTO IN
DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN DALLAS
COUNTY, TEXAS.
Section 6.6. Headings. The headings, captions, and arrangements used
--------
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
PLEDGE AGREEMENT - Page 11
<PAGE>
Section 6.7. Survival. All representations and warranties made in this
--------
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by the Agent or any Bank shall affect the representations and
warranties of Pledgor herein or the right of the Agent or any Bank to rely upon
them .
Section 6.8. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 6.9. Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 6.10. Construction. Pledgor and the Agent acknowledge that
------------
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and the
Agent.
Section 6.11. Termination. If all of the Obligations shall have been
-----------
paid and performed in full and all Commitments shall have expired or terminated,
the Agent shall, upon the written request of Pledgor, execute and deliver to
Pledgor a proper instrument or instruments acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to Pledgor (without recourse and without any representation
or warranty) such of the Collateral as may be in the possession of the Agent and
has not previously been sold or otherwise applied pursuant to this Agreement.
Section 6.12. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
--------------------
BY APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
PLEDGE AGREEMENT - Page 12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
PLEDGOR:
-------
CELLSTAR CORPORATION
By:
______________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:
______________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
PLEDGE AGREEMENT - Page 13
<PAGE>
ANNEX 11
Exhibit "E-12" (CAS Pledge Agreement)
-------------------------------------
<PAGE>
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT ("Agreement") dated as of July 31, 1996, is by and
between CELLSTAR AIR SERVICES, INC., a Delaware corporation (the "Pledgor"),
whose address is 1730 Briercroft, Carrollton, Texas 75006, and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association ("TCB"), not in its
individual capacity but solely as agent for itself and each of the other banks
or lending institutions (each, a "Bank" and collectively, the "Banks") which is
or may from time to time become a signatory to the Loan Agreement (hereinafter
defined) or any successor or permitted assignee thereof (TCB in such capacity,
together with its successors in such capacity, the "Agent"), whose address is
2200 Ross Avenue, Post Office Box 660197, Dallas, Texas 75266-0197.
R E C I T A L S:
---------------
A. National Auto Center, Inc., a Texas corporation (the "Borrower"),
CellStar Corporation, a Delaware corporation (the "Parent"), the Agent, and the
Banks are parties to that certain Amended and Restated Loan Agreement dated as
of July 20, 1995, as amended by that certain First Amendment to Amended and
Restated Loan Agreement dated as of February 29, 1996 (such Amended and Restated
Loan Agreement, as the same has been and may be amended, supplemented or
modified from time to time, being hereinafter referred to as the "Loan
Agreement").
B. Concurrently herewith, the Borrower, the Parent, the Agent, and the
Banks are entering into that certain Second Amendment to Amended and Restated
Loan Agreement of even date herewith (the "Second Amendment").
C. As a condition to the Second Amendment, Pledgor is required to
execute and deliver this Agreement.
A G R E E M E N T:
-----------------
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
PLEDGE AGREEMENT - Page 1
<PAGE>
ARTICLE I
Security Interest and Pledge
----------------------------
Section 1.1. Terms Defined in Loan Agreement. All capitalized terms
-------------------------------
used and not otherwise defined herein shall have their respective meanings as
specified in the Loan Agreement.
Section 1.2. Security Interest and Pledge. Subject to the terms of
----------------------------
this Agreement, Pledgor hereby pledges and grants to the Agent, for the pro rata
benefit of the Banks, a first priority security interest in the following
property (such property being hereinafter sometimes called the "Collateral"):
(a) All present and future issued and outstanding shares of capital
stock or other equity or investment securities issued by A & S Air
Services, Inc., a Delaware corporation ("A&S"), including without
limitation 3,000 shares of common capital stock of A&S evidenced by
certificate number 4;
(b) All present and future issued and outstanding shares of capital
stock or other equity or investment securities issued by any Subsidiary of
Pledgor not named above, except Foreign Subsidiaries and holding companies
of Foreign Subsidiaries, now owned or hereafter acquired by Pledgor;
(c) All present and future issued and outstanding shares of non-
voting capital stock or other non-voting equity or investment securities
issued by any Subsidiary of Pledgor not named above which is a holding
company of any Foreign Subsidiary, now owned or hereafter acquired by
Pledgor;
(d) Sixty-five percent (65%) of all present and future issued and
outstanding shares of voting capital stock or other voting equity or
investment securities issued by any Subsidiary of Pledgor not named above
which is a holding company of any Foreign Subsidiary, now owned or
hereafter acquired by Pledgor;
(e) All present and future increases, profits, combinations,
reclassifications of, and substitutes and replacements for, all or part of
the foregoing, and all present and future accounts, contract rights,
general intangibles, chattel paper, documents, instruments, cash and
noncash proceeds, and other rights arising from or by virtue of, or from
the voluntary or involuntary sale, lease, or other disposition of, or
collections with respect to, all or any part of the foregoing; and
(f) All products, proceeds, revenues, distributions, dividends, stock
dividends, securities, and other property, rights, and interests that
Pledgor receives or is at any time entitled to receive on account of any of
the foregoing.
Section 1.3. Obligations. The security interest granted, ratified
-----------
and confirmed hereby is to secure the payment or performance of the following
obligations, indebtedness, and liabilities of Borrower and Pledgor, or either of
them, to the Agent, now existing or hereafter arising (all
PLEDGE AGREEMENT - PAGE 2
<PAGE>
of such obligations, indebtedness, and liabilities being hereinafter sometimes
called the "Obligations"):
(a) the indebtedness, liabilities and obligations of the Borrower to
the Banks evidenced by those certain Promissory Notes executed by the
Borrower pursuant to the Loan Agreement and payable to the order of the
Banks in the aggregate principal amount of $90,000,000.00;
(b) the indebtedness, liabilities and obligations of the Pledgor to
the Agent and the Banks under that certain Guaranty of even date herewith,
executed by the Pledgor and the other guarantors named therein in favor of
the Agent and the Banks;
(c) the indebtedness, liabilities and obligations of the Borrower and
Pledgor, or either of them, to the Agent and the Banks pursuant to the Loan
Agreement;
(d) all of the "Obligations," as such term is defined in the Loan
Agreement;
(e) all future Advances by the Agent or any Bank to the Borrower and
Pledgor, or either of them;
(f) all costs and expenses, including without limitation all
reasonable attorneys' fees and legal expenses, incurred by the Agent or any
Bank to preserve and maintain the Collateral, collect the obligations
herein described and enforce this Agreement;
(g) all other obligations, indebtedness and liabilities of the
Borrower and Pledgor, or either of them, to the Agent or any Bank under any
of the Loan Documents, now existing or hereafter arising, regardless of
whether such obligations, indebtedness and liabilities are similar,
dissimilar, related, unrelated, direct, indirect, fixed, contingent,
primary, secondary, joint, several, or joint and several; and
(h) all extensions, renewals and modifications of any of the
foregoing.
Without limiting the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Obligations and would be owed by the
Borrower to the Agent or any Bank but for the fact that they are unenforceable
or not allowable due to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower.
ARTICLE II
Representations and Warranties
------------------------------
Pledgor represents and warrants to the Agent that:
Section 2.1. Title. Pledgor owns, and with respect to Collateral
-----
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any Lien or claim or any right or option on the
part of any third Person to purchase or otherwise acquire the
PLEDGE AGREEMENT - Page 3
<PAGE>
Collateral or any part thereof, except for the security interest granted
hereunder. The Collateral is not subject to any restriction on transfer or
assignment except for compliance with applicable federal and state securities
laws and regulations promulgated thereunder. Pledgor has the unrestricted right
to pledge the Collateral as contemplated hereby. All of the Collateral has been
duly and validly issued and is fully paid and nonassessable.
Section 2.2. Financing Statements. No financing statement covering any
--------------------
of the Collateral or its proceeds, except financing statements naming the Agent
as secured party, is on file in any public office. So long as any amount
remains unpaid on any Obligations or the Agent has any Commitment, Pledgor will
not execute or file, or consent to or permit the filing of, any such financing
statement or statements in any public office, except the financing statement
filed or to be filed with respect to the security interest hereby granted.
Section 2.3. Principal Place of Business. The principal place of
---------------------------
business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at the address of Pledgor shown at the
beginning of this Agreement.
Section 2.4. Percentage of Stock. The shares of capital stock included
-------------------
in the Collateral constitute one hundred percent (100%) of the issued and
outstanding shares of capital stock of A&S.
Section 2.5. First Priority Perfected Security Interest. Upon the filing
------------------------------------------
of UCC financing statements and Agent's taking possession of the certificates
representing the stock included in the Collateral, this Agreement creates in
favor of the Agent a first priority perfected security interest in the
Collateral. There are no conditions precedent to the effectiveness of this
Agreement that have not been fully and permanently satisfied.
Section 2.6. Benefit to Pledgor. The value of the consideration received
------------------
and to be received by the Pledgor as a result of the Borrower, the Agent and the
Banks entering into the Loan Agreement and the Second Amendment and the Pledgor
executing and delivering this Agreement is reasonably worth at least as much as
the liability and obligation of the Pledgor hereunder. Such liability and
obligation and the Borrower's entering into the Loan Agreement and the Second
Amendment have benefitted and may reasonably be expected to benefit the Pledgor
directly and indirectly.
ARTICLE III
Affirmative and Negative Covenants
----------------------------------
Pledgor covenants and agrees with the Agent that until the Obligations are
paid and performed in full and all Commitments have terminated:
Section 3.1. Delivery. Prior to or concurrently with the execution and
--------
delivery of this Agreement, Pledgor shall deliver to the Agent all certificates
identified in subsection (a) of Section 1.2 hereof and all other certificates
evidencing any other Collateral existing on the date hereof, accompanied by
undated stock powers duly executed in blank.
PLEDGE AGREEMENT - Page 4
<PAGE>
Section 3.2. Encumbrances. Pledgor shall not create, permit, or suffer
------------
to exist, and shall defend the Collateral against, any Lien on the Collateral
except the Permitted Liens, and shall defend Pledgor's rights in the Collateral
and the Agent's security interest in the Collateral against the claims and
demands of all Persons. Pledgor shall do nothing to impair the rights of the
Agent in the Collateral.
Section 3.3. Disposition of Collateral. Pledgor shall not sell, assign
-------------------------
(by operation of law or otherwise), or otherwise dispose of, or grant any option
with respect to the Collateral or any part thereof without the prior written
consent of the Agent.
Section 3.4. Distributions. If Pledgor shall become entitled to receive
-------------
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as the Agent's agent and to hold the same in trust for the
Agent, and to deliver the same forthwith to the Agent in the exact form
received, with the appropriate endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by the Agent
as additional Collateral for the Obligations, subject to the terms hereof. Any
sums paid upon or in respect of the Collateral upon the liquidation, dissolution
or winding up of any issuer of Collateral shall be paid over to the Agent to be
held by it as additional Collateral for the Obligations subject to the terms
hereof; and in case any distribution of capital shall be made on or in respect
of the Collateral or any property shall be distributed upon or with respect to
the Collateral pursuant to any recapitalization or reclassification of the
capital of any issuer of Collateral or pursuant to any reorganization of any
issuer of Collateral, the property so distributed shall be delivered to the
Agent to be held by it, as additional Collateral for the Obligations, subject to
the terms hereof. All sums of money and property so paid or distributed in
respect of the Collateral that are received by Pledgor shall, until paid or
delivered to the Agent, be held by Pledgor in trust as additional security for
the Obligations.
Section 3.5. Further Assurances. At any time and from time to time, upon
------------------
the request of the Agent, and at the sole expense of Pledgor, Pledgor shall
promptly execute and deliver all such further instruments and documents and take
such further action as the Agent may deem necessary or desirable to preserve and
perfect its security interest in the Collateral and carry out the provisions and
purposes of this Agreement, including, without limitation, the execution and
filing of such financing statements as the Agent may require. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement. Subject to the
right of Pledgor to receive cash dividends and distributions under Section 4.3
hereof, in the event any Collateral is ever received by Pledgor, Pledgor shall
promptly transfer and deliver to the Agent such Collateral so received by
Pledgor (together with any necessary endorsements in blank or undated stock
powers duly executed in blank), which Collateral shall thereafter be held by the
Agent pursuant to the terms of this Agreement. The Agent shall at all times
have the right to exchange any certificates representing Collateral for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
PLEDGE AGREEMENT - Page 5
<PAGE>
Section 3.6. Inspection Rights. Pledgor shall permit the Agent and its
-----------------
representatives to examine, inspect, and copy Pledgor's books and records at any
reasonable time and as often as the Agent may desire during normal business
hours.
Section 3.7. Notification. Pledgor shall promptly, and in any event
------------
within five (5) days after Pledgor obtains knowledge or becomes aware of any of
the following, notify the Agent of (a) any Lien or claim that has attached to or
been made or asserted against any of the Collateral, (b) any material damage to
or loss of any of the Collateral, (c) the occurrence of any other event that
could have a material adverse effect on the Collateral or the security interest
created hereunder, and (d) the occurrence or existence of any Default.
Section 3.8. Books and Records; Information. Pledgor shall keep accurate
------------------------------
and complete books and records of the Collateral and Pledgor's business and
financial condition in accordance with GAAP. Pledgor shall from time to time at
the request of the Agent deliver to the Agent such information regarding the
Collateral and Pledgor as the Agent may request. Pledgor shall mark its books
and records to reflect the security interest of the Agent under this Agreement.
Section 3.9. Additional Securities. Pledgor shall not consent to or
---------------------
approve the issuance of any additional shares of any class of capital stock of
any issuer of Collateral, or any securities convertible into, or exchangeable
for, any such shares or any warrants, options, rights, or other commitments
entitling any Person to purchase or otherwise acquire any such shares.
ARTICLE IV
Rights of Agent and Pledgor
---------------------------
Section 4.1. Power of Attorney. Pledgor hereby irrevocably constitutes
-----------------
and appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, to take any and all action and to execute any and all documents and
instruments which the Agent at any time and from time to time deems necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, Pledgor hereby gives the Agent the power and right
on behalf of Pledgor and in its own name to do any of the following (subject to
the rights of Pledgor under Sections 4.2 and 4.3 hereof), without notice to or
the consent of Pledgor, and whether or not an Event of Default has occurred or
is continuing (except as otherwise expressly provided below):
(i) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of Pledgor or
in its own name, any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or any
other instruments for the payment of money under the Collateral;
(ii) to pay or discharge taxes or Liens levied or placed on or
threatened against the Collateral;
PLEDGE AGREEMENT - Page 6
<PAGE>
(iii) (A) after the occurrence and during the continuance of an Event
of Default, to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to the Agent or as the Agent
shall direct; (B) after the occurrence and during the continuance of an
Event of Default, to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral; (C) after the occurrence and during the
continuance of an Event of Default, to sign and endorse any drafts,
assignments, proxies, stock powers, verifications, notices, and other
documents relating to the Collateral; (D) after the occurrence and during
the continuance of an Event of Default, to commence and prosecute any suit,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce
any other right in respect of any Collateral; (E) after the occurrence and
during the continuance of an Event of Default, to defend any suit, action,
or proceeding brought against Pledgor with respect to any Collateral; (F)
after the occurrence and during the continuance of an Event of Default, to
settle, compromise, or adjust any suit, action, or proceeding described
above and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; (G) to exchange any of the Collateral for
other property upon any merger, consolidation, reorganization,
recapitalization, or other readjustment of any issuer of Collateral and, in
connection therewith, deposit any of the Collateral with any committee,
depositary, transfer agent, registrar, or other designated agency upon such
terms as the Agent may determine; (H) to add or release any guarantor,
indorser, surety, or other party to any of the Collateral or the
Obligations; (I) to renew, extend, or otherwise change the terms and
conditions of any of the Collateral or Obligations; and (J) after the
occurrence and during the continuance of an Event of Default, to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's option
and Pledgor's expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve, or realize
upon the Collateral and the Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to the Agent in this Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or in its capacity as attorney-in-fact except
acts or omissions resulting from its willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve, and realize upon its
security interest in the Collateral. The Agent will exercise its best efforts
to notify Pledgor of any action taken by the Agent in its capacity as attorney-
in-fact pursuant to this Section, promptly after such action is taken provided
that any failure by the Agent to so notify Pledgor shall not impose any
liability upon the Agent or affect its rights and remedies hereunder, at law or
in equity. The Agent shall not be responsible for any decline in the value of
the Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or Lien given to secure the Collateral.
PLEDGE AGREEMENT - Page 7
<PAGE>
Section 4.2. Voting Rights. Unless and until an Event of Default
-------------
shall have occurred and be continuing, Pledgor shall be entitled to exercise any
and all voting rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Loan Agreement.
Section 4.3. Dividends and Distributions. Unless and until an Event of
----------------------------
Default shall have occurred and be continuing, Pledgor shall be entitled to
receive and retain any dividends and distributions on the Collateral paid in
cash to the extent and only to the extent that such dividends and distributions
are permitted by the Loan Agreement, except as provided in Section 3.4 hereof.
Section 4.4. Setoff; Property Held by Agent and the Banks. If an Event
--------------------------------------------
of Default shall have occurred and be continuing, the Agent and each Bank shall
have the right to set off and apply against the Obligations, at any time and
without notice to Pledgor, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from the Agent or any Bank to Pledgor whether or not the Obligations are then
due. As additional security for the Obligations, Pledgor hereby grants the Agent
and each Bank a security interest in all money, instruments, and other property
of Pledgor now or hereafter held by the Agent or any Bank, including, without
limitation, property held in safekeeping. In addition to the Agent's or any
Bank's right of setoff and as further security for the Obligations, Pledgor
hereby grants the Agent and each Bank a security interest in all deposits
(general or special, time or demand, provisional or final) and other accounts of
Pledgor now or hereafter on deposit with or held by the Agent or any Bank and
all other sums at any time credited by or owing from the Agent or any Bank to
Pledgor. The rights and remedies of the Agent and each Bank hereunder are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Agent or any Bank may have.
Section 4.5. Performance by Agent. If Pledgor shall fail to perform any
--------------------
covenant or agreement contained in this Agreement, the Agent may perform or
attempt to perform such covenant or agreement on behalf of Pledgor. In such
event, Pledgor shall, at the request of the Agent, promptly pay any amount
expended by the Agent in connection with such performance or attempted
performance to the Agent, together with interest thereon at the Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Agent shall not have any liability or responsibility for the
performance of any obligation of Pledgor under this Agreement.
Section 4.6. Agent's Duty of Care. Other than the exercise of reasonable
--------------------
care in the physical custody of the Collateral while held by the Agent
hereunder, the Agent shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto, including, without limitation, any obligation or
duty to collect any sums due in respect thereof or to protect or preserve any
rights against prior parties or any other rights pertaining thereto, it being
understood and agreed that Pledgor shall be responsible for preservation of all
rights in the Collateral. Without limiting the generality of the foregoing, the
Agent shall be conclusively deemed to have exercised reasonable care in the
custody of the Collateral if the Agent takes such action, for purposes of
preserving rights in the Collateral, as Pledgor may reasonably request in
writing, but no failure or omission or delay by the Agent in complying with any
such request by Pledgor, and no refusal by the
PLEDGE AGREEMENT - Page 8
<PAGE>
Agent to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.
ARTICLE V
Default
-------
Section 5.1. Rights and Remedies. If any Event of Default shall occur,
-------------------
the Agent shall have the following rights and remedies:
(i) In addition to all other rights and remedies granted to the Agent
in this Agreement and in any other Loan Document or by applicable law, the
Agent shall have all of the rights and remedies of a secured party under
the UCC. Without limiting the generality of the foregoing, the Agent may
(A) without demand or notice to Pledgor, collect, receive, or take
possession of the Collateral or any part thereof, (B) sell or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels at
public or private sale or sales, at the Agent's offices or elsewhere, for
cash, on credit, or for future delivery, and/or (C) bid and become a
purchaser at any sale free of any right or equity of redemption in
Pledgor, which right or equity is hereby expressly waived and released by
Pledgor. Upon the request of the Agent, Pledgor shall assemble the
Collateral and make it available to the Agent at any place designated by
the Agent that is reasonably convenient to Pledgor and the Agent. Pledgor
agrees that the Agent shall not be obligated to give more than five (5)
days written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice
shall constitute reasonable notice of such matters. The Agent shall not be
obligated to make any sale of the Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned. Pledgor shall be liable for all expenses of
retaking, holding, preparing for sale, or the like, and all attorneys'
fees and other expenses incurred by the Agent in connection with the
collection of the Obligations and the enforcement of the Agent's rights
under this Agreement, all of which expenses and fees shall constitute
additional Obligations secured by this Agreement. The Agent may apply the
Collateral against the Obligations in such order and manner as the Agent
may elect in its sole discretion. Pledgor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay the Obligations. Pledgor waives all rights of
marshalling in respect of the Collateral.
(ii) The Agent may cause any or all of the Collateral held by it to
be transferred into the name of the Agent or the name or names of the
Agent's nominee or nominees.
(iii) The Agent may collect or receive all money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so.
PLEDGE AGREEMENT - Page 9
<PAGE>
(iv) The Agent shall have the right, but shall not be obligated to,
exercise or cause to be exercised all voting, consensual, and other powers
of ownership pertaining to the Collateral, and Pledgor shall deliver to
the Agent, if requested by the Agent, irrevocable proxies with respect to
the Collateral in form satisfactory to the Agent.
