<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CellStar Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
April 2, 1997
To CellStar Corporation Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of CellStar Corporation (the "Company") to be held at the Las Colinas
Country Club, 4900 North O'Connor Blvd., Irving, Texas, on Wednesday, April 23,
1997, at 10:00 a.m., Dallas time.
The attached Notice of Annual Meeting and Proxy Statement fully describe the
formal business to be transacted at the Meeting, which includes (i) the election
of two Class II directors of the Company; and (ii) approval of the amendment and
restatement of the Company's 1993 Amended and Restated Long-Term Incentive Plan
to increase the number of shares of the Company's common stock available for
issuance under such plan from 1,500,000 shares to 2,000,000 shares. In
addition, we will review with you the affairs and progress of the Company during
the past fiscal year.
Directors and officers of the Company will be present to help host the
Meeting and to respond to any questions that our stockholders may have. I hope
you will be able to attend.
The Company's Board of Directors believes that a favorable vote on each of
the matters to be considered at the Meeting is in the best interests of the
Company and its stockholders and unanimously recommends a vote "FOR" each such
matter. Accordingly, we urge you to review the accompanying material carefully
and to return the enclosed Proxy promptly.
Please sign, date and return the enclosed Proxy without delay. If you attend
the Meeting, you may vote in person even if you have previously mailed a Proxy.
I look forward to seeing you at the Meeting.
Sincerely,
Alan H. Goldfield
Chairman of the Board and
Chief Executive Officer
<PAGE>
CELLSTAR CORPORATION
1730 BRIERCROFT COURT
CARROLLTON, TEXAS 75006
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of CellStar Corporation, a Delaware corporation (the "Company"), will
be held at the Las Colinas Country Club, 4900 North O'Connor Blvd., Irving,
Texas, on Wednesday, April 23, 1997, at 10:00 a.m., Dallas time, for the purpose
of considering and acting upon:
(1) The election of two Class II directors for terms expiring in 2000;
(2) A proposal to approve the amendment and restatement of the CellStar
Corporation 1993 Amended and Restated Long-Term Incentive Plan to
increase the number of shares of the Company's common stock available
for issuance under such plan from 1,500,000 to 2,000,000 shares; and
(3) Such other business as may properly come before the Meeting or any
adjournments thereof.
The close of business on February 27, 1997, has been fixed as the record
date for determining stockholders entitled to notice of and to vote at the
Meeting or any adjournment or adjournments thereof. For a period of at least
ten days prior to the Meeting, a complete list of stockholders entitled to vote
at the Meeting will be open to the examination of any stockholder during
ordinary business hours at the Company's offices located at 605 West Airport
Freeway, Irving, Texas 75062.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. PROXIES
FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS REQUESTED BY
THEM.
By Order of the Board of Directors,
Elaine Flud Rodriguez
Vice President, Secretary
and General Counsel
Carrollton, Texas
April 2, 1997
<PAGE>
CELLSTAR CORPORATION
1730 Briercroft Court
Carrollton, Texas 75006
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies ("Proxies") by the Board of Directors of CellStar Corporation (the
"Company" or "CellStar") for use at the Annual Meeting of Stockholders (the
"Meeting") of the Company to be held at the Las Colinas Country Club, 4900 North
O'Connor Blvd., Irving, Texas, on Wednesday, April 23, 1997, at 10:00 a.m.,
Dallas time, or at such other time and place to which the Meeting may be
adjourned. The approximate date on which this Proxy Statement and accompanying
Proxy are first being sent or given to stockholders is April 2, 1997.
All shares represented by valid Proxies, unless the stockholder specifies
otherwise, will be voted (i) FOR the election of the two persons named under
"Proposal I -- Election of Directors" as nominees for election as Class II
directors; and (ii) FOR the proposal to approve the amendment and restatement of
the CellStar Corporation 1993 Amended and Restated Long-Term Incentive Plan (the
"1993 Plan"), each as recommended by the Board of Directors. The Board of
Directors knows of no other business to be presented at the Meeting. If any
other business is properly presented, the persons named in the enclosed Proxy
have authority to vote on such matters in accordance with such persons'
discretion. Where a stockholder has appropriately specified how a Proxy is to
be voted, it will be voted accordingly.