(v) The Agent may notify or require Pledgor to notify parties
obligated under any accounts, instruments, contracts or agreements which
are part of the Collateral to make payment directly to the Agent, and the
Agent may take possession of all proceeds of any such instruments and
contracts in Pledgor's possession. Any such payments or distributions
received by Pledgor after an Event of Default shall, until paid or
delivered to the Agent, be held by Pledgor in trust as additional security
for the Obligations.
(vi) Pledgor hereby acknowledges and confirms that the Agent may be
unable to effect a public sale of any or all of the Collateral by reason
of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire
any shares of the Collateral for their own respective accounts for
investment and not with a view to distribution or resale thereof. Pledgor
further acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to the seller than if such sale were
a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner, and the Agent shall be under no obligation to take any
steps in order to permit the Collateral to be sold at a public sale. The
Agent shall be under no obligation to delay a sale of any of the
Collateral for any period of time necessary to permit any issuer thereof
to register such Collateral for public sale under the Securities Act of
1933, as amended, or under applicable state securities laws.
(vii) On any sale of the Collateral, the Agent is hereby authorized
to comply with any limitation or restriction with which compliance is
necessary, in the view of the Agent's counsel, in order to avoid any
violation of applicable law or in order to obtain any required approval of
the purchaser or purchasers by any applicable governmental authority.
(viii) The Agent may subrogate to all of Pledgor's interests, rights,
and remedies with respect to any of the Collateral.
ARTICLE VI
Miscellaneous
-------------
Section 6.1. No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights
PLEDGE AGREEMENT - Page 10
<PAGE>
and remedies provided for in this Agreement are cumulative and not exclusive of
any rights and remedies provided by law.
Section 6.2. Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Pledgor and the Agent and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Agent.
Section 6.3. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
---------------------------
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 6.4. Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to the other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid.
Section 6.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED INTO IN
DALLAS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN DALLAS
COUNTY, TEXAS.
Section 6.6. Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 6.7. Survival. All representations and warranties made in this
--------
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by the Agent or any Bank shall affect the representations and
warranties of Pledgor herein or the right of the Agent or any Bank to rely upon
them.
Section 6.8. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
PLEDGE AGREEMENT - Page 11
<PAGE>
Section 6.9. Severability. Any provision of this Agreement 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 6.10. Construction. Pledgor and the Agent acknowledge that each
------------
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and the
Agent.
Section 6.11. Termination. If all of the Obligations shall have been paid
-----------
and performed in full and all Commitments shall have expired or terminated, the
Agent shall, upon the written request of Pledgor, execute and deliver to Pledgor
a proper instrument or instruments acknowledging the release and termination of
the security interests created by this Agreement, and shall duly assign and
deliver to Pledgor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Agent and has not
previously been sold or otherwise applied pursuant to this Agreement.
Section 6.12. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
PLEDGOR:
-------
CELLSTAR AIR SERVICES, INC.
By:________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
PLEDGE AGREEMENT - Page 12
<PAGE>
Address for Notices:
1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Telephone No.: (214) 466-5000
Attention: Richard M. Gozia
AGENT:
-----
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:__________________________________
J. Kevin Kelty
Senior Vice President
Address for Notices:
2200 Ross Avenue
Post Office Box 660197
Dallas, Texas 75266-0197
Fax No.: (214) 965-2997
Telephone No.: (214) 965-2705
Attention: Allen K. King
PLEDGE AGREEMENT - Page 13
<PAGE>
ANNEX 12
Exhibit "F-3" (Guaranty of New Guarantors)
------------------------------------------
<PAGE>
GUARANTY
--------
THIS GUARANTY ("Guaranty"), dated as of July 31, 1996, is executed by the
undersigned guarantors (each a "Guarantor" and, collectively, the "Guarantors"),
for the benefit of each of the banks or lending institutions (each, a "Bank"
and, collectively, the "Banks") which is or may from time to time become a
signatory to the Loan Agreement (hereinafter defined) or any successor or
permitted assignee thereof, and Texas Commerce Bank National Association, a
national banking association ("TCB"), as agent for itself and each of the other
Banks (TCB in such capacity, together with its successors in such capacity, the
"Agent").
WHEREAS, National Auto Center, Inc., a Texas corporation (the "Borrower"),
Cellstar Corporation, a Delaware corporation (the "Parent"), the Banks, and the
Agent are parties to that certain Amended and Restated Loan Agreement dated as
of July 20, 1995, as amended by that certain First Amendment to Amended and
Restated Loan Agreement dated as of February 29, 1996 (such Amended and Restated
Loan Agreement, as the same has been and may be amended, supplemented or
modified from time to time, the "Loan Agreement"); and
WHEREAS, concurrently herewith, the Borrower, the Parent, the Banks and the
Agent are entering into that certain Second Amendment to Amended and Restated
Loan Agreement of even date herewith (the "Second Amendment"), pursuant to
which, among other things, the Borrower's right to obtain Advances under the
revolving credit facility established under the Loan Agreement is being
reinstated as provided in the Second Amendment; and
WHEREAS, as a condition to the Second Amendment, each Guarantor is required
to execute and deliver this Guaranty.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Guarantors hereby jointly and severally,
irrevocably and unconditionally guarantee to the Agent and the Banks the full
and prompt payment and performance of the Guaranteed Indebtedness (hereinafter
defined), this Guaranty being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein, means all of the
"Obligations", as defined in the Loan Agreement. The term "Guaranteed
Indebtedness" shall include any and all post-petition interest and expenses
(including reasonable attorneys' fees) whether or not allowed under any
bankruptcy, insolvency, or other similar law. All other
capitalized terms used and not otherwise defined herein shall have their
respective meanings as set forth in the Loan Agreement.
<PAGE>
2. This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and each Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which Borrower may have against the Agent,
any Bank or any other party, or which any Guarantor may have against Borrower,
the Agent, any Bank or any other party, shall be available to, or shall be
asserted by, any Guarantor against the Agent, any Bank or any subsequent holder
of the Guaranteed Indebtedness or any part thereof or against payment of the
Guaranteed Indebtedness or any part thereof.
3. The obligations of each Guarantor hereunder shall be limited to an
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or to being set aside, avoided, or annulled under any
applicable state law relating to fraudulent transfers or fraudulent obligations.
4. If any Guarantor becomes liable for any indebtedness owing by Borrower
to the Agent or any Bank by endorsement or otherwise, other than under this
Guaranty, such liability shall not be in any manner impaired or affected hereby,
and the rights of the Agent and the Banks hereunder shall be cumulative of any
and all other rights that any of them may ever have against any Guarantor. The
exercise by the Agent or any Bank of any right or remedy hereunder or under any
other instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.
5. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantors
jointly and severally agree to promptly pay the amount due thereon to the Agent,
for the pro rata benefit of the Banks, without notice or demand in lawful
currency of the United States of America and it shall not be necessary for the
Agent or any Bank, in order to enforce such payment by any Guarantor, first to
institute suit or exhaust its remedies against Borrower, any Guarantor or others
liable on such Guaranteed Indebtedness, or to enforce any rights against any
collateral which shall ever have been given to secure such Guaranteed
Indebtedness. Notwithstanding anything to the contrary contained in this
Guaranty, each Guarantor hereby irrevocably subordinates to the prior
indefeasible payment in full of the Guaranteed Indebtedness, any and all rights
such Guarantor may now or hereafter have under any agreement or at law or in
equity (including, without limitation, any law subrogating such Guarantor to the
rights of the Agent and the Banks) to assert any claim against or seek
contribution, indemnification or any other form of reimbursement from Borrower
or any other party liable for payment of any or all of the Guaranteed
Indebtedness for any payment made by such Guarantor under or in connection with
this Guaranty or otherwise.
-2-
<PAGE>
6. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
jointly and severally payable by the Guarantors hereunder forthwith on demand by
the Agent.
7. Each Guarantor hereby agrees that its obligations under this Guaranty
shall not be released, discharged, diminished, impaired, reduced, or affected
for any reason or by the occurrence of any event, including, without limitation,
one or more of the following events, whether or not with notice to or the
consent of any Guarantor: (a) the taking or accepting of collateral as security
for any or all of the Guaranteed Indebtedness or the release, surrender,
exchange, or subordination of any collateral now or hereafter securing any or
all of the Guaranteed Indebtedness; (b) any partial release of the liability of
any Guarantor hereunder, or the full or partial release of any other guarantor
from liability for any or all of the Guaranteed Indebtedness; (c) any disability
of Borrower, or the dissolution, insolvency, or bankruptcy of Borrower, any
Guarantor, or any other party at any time liable for the payment of any or all
of the Guaranteed Indebtedness; (d) any renewal, extension, modification,
waiver, amendment, or rearrangement of any or all of the Guaranteed Indebtedness
or any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Guaranteed Indebtedness; (e) any adjustment,
indulgence, forbearance, waiver, or compromise that may be granted or given by
the Agent or any Bank to Borrower, any Guarantor, or any other party ever liable
for any or all of the Guaranteed Indebtedness; (f) any neglect, delay, omission,
failure, or refusal of the Agent or any Bank to take or prosecute any action for
the collection of any of the Guaranteed Indebtedness or to foreclose or take or
prosecute any action in connection with any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (g) the unenforceability or invalidity of any or all of the
Guaranteed Indebtedness or of any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(h) any payment by Borrower or any other party to the Agent or any Bank is held
to constitute a preference under applicable bankruptcy or insolvency law or if
for any other reason the Agent or any Bank is required to refund any payment or
pay the amount thereof to someone else; (i) the settlement or compromise of any
of the Guaranteed Indebtedness; (j) the non-perfection of any security interest
or lien securing any or all of the Guaranteed Indebtedness; (k) any impairment
of any collateral securing any or all of the Guaranteed Indebtedness; (l) the
failure of the Agent or any Bank to sell any collateral securing any or all of
the Guaranteed Indebtedness in a commercially reasonable manner or as otherwise
required by law; (m) any change in the corporate existence, structure, or
ownership of Borrower; or (n) any other circumstance which might otherwise
constitute a defense available to, or discharge of, Borrower or any Guarantor.
-3-
<PAGE>
8. Each Guarantor represents and warrants to the Agent and the Banks
that:
(a) Each and every representation and warranty contained in the Loan
Agreement is true and correct in all respects.
(b) The value of the consideration received and to be received by such
Guarantor as a result of Borrower, the Parent, the Banks and the Agent
entering into the Loan Agreement, the extensions of credit thereunder and
such Guarantor executing and delivering this Guaranty is reasonably
equivalent to or greater than the liability and obligation of such
Guarantor hereunder, and such liability and obligation, the Borrower's
entering into the Loan Agreement and the extensions of credit thereunder
have benefited and may reasonably be expected to benefit such Guarantor
directly or indirectly.
(c) Such Guarantor has, independently and without reliance upon the
Agent or any Bank and based upon such documents and information as such
Guarantor has deemed appropriate, made its own analysis and decision to
enter into this Guaranty.
(d) The ability of Borrower to borrow and obtain letters of credit
from time to time under the Loan Agreement will enable such Guarantor to
obtain credit, will benefit such Guarantor and the consolidated corporate
group of which such Guarantor is a part and are necessary and convenient to
the conduct, promotion and attainment of the business of such Guarantor.
(e) As additional consideration for entering into this Guaranty, such
Guarantor has obtained certain rights under that certain Amended and
Restated Contribution and Indemnification Agreement of even date herewith,
among such Guarantor, the Parent, the Partnerships and the other
Guarantors.
(f) Such Guarantor has adequate capital to conduct its business as a
going concern, as presently conducted and as proposed to be conducted; such
Guarantor will be able to meet its obligations hereunder and in respect of
its other existing and future indebtedness and liabilities as and when the
same shall be due and payable; such Guarantor is not insolvent (as that
term is defined in 11 U.S.C. (S) 101 or applicable law) and will not be
rendered insolvent by its obligations hereunder, and the foregoing
representations are supported by such Guarantor's internal projections and
forecasts.
(g) Such Guarantor has determined that the execution and delivery of
this Guaranty is to its advantage and benefit, taking into account all
relevant facts and circumstances.
9. If an Event of Default shall have occurred and be continuing, the
Agent and each Bank shall have the right to set off and apply against this
Guaranty or the Guaranteed
-4-
<PAGE>
Indebtedness or both, at any time and without notice to any Guarantor, any and
all deposits (general or special, time or demand, provisional or final) or other
sums at any time credited by or owing from the Agent or any Bank to any
Guarantor whether or not the Guaranteed Indebtedness is then due and
irrespective of whether or not the Agent or any Bank shall have made any demand
under this Guaranty. As security for this Guaranty and the Guaranteed
Indebtedness, each Guarantor hereby grants the Agent and each Bank a security
interest in all money, instruments, certificates of deposit, and other property
of such Guarantor now or hereafter held by the Agent and each Bank, including
without limitation, property held in safekeeping. In addition to the Agent's
and each Bank's right of setoff and as further security for this Guaranty and
the Guaranteed Indebtedness, each Guarantor hereby grants the Agent and each
Bank a security interest in all deposits (general or special, time or demand,
provisional or final) and all other accounts of such Guarantor now or hereafter
on deposit with or held by the Agent or any Bank and all other sums at any time
credited by or owing from the Agent or any Bank to such Guarantor. The rights
and remedies of the Agent and each Bank hereunder are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which the Agent and each Bank may have.
10. (a) Each Guarantor hereby agrees that the Subordinated Indebtedness
(hereinafter defined) shall be subordinate and junior in right of payment to the
prior payment in full of all Guaranteed Indebtedness, and each Guarantor hereby
assigns the Subordinated Indebtedness to the Agent, for the pro rata benefit of
the Banks, as security for the Guaranteed Indebtedness. If any sums shall be
paid to any Guarantor by Borrower or any other Person on account of the
Subordinated Indebtedness, such sums shall be held in trust by such Guarantor
for the benefit of the Agent and shall forthwith be paid to the Agent, for the
pro rata benefit of the Banks, without affecting the liability of any Guarantor
under this Guaranty and may be applied by the Banks against the Guaranteed
Indebtedness in such order and manner as they may determine in their absolute
discretion; provided, however, that so long as no Event of Default shall have
occurred, Borrower shall be permitted to pay to any Guarantor, and each
Guarantor shall be permitted to receive and retain, payments on account of
Subordinated Indebtedness consisting of trade payables owing by Borrower to any
Guarantor. Upon the request of the Agent, each Guarantor shall execute,
deliver, and endorse to the Agent, for the pro rata benefit of the Banks, such
documents and instruments as the Agent may request to perfect, preserve, and
enforce the rights of the Agent and the Banks hereunder. For purposes of this
Guaranty, the term "Subordinated Indebtedness" means all indebtedness,
liabilities, and obligations of Borrower and the Subsidiaries, or any of them,
to any Guarantor, whether such indebtedness, liabilities, and obligations now
exist or are hereafter incurred or arise, or whether the obligations of Borrower
or such Subsidiary thereon are direct, indirect, contingent, primary, secondary,
several, joint, joint and several, or otherwise, and irrespective of whether
such indebtedness, liabilities, or obligations are evidenced by a note,
contract, open account, or otherwise, and irrespective of the Person or Persons
in whose favor such indebtedness, obligations, or liabilities may, at their
inception, have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by any Guarantor.
-5-
<PAGE>
(b) Each Guarantor agrees that any and all liens, security interests,
judgment liens, charges, or other encumbrances upon the assets of Borrower and
the Subsidiaries, or any of them, securing payment of any Subordinated
Indebtedness shall be and remain inferior and subordinate to any and all liens,
security interests, judgment liens, charges, or other encumbrances upon such
assets securing payment of the Guaranteed Indebtedness or any part thereof,
regardless of whether such encumbrances in favor of any Guarantor or the Agent
presently exist or are hereafter created or attached. No Guarantor shall (i)
file suit against Borrower or any Subsidiary or exercise or enforce any other
creditor's right it may have against Borrower or any Subsidiary, or (ii)
foreclose, repossess, sequester, or otherwise take steps or institute any action
or proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any liens, security
interests, collateral rights, judgments or other encumbrances held by any
Guarantor on assets of Borrower or any Subsidiary unless and until the
Guaranteed Indebtedness shall have been paid in full, no Letters of Credit are
outstanding, and the Commitments have expired or terminated.
(c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving
Borrower or any Subsidiary as debtor, the Agent shall have the right to prove
and vote any claim under the Subordinated Indebtedness and to receive, for the
benefit of the Banks, directly from the receiver, trustee or other court
custodian all dividends, distributions, and payments made in respect of the
Subordinated Indebtedness. The Agent and the Banks may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in such order
and manner as they may determine in their absolute discretion.
(d) Each Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty.
11. No Guarantor shall prepay any Debt, except the Guaranteed
Indebtedness.
12. No amendment or waiver of any provision of this Guaranty or consent to
any departure by any Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by the Agent and the Required Banks. No
failure on the part of the Agent or any Bank to exercise, and no delay in
exercising, any right, power, or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
-6-
<PAGE>
13. Any acknowledgment or new promise, whether by payment of principal or
interest or otherwise and whether by Borrower or others (including any
Guarantor), with respect to any of the Guaranteed Indebtedness shall, if the
statute of limitations in favor of any Guarantor against the Agent or any Bank
shall have commenced to run, toll the running of such statute of limitations
and, if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.
14. This Guaranty is for the benefit of the Agent and the Banks and their
respective successors and assigns, and in the event of an assignment of the
Guaranteed Indebtedness, or any part thereof, the rights and benefits hereunder,
to the extent applicable to the indebtedness so assigned, may be transferred
with such indebtedness. This Guaranty is binding not only on each Guarantor, but
on each Guarantor's successors and assigns. The Guarantors' obligations and
agreements hereunder are joint and several. The provisions of this Guaranty
shall apply to each Guarantor individually and collectively.
15. Each Guarantor recognizes that the Agent and the Banks are relying
upon this Guaranty and the undertakings of each Guarantor hereunder in making
extensions of credit to Borrower under the Loan Agreement and further recognizes
that the execution and delivery of this Guaranty is a material inducement to the
Agent and the Banks in entering into the Second Amendment. Each Guarantor
hereby acknowledges that there are no conditions to the full effectiveness of
this Guaranty.
16. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT TO A LENDING
TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN DALLAS COUNTY, TEXAS,
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS.
17. Guarantors jointly and severally agree to pay on demand all attorneys'
fees and all other costs and expenses incurred by the Agent and each Bank in
connection with the preparation, administration, enforcement, or collection of
this Guaranty.
18. Each Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty, presentment, notice of protest, notice of dishonor,
notice of intent to accelerate, notice of acceleration, notice of the incurring
by Borrower of additional indebtedness, and all other notices and demands with
respect to the Guaranteed Indebtedness and this Guaranty.
19. Each Guarantor agrees that the Agent and each Bank may exercise any
and all rights granted to them under the Loan Agreement and the other Loan
Documents without affecting the validity or enforceability of this Guaranty.
-7-
<PAGE>
20. Each Guarantor hereby represents and warrants to the Agent and the
Banks that such Guarantor has adequate means to obtain from the Borrower, the
Parent and the Subsidiaries on a continuing basis information concerning the
financial condition and assets of the Borrower, the Parent and the Subsidiaries
and that such Guarantor is not relying upon the Agent or any Bank to provide
(and neither the Agent nor any Bank shall have any duty to provide) any such
information to such Guarantor either now or in the future.
21. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF THE GUARANTORS,
THE AGENT AND THE BANKS WITH RESPECT TO THE GUARANTORS' GUARANTY OF THE
GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF ANY GUARANTOR, THE AGENT AND THE BANKS. THERE ARE NO ORAL AGREEMENTS BETWEEN
ANY GUARANTOR, THE AGENT AND THE BANKS.
22. Each Guarantor acknowledges that it has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review this
Guaranty with its legal counsel and that this Guaranty shall be construed as if
jointly drafted by the Guarantors and the Agent.
23. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR
HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY, THE LOAN AGREEMENT, ANY
OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
-8-
<PAGE>
EXECUTED as of the day and year first written above.
GUARANTORS:
----------
CELLSTAR AIR SERVICES, INC.,
a Delaware corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
A & S AIR SERVICES, INC.,
a Delaware corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
-9-
<PAGE>
CELLSTAR INTERNATIONAL
CORPORATION/SA,
a Delaware corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
AUDIOMEX EXPORT CORPORATION,
a Texas corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
-10-
<PAGE>
CELLSTAR INTERNATIONAL
CORPORATION/ASIA,
a Delaware corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
CELLSTAR FULFILLMENT, INC.,
a Delaware corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
-11-
<PAGE>
NAC HOLDINGS, INC.,
a Nevada corporation
By:_________________________________________
Name:____________________________________
Title:___________________________________
Address: 1325 Airmotive Way
Reno, Nevada 89502
Fax No.: (702) 322-8808
Phone No.: (702) 322-2221
Attention: Secretary
CELLSTAR WEST, INC.,
a Delaware corporation
By:_________________________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
Address: 1730 Briercroft
Carrollton, Texas 75006
Fax No.: (214) 466-0288
Phone No.: (214) 466-5000
Attention: Richard M. Gozia
-12-
<PAGE>
ANNEX 13
Schedule 1 (Existing Litigation)
--------------------------------
<PAGE>
Schedule 1
Existing Litigation
-------------------
SIDNEY GLUCK, JOHN DOLCEMASCHIO, JAMES MILLER AND NANCY L. MILLER V. CELLSTAR
CORPORATION, ALAN H. GOLDFIELD, TERRY S. PARKER, JOHN S. BAIN, KENNETH W.
SANDERS AND KPMG PEAT MARWICK LLP., Cause No. 396CV1353-H, Northern District of
Texas, Dallas Division, filed May 14, 1996 (the "Gluck Suit").
The Gluck Suit alleges violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
10b-5 promulgated thereunder, as well as certain state laws.
DIANE LARSON, ET AL, PLAINTIFF, AGAINST CELLSTAR CORPORATION, ALAN H. GOLDFIELD,
TERRY S. PARKER, AND EVELYN M. HENRY, DEFENDANTS, Cause No. 396CV1436-R,
Northern District of Texas, Dallas Division, filed May 21, 1996 (the "Larson
Suit").
The Larson Suit alleges violations of Sections 10(b) and 20(a) of the
Exchange Act and Rule 10b-5 promulgated thereunder.
ELVIA H. GOGGIN AND R. HEATH LARRY, ET AL, PLAINTIFFS V. CELLSTAR CORPORATION,
ALAN H. GOLDFIELD AND TERRY S. PARKER, DEFENDANTS, Cause Number 3-96CV1666-T,
Northern District of Texas, Dallas Division, filed June 14, 1996 (the "Goggin
Suit").
The Goggin Suit alleges violations of Sections 10(b) and 20(a) of the
Exchange Act and Rule 10b-5 promulgated thereunder.
REED AND LILLIAN RIEMER, ET AL, PLAINTIFFS V. CELLSTAR CORPORATION, ALAN H.
GOLDFIELD, TERRY S. PARKER, JOHN S. BAIN, KENNETH W. SANDERS AND KPMG PEAT
MARWICK, LLP., DEFENDANTS, Cause Number 3-96CV2048-T, Northern District of
Texas, Dallas Division, filed July 22, 1996 (the "Riemer Suit").
The Riemer Suit alleges violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
10b-5 promulgated thereunder, as well as certain state laws.
MCBRIDE-NEWELL, INC. DBA CARPHONES, INC., ET AL, PLAINTIFFS V. MOBILWORKS, INC.,
CELLSTAR CORPORATION, ET AL, DEFENDANTS, Cause Number 695897, Superior Court,
County of San Diego, filed on or about July 19, 1996 (the "McBride-Newell
Suit").
The McBride-Newell suit alleges, among other causes of action, a conspiracy
to monopolize the cellular telephone service market and conspiracy to fix
or tamper with cellular telephone prices, in violation of (S)(S) 16720,
16726, and 16727 of the California Business and Professions Code.
G:\USERS\LEGAL\WP\TCBJUL\LIT
SCHEDULE 1, Existing litigation - Solo Page
<PAGE>
ANNEX 14
Schedule 2 (Existing Debt)
--------------------------
<PAGE>
Schedule 2
Existing Debt
-------------
(As of May 31, 1996)
1. Debt of CellStar, Ltd. and National Auto Center, Inc.
-----------------------------------------------------
(a) Indebtedness of $72,000,000 to Texas Commerce Bank, N.A.
(b) Letter of Credit for $3,000,000 to Texas Commerce Bank, N.A.
(c) Indebtedness of $4,277,500 to First Interstate Bank of Texas
2. Debt of CellStar Corporation
----------------------------
(a) Indebtedness of $3,500,000 to Banque Nationale de Paris
3. CellStar International Telfonia Celular Ltda.
---------------------------------------------
(a) Indebtedness of $2,932,174 to Banco Cidade
4. CellStar (Asia) Corporation Ltd.
--------------------------------
(a) Indebtedness of $11,170,209 to First National Bank of Chicago
5. A & S Air Service,Inc.
----------------------
(a) Indebtedness of $2,882,323 to G.E. Capital Corporation
SCHEDULE 2 - EXISTING DEBT - Page 1
<PAGE>
CELLSTAR CORPORATION
INVESTMENTS IN AND ADVANCES TO SUBSIDIARIES AND JOINT VENTURES
AS OF JULY 31, 1996
<TABLE>
<CAPTION>
CellStar National CellStar Air
Corporation Auto Center, Inc. Services, Inc.
--------------- ----------------- -----------------
<S> <C> <C> <C>
CellStar Corporation
National Auto Center, Inc. 67,700,000 (C)
CellStar International Corp./S.A. 1,000
CellStar Celular S.A.(Venezuela)
CellStar International Telefonia Celular Ltda.(Brazil)
CellStar Celular Chile, S.A.
CellStar de Colombia Ltda.
CellStar S.A. (Argentina)
CellStar Ecuador S.A.
CellStar UK Limited
CellStar International Corporation/Asia 1,000
CellStar (Asia) Corp.Ltd.
CellStar Pacific Pte Ltd.
CellStar Philippines
HCL CellStar Ltd. (India)
Investment Facility Company 280 Pte Ltd. (South Africa)
CellStar Israel
CellStar Taiwan
CellStar West 1,770,569
AudioMex Export Corp. 1,000
Celular Express S.A.de C.V.
Celular Express Management S.A. de C.V.
CellStar Air Services, Inc. 1,000
A&S Air Services, Inc. 291,091
---------------------------------------------------------
Investments in subsidiaries and joint ventures 67,702,000 1,772,569 291,091
CellStar Corporation 3,647,250 (D) 1,000
National Auto Center, Inc.
CellStar International Corp./S.A. 7,000,000 2,665,925
CellStar UK Limited 500,963
CellStar International Asia Corporation 24,288,737
CellStar West 134,000
AudioMex Export Corp. 562,295
Celular Express Management S.A. de C.V. 15,290
CellStar Air Services, Inc. 291,091
A&S Air Services, Inc. 438,293
---------------------------------------------------------
Advances to subsidiaries and joint ventures 7,577,585 31,966,259 1,000
---------------------------------------------------------
Total 75,279,585 (A) 33,738,828 (B) 292,091
=========================================================
CellStar Corporation (Parent) and National Auto Center
(Borrower) Investments and Advances (A + B) 109,018,413
Less: Net Investments and Advances Between CellStar
Corporation and National Auto Center (C + D) 71,347,250
----------------
Total Investments in and Advances to Subsidiaries
and Joint Ventures by CellStar Corporation (Parent) and
National Auto Center (Borrower) 37,671,163
================
<CAPTION>
CellStar CellStar
AudioMex International International
Export Corp S.A. Corporation
Corporation Equity Asia
--------------- -------------- --------------
<S> <C> <C> <C>
CellStar Corporation
National Auto Center, Inc.
CellStar International Corp./S.A.
CellStar Celular S.A.(Venezuela) 12,000
CellStar International Telefonia Celular Ltda.(Brazil) 8,005,000
CellStar Celular Chile, S.A. 270,000
CellStar de Colombia Ltda. 1,135,000
CellStar S.A. (Argentina) 10,700
CellStar Ecuador S.A. 232,000
CellStar UK Limited 1,225
CellStar International Corporation/Asia
CellStar (Asia) Corp.Ltd. 22,272,601
CellStar Pacific Pte Ltd. 356,521
CellStar Philippines 500,000
HCL CellStar LTD. (India)
Investment Facility Company 280 Pte Ltd. (South Africa)
CellStar Israel
CellStar Taiwan 209,215
CellStar West
AudioMex Export Corp.
Celular Express S.A.de C.V. 575,000
Celular Express Management S.A. de C.V. 15,290
CellStar Air Services, Inc.
A&S Air Services, Inc.
---------------------------------------------------------
Investments in subsidiaries and joint ventures 590,290 9,665,925 23,338,337
=========================================================
CellStar Corporation
National Auto Center, Inc.
CellStar International Corp./S.A.
CellStar UK Limited
CellStar International Asia Corporation
CellStar West
AudioMex Export Corp.
Celular Express management S.A. de C.V.
CellStar Air Services, Inc.
A&S Air Services, Inc.
---------------------------------------------------------
Advances to subsidiaries and joint ventures - - -
---------------------------------------------------------
Total 590,290 9,665,925 23,338,337
=========================================================
CellStar Corporation (Parent) and National Auto Center
(Borrower) Investments and Advances (A + B)
Less: Net Investments and Advances Between CellStar
Corporation and National Auto Center (C + D)
Total Investments in and Advances to Subsidiaries
and Joint Ventures by CellStar Corporation (Parent) and
National Auto Center (Borrower)
<CAPTION>
CellStar
International
Corporation
Asia
(Joint Ventures)
-----------------
<S> <C>
CellStar Corporation
National Auto Center, Inc.
CellStar International Corp./S.A.
CellStar Celular S.A.(Venezuela)
CellStar International Telefonia Celular Ltda.(Brazil)
CellStar Celular Chile, S.A.
CellStar de Colombia Ltda.
CellStar S.A. (Argentina)
CellStar Ecuador S.A.
CellStar UK Limited
CellStar International Corporation/Asia
CellStar (Asia) Corp.Ltd.
CellStar Pacific Pte Ltd.
CellStar Philippines
HCL CellStar LTD. (India) 500,000
Investment Facility Company 280 Pte Ltd. (South Africa) 200,400
CellStar Israel 250,000
CellStar Taiwan
CellStar West
AudioMex Export Corp.
Celular Express S.A.de C.V.
Celular Express Management S.A. de C.V.
CellStar Air Services, Inc.
A&S Air Services, Inc. ---------------------------------------------------------
950,400
Investments in subsidiaries and joint ventures
CellStar Corporation
National Auto Center, Inc.
CellStar International Corp./S.A.
CellStar UK Limited
CellStar International Asia Corporation
CellStar West
AudioMex Export Corp.
Celular Express Management S.A. de C.V.
CellStar Air Services, Inc.
A&S Air Services, Inc.
---------------------------------------------------------
Advances to subsidiaries and joint ventures -
---------------------------------------------------------
Total 950,400
=========================================================
CellStar Corporation (Parent) and National Auto Center
(Borrower) Investments and Advances (A + B)
Less: Net Investments and Advances Between CellStar
Corporation and National Auto Center (C + D)
Total Investments in and Advances to Subsidiaries
and Joint Ventures by CellStar Corporation (Parent) and
National Auto Center (Borrower)
</TABLE>
SCHEDULE 2 - EXISTING DEBT - PAGE 2
<PAGE>
ANNEX 15
Schedule 3 (Subsidiaries and Foreign Affiliates)
------------------------------------------------
<PAGE>
SCHEDULE 3A
LIST OF SUBSIDIARIES OF GUARANTOR (CELLSTAR CORPORATION)
--------------------------------------------------------
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY THE GUARANTOR
- ------------------ ------------- ----------------
National Auto Center, Inc. Texas 100%
CellStar Air Services, Inc. Delaware 100%
<PAGE>
SCHEDULE 3B
LIST OF SUBSIDIARIES OF BORROWER (NATIONAL AUTO CENTER, INC.)
-------------------------------------------------------------
<TABLE>
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY THE BORROWER
- ------------------ --------------- ---------------
<S> <C> <C>
NAC Holdings, Inc. Nevada 100%
CellStar Fulfillment, Inc. Delaware 100%
CellStar International
Corporation\Asia Delaware 100%
CellStar International
Corporation\S.A. Delaware 100%
Audiomex Export Corporation Texas 100%
CellStar West, Inc. Delaware 80%/1/
</TABLE>
_________________________
/1/ The other 20% is owned by CPD, Inc.
<PAGE>
SCHEDULE 3C
LIST OF PARTNERSHIPS
--------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
JURISDICTION OF PARTNERSHIP INTERESTS
NAME OF PARTNERSHIP FORMATION OWNED BY BORROWER
- ------------------- ----------- -----------------
<S> <C> <C>
CellStar Ltd. Texas 1% general
partnership interest/2/
CellStar Fulfillment, Ltd. Texas 1% general
partnership interest/3/
</TABLE>
________________________
/2/ 1% general partnership interest held by CellStar Fulfillment, Inc. and
99% limited partnership interest held by NAC Holdings, Inc.
/3/ 1% general partnership interest held by National Auto Center, Inc. and
99% limited partnership interest held by NAC Holdings, Inc.
<PAGE>
SCHEDULE 3D
LIST OF SUBSIDIARIES OF CELLSTAR AIR SERVICES, INC.
---------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY CELLSTAR AIR SERVICES, INC.
- ------------------ --------------- ------------------------------
<S> <C> <C>
A & S Air Service, Inc. Delaware 100%
</TABLE>
<PAGE>
SCHEDULE 3E
LIST OF SUBSIDIARIES AND FOREIGN AFFILIATES OF CELLSTAR INTERNATIONAL
---------------------------------------------------------------------
CORPORATION\ASIA
----------------
<TABLE>
<CAPTION>
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY CELLSTAR INTL. CORP.\ASIA
- ------------------ --------------- ----------------------------
<S> <C> <C>
CellStar (Asia) Corporation LTD Hong Kong 100%
CellStar Pacific PTE LTD Singapore 80%/4/
CellStar Singapore PTE LTD Singapore 100%
Investment Facility Company
Two Eight Zero (PTY) LTD. South Africa 50%/5/
CellStar (Taiwan) Company LTD Taiwan 99%/6/
</TABLE>
________________________________
/4/ Joint venture 80% owned by CellStar International Corporation\Asia and
20% owned by Leap International PTE LTD.
/5/ Joint venture 50% owned by CellStar International Corporation\Asia and
50% owned by Mr. Chi-Ming Wu.
/6/ The other 1% is owned by CellStar International Corporation\SA,
National Auto Center, Inc., Alan H. Goldfield, Kenneth E. Kerby, Michael S.
Hedge and Elaine F. Rodriguez.
<PAGE>
SCHEDULE 3F
LIST OF SUBSIDIARIES OF CELLSTAR INTERNATIONAL CORPORATION\S.A.
---------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY CELLSTAR INTL. CORP.\S.A.
- ------------------ --------------- ----------------------------
<S> <C> <C>
CellStar S.A. Argentina 99.9%/7/
CellStar International
Telefonia Celular, Ltda. Brazil 99.9%/8/
CellStar Celular Chile S.A. Chile 99.9%/9/
CellStar Celular S.A. Venezuela 99.9%/10/
CellStar Industria de
Telephonia da Amazonia LTD Brazil 99.0%/11/
CellStar de Colombia, Ltda. Colombia 99.0%/12/
CellStar Ecuador S.A. Ecuador 100%
CellStar (U.K.) U.K. 80%/13/
</TABLE>
_________________________
/7/ The other 0.1% is owned by Elaine F. Rodriguez.
/8/ The other 0.1% is owned by Elaine F. Rodriguez.
/9/ The other 0.1% is owned by Elaine F. Rodriguez.
/10/ The other 0.1% is owned by Elaine F. Rodriguez.
/11/ The other 1% is owned by CellStar International Telefonia Celular,
Ltda.
/12/ The other 1% is owned by Elaine F. Rodriguez.
/13/ The remaining 20% is owned as follows: 10% is owned by Simon Rex Earle
and the other 10% is owned by Martin deRooy.
<PAGE>
SCHEDULE 3G
LIST OF SUBSIDIARIES OF AUDIOMEX EXPORT CORPORATION
---------------------------------------------------
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY AUDIOMEX EXPORT CORP.
- ------------------ -------------- ------------------------
Celular Express
S.A. de C.V. Mexico 99%/14/
Celular Express
Management S.A. de C.V. Mexico 99%/15/
_________________________
/14/ Approximately 99% is owned by Audiomex Export Corporation. Remaining
amount is owned by Alan H. Goldfield, President and CEO of CellStar Corporation.
/15/ The other 1% is owned by Alan H. Goldfield.
<PAGE>
SCHEDULE 3H
LIST OF SUBSIDIARIES AND FOREIGN AFFILIATES OF CELLSTAR SINGAPORE PTE LTD
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY CELLSTAR SINGAPORE PTE LTD
- ------------------ --------------- -----------------------------
<S> <C> <C>
HCL-CellStar Ltd. India 50%/16/
</TABLE>
_______________________
/16/ Joint venture 50% owned by CellStar Singapore PTE LTD and 50% owned by
the HCL Promoter Group, consisting of Messrs. D.S. Puri, K.R. Vasudevan, N.L.
Bhatia, B.M. Bharadwaj, P.S. Ravishankar, S. Murali, and K.R. Radhakrishnan.
<PAGE>
SCHEDULE 31
LIST OF SUBSIDIARIES AND FOREIGN AFFILIATES OF CELLSTAR PACIFIC PTE LTD
-----------------------------------------------------------------------
PERCENTAGE OF
JURISDICTION OF VOTING STOCK OWNED
NAME OF SUBSIDIARY INCORPORATION BY CELLSTAR PACIFIC PTE LTD
- ------------------ ---------------- ---------------------------
CellStar Philippines, Inc. Philippines 100%
CellStar Amtel Sdn Bhd Malaysia 49% /17/
_______________________________
/17/ The other 51% is owned by Amtel Group Sdn Bhd.
<PAGE>
SCHEDULE 3J
LIST OF FOREIGN SUBSIDIARIES AND AFFILLIATES
--------------------------------------------
JURISDICTION OF
NAME OF FOREIGN SUBSIDIARY INCORPORATION
- -------------------------- ---------------
CellStar S.A. Argentina
CellStar International
Telefonia Celular, Ltda. Brazil
CellStar Industria de Telefonia
da Amazonia Ltda. Brazil
CellStar Ecuador S.A. Ecuador
CellStar Celular Chile S.A. Chile
CellStar Celular S.A. Venezuela
CellStar de Colombia Ltda. Colombia
Celular Express S.A. de C.V. Mexico
Celular Express
Management S.A. de C.V. Mexico
CellStar Pacific PTE LTD Singapore
CellStar Singapore PTE LTD Singapore
CellStar Asia Corp. LTD Hong Kong
CellStar Philippines, Inc. Philippines
CellStar (Taiwan) Co., Ltd. Taiwan
JURISDICTION OF
NAME OF FOREIGN AFFILIATE INCORPORATION
- ------------------------- ---------------
Investment Facility Company
Two Eight Zero (PTY) LTD South Africa
HCL-CellStar Ltd. India
CellStar Amtel Sdn Bhd Malaysia
<PAGE>
ANNEX 16
Schedule 5 (Existing Liens)
---------------------------
<PAGE>
SCHEDULE 5
EXISTING LIENS
--------------
FOR CELLSTAR CORPORATION:
(a) Secured Party: Houston Westpark Westchase Associates
Financing Statement Number:93-226388, filed on 11-29-93, on all furniture,
equipment and warehouse inventory, and the proceeds from the sale thereof
located at 8727 Westpark Drive, Houston, Texas 77063.
(b) Secured Party: Houston Westpark Westchase Associates
Financing Statement Number: 93-874662, filed on 12-13-93, on all furniture,
equipment and warehouse inventory, and the proceeds from the sale thereof
located at 8728 Westpark Drive, Houston, Texas 77063.
(c) Secured Party: Banque Nationale de Paris, Houston Agency
Pledge of 65% of the capital stock of CellStar International
Corporation/SA, and collateral assignment of interest in any contract or
agreement which exists or may exist with respect to the sale or transfer of
its interest in that one certain Amended and Restated License Agreement
executed by and between Sam's Club, a division of Wal-Mart Stores, Inc., a
Delaware corporation, and National Auto Center, Inc. a Texas corporation,
dated as of September 1, 1994 and National Auto Center, Inc.'s rights to
operate in Sam's Club locations, together with all proceeds, other than
proceeds of inventory sales, pagers, pager customer lists and accounts
receivable, from any sale or conveyance pursuant to such a contract.
FOR CELLSTAR, LTD.:
(a) First lien security interest of First Interstate Bank of Texas, N.A.
("First Interstate") to in all Real Property, Personal Property attached or
affixed to the Real Property, and Rent proceeds therefrom for property
located at 1728 and 1730 Briercroft Court, Carrollton, Texas, which
collateral secures the payment of the indebtedness of CellStar, Ltd. to
First Interstate.
FOR A & S AIR SERVICES, INC.:
(a) First lien security interest of General Electric Capital Corporation
("GECC") in that one certain 1984 Cessna Citation III, Model 650 aircraft
to secure payment of indebtedness of A & S Air Services, Inc. to Cessna
Finance Corporation.
SCHEDULE 5, Existing Liens - Page 1
<PAGE>
SCHEDULE 5
EXISTING LIENS
--------------
(continued)
FOR CELLSTAR WEST, INC.:
(a) Secured Party: Bay Area Cellular Telephone Company
Financing Statement Number: 96-10860112, filed on 4-16-96, all equipment
(including fixtures), inventory, all goods on consignment, all products and
proceeds thereof, and insurance policies including returned or unearned
premiums thereon.