A stockholder executing a Proxy retains the right to revoke it at any time
prior to exercise at the Meeting. A Proxy may be revoked by delivery of written
notice of revocation to the Secretary of the Company, by execution and delivery
of a later Proxy, or by voting the shares in person at the Meeting.
RECORD DATE AND VOTING SECURITIES
The record date for determining the stockholders entitled to notice of and
to vote at the Meeting and any adjournments thereof was the close of business on
February 27, 1997 (the "Record Date"), at which time the Company had issued and
outstanding 19,297,105 shares of Common Stock, par value $0.01 per share
("Common Stock"). Common Stock is the only class of outstanding voting
securities of the Company. Each share of Common Stock is entitled to one vote
with respect to any matter (including election of directors) to be voted at the
Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by Proxy, of the holders of at
least a majority of the shares of Common Stock as of the Record Date is
necessary to constitute a quorum. Each share of Common Stock represented at the
Meeting in person or by Proxy will be counted toward a quorum.
Approval of the proposal to elect the two nominees to serve as Class II
directors requires the affirmative vote of the holders of a plurality of the
shares of Common Stock present or represented at the Meeting and entitled to
vote on such proposal. Votes may be cast in favor or withheld with respect to
each nominee. Votes that are withheld will be counted toward a quorum, but will
be excluded entirely from the tabulation for such proposal and, therefore, will
not affect the outcome of the vote on such proposal.
<PAGE>
Approval of the proposal to amend the 1993 Plan requires the affirmative
vote of a majority of the shares of Common Stock present or represented at the
Meeting and entitled to vote on such proposals. Abstentions may be specified on
such proposals and will have the effect of a negative vote.
The inspectors of election will treat shares referred to as "broker non-
votes" (i.e., shares held by brokers or nominees as to which they have no
discretionary power to vote on a particular matter and have received no
instructions from the beneficial owners or person entitled to vote thereon), if
any, as shares that are present and entitled to vote for purposes of determining
the presence of a quorum. However, for purposes of determining the outcome of
any matter as to which the broker has physically indicated on the Proxy that it
does not have discretionary authority to vote, those shares will be treated as
not present and not entitled to vote with respect to that matter (even though
those shares may be entitled to vote on other matters). Broker non-votes will
have no effect on determining the outcome of the election of directors, but will
have the effect of a negative vote on the proposal to amend the 1993 Plan.
2
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
There are two Class II directors to be elected for terms expiring at the
Company's Annual Meeting of Stockholders in 2000 or until their successors have
been elected and qualified. It is intended that the names of the nominees
indicated below will be placed in nomination and that the persons named in the
Proxy will vote for their election. Each of the nominees has indicated his
willingness to serve as a member of the Board of Directors if elected; however,
in case any nominee shall become unavailable for election to the Board of
Directors for any reason not presently known or contemplated, the Proxy holders
will have discretionary authority in that instance to vote the Proxy for a
substitute. Although there are three directors currently serving as Class II
directors, only two persons are being nominated at the Meeting to serve as Class
II directors. The Board intends to fill the one remaining vacancy as soon as it
is able to locate a satisfactory candidate. Proxies cannot be voted for more
than two nominees.
Information concerning the two nominees proposed by the Board of Directors
for election as Class II directors, along with information concerning the
present Class I and Class III directors, whose terms of office will continue
after the Meeting, is set forth below.