SCHEDULE 5, Existing Liens - Page 2
<PAGE>
ANNEX 17
Schedule 6 (Patents, Trademarks and Copyrights)
-----------------------------------------------
<PAGE>
06/06/96
CELLSTAR, LTD. US TRADEMARKS
----------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FILE NO. MARK DESCRIPTION OF GOODS AND SERVICES SER. NO./ REG. NO./ RENEWAL DATE/
FILING DATE REG. DATE *OTHER
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CEL-04/US CELLSTAR cellular telephones sold to cellular 74/354,588 1,835,240 05/10/2003
telephone service subscribers and 02/15/94 05/10/94 *05/10/2000 - (S)8
accessories for use with cellular and 15 Affidavits
telephones; namely, mounting brackets,
antennas, antenna mounts, batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices, in class 9
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-10 TWO NAMES YOU advertising and business services for 74/483,718 1,875,583 01/24/2004
CAN CLEARLY the class of cellular telephones and 01/28/94 01/24/95 *01/24/2000 - (S)8
COUNT ON cellular telephone subscription and 15 Affidavits
contracts
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-12 CELLSTAR wholesale distributing services 74/489,103 1,896,626 5/30/2004
w/globe logo featuring cellular telephones 2/14/94 5/30/95 *5/30/2000 - (S)8
and related accessories and 15 Affidavits
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-16 INTELLIGENT cellular telephone battery chargers, 74/559,265
FAST CHARGER in international class 9 08/10/94
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-18A ACCESSORY cellular telephones, and accessories for 74/677,425
PERFORMANCE PAC cellular telephones, namely batteries, 05/17/95
battery eliminators in class 9, and
leather cases, in class 18
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-19 CELLULAR PHONE subscription contracts for cellular 74/577,186 1,967,868 between
CENTER and telephone communication services 09/22/94 04/16/96 04/16/2005 &
design providedby a third party, in 04/16/2006
International class 38, and retail
outlets featuringcellular telephones
and cellulartelephone subscription
contracts, ininternational class 42
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
06/06/96
CELLSTAR, LTD, US TRADEMARKS
----------------------------
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CEL-21 NATIONAL subscription contracts for cellular telephone 74/582,146
COMMUNICATION communication services in class 38; retail outlets 10/03/94
(and design) featuring cellular telephones, accessories for
cellular telephones and cellular telephone
subscription contracts in class 42
- -------------------------------------------------------------------------------------------------------------------------------
CEL-25 ESSENTIALS cellular telephone accessories including antennas, 74/686,976
CELLULAR batteries, battery eliminators, battery chargers, 06/12/95
ACCESSORIES carrying cases and mounting hardware in class 9
(stylized)
- -------------------------------------------------------------------------------------------------------------------------------
CEL-25A ESSENTIALS wholesale distributing services featuring 74/686,975
CELLULAR accessories related to cellular telephones in class 06/12/95
ACCESSORIES 42
(stylized)
- -------------------------------------------------------------------------------------------------------------------------------
CEL-28 COMMUNICATION cellular telephone communication services, in class 74/582,145
CENTER (stylized) 38; retail outlets featuring cellular telephones, 10/03/94
accessories for cellular telephones and cellular
telephone subscription contracts in class 42
- -------------------------------------------------------------------------------------------------------------------------------
CEL-31 FULFILLING A wholesale distributing services featuring cellular 74/674,551
WIRELESS WORLD telephones and related accessories in international 05/16/95
class 42
- -------------------------------------------------------------------------------------------------------------------------------
CEL-35 STARPOINTS bonus and award program for dealers based on 74/674,586 1,974,916 between
purchases of cellular telephones and related 05/18/95 05/21/96 05/21/2005&
accessories for resale, in class 42 05/21/2006
- -------------------------------------------------------------------------------------------------------------------------------
CEL-36 FULFILLING YOUR cellular telephone communication services in class 74/603,603
WIRELESS WORLD 38. Wholesale distributorships featuring cellular 11/28/94
telephones, accessories for cellular telephones and
cellular telephone subscription contracts in class
42
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
06/06/96
CELLSTAR, LTD. US TRADEMARKS
----------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-39 CELLSTAR (stylized) cellular telephones sold to cellular telephone 74/651,394 1,976,263 between
service subscribers and accessories for use with 03/24/95 05/28/96 05/28/2005 &
cellular telephones; namely mounting brackets, 05/28/2006
antennas, antenna mounts, batteries, battery
chargers, battery eliminators, input and output
jacks, carrying cases, headphones, remote listening
and speaking devices in class 9. Cellular
telephone communication services, in class 38.
Retail outlets featuring cellular telephones, and
accessories for cellular telephones and cellular
telephone subscription contracts; and wholesale
distributing services featuring cellular telephones
and related accessories in class 42
CEL-43 INTERACT (stylized) guidance services provided by video terminal 74/663,849
interface in retail outlets for the selection and 04/20/95
configuration of cellular telephone equipment in
international class 42
CEL-44 INTERACT guidance services provided by video terminal 74/663,850
INTERACTIVE interface in retail outlets for the selection and 04/20/95
ASSISTANT FOR configuration of cellular telephone equipment in
CELLULAR class 42
TECHNOLOGY
CEL-46 BACKED BY THE BEST wholesale distributing services featuring cellular 74/735,081
telephones and accessories in class 42 09/27/95
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
CELLSTAR, LTD. US TRADEMARKS 06/06/96
----------------------------
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CEL-48 NATIONAL AUTO service activation and subscription contracts 75/015,298
CELLULAR (and for cellular telephone communication services in 11/06/95
design) class 38; retail outlets featuring cellular
telephones, accessories for cellular telephones
and services activation and subscription
contracts for cellular telephone communication
services in class 42
- ----------------------------------------------------------------------------------------------------------------------------------
CEL-49 COMMUNICATIONS service activation and subscription contracts 75/028,757
CENTER AFFILIATES for cellular telephone communication services in 12/01/95
(stylized) class 38; retail outlets featuring cellular
telephones, accessories for cellular telephones
and services activation and subscription
contracts for cellular telephone communication
services in class 42
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FILE NO. COUNTRY MARK DESCRIPTION OF GOODS AND SERVICES SER. NO./ REG. NO./ RENEWAL DATE/
FILING DATE REG. DATE *OTHER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/ARG Argentina CELLSTAR (stylized) cellular telephones and accessories for 1,871,769/ 1.510.201/
cellular telephones (accessories 02/12/93 03/31/93
include antennas, antenna mounts,
antenna passive repeater, batteries,
battery chargers, battery charger
clips, and battery charter Y-adapters)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/ARG Argentina CELLSTAR class 9 1,985,259
06/28/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/ARG Argentina CELLSTAR class 38 1,985,260
06/28/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/ARG Argentina CELLSTAR class 42 1,985,261
06/28/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/AUS Australia CELLSTAR cellular telephones and accessories 74/651,649/
such as mounting brackets, antennas, 01/27/95
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/AUS Australia CELLSTAR cellular telephone communication 651,650/
services (class 38) 01/27/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/AUS Australia CELLSTAR retail outlets featuring cellular 651,652/
telephones, and accessories for 01/27/95
cellular telephones and cellular
telephone subscription contracts; and
wholesale distributing services
featuring cellular telephones and
related accessories (class 42)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/BAN Bangledesh CELLSTAR cellular telephones and accessories for 42,983
cellular telephones in international 02/12/95
class 9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
06/06/96
CELLSTAR, LTD.FOREIGN TRADEMARKS
--------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/BOA Bolivia CELLSTAR cellular telephones and accessories for 1236/ 57977-C/ 05/18/2003
cellular telephones including antennas, 02/26/93 02/09/95
antenna mounts, antenna passive
repeaters, batteries, battery charger
clips, battery chargers, battery
charger Y-adapters (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/BRA Brazil CELLSTAR electrical communications equipment 817,136,878/ 817,136,878/ 06/05/2005
including cellular telephones and 03/02/93 06/06/95
accessories for cellular telephones in
class 37.45 (services)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/BRA Brazil CELLSTAR electrical communications equipment 817,322,698/ 817,322,698/ 01/23/2005
including cellular telephones and 06/23/93 01/24/95
accessories for cellular telephones in
class 9.35/80
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/BRU Brunei CELLSTAR cellular telephones and accessories for 24615 20230 02/22/2002
cellular telephones including mounting 02/22/95 12/06/95
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, and remote
listening and speaking devices (class
9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/CAM Cambodia CELLSTAR cellular telephones and accessories for 4038/ 4038/ 01/01/2004
cellular telephones, including mounting 01/01/94 01/12/94 *01/12/1999 - Use
brackets, antennas, antenna mounts, *01/12/2000 -
batteries, battery chargers, battery Affidavit of Use
eliminators, input and output jacks,
carrying cases, headphones and remote
listening and speaking devices (class
9)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADERMARKS
----------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/CAN Canada CELLSTAR cellular telephones and accessories for 721,282/ 432,754/ 09/02/2009
cellular telephones; namely: mounting 01/28/93 09/02/94
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, and remote
listening and speaking devices for use
with cellular telephones
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/CHE Chile CELLSTAR (stylized) all goods in class 9 241.663/ 415,964/ 11/08/2003
05/26/93 11/08/93
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/CHI China CELLSTAR (plain) cellular telephones and accessories for 93015835/ 694522/ 06/20/2004
cellular telephones such as aerials and 03/11/93 06/21/94
frame for wireless aerials, chargers
batteries, electrical adapters, and the
like in international class 9
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/CHI China CELLSTAR (stylized) cellular telephones and accessories for 93015836/ 694523/ 06/20/2004
cellular telephones such as aerials and 03/11/93 06/21/94
frame for wireless aerials, chargers
batteries, electrical adapters, and the
like in international class 9
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/COL Colombia/ASR CELLSTAR class 9 93/388,651
05/27/93
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/COL Colombia CELLSTAR cellular telephones and accessories for 93/403,362
cellular telephones (accessories 08/20/93
include antennas, antenna mounts,
antenna passive repeater, batteries,
battery chargers, battery charger clips
and battery charter Y-adapters)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/COS Costa Rica CELLSTAR cellular telephones sold to cellular 95202 03/13/2005
telephone service subscribers and 03/13/96
accessories for use with cellular
telephones; namely, mounting brackets,
antennas, antenna mounts, batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices, in class 9.
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/COS Costa Rica CELLSTAR agent services for cellular telephone
service subscription agreements in
international class 35
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/COS Costa Rica CELLSTAR cellular telephone communication
services in international class 38
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/COS Costa Rica CELLSTAR retail outlets featuring cellular 95203 03/13/2005
telephones and accessories for cellular 03/13/96
telephones and cellular telephone
subscription contracts, and wholesale
distributing services featuring
cellular telephones and related
accessories in international class 42
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/CTM European Union CELLSTAR 47233
04/01/96
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/ECU Ecuador CELLSTAR communications apparatus in general and DNPI-2197- 08/01/2004
especially antennas and receivers for MICIP
television channels via satellite in 08/01/94
class 9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/FRA France CELLSTAR cellular telephones and accessories, 95/560,740 188,173 03/01/2005
namely mounting brackets, antennas, 03/01/95 07/31/95
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9); telephone
communication services and in
particular cellular telephone
communication services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/GER Germany CELLSTAR cellular telephones and accessories, 395,078,598 395078598 02/28/2005
namely mounting brackets, antennas, 02/21/95 02/16/96
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9); telephone
communication services, and
particularly cellular telephone
communication services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/GB Great Britain CELLSTAR cellular telephones and accessories, 2,011,720 02/21/2005
therefore namely mounting brackets, 02/21/95
antennas, antenna mounts, batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9); telephone
communication services, particularly
cellular telephone communication
services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
06/06/96
CELLSTAR, LTD.FOREIGN TRADEMARKS
--------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/HON Hong Kong CELLSTAR cellular telephones, parts and fittings 93/12897 8357/1995
therefor, mounting brackets, antennas, 11/30/93 no date listed
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jacks, carrying cases
therefor, headphones and remote
listening and speaking devices; all
included in class 9
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/IND India CELLSTAR cellular telephones and accessories for 613,904/
cellular telephones, including mounting 12/14/93
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones and remote
listening and speaking devices. All
being goods in class 9
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/INO Indonesia CELLSTAR cellular telephones and accessories for H4.Hc.01. 01-
cellular telephones such as mounting 14643
brackets, antenna, antenna mounts, 08/15/94
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, and remote
listening and speaking devices, their
parts and fittings
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/IRE Ireland CELLSTAR cellular telephones and accessories, 6182/95 pending
therefore namely mounting brackets, 09/07/95
antennas, antenna mounts, batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/ISR Israel CELLSTAR cellular telephones and accessories 96247/ pending
therefor (class 9) 12/25/94
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/ISR Israel CELLSTAR cellular telephone communication 96248/ pending
services (class 38) 12/25/94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/ISR Israel CELLSTAR wholesale distributing services 96249/ pending
featuring cellular telephones and 12/25/94
related accessories; retail outlets
featuring cellular telephones and
accessories for cellular telephones and
cellular telephone subscription
contracts (class 42).
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/KOR Korea CELLSTAR (class 9) cellular telephones and accessories for 4414/93/
cellular telephones (these included 02/15/93
antenna, antenna mounts, antenna
passive repeaters, batteries, battery
chargers, battery charger clips and
battery charger Y-adapters)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/LAO Laos CELLSTAR (and all goods in international class 9 2686/ 2879/ 12/29/2003
design) 12/29/93 12/05/94
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/MAL Malaysia CELLSTAR cellular telephones and accessories for 94/06847/
cellular telephones such as mounting 08/30/94
brackets, antenna, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, and remote
listening and speaking devices, their
parts and fittings
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/MEX Mexico CELLSTAR Apparatus for communication known in 169,936/ 468,271/ 06/09/2003
this class, particularly antenna 06/09/93 08/01/94
receivers (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/NZ New Zealand CELLSTAR communications products in this class 245184/
including cellular telephones, mounting 01/31/95
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, remote
listening and speaking devices and
other accessories; parts and fittings
for all the aforesaid goods (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/NZ New Zealand CELLSTAR telecommunication services including 245185/
cellular telephone communication 01/31/95
services (class 38)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-04/NZ New Zealand CELLSTAR services in retailing electrical and 245186/
communication products including 01/31/95
cellular telephones and accessories for
cellular telephones and cellular
telephone subscription contract; and
wholesale distributing services
featuring electrical and communication
products (class 42)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-04/PAK Pakistan CELLSTAR cellular telephones and accessories for 124,187/
cellular telephones, including mounting 03/01/94
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones and remote
listening and speaking devices (class
9)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-04/PAR Paraguay CELLSTAR class 9 9,303,636/ 165,440 11/16/2003
11/16/93
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-04/PER Peru CELLSTAR(with scientific, nautical surveying and 221,530/
design) electrical apparatus and instruments 05/31/93
(including wireless), photographic,
cinematographic, optical, weighing,
measuring signaling, checking,
(supervision), lifesaving and teaching
apparatus and instruments; coil or
counterfredd (sic) apparatus; talking
machines; cash registers; calculating
machines, fire extinguishing apparatus
including parts and accessories (class
9)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/PER Peru CELLSTAR (with scientific, natrtical surveying and 221,228 6821 04/22/2004
design) electrical apparatus and instruments
(including wireless), photographic,
cinematographic, optical, weighing,
measuring signaling, checking,
(supervision), lifesaving and teaching
apparatus and instruments; coil or
counterfredd (sic) apparatus; talking
machines; cash registers; calculating
machines, fire extinguishing apparatus
including parts and accessories (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/PHI Philippines CELLSTAR cellular telephones sold to cellular 940930
telephone service subscribers and 00095828-PN
accessories for use with cellular 09/30/94
telephones; namely, mounting brackets,
antennas, antenna mounts, batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/SIN Singapore CELLSTAR cellular telephones sold to cellular 6959/94
telephone service subscribers and
accessories for use with cellular
telephones; namely, mounting brackets,
antennas, antenna mounts, batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/SOAF South Africa CELLSTAR scientific, nautical, surveying, 9,500,288/
electric, photographic, 01/12/95
cinematographic, optical, weighing,
measuring, signaling, checking
(supervision), life-saving and
teaching apparatus and instruments;
apparatus for recording, transmission
or reproduction of sound or images;
telecommunication devices of all kinds
included in the class including mobile
and cellular telephones and devices and their
accessories; magnetic date carriers, recording
discs; automatic vending machines and
mechanisms for coin-operated apparatus; cash
registers, calculating machines, data
processing equipment and computers;
fire-extinguishing apparatus (class 9)
- ----------------------------------------------------------------------------------------------------------------------------------
CEL-04/SOAF South Africa CELLSTAR communication services in relation to 9,500,289/
mobile and cellular telephones and 01/12/95
devices and their accessories (class
38)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-04/SOAF South Africa CELLSTAR wholesale, retail, mail-order, 9,500,290/
distribution and subscription services 01/12/95
all relating to mobile and cellular
telephones and devices and their
accessories (class 42)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-04/SPA Spain CELLSTAR cellular telephones and accessories for 1,744,587/ 1,744,587/ 02/15/2003
cellular telephones in international 02/15/93 04/20/94 *02/28/98 Second
class 9 tax due
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-04/SRI Sri Lanka CELLSTAR cellular telephones and accessories 73904/
for cellular telephones, including 04/06/95
mounting brackets, antennas, antenna
mounts, batteries, battery charges,
battery eliminators, input and output
jacks, carrying cases, headphones and
remote listening and speaking devices
(class 9).
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/TAI Taiwan CELLSTAR class 9 - cellular telephones and (84)029970/
accessories for cellular telephones, 06/16/95
namely mounting brackets, antennas,
antenna mounts, batteries, battery
chargers, battery eliminators, input
output jackets, carrying cases,
headphones, remote listening and
speaking devices
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/THA Thailand CELLSTAR (stylized) cellular telephones and accessories for 276,536/
cellular telephones in international 11/25/94
class 9
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04 URU Uruguay CELLSTAR all goods in classes 9, 38 and 42 279,888/
07/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/VEN Venezuela CELLSTAR (stylized) cellular telephones and accessories 3011/
for cellular telephones (accessories 02/26/93
include antennas, antenna mounts,
antenna passive repeater, batteries,
battery chargers, battery charger
clips and battery charger Y-adapters)
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/VIE Vietnam CELLSTAR cellular telephones and accessories for 16,487/ 13868 12/21/2003
cellular telephones, including mounting 12/21/93 10/22/94
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones and remote
listening and speaking devices (class
9)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-09/ARG Argentina SERVICELL cellular telephones and accessories 1,899,480/ 1,531,704/ 07/29/2004
for cellular telephones, including 11/17/93 07/29/94
mounting brackets, antennas, antenna
mounts, batteries, battery chargers,
battery eliminators, input and output
jacks, carrying cases, headphones and
remote listening and speaking devices
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-09/CHE Chile SERVICELL cellular telephones and accessories 256,531/
for cellular telephones, including 02/02/94
mounting brackets, antennas, antenna
mounts, batteries, battery chargers,
battery eliminators, input and output
jacks, carrying cases, headphones and
remote listening and speaking devices
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-09/COL Columbia SERVICELL cellular telephones and accessories 421,437/ 156,157/ 05/18/2004
for cellular telephones, including 12/06/93 05/17/94
mounting brackets, antennas, antenna
mounts, batteries, battery chargers,
battery eliminators, input and output
jacks, carrying cases, headphones and
remote listening and speaking devices
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/COL Columbia CELLULAR EXPRESS cellular telephones and accessories 9,422,250/ 165,487/ 09/27/2004
for cellular telephones, including 05/25/94 09/28/94
mounting brackets, antennas, antenna
mounts, batteries, battery chargers,
battery eliminators, input and output
jacks, carrying cases, headphones and
remote listening and speaking devices
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKES
----------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-15/FRA France CELLULAR EXPRESS cellular telephones and accessories, 95/569,698/ 95569696 04/28/2005
(and design) namely mounting brackets, antennas, 04/28/95 04/28/95
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9); telephone
communication services and inparticular
cellular telephone communication
services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/GER Germany CELLULAR EXPRESS cellular telephones and accessories, 39517285.3/
(and design) there fore namely mounting brackets, 04/21/95
antennas, antenna mounts ,batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9); telephone
communication services, and particularly
cellular telephone communication
services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/GB Great Britain CELLULAR EXPRESS cellular telephones and accessories, 2,018,225/ 2,018,225 04/22/2005
(and design) therefore namely mounting brackets, 04/22/95 03/01/96
antennas, antenna mounts ,batteries,
battery chargers, battery eliminators,
input and output jacks, carrying cases,
headphones, remote listening and
speaking devices (class 9); telephone
communication services, particularly
cellular telephone communication
services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/KOR Korea CELLULAR EXPRESS cellular telephones; mounting brackets, 13992/95
(and design) antennas, antenna mounts; batteries; 04/12/95
battery chargers; battery eliminators;
input and output jacks; carrying cases;
headphones; remote listening and
speaking devices (class 39)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-15/KOR Korea CELLULAR EXPRESS cellular telephone communication 3359/95
(and design) services (class 106) 04/12/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/KOR Korea CELLULAR EXPRESS retail outlet and wholesale distributing 3450/96
(and design) agency services featuring cellular 04/14/95
telephones and accessories for
cellular telephones and cellular
telephone subscription contract;
retail and wholesale distributing
chain-store management services
featuring cellular telephones and
related accessories (class 112)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/NZ New Zealand CELLULAR EXPRESS communications products in this class 246,078/
(and design) including cellular telephones, 02/22/95
mounting brackets, antennas,
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jacks, carrying cases,
headphones, remote listening and
speaking devices and other
accessories (class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/NZ New Zealand CELLULAR EXPRESS telecommunication services including 246,077/
(and design) cellular telephone communication 02/22/95
services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/NZ New Zealand CELLULAR EXPRESS services in relating electrical and 246,078/
(and design) communication products including 02/22/95
cellular telephones and accessories
for cellular telephones and cellular
telephone subscription contracts; and
wholesale distributing services
featuring electrical and
communication products (class 42)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CEL-15/PHI Phillippines CELLULAR EXPRESS class 9 - cellular telephones and In Process
(and design) accessories for cellular telephones
namely mounting brackets, antennas,
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jackets, carrying cases,
headphones, remote listening and
speaking devices
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-15/PHI Phillippines CELLULAR EXPRESS telecommunication services including In Process
(and design) cellular telephone communication
services (class 38)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL015/PHI Phillippines CELLULAR EXPRESS services in retailing electrical and In Process
(and design) communication products including
cellular telephones and accessories
for cellular telephones and cellular
telephone subscription contracts; and
wholesale distributing services
featuring electrical and
communication products (class 42)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
06/06/96
CELLSTAR, LTD. FOREIGN TRADEMARKS
---------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CEL-15/SOAF South Africa CELLULAR EXPRESS scientific, nautical, surveying, electric, 9,503,360/
(and design) photographic, cinematographic, optical, 03/17/95
weighing, measuring, signaling, checking
(supervision), life-saving and teaching
apparatus and instruments; apparatus
for recording, transmission or reproduction
of sound or images; telecommunication
devices of all kinds included in the class
including mobile and cellular telephones and
devises and their accessories; magnetic date
carriers, recording discs; automatic vending
machines and mechanisms for coin-operated
apparatus; cash registers, calculating machines,
data processing equipment and computers;
fire-extinguishing apparatus (class 9)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-15/SOAF South Africa CELLULAR EXPRESS communication services in relation to 9,503,361/
(and design) mobile and cellular telephones and 03/17/95
devices and their accessories (class
38)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-15/SOAF South Africa CELLULAR EXPRESS wholesale, retail, mail-order, distribution 9,503,362/
(and design) distribution and subscription services all 03/17/95
relating to mobile and cellular telephones
and devices and their accessories (class 42)
- -----------------------------------------------------------------------------------------------------------------------------------
CEL-15/TAI Taiwan CELLULAR EXPRESS class 9 - cellular telephones and (84)029969/
(and design) accessories for cellular telephones, 06/16/95
namely mounting brackets, antennas,
antenna mounts, batteries, battery
chargers, battery eliminators, input
and output jackets, carrying cases,
headphones, remote listening and
speaking devices.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
06/06/96
CELLSTAR PACIFIC PTE LTD. TRADEMARKS
------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FILE NO. COUNTRY MARK DESCRIPTION OF GOODS SER. NO./ REG. NO./ RENEWAL DATE/
AND SERVICES FILING DATE REG. DATE *OTHER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/SAU Saudi Arabia CELLSTAR cellular telephones and accessories 30267
(accessories can include mounting 07/30/95
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, remote
listening and speaking devices)
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/SAU Saudi Arabia CELLSTAR services for business management 39268
assistance for the sale of goods, 07/30/95
sale promotion services,
demonstration of goods, distribution
of samples and shop window dressing
services (class 35)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/SAU Saudi Arabia CELLSTAR cellular telephone service 30269
subscription contracts (class 38) 07/30/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/UAE United Arab CELLSTAR cellular telephones and accessories 10680
Emirates (accessories can include mounting 05/20/95
brackets, antennas, antenna mounts,
batteries, battery chargers, battery
eliminators, input and output jacks,
carrying cases, headphones, remote
listening and speaking devices)
(class 9)
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/UAE United Arab CELLSTAR cellular telephone communication 10681
Emirates services (class 38) 05/20/95
- ------------------------------------------------------------------------------------------------------------------------------------
CEL-04/UAE United Arab CELLSTAR retail outlets featuring cellular 10682
Emirates telephones and accessories for 05/20/95
cellular telephones and cellular
telephone subscription contract; and
wholesale distributing services
featuring cellular telephones and
related accessories (class 42)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
CELULAR EXPRESS, S.A, de C.V. TRADEMARKS
----------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COUNTRY MARK DESCRIPTION OF GOODS AND SERVICES SER. NO./ REG. NO./
FILING DATE REG. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mexico CELLSTAR (and construction and repair services in 446,978
design) class 37 11/23/93
- -----------------------------------------------------------------------------------------------------------------------------------
Mexico CELLSTAR (and services lent for warehouse buying in 446,979
design) bulk and selling retail, and 11/23/93
particularly dedicated to the selling
of cellular telephones and their parts
and accessories in class 42
- -----------------------------------------------------------------------------------------------------------------------------------
Mexico CELLULAR trade name 440,077
EXPRESS S.A. de 06/02/94
C. V.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
FILING RECEIPT [LOGO HERE] ASSISTANT SECRETARY AND COMMISSIONER
OF PATENTS AND TRADEMARKS
Washington, D.C. 20231
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
APPLICATION NUMBER FILING DATE GRP ART UNIT FIL FEE REC'D ATTORNEY DOCKET NO. DRWGS TOT CL IND CL
- ---------------------------------------------------------------------------------------------------------------------
08/565,159 11/30/95 3201 $750.00 CEL-42 3 15 2
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
DANIEL N LUNDEEN
SROUFE PAYNE & LUNDEEN
1700 WEST LOOP SOUTH
SUITE 1230
HOUSTON TX 77027-3008
Receipt to acknowledge of this nonprovisional Patent Application. It will be
considered in its order and you will be notified as to the results of the
examination. Be sure to provide the U.S. APPLICATION NUMBER, FILING DATE, NAME
OF APPLICANT, and TITLE OF INVENTION when inquiring about the application. Fees
transmitted by check or draft are subject to collection. Please verify the
accuracy of the data presented on this receipt. If an error is noted on the
filing Receipt, please write to the Application Processing Division's Customer
Correction Branch within 10 days of receipt. Please provide a copy of the filing
Receipt with the changes noted thereon.
Applicant(s)
REBECCA K. RICHARDSON, GARLAND, TX.
FOREIGN FILING LICENSE GRANTED 02/13/96
TITLE
UNITIZED PACKAGE ASSEMBLY
PRELIMINARY CLASS: 053
<PAGE>
ANNEX 18
Consent Letter
--------------
<PAGE>
As of July 31, 1996
National Auto Center, Inc.
CellStar Corporation
CellStar, Ltd.
CellStar Fulfillment, Ltd.
1730 Briercroft
Carrollton, Texas 75006
Re: Consent to $3,000,000 Term Loan by Banque Nationale de Paris, Houston
Agency to CellStar Corporation; Consent to Sale of Sam's Operations
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated Loan
Agreement dated as of July 20, 1995, among National Auto Center, Inc., a Texas
corporation (the "Borrower"), CellStar Corporation, a Delaware corporation (the
"Parent"), each of the banks or other lending institutions which is or may from
time to time become a signatory thereto or any successor or permitted assignee
thereof (each a "Bank" and, collectively, the "Banks"), and Texas Commerce Bank
National Association, a national banking association, as agent for itself and
the other Banks and as issuer of Letters of Credit thereunder (in such capacity,
together with its successors in such capacity, the "Agent"), as amended by that
certain First Amendment to Amended and Restated Loan Agreement dated as of
February 29, 1996, as amended by that certain Second Amendment to Amended and
Restated Loan Agreement of even date herewith (such Amended and Restated Loan
Agreement, as the same has been or may be amended, supplemented or modified from
time to time, being hereinafter referred to as the "Agreement"). The
obligations of Borrower pursuant to the Agreement are guaranteed by the Parent
and the Subsidiaries other than the Foreign Subsidiaries (collectively, the
"Guarantors"). All capitalized terms used and not otherwise defined herein
shall have their respective meanings as set forth in the Agreement.
The Parent proposes to enter into that certain Loan Agreement dated as of
July 31, 1996 (the "BNP Loan Agreement"), between the Parent and Banque
Nationale de Paris, Houston Agency ("BNP"), pursuant to which BNP will make a
term loan in the principal amount of $3,000,000 (the "BNP Loan") to the Parent
to refinance the outstanding unreimbursed principal balance of a letter of
credit drawing. The indebtedness of the Parent pursuant to the BNP Loan will be
evidenced by the Parent's Secured Promissory Note dated as of July 31, 1996,
executed by the Parent and payable to the order of BNP in the original principal
amount of $3,000,000 (the "BNP Note").
<PAGE>
The BNP Loan will bear interest at one of the following rates as elected by
the Parent: (i) the Offshore Rate (as defined in the BNP Loan Agreement), plus
3.50% per annum, or (ii) the BNP Prime Rate (as defined in the BNP Loan
Agreement) plus 2% per annum. All past due principal and, to the extent
permitted by applicable law, interest on the BNP Note will bear interest at the
Highest Lawful Rate (as defined in the BNP Loan Agreement).
The BNP Loan will be payable as follows:
(a) Accrued and unpaid interest thereon shall be payable monthly;
(b) The Parent shall apply any net proceeds the Parent receives on
account of any refinancing of the Parent's corporate headquarters towards
payment of the BNP Note, such proceeds to be applied first to accrued and
unpaid interest and then to reduce the amount of principal remaining to be
paid under the BNP Note;
(c) The Parent shall apply any net proceeds the Parent receives on
account of the sale or refinancing of any aircraft owned by C&S Air
Services, Inc. towards payment of the BNP Note, such proceeds to be applied
first to accrued and unpaid interest and then to reduce the amount of
principal remaining to be paid under the BNP Note;
(d) The Parent shall apply, or cause to be applied, any proceeds
(other than proceeds of inventory, pagers, pager customer lists and
accounts receivable) the Borrower, the Parent or CellStar, Ltd. receives on
account of a sale or other transfer of the Borrower's interest in and to
the License Agreement (hereinafter defined) and the Borrower's right to
operate in Sam's Club locations (collectively, the "Sam's Operations"),
including without limitation any contract or agreement which arises as a
result of or in connection with the Letter of Intent (hereinafter defined),
towards payment of the BNP Note, such proceeds to be applied first to
accrued and unpaid interest and then to reduce the amount of principal
remaining to be paid under the BNP Note;
(e) A final installment of all then unpaid principal and accrued and
unpaid interest shall be finally due and payable on November 21, 1996.
As used herein, "License Agreement" means that certain Amended and Restated
National License Agreement dated as of September 1, 1994, between Sam's Club, a
division of Wal-Mart Stores, Inc., a Delaware corporation, and the Borrower. As
used herein, "Letter of Intent" means that certain letter of intent dated May 6,
1996, among the Borrower, the Parent, CellStar, Ltd. and the Buyer named
therein.
To secure payment and performance of the BNP Note, the Parent proposes to
execute and deliver or cause to be executed and delivered the documents
described below covering the property and collateral described below
(collectively, the "BNP Collateral"):
-2-
<PAGE>
(a) The Borrower shall grant to BNP a first and prior perfected
security interest in 65% of the capital stock of CellStar International
Corporation/S.A., pursuant to that certain Stock Pledge Agreement dated
July 31, 1996, executed by the Borrower in favor of BNP (the "BNP Stock
Pledge Agreement").
(b) The Parent shall cause to be collaterally assigned to BNP all of
the Parent's, the Borrower's and CellStar, Ltd.'s right, title and interest
in and to any contract or agreement which exists or may exist with respect
to the sale or other transfer of the Borrower's interest in and to the
License Agreement and the Borrower's rights to operate in Sam's Club
locations as set forth in the License Agreement, including without
limitation any contract or agreement which arises as a result of or in
connection with the Letter of Intent, together with all proceeds, other
than proceeds of inventory, pagers, pager customer lists and accounts
receivable, from any sale or transfer pursuant to such contract or
agreement. The collateral assignment of such contract shall be contained
in that certain Security Agreement dated July 31, 1996, executed by the
Borrower, the Parent and CellStar, Ltd. in favor of BNP (the "BNP
Collateral Assignment").
(c) The Parent, the Borrower and CellStar, Ltd. shall execute Uniform
Commercial Code financing statements for filing in the appropriate
jurisdictions to perfect BNP's security interest in the BNP Collateral
(collectively, the "BNP Financing Statements").
At your request, the Agent and the Banks hereby consent to the BNP Loan,
the BNP Loan Agreement, the BNP Note, the BNP Stock Pledge Agreement, the BNP
Collateral Assignment, the BNP Financing Statements, all terms and provisions
thereof and all liens and security interests granted thereby to BNP in the BNP
Collateral to secure the BNP Note, to the extent the foregoing would otherwise
violate any of the terms and provisions of Section 10.1 or Section 10.2 of the
Agreement, provided that such documents are in the form approved by the Agent
and contain terms and provisions as described herein. Without in any way
limiting the foregoing, the Agent and the Banks specifically consent to the
payment terms of the BNP Note as described herein.
Further, the Agent and the Banks hereby agree that any and all liens and
security interests of the Agent, for the pro rata benefit of the Banks, in the
BNP Collateral are subordinated to the liens and security interests of BNP in
the BNP Collateral, to the extent the BNP Collateral secures payment of the
indebtedness evidenced by the BNP Note.
Further, the Agent, BNP and the other Banks hereby consent to any sale of
the Sam's Operations and the release by the Agent and BNP of their respective
security interests in the assets sold in connection therewith, so long as (a)
such sale is upon terms substantially similar to those outlined in the Letter of
Intent, including a cash purchase price not less than the range specified in the
Letter of Intent, and (b) the net cash proceeds from such sale shall be applied
as follows:
-3-
<PAGE>
(i) Net cash proceeds attributable to the BNP Collateral shall be
paid to BNP for application first to accrued and unpaid interest on the BNP
Note and then to the outstanding principal balance thereof; and
(ii) Net cash proceeds attributable to the BNP Collateral remaining
after payment in full of the BNP Note, together with all other net cash
proceeds, shall be paid to the Banks, pro rata, for application to the
Obligations in accordance with the Loan Agreement. The principal reduced
by such proceeds may be reborrowed by the Borrower, subject to the
Borrowing Base as recalculated as of the closing date of such sale in
accordance with the provisions of the Loan Agreement.
Nothing herein shall be construed as a consent to the sale of the Sam's
Operations pursuant to any terms other than those specified herein.
The consents granted herein are limited to the covenants and sections of
the Agreement specifically stated herein and the specific transactions and
documents specified herein. The consents granted herein shall not be construed
as a consent to or waiver of any other Default which may now exist or hereafter
occur or any other violation of any term, covenant or provision of the Agreement
or any other Loan Document. All rights and remedies of the Banks and Agent are
hereby expressly reserved with respect to any such Default. The consents
granted herein do not affect or diminish the right of Agent and the Banks to
require strict performance by the Borrower and each Guarantor of each provision
of any Loan Document to which it is a party, except as expressly provided
herein. All terms and provisions of, and all rights and remedies of Agent and
the Banks under, the Loan Documents shall continue in full force and effect and
are hereby confirmed and ratified in all respects.
THIS LETTER EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
RELATING TO THE CONSENTS AND AGREEMENTS SET FORTH HEREIN AND SUPERSEDES ANY AND
ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE CONSENTS AND AGREEMENTS SET FORTH HEREIN AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
This letter may be executed in any number of counterparts and by different
parties on separate counterparts, each of which shall be an original and all of
which taken together shall constitute one and the same agreement. This letter
shall not be effective unless and until the Agent, the Banks, the Borrower, and
the Guarantors each have executed and delivered a counterpart hereof, whereupon
this letter shall be effective as of the date first above written.
-4-
<PAGE>
By executing this letter in the spaces provided below, the Borrower agrees
to the terms and provisions hereof, and the Guarantors (i) consent and agree to
the consents granted herein and the other terms and provisions hereof, and (ii)
agree that the Guaranties and all other Loan Documents to which the Parent and
the Partnerships, respectively, are a party are, and shall continue to be, in
full force and effect and are hereby confirmed and ratified in all respects.
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent and as a Bank
By:___________________________________________
Name:______________________________________
Title:_____________________________________
NATIONAL CITY BANK
By:___________________________________________
Name:______________________________________
Title:_____________________________________
NBD BANK
By:___________________________________________
Name:______________________________________
Title:_____________________________________
BANK OF SCOTLAND
By:___________________________________________
Name:______________________________________
Title:_____________________________________
-5-
<PAGE>
BANK NATIONALE DE PARIS,
HOUSTON AGENCY
By:___________________________________________
Name:______________________________________
Title:_____________________________________
ACCEPTED AND AGREED TO
as of the date first above written:
NATIONAL AUTO CENTER, INC.
By:____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR CORPORATION
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR, LTD.
By: National Auto Center, Inc.,
General Partner
By:________________________
Alan H. Goldfield
Chairman and
Chief Executive Officer
-6-
<PAGE>
CELLSTAR FULFILLMENT, LTD.
By: CellStar Fulfillment, Inc.,
General Partner
By:________________________
Alan H. Goldfield
Chairman and
Chief Executive Officer
CELLSTAR FULFILLMENT, INC.
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
NAC HOLDINGS, INC.
By:_____________________________
Name:_________________________
Title:________________________
AUDIOMEX EXPORT CORPORATION
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR INTERNATIONAL
CORPORATION/ASIA
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
-7-
<PAGE>
CELLSTAR INTERNATIONAL
CORPORATION/SA
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR AIR SERVICES, INC.
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
A&S AIR SERVICES, INC.
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
CELLSTAR WEST, INC.
By:_____________________________
Alan H. Goldfield
Chairman and Chief Executive Officer
-8-
<PAGE>
ANNEX 19
Matters to be Addressed in Opinion of Counsel
---------------------------------------------
<PAGE>
Matters to Be Addressed in Opinion of Counsel
---------------------------------------------
All capitalized terms used and not otherwise defined herein shall have
their respective meanings as set forth in the Loan Agreement, as defined in the
Second Amendment to Amended and Restated Loan Agreement to which this is an
Annex (the "Amendment").
1. Each of the Borrower and the Guarantors (other than the Partnerships)
is a corporation duly organized, validly existing, and in good standing under
the laws of the state of its incorporation. Each of the Partnerships is a
limited partnership duly organized and validly existing under the laws of the
State of Texas.
2. Each of the Borrower and the Guarantors (other than the Partnerships)
has the corporate power and authority to execute, deliver, and perform the
Amendment and the other Loan Documents to which such Person is a party. The
execution, delivery, and performance by each such Person of the Amendment and
the other Loan Documents to which such Person is a party and compliance with the
terms and provisions thereof have been duly authorized by all requisite
corporate action on the part of such Person and do not and will not (a) violate
or conflict with, or result in a breach of, or require any consent under (i) the
articles or certificate of incorporation or bylaws of such Person, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree of
any Governmental Authority or arbitrator, or (iii) any agreement or instrument
to which such Person is a party or by which such Person or any of its property
is bound or subject, or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien (except Liens
created in favor of the Agent pursuant to the Loan Documents) upon any of the
revenues or assets of such Person.
3. Each of the Partnerships, and each Person executing any Loan Documents
on behalf of any Partnership, has the power and authority to execute, deliver,
and perform the Amendment and the other Loan Documents to which such Partnership
is a party. The execution, delivery, and performance by each Partnership, and
by each Person on behalf of any Partnership, of the Amendment and the other Loan
Documents to which such Partnership is a party and compliance with the terms and
provisions thereof have been duly authorized by all requisite action on the part
of such Person and do not and will not (a) violate or conflict with, or result
in a breach of, or require any consent under (i) the partnership agreement of
such Partnership, (ii) any applicable law, rule or regulation or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, or
(iii) any agreement or instrument to which such Partnership is a party or by
which it or any of its property is bound or subject, or (b) constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any Lien (except Liens created in favor of the Agent pursuant to the Loan
Documents) upon any of the revenues or assets or of such Partnership.
MATTERS TO BE ADDRESSED IN OPINION OF COUNSEL - Page 1
<PAGE>
4. The Amendment and the other Loan Documents to which the Borrower or any
Guarantor is a party have been duly executed and delivered by such Person. The
Amendment and the other Loan Documents to which the Borrower or any Guarantor is
a party constitute the legal, valid, and binding obligations of such Person
enforceable against such Person in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally.
5. There are no legal or arbitral proceedings, and no proceedings by or
before any Governmental Authority, pending or, to our knowledge, threatened
against or affecting the Borrower, any Guarantor, any other Subsidiary or any
Foreign Affiliate, or any properties or rights of any such Person, which if
adversely determined, would have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of any
such Person.
6. No authorization, consent, or approval of, or filing or registration
with, any Governmental Authority is required for the execution, delivery, and
performance by the Borrower or any Guarantor of the Loan Documents to which
such Person is a party.
7. All of the shares of capital stock of each Subsidiary (other than the
Foreign Subsidiaries) have been duly authorized and validly issued and are fully
paid and nonassessable. None of the shares of capital stock of any Subsidiary
(other than the Foreign Subsidiaries) are subject to any restriction on transfer
or assignment, except compliance with applicable securities laws and
regulations.
MATTERS TO BE ADDRESSED IN OPINION OF COUNSEL - Page 2
<PAGE>
EXHIBIT 10.2
THIRD AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
This THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment"), dated as of July 31, 1996, is among NATIONAL AUTO CENTER, INC., a
Texas corporation (the "Borrower"), CELLSTAR CORPORATION, a Delaware corporation
(the "Parent"), each of the banks or other lending institutions which is or may
from time to time become a signatory to the Agreement (hereinafter defined) or
any successor or permitted assignee thereof (each a "Bank" and collectively, the
"Banks"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association ("TCB"), as agent for itself and the other Banks and as issuer of
Letters of Credit under the Agreement (in such capacity, together with its
successors in such capacity, the "Agent").
RECITALS:
A. The Borrower, the Parent, the Banks and the Agent have entered into
that certain Amended and Restated Loan Agreement dated as of July 20, 1995, as
amended by that certain First Amendment to Amended and Restated Loan Agreement
dated as of February 29, 1996, and as further amended by that certain Second
Amendment to Amended and Restated Loan Agreement dated as of July 31, 1996 (the
"Agreement").