The nominees for election as Class II directors are as follows:
<TABLE>
<CAPTION>
CLASS II NOMINEES - TERMS EXPIRING IN 2000
NAME AGE CURRENT POSITION
---- --- ----------------
<S> <C> <C>
James L. Johnson.................................. 69 Director
John T. Stupka.................................... 47 Director
The present directors whose terms will expire after 1997 are as
follows:
CLASS III DIRECTORS--TERMS EXPIRING IN 1998
NAME AGE CURRENT POSITION
---- --- ----------------
Alan H. Goldfield................................. 53 Chief Executive Officer and Chairman of the Board
Terry S. Parker................................... 52 Director
CLASS I DIRECTORS--TERMS EXPIRING IN 1999
NAME AGE CURRENT POSITION
---- --- ----------------
Richard M. Gozia.................................. 52 President, Chief Operating Officer and Director
Sheldon I. Stein.................................. 43 Director
Daniel T. Bogar................................... 37 Vice President - South American Operations and Director
</TABLE>
3
<PAGE>
Set forth below is a description of the backgrounds of each of the
directors of the Company.
ALAN H. GOLDFIELD is a founder of the Company and has been the Chairman of
the Board of Directors and Chief Executive Officer of the Company since its
formation in 1981. Mr. Goldfield served as President of the Company from its
formation until March 1995, when Terry S. Parker was appointed President, and
from August 1996 until December 1996, when Richard M. Gozia was appointed
President. Mr. Goldfield serves as Chairman of the Board pursuant to his
employment agreement. See "Executive Compensation -- Employment Contracts and
Termination of Employment and Change in Control Arrangements."
RICHARD M. GOZIA has served as a director of the Company since June 1996
and as President and Chief Operating Officer of the Company since December 1996.
Mr. Gozia jointed CellStar as Executive Vice President-Administration and Chief
Financial Officer in June 1996. Mr. Gozia serves as a director of the Company
pursuant to his employment agreement. From 1994 to 1996, Mr. Gozia served as
Executive Vice President of Spectravision, Inc., a provider of in-room hotel
movies. From 1991 to 1994, Mr. Gozia was Chairman and Chief Executive Officer
of Wyatt Cafeterias, Inc.
TERRY S. PARKER has served as a director of the Company since March 1995
and served as President and Chief Operating Officer of the Company from March
1995 through July 1996. Mr. Parker served as Senior Vice President of GTE
Corporation and President of GTE's Personal Communications Services, GTE's
wireless division, from October 1993 until he joined the Company. From 1991 to
1993, Mr. Parker served as President of GTE Telecommunications Products and
Services. Prior to 1991, Mr. Parker served as President of GTE Mobile
Communications. Mr. Parker serves on the Boards of Directors for HighwayMaster
Communications, Inc. and EqualNet Corporation.
SHELDON I. STEIN has served as a director of the Company since August 1996.
Mr. Stein is a Senior Managing Director of and oversees the Southwestern
Corporate Finance Department for Bear, Stearns & Co., Inc. Mr. Stein also
serves on the Boards of Directors of Cinemark USA, Inc., Fresh America Corp.,
The Men's Wearhouse, Inc., First Plus Financial Group, Inc. and Tandycrafts,
Inc. Mr. Stein presently serves on the Audit and Compensation Committees of
CellStar's Board of Directors.
DANIEL T. BOGAR has served as Vice President of South American Operations
since October 1993 and has been a director of the Company since July 1994. He
has been responsible for the Company's South American operations since November
1992. From August 1991 to November 1992, Mr. Bogar managed the Company's
operations in Mexico, and from 1987 to 1991, Mr. Bogar served as General Manager
of the Company's Houston operations.
MICHAEL S. HEDGE, 41, has served as Vice President of Wholesale Sales and
as a director of the Company since October 1993. From 1990 to 1993, Mr. Hedge
was the Company's Wholesale Distribution Sales Manager. From 1987 until 1990,
Mr. Hedge served as Sales Manager of the Company's Houston operations. Mr.
Hedge's term as a director of the Company expires at the Meeting.
JAMES L. JOHNSON has served as a director of the Company since March 1994.
Mr. Johnson has been Chairman Emeritus of GTE Corporation since May 1992 and
served as GTE's Chairman and Chief Executive Officer from April 1988 to April
1992. Mr. Johnson began his career with Southwestern Associated Telephone
Company (the predecessor company of GTE Central) in 1949. He has been a member
of GTE's Board of Directors since 1985 and is currently a director of Harte
Hanks Communications, Inc., M.O.N.Y (Mutual of New York, Inc.), Valero Energy
Corp., GFC Financial Corp., Walter Industries Incorporated, and Finova Group
Incorporated (formerly GFC Financial). Mr. Johnson is also past Chairman of the
United States Telephone Association. Mr. Johnson presently serves on the Audit
and Compensation Committees of CellStar's Board of Directors.