B. The Borrower, the Parent, the Agent and the Banks now desire to amend
the Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
---------
Definitions
-----------
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
-----------
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE II
----------
Amendment
---------
Section 2.1 Debt. Effective as of the date hereof, subsection (b) of
----
Section 10.1 of the Agreement is hereby amended to read in its entirety as
follows:
<PAGE>
(b) Debt of the Foreign Subsidiaries, Debt of the Foreign
Affiliates, and Guarantees by the Borrower, the Parent or CellStar,
Ltd. of any Debt or other obligations of any of the Foreign
Subsidiaries or the Foreign Affiliates, all incurred when no Default
exists or would result therefrom, provided that the aggregate amount
of all such Debt and obligations (including such Debt existing on the
date hereof and described on Schedule 2 hereto) outstanding at any
time shall not exceed $30,000,000; and
ARTICLE III
-----------
Conditions Precedent
--------------------
Section 3.1 Conditions. The effectiveness of this Amendment is subject to
----------
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
------------------------------
warranties contained herein and in all other Loan Documents, as amended
hereby, shall be true and correct as of the date hereof as if made on the
date hereof.
(b) No Default. No Default shall have occurred and be continuing.
----------
(c) Corporate Matters. All corporate proceedings taken in connection
-----------------
with the transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be satisfactory
to the Agent and its legal counsel, Winstead Sechrest & Minick P.C.
ARTICLE IV
----------
Ratifications, Representations and Warranties
---------------------------------------------
Section 4.1 Ratifications. The terms and provisions set forth in this
-------------
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrower and Parent agree that the Agreement, as amended hereby, and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
Section 4.2 Representations and Warranties. Borrower and Parent each
------------------------------
hereby represent and warrant to the Agent that (1) the execution, delivery, and
performance by the Borrower and the Guarantors of this Amendment and compliance
with the terms and provisions hereof have been duly authorized by all requisite
action on the part of each such Person and do not and will not (a) violate or
conflict with, or result in a breach of, or require any consent under (I) the
articles of incorporation, certificate of incorporation, bylaws, partnership
agreement or other
-2-
<PAGE>
organizational documents of any such Person, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree of
any Governmental Authority or arbitrator, or (iii) any material agreement or
instrument to which any such Person is a party or by which any of them or any of
their property is bound or subject, (2) the representations and warranties
contained in the Agreement, as amended hereby, and any other Loan Document are
true and correct on and as of the date hereof as though made on and as of the
date hereof, and (3) no Default has occurred and is continuing.
ARTICLE V
---------
Miscellaneous
-------------
Section 5.1 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Amendment or any other Loan Document
shall survive the execution and delivery of this Amendment, and no investigation
by the Agent or any Bank or any closing shall affect the representations and
warranties or the right of the Agent or any Bank to rely upon them.
Section 5.2 Reference to Agreement. Each of the Loan Documents, including
----------------------
the Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
Section 5.3 Expenses of the Agent. Each Company agrees to pay on demand
---------------------
all costs and expenses incurred by the Agent in connection with the preparation,
negotiation, and execution of this Amendment and any and all amendments,
modifications, and supplements thereto, including without limitation the costs
and fees of the Agent's legal counsel, and all costs and expenses incurred by
the Agent in connection with the enforcement or preservation of any rights under
the Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of the Agent's legal counsel.
Section 5.4 Severability. Any provision of this Amendment held by a court
------------
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.5 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
--------------
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 5.6 Successors and Assigns. This Amendment is binding upon and
----------------------
shall inure to the benefit of the Borrower, the Parent, the Agent and the Banks
and their respective
-3-
<PAGE>
successors and assigns, except neither the Borrower nor the
Parent shall assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Agent.
Section 5.7 Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
Section 5.8 Headings. The headings, captions, and arrangements used in
--------
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.9 Release of Claims. The Borrower and the Guarantors each
-----------------
hereby acknowledge and agree that none of them has any and there are no claims
or offsets against or defenses or counterclaims to the terms and provisions of
or the obligations of the Borrower, any Guarantor or any Subsidiary created or
evidenced by the Agreement or any of the other Loan Documents, and to the extent
any such claims, offsets, defenses or counterclaims exist, Borrower and the
Guarantors each hereby waives, and hereby release the Agent and each of the
Banks from, any and all claims, offsets, defenses and counterclaims, whether
known or unknown, such waiver and release being with full knowledge and
understanding of the circumstances and effects of such waiver and release and
after having consulted legal counsel with respect thereto.
Section 5.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
----------------
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO REGARDING
THIS AMENDMENT AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
BORROWER:
--------
NATIONAL AUTO CENTER, INC.
By: /S/ Richard M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
-4-
<PAGE>
PARENT:
------
CELLSTAR CORPORATION
By: /s/ Richard M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
AGENT AND BANKS:
---------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Agent and as a Bank
By: /s/ Allan K. King
-----------------------------------------
Name: /s/ Allan K. King
-----------------------------------
Title: Vice President
----------------------------------
NATIONAL CITY BANK
By: /s/ Don Pullen
-----------------------------------------
Name: Don Pullen
-----------------------------------
Title: V.P
----------------------------------
NBD BANK
By: /s/ William J. McCaffrey
------------------------------------------
Name: William J. McCaffrey
-------------------------------------
Title: Vice President
------------------------------------
BANK OF SCOTLAND
By: /s/ Catharine M. Omffrey
-----------------------------------------
Name: Catharine M. Omffrey
------------------------------------
Title: Vice President
-----------------------------------
-5-
<PAGE>
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: Henry F. Setina
-----------------------------------------
Name: HENRY F. SETINA
-----------------------------------
Title: Vice President
----------------------------------
Each of the undersigned Guarantors hereby (a) consents and agrees to
this Amendment, and (b) agrees that its Guaranty shall continue to be the legal,
valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms.
CELLSTAR, LTD.
By: National Auto Center, Inc.,
General Partner
By: R M. Gozia
------------------------------------
Richard M. Gozia
Executive Vice President
CELLSTAR FULFILLMENT, LTD.
By: CellStar Fulfillment, Inc.,
General Partner
By: R M. Gozia
------------------------------------
Richard M. Gozia
Executive Vice President
CELLSTAR FULFILLMENT, INC.
By: R M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
-6-
<PAGE>
NAC HOLDINGS, INC.
By: R M. Gozia
-----------------------------------------
Elaine Flud Rodriguez
President
AUDIOMEX EXPORT CORPORATION
By: Richard M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
CELLSTAR INTERNATIONAL CORPORATION/ASIA
By: R M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
CELLSTAR AIR SERVICES, INC.
By: R M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
A & S AIR SERVICES, INC.
By: R M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
-7-
<PAGE>
CELLSTAR INTERNATIONAL
CORPORATION/SA
By: R M. Gozia
-----------------------------------------
Richard M. Gozia
Executive Vice President
CELLSTAR WEST, INC.
By: Elaine F. Rodriquez
-----------------------------------------
Elaine Flud Rodriguez
Vice President
-8-
<PAGE>
EXHIBIT 10.3
AGREEMENT
This Agreement is entered into between Motorola, Inc., by and through its Pan
American Cellular Subscriber Group, having a place of business at 600 North U.S.
Highway 45, Libertyville, Illinois 60048-1286 (hereinafter "Seller" or
"MOTOROLA") and CellStar, Ltd., with a place of business at 1730 Briercroft
Drive, Carrollton, Texas 75006 (hereinafter "Buyer").
Buyer agrees to purchase and Seller agrees to sell [REDACTED] cellular
subscriber units (hereinafter "Products") over a term beginning January 1, 1996
and ending December 31, 1996 ("Initial Term"), under the terms and conditions
set forth in this Agreement including the following attachments:
. Attachment A - Products and Prices
. Attachment B - Terms and Conditions
. Attachment C - Supplemental Terms and Conditions
. Attachment D - Limited Warranty
. Attachment E - CellStar Authorized Markets
Premier Line and Signature Line cellular subscriber units may only be purchased
by Buyer under terms contained in a separate written agreement with Motorola
applicable to those products.
Buyer also agrees to purchase and Seller agrees to sell cellular subscriber
accessories (hereinafter "Accessories") during the Initial Term under the terms
and conditions set forth in the following attachment:
. Attachment F - Accessories Program.
This Agreement constitutes the entire and final expression of agreement between
the parties pertaining to the subject matter hereof and supersedes all other
communications between the parties.
Unless this Agreement is superseded by a new agreement, or otherwise terminated
pursuant to the terms contained herein, this Agreement will continue in effect
beyond its initial term until terminated by either party upon thirty (30) days'
prior written notice.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives effective as of January 1, 1996.
MOTOROLA, INC. CELLSTAR LTD.
By: National Auto Center, Inc.
/s/ WOLF PAVLOK General Partner
- --------------------------
Wolf Pavlok
Senior Vice President and General Manager
Pan American Cellular Subscriber Group
DATE: 9/16/96
/s/ SUZETTE STEIGER /s/ALAN H. GOLDFIELD
- --------------------------- ---------------------------------
Suzette Steiger Alan H. Goldfield
Corporate Vice President and General Manager Chairman of the Board and CEO
U.S. Markets Division
Pan American Cellular Subscriber Group
DATE: ____________________ DATE: __________________________
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Cover
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED,
WHICH PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. OMITTED
PORTIONS ARE INDICATED IN THIS AGREEMENT WITH
BRACKETS ([ ]).
<PAGE>
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE LETTER OF AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A - PRICING
[REDACTED]
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
1. Contract prices are based on a firm commitment by Buyer to take delivery of
the agreed quantity of Products during the Initial Term. Products may be
aggregated to reach the contract volume commitment. If Buyer takes delivery
of less than the committed quantity during the Initial Term, a volume
shortfall adjustment will be calculated and billed to Buyer based on unit
shipment shortfall from the committed quantity during the Initial Term. The
charge per unit short will be [REDACTED] for up to [REDACTED] units short,
[REDACTED] for more than [REDACTED] units and up to [REDACTED] units short,
and [REDACTED] for more than [REDACTED] units short of the committed
quantity. [REDACTED]
2. Motorola will issue rebates promptly after the month in which the Products
were delivered and after Product payment is received, in the form of a credit
memo that may be applied to the purchase of additional Products.
3. Motorola may sell other cellular subscriber equipment to Buyer if requested.
Any such sale during the term of this Agreement will be at Motorola's price,
and in accordance with the terms and conditions herein unless otherwise
specified by Motorola.
4. Buyer will exercise its best efforts to submit purchase orders no less than
thirty (30) days prior to the requested shipment dates and acknowledges that
shipment on the requested date is more likely as the lead time is increased.
If Motorola accepts a purchase order requesting shipment within thirty (30)
from the date Motorola receives the order, Buyer agrees that the ordered
Products will be shipped when it is practicable for Motorola to do so.
5. Payment terms are net 30 days.
6. Two percent (2%) of the invoice price of applicable Products purchased under
this Agreement will be accrued as a cooperative promotional allowance.
Application for funds must be made according to the Motorola Cellular Co-op
Advertising and Promotion Plan, US Version January 1994 or any subsequent
revision thereof that may be implemented by Motorola, which is incorporated
herein by reference.
7. All orders and shipments shall be in multiples of 5 units per model.
8. (a) Buyer shall be a non-exclusive distributor of the Products in those
geographical areas identified in Attachment E, and in any other market
attachment that may later be agreed upon by the parties as an amendment to
this Agreement (Buyer's "Territory").
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-1
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
(b) This Agreement may be amended by adding markets to Buyer's Territory.
Any such additional markets will be added by mutual agreement and will be
identified in separate attachments. It is the intention of the parties that
any market additions to this Agreement will have purchase volume
commitments, market development funds, and other similar incentives and
obligations, separate from and in addition to those incentives and
requirements associated with the markets identified in Attachment E.
(c) Any markets may be withdrawn from Buyer's Territory by Motorola on
ninety (90) days advance notice to Buyer. Buyer agrees that Motorola may
withdraw markets from Buyer's Territory at Motorola's discretion, with or
without cause, without any liability or obligation to Buyer or its
customers; provided, however, that Motorola will reimburse Buyer for a
reasonable cancellation fee paid to terminate a lease commitment(s)
reasonably occasioned by Buyer's obligation to sell Products in that market
by this Agreement.
(d) From time to time Motorola may request Buyer to service a certain market
not on the current Attachment E for a limited period of time. The terms of
any such arrangement shall be in writing and mutually agreeable to the
parties.
(e) Buyer's distribution of the Products is limited to Buyer's Territory.
Buyer shall not transship, sell, or otherwise transfer Products outside its
Territory, and Buyer shall incorporate this limitation into all of its agent
and distributor equipment agreements as a condition of resale of the
Products and reasonably enforce same. Sales within the Territory without
transshipment is a material condition to Buyer's rights under this
Agreement, and it is agreed that any direct or indirect distribution,
transshipment and/or sale of Products outside the Territory by Buyer or
others purchasing through Buyer shall be a material breach of this Agreement
and will result in substantial damage to Motorola which will be difficult to
quantify. Accordingly, in the event of such the parties agree that Motorola,
in addition to any other remedies it may have under applicable law and this
Agreement, may reject some or all purchase orders from Buyer for any model
or models of Product, including Premier products, until Buyer can
demonstrate that Buyer has instituted policies and procedures to prevent any
such occurrences in the future.
9. All units will carry mutually agreed upon designated logos. Buyer will
provide photographic quality artwork 30 days prior to requested ship date.
Buyer represents and warrants that it has the right by way of ownership or
otherwise, to use such logo and further agrees to indemnify and hold
Motorola harmless for any losses, damages or other liabilities resulting
from the use of the designated logo.
10. Buyer shall provide Motorola on a quarterly basis, not less than thirty (30)
days prior to the start of the next quarter, a continuous usage forecast for
the next two (2) calendar quarters (the "Quarterly Forecast") to assist
Motorola in maintaining an orderly production flow for the purpose of
Buyer's delivery requirements. Buyer shall indicate the Product model number
and projected purchase volume by units for each month of the quarter.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-2
<PAGE>
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
11. Buyer shall provide Motorola on a quarterly basis, not less than thirty (30)
days prior to the start of the next quarter, a firm processable purchase
order for the first month of the Quarterly Forecast; provided, however, that
a delivery(ies) scheduled in such first month may be rescheduled by Buyer
into the second month on notice to Motorola not less than [REDACTED] prior
to the scheduled delivery date.
12. (a) During the Initial Term of this Agreement, if Motorola reduces the price
of a particular model of Product, then Buyer shall be entitled to the
benefit of price protection for [REDACTED}
(b) Motorola will make a price adjustment for each Eligible Unit equal to
the difference between Buyer's net purchase price (invoice price less rebate
and any promotional amounts) and the new net price (invoice price less
rebate and any promotional amounts). Price protection will be paid as a
credit against future purchases within fifteen (15) days after the end of
the month of receipt of price protection claim and required documentation.
13. As a condition to the price protection described herein, Buyer shall furnish
Motorola with accurate monthly reports of Buyer inventory (by major product
category) of Products. Each such inventory report shall be received by your
Motorola Account Executive no later than the first Thursday following the
close of Motorola's shipment month (dates listed below), and shall include
all inventories maintained by Buyer and its affiliates, including
inventories maintained by major agents or at drop ship distribution points.
It is specifically understood that inventories maintained at Sam's Club
kiosk locations shall be estimates only. If any such report is received
after the applicable date listed below, the time period for shipments
protected against price reductions shall be reduced by one day for each day
such report is late.
Monthly reports of inventory are to be received by Motorola by:
Thursday 8/01/96
Thursday 8/29/96
Thursday 10/03/96
Thursday 10/31/96
Wednesday 11/27/96*
Thursday 1/02/97
* November inventory date is on Wednesday due to the Thanksgiving national
holiday.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-3
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
14. [REDACTED]
15. Motorola will offer its Signature Products (including the StarTAC(TM)
cellular phone) to Buyer for distribution to Buyer's dealers and agents at
locations pre-approved by Motorola under the terms of Motorola's Signature
program in effect from time to time. Motorola will drop ship Buyer's orders
for Signature Products direct to each approved dealer and/or agent location,
with the related invoice being sent to the Buyer. Signature Products
delivered to a location may not be transshipped to any other location nor
offered for sale from any other location without Motorola's express prior
written consent.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-4
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
CELLSTAR LTD.
ATTACHMENT C
SUPPLEMENTAL TERMS AND CONDITIONS
1. PRICES The prices for the Products purchased hereunder shall be as set forth
in Attachment A to the Agreement.
2. ORDERS AND FORECASTS (a) Orders. All orders by Buyer shall be only upon the
terms and conditions of this Agreement. The only effect of any terms and
conditions in Buyer's orders or elsewhere shall be to request the time and
place of delivery and number of units to be delivered, subject to Seller's
acceptance, but they shall not change, alter or add to the terms and
conditions of this Agreement in any other way. Seller's invoice shall also
not change the terms and conditions of this Agreement. (b) Forecasts. During
the term of this Agreement, Buyer shall use its best efforts to update, on a
quarterly basis, a continuous usage forecast to assist Seller in maintaining
an orderly production flow for the purpose of meeting Buyer's delivery
requirements. Buyer's failure to provide such information may be considered
cause by Seller for excusable delivery delay.
3. CANCELLATION Buyer may cancel orders placed in accordance with the terms and
conditions of this Agreement upon payment of cancellation charges which shall
include all costs incurred or committed for unless such costs are otherwise
recoverable through the sale of the product on a timely basis. Payment shall
be due within thirty (30) days of the date of invoice. Seller agrees to
divert completed material and work in process from canceled orders to other
requirements wherever possible in order to minimize cancellation charges.
4. DELIVERY AND PAYMENT (a.) All deliveries are FOB Motorola's plant. Each such
delivery will be separately invoiced and payment from Buyer shall be due
thirty (30) days from the date thereof without regard to other deliveries.
DELIVERY DATES ARE BEST ESTIMATES ONLY. (b.) Title to the Products sold shall
pass to Buyer at the FOB point.
5. FORCE MAJEURE Neither party shall be liable for any delay or failure to
perform due to any cause beyond its reasonable control except the obligation
to pay money when due. Causes include but are not limited to strikes, acts of
God, acts of the other party, interruptions of transportation or inability to
obtain necessary labor, materials or facilities, or default of any supplier,
or delays in FCC frequency authorization or license grant. The delivery
schedule shall be considered extended by a period of time equal to the time
lost because of any excusable delay. To the extent that MOTOROLA is unable to
manufacture and deliver the annual commitment, it shall be reduced on a pro-
rata basis. In the event MOTOROLA is unable to wholly or partially perform
for a period greater than forty-five (45) days because of any cause beyond
its reasonable control, either party may terminate any delayed order without
any liability.
6. WARRANTY MOTOROLA warrants the Products to the original subscriber buyers or
lessees only in accordance with its Limited Warranty attached to the
Agreement, or as the Limited Warranty may be revised by Motorola from time to
time (to be applicable to units shipped by Motorola on or after the effective
date of the revision), and makes no representation or warranty of any other
kind, express or implied. EXCEPT AS OTHERWISE PROVIDED IN THE LIMITED
WARRANTY, MOTOROLA SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7. PATENT AND COPYRIGHT INDEMNIFICATION (a) MOTOROLA agrees to defend, at its
expense, any suits against Buyer and third parties purchasing Motorola
products from Buyer based upon a claim that any products furnished hereunder
directly infringes a U.S. patent or copyright and to pay costs and damages
finally awarded in any such suit, provided that MOTOROLA is notified promptly
in writing of the suit and at Motorola's request and at its expense is given
control of said suit and all requested assistance for defense of same. If the
use or sale of any product(s) furnished hereunder is enjoined as a result of
such suit, MOTOROLA at its option and at no expense to Buyer, shall obtain
for Buyer the right to use or sell said product(s) or shall substitute an
equivalent product reasonably acceptable to Buyer and extend this indemnity
thereto or shall accept the return of the product(s) and reimburse Buyer the
purchase price therefor, less a reasonable charge for reasonable wear and
tear. This indemnity does not extend to any suit based upon any infringement
or alleged infringement of any patent or copyright by the alteration of any
products furnished by MOTOROLA or by the combination of any products(s)
furnished by MOTOROLA and other elements nor does it extend to any
products(s) of Buyer's design or formula. The foregoing states the entire
liability of MOTOROLA for patent or copyright infringement. (b) IN NO EVENT
SHALL MOTOROLA BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM
INFRINGEMENT OR ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS, OR OTHER
INTELLECTUAL PROPERTY RIGHTS.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page C-1
<PAGE>
CELLSTAR LTD.
ATTACHMENT C
SUPPLEMENTAL TERMS AND CONDITIONS
8. LICENSE DISCLAIMER Nothing contained herein shall be deemed to grant either
directly or by implication, estoppel, or otherwise, any license under any
patents, copyrights, trademarks or trade secrets of MOTOROLA.
9. TAXES Except for the amount, if any, of state and local tax stated in the
Agreement, the prices set forth herein are exclusive of any amount for
Federal, State and/or Local excise, sales, use, property, retailer's,
occupation or any other assessment in the nature of taxes however
designated, on the products and/or services provided under this Agreement.
If any such excluded tax, exclusive however, of any taxes measured by
Seller's net income or taxes based on Seller's gross receipts or based on
Seller's franchise, is determined to be applicable to this transaction or to
the extent MOTOROLA is required to pay or bear the burden thereof, one
hundred percent (100%) thereof shall be added to the prices set forth herein
and paid by Buyer. Personal property taxes assessable on the products shall
be the responsibility of Buyer. In the event Buyer claims exemption from
sales, use or other such taxes under this Agreement, Buyer shall hold
Motorola harmless of any subsequent assessments levied by a proper taxing
authority for such taxes, including interest, penalties, and late charges.
10. TECHNICAL ASSISTANCE Motorola's warranty shall not be enlarged, and no
obligation or liability shall arise out of Motorola's rendering of technical
advice, facilities or service in connection with Buyer's purchase of the
products furnished.
11. LIMITATION OF LIABILITY EXCEPT FOR PERSONAL INJURY, AND EXCEPT FOR PARAGRAPH
7 PATENT AND COPYRIGHT INDEMNIFICATION, MOTOROLA'S TOTAL LIABILITY, WHETHER
FOR BREACH OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY IN TORT OR
OTHERWISE, IS LIMITED TO THE PRICE OF THE PARTICULAR PRODUCTS SOLD HEREUNDER
WITH RESPECT TO WHICH LOSSES OR DAMAGES ARE CLAIMED. BUYER'S SOLE REMEDY IS
TO REQUEST MOTOROLA AT MOTOROLA'S OPTION TO EITHER REFUND THE PURCHASE
PRICE, REPAIR OR REPLACE PRODUCT(S) THAT ARE NOT AS WARRANTED. IN NO EVENT
WILL MOTOROLA BE LIABLE FOR ANY LOSS OF USE, LOSS OF TIME, INCONVENIENCE,
COMMERCIAL LOSS, LOST PROFITS OR SAVINGS OR OTHER INCIDENTAL OR
CONSEQUENTIAL DAMAGES TO THE FULL EXTENT SUCH MAY BE DISCLAIMED BY LAW.
12. LOGOS AND TRADEMARKS In order that Seller may protect its trademarks, trade
names, corporate slogans, corporate logo, goodwill and product designations,
Buyer, without the express written consent of Seller, shall have no right to
use any such marks, names, slogans or designations of Seller in the sales,
lease or advertising of any products or on any product container, component
part, business forms, sales, advertising and promotional materials or other
business supplies or material, whether in writing, orally or otherwise.
13. PARTY RELATIONSHIP This Agreement does not create any agency, joint venture
or partnership between Buyer and Seller. Buyer shall not impose or create
any obligation or responsibility, express or implied, or make any promises,
representations or warranties on behalf of Seller, other than as expressly
provided herein.
14. WAIVER The failure of either party to insist in any one or more instances,
upon the performance of any of the terms or conditions herein or to exercise
any right hereunder shall not be construed as a waiver or relinquishment of
the future performance of any such terms or conditions or the future
exercise of such right but the obligation of the other party with respect to
such future performance shall continue in full force and effect.
15. DEFAULT In the event that either party shall be in breach or default of any
of the terms or conditions of this Agreement and such breach or default
shall continue for a period of thirty (30) days after the giving of written
notice to the breaching party, then subject to the other terms and
conditions of this Agreement, the other party, in addition to other rights
and remedies it may have in law or equity, shall have the right to
immediately cancel this Agreement without any charge or liability
whatsoever.
16. GOVERNMENT SALES In the event that Buyer elects to sell Motorola products or
services to the U.S. Government or a prime contractor selling to the U.S.
Government, Buyer remains solely and exclusively responsible for compliance
with all statutes and regulations governing sales to the U.S. Government.
Motorola makes no representations, certifications or warranties whatsoever
with respect to the ability of its goods, services or prices to satisfy any
such statutes or regulations. Failure of Buyer to conduct any sales to the
U.S. Government or to U.S. Government prime contractors in strict accordance
with U.S. law shall constitute a material breach of this Agreement.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page C-2
<PAGE>
CELLSTAR LTD.
ATTACHMENT C
SUPPLEMENTAL TERMS AND CONDITIONS
17. DISPUTE RESOLUTION. The parties agree that any claims or disputes will be
submitted to non-binding mediation prior to initiation of any formal legal
process. Costs of mediation will be shared equally.
18. EDI. In order to facilitate transactions under this Agreement, the parties
may electronically transmit and receive data in agreed formats in
substitution for conventional paper-based documents as provided in the
Electronic Data Interchange Trading Partner Agreement between the parties
dated as of April 20, 1993.
19. GENERAL No alterations or modifications of this Agreement shall be binding
upon either Buyer or Seller unless made in writing and signed by an
authorized representative of each. If any term or condition of this
Agreement shall to any extent be held by a court or other tribunal to be
invalid, void or unenforceable, then that term or condition shall be
inoperative and void insofar as it is in conflict with law, but the
remaining rights and obligations of the parties shall be construed and
enforced as if this Agreement did not contain the particular term or
condition held to be invalid, void or unenforceable. No assignment of this
Agreement or of any right granted herewith shall be made by Buyer without
the prior written consent of MOTOROLA. This Agreement shall be governed by
the laws of the State of Illinois.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page C-3
<PAGE>
MOTOROLA LIMITED WARRANTY FOR THE UNITED STATES
CELLULAR SUBSCRIBER RADIOTELEPHONE PRODUCTS
I. WHAT THIS WARRANTY COVERS AND FOR HOW LONG:
MOTOROLA INC. (MOTOROLA) warrants the MOTOROLA Cellular Subscriber
Radiotelephone products and accessories against defects in material and
workmanship under normal use and service for a period of time specified by the
product's serial number from the date of installation. (NOTE: Installation, in
the case of radiotelephones, accessories or batteries that are not installed in
a vehicle, means the date that the product is placed into subscriber service.
Installation will be deemed to be no later than thirty (30 days from date of
delivery of the Product to you the owner.) The warranty time period is specified
by the last digit of the mechanical serial number found on each cellular
product. Products sold under this warranty may have either a "P", "Y", "A", "B",
"C", or "D" or nothing in the eleventh position of the serial number. If there
is no letter or an "A", the product comes with a (1) one year warranty. Products
that have a "D" have a (2) two year warranty. Products that have a "Y" or a "B"
have a (3) three year warranty, and products that have a "P" or a "C" have a (5)
five year warranty commencing from the date of installation. The warranty time
period for radiotelephone accessories and batteries is as follows:
Transportable and Carry Phone batteries: 1 year
Portable or Digital Personal Communicator(TM) (DPC)
telephone batteries: 1 year
Carrying cases (excluding leather briefcases): Defect free at time
of shipment
Other radiotelephone accessories: 1 year
MOTOROLA, at its option, will at no charge either repair, replace, or refund the
purchase price of the Cellular Subscriber Radiotelephone Product during the
warranty period, provided it is returned in accordance with the terms of this
warranty to the MOTOROLA Cellular Service Center or distributor's service shop
qualified by MOTOROLA. Repair, at MOTOROLA's option, may include the replacement
of parts or boards with functionally equivalent reconditioned or new parts or
boards. Replaced parts, accessories, batteries, or boards are warranted for the
balance of the original time period. All replaced accessories, batteries, parts
and cellular telephone equipment shall become the property of MOTOROLA.
II. WARRANTY CONDITIONS:
This express limited warranty is extended by MOTOROLA to the original subscriber
buyer or lessee only and is not assignable or transferable to subsequent
subscriber buyers or lessees. This is the complete warranty for Cellular
Subscriber Radiotelephone Products by MOTOROLA. MOTOROLA assumes no obligation
or liability for additions or modifications to this warranty unless made in
writing and signed by an officer of MOTOROLA. Unless made in separate written
agreement between MOTOROLA and you, MOTOROLA does not warrant the installation,
maintenance or service of the equipment, accessories, batteries or parts.
Portable or DPC (Nickel Cadmium) batteries are warranted only if battery
capacity falls below 80% of rated capacity, or the battery develops leakage.
This warranty becomes void for all types of batteries if:
a. the batteries are charged by other than MOTOROLA approved battery
chargers specified for the charging of the battery.
b. any of the seals on the battery are broken or show evidence of
tampering.
c. the battery is used in equipment or service other than the cellular
telephone equipment for which it is specified.
MOTOROLA cannot be responsible in any way for any ancillary equipment not
furnished by MOTOROLA which is attached to or used in connection with MOTOROLA's
Cellular Subscriber Radiotelephone Products, or for operation of our equipment
with any ancillary equipment and all such equipment is expressly excluded from
this warranty. Furthermore, MOTOROLA cannot be responsible for any damage to
MOTOROLA equipment resulting from the use of ancillary equipment not furnished
by MOTOROLA for use with cellular subscriber equipment.
When the product is used in conjunction with ancillary or peripheral equipment
not manufactured by MOTOROLA, MOTOROLA does not warrant the operation of the
product/peripheral combination, and MOTOROLA will honor no warranty claim where
the product is used in such a combination and it is determined by MOTOROLA that
there is no fault with the MOTOROLA product. MOTOROLA specifically disclaims any
responsibility for any damage caused in any way by the use of portable
radiotelephone accessories and peripherals (specific examples include, but are
not limited to: batteries, chargers, adapters, and power supplies) when such
accessories and peripherals are not manufactured or supplied by MOTOROLA.
MOTOROLA disclaims liability for range, coverage, availability, or operation of
the Cellular System which is provided by the Carrier.
III. WHAT THIS WARRANTY DOES NOT COVER:
(a) Defects or damage resulting from use of the product in other than its normal
and customary manner. (b) Defects or damage from misuse, accident or neglect.
(c) Defects or damage from improper testing, operation, maintenance,
installation, adjustment, or any alteration or modification of any kind. (d)
Breakage or damage to antennas unless caused directly by defects in material or
workmanship. (e) Products disassembled or repaired in such a manner as to
adversely affect performance or prevent adequate inspection and testing to
verify any warranty claim. (f) Products which have had the serial number removed
or made illegible. (g) Defects or damage due to spills of food or liquid. (h)
Control Unit Coil Cords that are stretched or have the modular tab broken. (i)
All plastic surfaces and all other externally exposed parts that are scratched
or damaged due to customer normal use. (j) Leather briefcases (which are covered
under separate manufacturers' warranties). (k) Products rented on a
month-to-month basis. (l) The control unit keypad assembly, control unit
displays, and control unit coil cords are not covered after the first year from
installation.
IV. HOW TO GET WARRANTY SERVICE:
To receive warranty service, present your equipment to the facility described
below, along with your bill of sale or comparable substitute proof of sale or
lease bearing the date of installation, transceiver serial number, electronic
serial number, and installation facility if applicable.
Warranty service is available by returning MOTOROLA branded Radiotelephone
Products to a MOTOROLA Cellular Service Center authorized in writing by a
MOTOROLA Area Service Manager to perform warranty work on MOTOROLA Cellular
Subscriber Radiotelephone products. A Carrier or Distributor branded
Radiotelephone Product may be returned to either (a) the specific cellular
service shop qualified by MOTOROLA's Cellular Subscriber Services Department in
writing and operated by or affiliated with the cellular distributor which the
Distributor designates or (b) a MOTOROLA Authorized Cellular Service Center. In
most cases the service shop which installed your Cellular Radiotelephone and
accessories will provide warranty service. If you need additional information,
contact the shop that installed your Radiotelephone, the customer service
department of your cellular system operator, or MOTOROLA at the address at the
bottom of this page.
In the case of vehicular installation, the vehicle in which the Radiotelephone
Product is installed should be driven to the service shop, as analysis of any
problem may require inspection of the entire vehicular installation. In the case
of non-vehicular installation, the unit or accessories, together with any
detachable parts such as antennas, battery packs, and chargers, must be
delivered to a qualified MOTOROLA Cellular Service Center, or a MOTOROLA-
qualified service shop, transportation and insurance prepaid. When sent or
brought to the servicer, the Radiotelephone Product must be accompanied by your
name, address, and telephone number, name of cellular Carrier, and a description
of the problem.
V. GENERAL PROVISIONS:
This warranty sets forth our responsibilities regarding this product. Repair,
replacement or refund of the purchase price at MOTOROLA's option, is your
exclusive remedy. THIS WARRANTY IS GIVEN IN LIEU OF ALL OTHER EXPRESS
WARRANTIES. IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE LIMITED TO THE
DURATION OF THIS LIMITED WARRANTY. FURTHER, AS THE CELLULAR CARRIER IS NOT
CONTROLLED BY MOTOROLA, NO WARRANTY IS MADE AS TO COVERAGE, AVAILABILITY OR
GRADE OF SERVICE PROVIDED BY THE CELLULAR CARRIER. IN NO EVENT SHALL MOTOROLA BE
LIABLE FOR DAMAGES IN EXCESS OF THE PURCHASE PRICE OF THE CELLULAR
RADIOTELEPHONE PRODUCT, FOR ANY LOSS OF USE, LOSS OF TIME, INCONVENIENCE,
COMMERCIAL LOSS, LOST PROFITS OR SAVINGS OR OTHER INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE SUCH PRODUCT,
TO THE FULL EXTENT SUCH MAY BE DISCLAIMED BY LAW.
VI. PATENT AND SOFTWARE PROVISIONS:
MOTOROLA will defend at its own expense, any suit brought against you to the
extent that it is based on a claim that the Cellular Subscriber Radiotelephone
Product parts infringes a United States patent, and MOTOROLA will pay those
costs and damages finally awarded against you in any such suit which are
attributable to any such claim, but such defense and payments are conditioned on
the following: (i) that MOTOROLA will be notified promptly in writing by you of
any notice of such claim; and (ii) that MOTOROLA will have sole control of the
defense of such suit and all negotiations for its settlement or compromise; and
(iii) should the Cellular Radiotelephone, accessory, battery or parts become, or
in MOTOROLA's opinion be likely to become the subject of a claim of infringement
of a United States patent that you will permit MOTOROLA, at its option and
expense, either to procure for you the right to continue using the Cellular
Radiotelephone or parts or to replace or modify the same so that it becomes
non-infringing or to grant you a credit for such Cellular Radiotelephone or
parts as depreciated and accept its return. The depreciation will be an equal
amount per year over the lifetime of the Cellular Subscriber Radiotelephone,
accessories, battery or parts as established by MOTOROLA.
MOTOROLA will have no liability to you with respect to any claim of patent
infringement which is based upon the combination of the Cellular Radiotelephone
or parts furnished hereunder with software, apparatus or devices not furnished
by MOTOROLA, nor will MOTOROLA have any liability for the use of ancillary
equipment or software not furnished by MOTOROLA which is attached to or used in
connection with the Cellular Radiotelephone. The foregoing states the entire
liability of MOTOROLA with respect to infringement of patents by the Cellular
Radiotelephone, accessories, batteries or any parts thereof.
Laws in the United States and other countries preserve for MOTOROLA certain
exclusive rights for copyrighted MOTOROLA software such as the exclusive rights
to reproduce in copies and distribute copies of such MOTOROLA software.
MOTOROLA software may be copied into, used in and redistributed with only the
Cellular Subscriber Radiotelephone Product associated with such MOTOROLA
software. No other use, including without limitation disassembly, of such
MOTOROLA software or exercise of exclusive rights in such MOTOROLA software is
permitted.
VII. STATE LAW RIGHTS:
SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR
CONSEQUENTIAL DAMAGES, OR LIMITATIONS ON HOW LONG AN IMPLIED WARRANTY LASTS. SO
THE ABOVE LIMITATIONS OR EXCLUSIONS MAY NOT APPLY TO YOU.
This warranty gives you specific legal rights, and you may also have other
rights which vary from state to state.
MOTOROLA INC., Cellular Subscriber Services Department
1485 W. Shure Drive, Arlington Heights, IL 60004
<PAGE>
CELLSTAR LTD. AUTHORIZED MARKETS
ATTACHMENT E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MARKET CODE STATE/CITIES CARRIER PRODUCT MARKET CODE STATE/CITIES CARRIER PRODUCT
- ------------------------------------------------------------------------------------------------------------------------------------
ALASKA MONTANA
- ------------------------------------------------------------------------------------------------------------------------------------
315 AK1 Wade Hampton PTI B 268 MSA Billings CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
316 AK3 Bethel PTI B 297 MSA Great Falls CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
ALABAMA 523 MT1 Lincoln CommNET B1
- ------------------------------------------------------------------------------------------------------------------------------------
41 MSA Birmingham GTE A 523 MT1 Lincoln CommNET B2
- ------------------------------------------------------------------------------------------------------------------------------------
83 MSA Mobile CONTEL A 524 MT2 Toole CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
222 MSA Tuscaloosa GTE A 525 MT3 Phillips CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
226 MSA Florence GTE A 526 MT4 Daniels CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
226 MSA Florence PriCellular B 527 MT5 Mineral CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
249 MSA Anniston GTE A 528 MT6 Deer Lodge CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
272 MSA Gadsden GTE A 529 MT7 Fergus CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
307 AL1 Franklin CONTEL B1 530 MT8 Beaverhead CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
307 AL1 Franklin Shoal Cellular B 531 MT9 Carbon CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
307 AL1 Franklin Algreg A 532 MT10 Prairie CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
308 AL2 Rainsville Farmers B2 NEW MEXICO
- ------------------------------------------------------------------------------------------------------------------------------------
309 AL3 Demopolis W. Alabama Cell A 285 MSA Las Cruces GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
310 AL4 Atmore Frontier B 554 NM2 Colfax Plateau Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
310 AL4 Clanton Dominion Cell A 555 NM3 Caltron GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
312 AL6 Washington Frontier B 556 NM4 Sante Fe Plateau Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
312 AL6 Washington Pro Max Comm. A 557 NM5 Grant GTE B1
- ------------------------------------------------------------------------------------------------------------------------------------
313 AL7 Butler ATT RSA A 558 NM6 Lincoln GTE B3
- ------------------------------------------------------------------------------------------------------------------------------------
314 AL8 Lee Dana Comm A 558 NM6 Lincoln Plateau Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
165 MSA Fort Smith CONTEL A 25 MSA Buffalo SBMS A
- ------------------------------------------------------------------------------------------------------------------------------------
182 MSA Fayetville CONTEL A 34 MSA Rochester SBMS A
- ------------------------------------------------------------------------------------------------------------------------------------
324 AR1 Madison ALLTEL B 44 MSA Albany SBMS A
- ------------------------------------------------------------------------------------------------------------------------------------
324 AR1 Madison US CELLULAR A 53 MSA Syracuse SBMS A
- ------------------------------------------------------------------------------------------------------------------------------------
325 AR2 Marion Century B 115 MSA Udea SBMS A
- ------------------------------------------------------------------------------------------------------------------------------------
326 AR3 Sharp Century B 562 NY4 Ithaca SBMS A
- ------------------------------------------------------------------------------------------------------------------------------------
327 AR4 Clay East AR Cellular A NORTH DAKOTA
- ------------------------------------------------------------------------------------------------------------------------------------
328 AR5 Cross Meta Comm Cell A 298 MSA Bismarck CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
331 AR8 Franklin CONTEL B 580 ND1 Divide CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
332 AR9 Polk New Era Telecom A 581 ND2 Bottineau CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
334 AR11 Hempstead Century B 583 ND4 McKenzie CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
334 AR11 Hempstead Center Comm. A 584 ND5 Kidder CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
335 AR12 Ouachita Century B OKLAHOMA
- ------------------------------------------------------------------------------------------------------------------------------------
335 AR12 Ouachita Cellular Corp. A 45 MSA Oklahoma City SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO 302 MSA Enid Dobson Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
241 MSA Pueblo CommNET B 302 MSA Enid Enid Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
348 CO1 Moffat CommNET A 596 OK1 Cimarron Panhandle Cell. B
- ------------------------------------------------------------------------------------------------------------------------------------
349 CO2 Logan CommNET B 597 OK2 Harper Dobson Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
351 CO4 Park CommNET B 597 OK2 Harper Pioneer Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
352 CO5 Elbert CommNET B 598 OK3 Grant Pioneer Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
353 CO6 San Miguel CommNET B 598 OK3 Grant SBMS B1
- ------------------------------------------------------------------------------------------------------------------------------------
354 CO7 Saguache CommNET B 599 OK4 Nowata CONTEL B
- ------------------------------------------------------------------------------------------------------------------------------------
355 CO8 Kiowa CommNET B 600 OK5 Roger Mills Dobson Cellular B1
- ------------------------------------------------------------------------------------------------------------------------------------
356 CO9 Costilla CommNET B 600 OK5 Roger Mills Pioneer Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
GEORGIA 601 OK6 Seminole Pioneer Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
372 GA2 Dawson Horizon B2 602 OK7 Beckham Triad Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
374 GA4 Jasper Wilkes Cell. B2 602 OK7 Beckham Dobson Cellular B1
- ------------------------------------------------------------------------------------------------------------------------------------
376 GA6 Spalding Horizon A 603 OK8 Jackson Texahoma LP B
- ------------------------------------------------------------------------------------------------------------------------------------
381 GA11 Toombe Cone Cellular B 604 OK9 Garvin SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
383 GA13 Early Cellular One A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Business Confidential Proprietary
<PAGE>
CELLSTAR LTD. AUTHORIZED MARKETS
ATTACHMENT E
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARKET CODE STATE/CITIES CARRIER PRODUCT MARKET CODE STATE/CITIES CARRIER PRODUCT
- ------------------------------------------------------------------------------------------------------------------------------------
IDAHO SOUTH DAKOTA
- ------------------------------------------------------------------------------------------------------------------------------------
392 ID5 Bune CommNET B1 289 MSA Rapid City CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
393 ID6 Clark CommNET B 267 MSA Sioux Falls CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
IOWA 634 SD1 Harding CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
253 MSA Sioux City CommNET B 635 SD2 Carson CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
417 IA6 Iowa CommNET B 636 SD3 McPherson CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
419 IA8 Monona CommNET B 637 SD4 Marshall PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
420 IA9 Ida CommNET B 638 SD5 Custer CommNET B1
- ------------------------------------------------------------------------------------------------------------------------------------
420 IA14 Korruth CommNET B 638 SD5 Custer CommNET B2
- ------------------------------------------------------------------------------------------------------------------------------------
426 IA15 Dicksun CommNET B 639 SD6 Harkon CommNET B1
- ------------------------------------------------------------------------------------------------------------------------------------
427 IA16 Lyon CommNET B 639 SD6 Harkon CommNET B2
- ------------------------------------------------------------------------------------------------------------------------------------
KANSAS 640 SD7 Sully CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
89 MSA Wichita SBMS B 641 SD8 Kingsburg CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
179 MSA Topeka SBMS B 642 SD9 Hanson CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
301 MSA Lawrence SBMS B TENNESSEE
- ------------------------------------------------------------------------------------------------------------------------------------
428 KS1 Cheyenne Mercury Cellular A 36 MSA Memphis GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
428 KS1 Cheyenne Kansas Cellular B 46 MSA Nashville GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
429 KS2 Norton Mercury Cellular A 79 MSA Knoxville GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
429 KS2 Norton Kansas Cellular B 85 MSA Tri-Cities GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
430 KS3 Jewell Kansas Cellular B 88 MSA Chattanooga GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
431 KS4 Marshall Kansas Cellular B 209 MSA Clarksville GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
432 KS5 Brown Kansas Cellular B1 643 TN1 Lake GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
432 KS5 Brown SBMS B2 645 TN3 Macon GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
433 KS6 Wallace Mercury Cellular A 647 TN5 Fayette GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
433 KS6 Wallace Kansas Cellular B 649 TN7 Bledsoe GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
434 KS7 Trego Mercury Cellular A 649 TN7 Bledsoe Bledsoe Telephone B2
- ------------------------------------------------------------------------------------------------------------------------------------
434 KS7 Trego Kansas Cellular B TEXAS
- ------------------------------------------------------------------------------------------------------------------------------------
435 KS8 Ellsworth Kansas Cellular B 9 MSA Dallas/Ft. Worth SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
436 KS9 Morris Kansas Cellular B 10 MSA Houston GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
437 KS10 Franklin Kansas Cellular B 33 MSA San Antonio SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
438 KS11 Hamilton Mercury Cellular A 75 MSA Austin GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
438 KS11 Hamilton Kansas Cellular B 81 MSA El Paso GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
439 KS12 Hodgeman Kansas Cellular B 101 MSA Beaumont GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
439 KS12 Hodgeman Mercury Cellular A 112 MSA Corpus Christi SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
440 KS13 Edwards Kansas Cellular B 128 MSA McAllen Century A
- ------------------------------------------------------------------------------------------------------------------------------------
441 KS14 Reno Kansas Cellular B 128 MSA McAllen/Harlingen SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
442 KS15 Elk Kansas Cellular A 161 MSA Lubbock SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY 162 MSA Brownsville Century A
- ------------------------------------------------------------------------------------------------------------------------------------
37 MSA Louisville GTE A 162 MSA Brownsville SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
116 MSA Lexington GTE A 170 MSA Galveston GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
293 MSA Owensboro GTE B 188 MSA Amarillo Cell One A
- ------------------------------------------------------------------------------------------------------------------------------------
443 KY1 Fulton CONTEL B 188 MSA Amarillo SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
444 KY2 Union CONTEL B 220 MSA Abilene SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
445 KY3 Meade Bluegrass B 240 MSA Texarkana Century B
- ------------------------------------------------------------------------------------------------------------------------------------
446 KY4 Spencer Bluegrass B 255 MSA Odessa SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
446 KY4 Spencer Horizon Cellular A 287 MSA Bryan GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
447 KY5 Barren Horizon Cellular A 292 MSA Sherman/Denison SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
447 KY5 Barren Bluegrass B 295 MSA Midland SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
448 KY6 Madison Horizon Cellular A 300 MSA Victoria GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
448 KY6 Madison Cell. Phone of KY B 652 TX1 Dallas Triad Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
449 KY7 Trimble GTE A 652 TX1 Dallas XIT Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
450 KY8 Mason Horizon Cellular A 653 TX2 Hansford Triad Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
451 KY9 Elliott Appalachian Cell. B 653 TX2 Hansford Dobson Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
452 KY10 Powell Kentucky Cell. B 654 TX3 Parmer Plateau Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
453 KY11 Clay First Kentucky Cell. A 655 TX4 Brisloe Triad Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
453 KY11 Clay Litchfield County Cell. B 656 TX5 Hardeman Triad Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
656 TX5 Hardeman Brazos Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
657 TX6 Jack SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
658 TX7 Fannin Century B6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CELLSTAR LTD. AUTHORIZED MARKETS
ATTACHMENT E
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARKET CODE STATE/CITIES CARRIER PRODUCT MARKET CODE STATE/CITIES CARRIER PRODUCT
- ------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA TEXAS Cont.
- ------------------------------------------------------------------------------------------------------------------------------------
100 MSA Shreveport Century B 658 TX7 Fannin Lamar Cellular B5
- ------------------------------------------------------------------------------------------------------------------------------------
184 MSA Houma Mobile Tel B 658 TX7 Fannin Peoples Cellular B3
- ------------------------------------------------------------------------------------------------------------------------------------
197 MSA Lake Charles Mercury Cellular B 658 TX7 Fannin SBMS B1
- ------------------------------------------------------------------------------------------------------------------------------------
205 MSA Alexandria Century B 659 TX8 Gaines Poka Lambro B1
- ------------------------------------------------------------------------------------------------------------------------------------
219 MSA Monroe Century B 660 TX9 Runnels Lone Star Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
454 LA1 Claiborne Century B 660 TX9 Runnels Peoples Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
455 LA2 Morehouse Century B 660 TX9 Runnels SBMS B1
- ------------------------------------------------------------------------------------------------------------------------------------
456 LA3 DeSoto Century B2 660 TX9 Runnels SBMS B4
- ------------------------------------------------------------------------------------------------------------------------------------
456 LA3 DeSoto Mercury Cellular B1 661 TX10 Navarro GTE B3
- ------------------------------------------------------------------------------------------------------------------------------------
457 LA4 Caldwell Century B 661 TX10 Navarro SBMS B1
- ------------------------------------------------------------------------------------------------------------------------------------
458 LA5 Beauregard Centennial A 662 TX11 Cherokee GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
458 LA5 Beauregard Mercury Cellular B1 663 TX12 Hudspeth ENMR B
- ------------------------------------------------------------------------------------------------------------------------------------
458 LA5 Kaplan Pace Communications B3 664 TX13 Reeves ENMR B
- ------------------------------------------------------------------------------------------------------------------------------------
459 LA6 Iberville Iberia Cellular A 665 TX14 Loving ENMR B
- ------------------------------------------------------------------------------------------------------------------------------------
461 LA8 St. James Mobile Tel B 666 TX15 Concho Five Star Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
462 LA9 Plaquemines Mobile Tel B 667 TX16 Burleson GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
MARYLAND 668 TX17 Newton GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
257 MSA Hagerstown Horizon Cellular B 669 TX18 Edwards SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
469 MD3 Frederick Horizon Cellular A 670 TX19 Atascosa SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
MASS. 671 TX20 Wilson La Ward Cellular B2
- ------------------------------------------------------------------------------------------------------------------------------------
6 MSA Boston SBMS A 671 TX20 Wilson SBMS B1
- ------------------------------------------------------------------------------------------------------------------------------------
55 MSA Worchester SBMS A 672 TX21 Chambers GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
471 MA2 Barnstable SBMS A UTAH
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN 675 UT3 Juab CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
64 MSA Grand Rapids Century B 676 UT4 Beaver CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
78 MSA Lansing Century B 677 UT5 Carbon CommNET B3
- ------------------------------------------------------------------------------------------------------------------------------------
94 MSA Saginaw Century B 678 UT6 Piute CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
132 MSA Kalamazoo Century B VIRGINIA
- ------------------------------------------------------------------------------------------------------------------------------------
177 MSA Battle Creek Century B 43 MSA Norfolk GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
181 MSA Muskegon Century B 59 MSA Richmond GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
193 MSA Benton Harbor Century B 104 MSA Newport News GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
207 MSA Jackson Century B 157 MSA Roanoke GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
472 MI1 Gogebie PTI B 235 MSA Petersburg GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
473 MI2 Alger PTI B 262 MSA Danville GTE A
- ------------------------------------------------------------------------------------------------------------------------------------
474 MI3 Emmet Century B 683 VA3 Giles Blue Ridge Cell. A
- ------------------------------------------------------------------------------------------------------------------------------------
476 MI5 Manistee Century B 683 VA3 Giles GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
477 MI6 Roscommon Century B 684 VA4 Bedford GTE B1
- ------------------------------------------------------------------------------------------------------------------------------------
478 MI7 Newaygo Century B 685 VA5 Bath GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
479 MI8 Allegan Century B 686 VA6 Highland Virginia Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
480 MI9 Cass Century B 686 VA6 Highland CFW Cellular B
- ------------------------------------------------------------------------------------------------------------------------------------
687 VA7 Buckingham GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
688 VA8 Amelia GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
689 VA9 Greensville GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
690 VA10 Frederick Shenandoah Cell. B
- ------------------------------------------------------------------------------------------------------------------------------------
691 VA11 Madison GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
692 VA12 Caroline GTE B
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CELLSTAR LTD. AUTHORIZED MARKETS
ATTACHMENT E
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARKET CODE STATE/CITIES CARRIER PRODUCT MARKET CODE STATE/CITIES CARRIER PRODUCT
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA WEST VIRGINIA
- ------------------------------------------------------------------------------------------------------------------------------------
198 MSA St. Cloud Cell. Mobile Systems B 703 WV3 Monongalia Horizon A
- ------------------------------------------------------------------------------------------------------------------------------------
482 MN1 Kittson Rural Cellular B 707 WV7 Raliegh Highland A
- ------------------------------------------------------------------------------------------------------------------------------------
483 MN2 Lake of the Woods Rural Cellular B WISCONSIN
- ------------------------------------------------------------------------------------------------------------------------------------
484 MN3 Koochiching Rural Cellular B 125 MSA Appleton PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
486 MN5 Wilkin Rural Cellular B 232 MSA Eau Claire PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
487 MN6 Hubbard Century A 290 MSA La Crosee Century B
- ------------------------------------------------------------------------------------------------------------------------------------
487 MN6 Hubbard Rural Cellular B 708 WI1 Burnett PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
488 MN7 Chippewa Triad Cellular A 709 WI2 Bayfield PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
489 MN8 Lacqui Parle Triad Cellular A 713 WI6 Trempeleau PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
490 MN9 Pipestone Triad Cellular A 714 WI7 Wood PTI B
- ------------------------------------------------------------------------------------------------------------------------------------
491 MN10 LeSueur Frontier A 716 WI9 Columbia PTI B3
- ------------------------------------------------------------------------------------------------------------------------------------
492 MN11 Goodhue PTI A WYOMING
- ------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI 718 WY1 Park CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
106 MSA Jackson Century A 719 WY2 Sheridan CommNET B
- ------------------------------------------------------------------------------------------------------------------------------------
173 MSA Biloxi/Gulfport Century A 710 WY3 Lincoln CommNET A
- ------------------------------------------------------------------------------------------------------------------------------------
173 MSA Biloxi/Gulfport Cell South B
- ------------------------------------------------------------------------------------------------------------------------------------
252 MSA Pascagoula Cell South A
- ------------------------------------------------------------------------------------------------------------------------------------
252 MSA Pascagoula Century A
- ------------------------------------------------------------------------------------------------------------------------------------
493 MS1 Tunica Mercury Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
493 MS1 Tunica Cell South B2
- ------------------------------------------------------------------------------------------------------------------------------------
494 MS2 Benton R&D Cell. A
- ------------------------------------------------------------------------------------------------------------------------------------
495 MS3 Bolivar Cell South B1
- ------------------------------------------------------------------------------------------------------------------------------------
496 MS4 Yalobusba Mercury Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
496 MS4 Yalobusba Cell South B
- ------------------------------------------------------------------------------------------------------------------------------------
497 MS5 Washington Bay Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
497 MS5 Washington Cell South B1
- ------------------------------------------------------------------------------------------------------------------------------------
498 MS6 Montgomery Mercury Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
498 MS6 Montgomery Cell South B2
- ------------------------------------------------------------------------------------------------------------------------------------
499 MS7 Leak County Cone Enterprises A
- ------------------------------------------------------------------------------------------------------------------------------------
500 MS8 Clairborne Cell South B
- ------------------------------------------------------------------------------------------------------------------------------------
501 MS9 Copiah Cell South A
- ------------------------------------------------------------------------------------------------------------------------------------
502 MS10 Smith Cell South B1
- ------------------------------------------------------------------------------------------------------------------------------------
502 MS10 Smith Cellular XL A
- ------------------------------------------------------------------------------------------------------------------------------------
503 MS11 Lamar Cellular XL A
- ------------------------------------------------------------------------------------------------------------------------------------
503 MS11 Lamar Cell South B1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CELLSTAR LTD. AUTHORIZED MARKETS
ATTACHMENT E
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MARKET CODE STATE/CITIES CARRIER PRODUCT MARKET CODE STATE/CITIES CARRIER PRODUCT
- ------------------------------------------------------------------------------------------------------------------------------------
MISSOURI
- ------------------------------------------------------------------------------------------------------------------------------------
11 MSA St. Louis SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
24 MSA Kansas City SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
275 MSA St. Joseph SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
278 MSA Columbia Columbia Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
505 MO2 Harrison Florida Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
506 MO3 Schuyler US Cellular A
- ------------------------------------------------------------------------------------------------------------------------------------
508 MO5 Limm Charlton Valley Cell. B
- ------------------------------------------------------------------------------------------------------------------------------------
509 MO6 Jefferson Cell TEL A
- ------------------------------------------------------------------------------------------------------------------------------------
510 MO7 Saline Mid Missouri Cell. B
- ------------------------------------------------------------------------------------------------------------------------------------
511 MO8 Callaway SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
512 MO9 Bates SBMS B1
- ------------------------------------------------------------------------------------------------------------------------------------
514 MO11 Moniteau SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
514 MO11 Moniteau Al Cell Comm. A
- ------------------------------------------------------------------------------------------------------------------------------------
515 MO12 Maries SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
516 MO13 Washington SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
521 MO18 Perry SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
522 MO19 Stoddard SBMS B
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CELLSTAR LTD.
ATTACHMENT F
ACCESSORIES PROGRAM
The following terms apply to Buyer's purchase of Accessories:
1. The attached Exhibit A sets forth the Accessories and the
applicable prices. Notwithstanding any other provision of the Agreement, Seller
may modify Exhibit A in any way at any time, including deleting or substituting
Accessories, by delivering or mailing a copy of such modification(s) to Buyer,
to be effective on the date therein stated.
2. The following provisions of the Agreement apply to the Accessories as
if they were Products, subject to the noted modifications:
(a) The cover page, except: Accessories are not considered in
determining the number of cellular subscriber units purchased, and Attachment A
is not applicable to Accessories.
(b) Attachment B, Paragraphs 5, 6, 12 through 15.
(c) Attachment C, Paragraphs 2 through 5, 6 ( except that the Limited
Warranty for Accessories is attached to this Amendment as Exhibit B, which is
subject to revision as provided in Paragraph 6), 7 through 11, 12(b), and 13
through 19.
3. Except as listed in Paragraph 2 above, the provisions of the
Agreement do not apply to the Accessories.
4. The following provisions also apply to the Accessories:
(a) Buyer agrees to exercise reasonable commercial efforts to purchase a
minimum of [REDACTED] of Accessories (net of any returns) from Seller under the
Agreement during the period January 1, 1996 to December 31, 1996. Buyer has set
the following quarterly goals for such purchases:
Q1 [REDACTED]
Q2 [REDACTED]
Q3 [REDACTED]
Q4 [REDACTED]
(b) For each calendar quarter stated in paragraph 4(a), if Buyer has
purchased (including taking delivery) a minimum of [REDACTED] (net of any
returns) of Accessories during such quarter, then Seller will, within 60 days
after the end of such quarter, credit Buyer's account [REDACTED] of the amount
paid by Buyer for such Accessories purchased during such quarter.
(c) If, after the end of each calendar month, Buyer substantiates to
Seller (in a form reasonably satisfactory to Seller) that at least [REDACTED] of
the dollar volume of its sales of aftermarket accessories for Motorola cellular
phones during that month were sales of Accessories Buyer purchased from Seller
under the Agreement, then Seller will, within 30 days after such substantiation,
credit Buyer's account [REDACTED] of the total dollar volume of Accessories
purchased by Buyer from Seller (including taking delivery and net of
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page F-1
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
CELLSTAR LTD.
ATTACHMENT F
ACCESSORIES PROGRAM
returns) during that month. If after December 31, 1996 Buyer substantiates a
level of at least [REDACTED] instead of [REDACTED], then Seller will credit
Buyer's account an additional [REDACTED] of the total dollar volume purchased
from the Seller.
(d) Seller will provide Buyer the following stock balancing options on
Accessories:
(i) Any Accessories returned within 60 days will be accepted by
Seller, provided that (i) Seller is notified of the return
request within 60 days of the invoice date, (ii) Buyer submits
an offsetting order for Accessories of equal or greater value,
and (iii) such offsetting order is received by Seller within 20
days of Seller's return authorization.
Example: Accessory return value equals $100,000. New order to
be placed for $100,000.
(ii) Any Accessories returned within 90 days will be accepted by
Seller, provided that (i) Seller is notified of the return
request within 90 days of the invoice date, (ii) Buyer submits
an offsetting order for Accessories of twice the value or
greater, and (iii) such offsetting order is received by Seller
within 20 days of Seller's return authorization.
Example: Accessory return value equals $100,000. New order to
be placed for $200,000.
Exhibits included:
Exhibit A: Accessories and Prices
Exhibit B: Limited Warranty for Accessories
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page F-2
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
CELLSTAR LTD.
ATTACHMENT F
ACCESSORIES PROGRAM
EXHIBIT A: ACCESSORIES AND PRICES
[REDACTED]
- --------------
Brackets ([/]) indicate confidential portions omitted and filed separately with
the Commission.
<PAGE>
MOTOROLA
LIMITED WARRANTY
MOTOROLA, INC. (Motorola) warrants this Motorola cellular accessory against
defects in material and workmanship under normal use for ONE YEAR from the date
of original retail purchase. This warranty extends to the original retail
purchaser only and is not transferable. Motorola, at its option, will at no
charge either repair the accessory (with new or reconditioned parts) or replace
the accessory or refund the purchase price of the accessory during the warranty
period. Repaired/replacement accessories are warranted for either ninety days
or the remainder of the original warranty period, whichever is longer. All
replaced items become Motorola's property. This warranty does not cover defects
or damage resulting from abnormal use, misuse, mishandling, neglect, accident or
tampering.
You can obtain warranty service through your original place of purchase in most
cases. Or you can obtain warranty service by returning the accessory directly
to Motorola. In either case, you must return the accessory with transportation
prepaid and provide proof that the accessory is within the warranty period (for
example, a dated purchase receipt). For more information, including about
returning an accessory to Motorola, please call the Motorola Cellular
Information Center toll-free at 1-800-331-6456 in the USA.
THIS IS THE COMPLETE WARRANTY FOR THE ACCESSORY BY MOTOROLA AND SETS FORTH YOUR
EXCLUSIVE REMEDIES. THIS WARRANTY IS GIVEN IN LIEU OF ALL OTHER EXPRESS
WARRANTIES. IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE LIMITED
TO THE DURATION OF THIS LIMITED WARRANTY. IN NO EVENT SHALL MOTOROLA BE LIABLE
FOR DAMAGES IN EXCESS OF THE PURCHASE PRICE OF THE ACCESSORY OR FOR ANY
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY
TO USE SUCH ACCESSORY TO THE FULL EXTENT SUCH MAY BE DISCLAIMED BY LAW:
Some states do not allow the exclusion or limitation of incidental or
consequential damages, or limitations on how long an implied warranty lasts, so
the above limitations or exclusions may not apply to you. This warranty gives
you specific legal rights, and you may also have other rights which vary from
state to state.
This warranty is valid only in the USA.
68P09372AB3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATIN EXTRACTED FROM AUGUST 31,
1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> NOV-30-1996 NOV-30-1996
<PERIOD-START> JUN-01-1996 DEC-01-1996
<PERIOD-END> AUG-31-1996 AUG-31-1996
<CASH> 10,783 0
<SECURITIES> 0 0
<RECEIVABLES> 143,256 0
<ALLOWANCES> 17,042 0
<INVENTORY> 94,825 0
<CURRENT-ASSETS> 235,668 0
<PP&E> 32,143 0
<DEPRECIATION> 7,547 0
<TOTAL-ASSETS> 278,964 0
<CURRENT-LIABILITIES> 176,340 0
<BONDS> 0 0
0 0
0 0
<COMMON> 193 0
<OTHER-SE> 95,984 0
<TOTAL-LIABILITY-AND-EQUITY> 278,964 0
<SALES> 223,590 654,136
<TOTAL-REVENUES> 223,590 654,136
<CGS> 192,798 561,711
<TOTAL-COSTS> 192,798 561,711
<OTHER-EXPENSES> 38,521 98,593
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,886 6,861
<INCOME-PRETAX> (9,615) (13,029)
<INCOME-TAX> 2,716 1,617
<INCOME-CONTINUING> (12,331) (14,646)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (12,331) (14,646)
<EPS-PRIMARY> (.64) (.76)
<EPS-DILUTED> (.64) (.76)
</TABLE>