JOHN T. STUPKA has served as a director of the Company since January 1997.
Mr. Stupka has served as President, Chief Executive Officer and director of
Mobile Telecommunications Technologies, Inc. since August 1996. From July 1995
to August 1996, Mr. Stupka was Senior Vice President - Strategic Planning for
SBC Communications (formerly Southwestern Bell Telephone Company). From
November 1985 to August 1995, Mr. Stupka was President
4
<PAGE>
and Chief Executive Officer of Southwestern Bell Mobile Systems ("SBMS"). Mr.
Stupka presently serves on the Audit and Compensation Committees of CellStar's
Board of Directors.
VOTE REQUIRED
The affirmative vote of the holders of a plurality of the shares present in
person or represented by Proxy at the Meeting and entitled to vote on the
subject matter is required to elect the nominees for director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR NAMED ABOVE.
MEETINGS OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis during its fiscal
year to review significant developments affecting the Company and to act on
matters requiring Board approval. It also holds special meetings when an
important matter requires Board action between scheduled meetings. The Board of
Directors met four times and acted by unanimous written consent fourteen times
during the 1996 fiscal year. During the 1996 fiscal year, with the exception of
Mr. Bogar, each member of the Board participated in at least 75% of all Board
and applicable committee meetings held during the period for which he was a
director.
The Board of Directors has established audit and compensation committees to
devote attention to specific subjects and to assist it in the discharge of its
responsibilities. The functions of those committees, their current members and
the number of meetings held during the 1996 fiscal year are described below.
Audit Committee. The Board of Directors has a standing Audit Committee,
which committee has the power to (i) recommend to the Board the appointment of
the firm selected to be independent public accountants for the Company and
monitor the performance of such firm; (ii) review and approve the scope of the
annual audit and evaluate with the independent public accountants the Company's
annual audit and annual consolidated financial statements; (iii) review with
management the status of internal accounting controls; (iv) evaluate areas
having a potential financial impact on the Company which may be brought to its
attention by management, the independent public accountants or the Board; and
(v) evaluate the public financial reporting documents of the Company. Messrs.
Johnson (Chairman), Stein and Stupka are the current members of the Audit
Committee. The Audit Committee met one time during fiscal 1996.
Compensation Committee. The Board of Directors has a standing Compensation
Committee, which committee has the power to establish the compensation policies
of the Company and the specific compensation of the executives of the Company.
The Compensation Committee also has the power to administer the Company's 1993
Plan, Amended and Restated Compensation Plan (the "Incentive Plan") and 1994
Amended and Restated Director Nonqualified Stock Option Plan (the "Directors'
Plan"). Messrs. Stein (Chairman), Johnson and Stupka are the current members
of the Compensation Committee. The Compensation Committee met three times and
acted by unanimous consent five times during fiscal 1996.
The Board of Directors does not have a nominating committee because the
Board as a whole functions in this capacity. A stockholder may nominate a
person for election to the Board of Directors at a meeting of the Company's
stockholders only if written notice is delivered to the Company by such
stockholder at least 60 days in advance of the meeting, or within ten days after
the date of notice or public disclosure if such notice is given less than 70
days before the meeting. Such notice shall contain certain required information
including, without limitation, the name and address of the nominating
stockholder, the nominee's name, address and principal occupation, and any other
information relating to such nominee that the Company reasonably requires or is
required to be disclosed in a proxy statement or Schedule 13D filing.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned as of January 31, 1997, by (i) each
person known by the Company to beneficially own more than five percent (5%) of
the outstanding shares of Common Stock; (ii) the Company's Chief Executive
Officer, each of the Company's four other most highly compensated executive
officers who were serving as such on November 30, 1996 (based on salary and
bonus earned during fiscal 1996) and two former executive officers of the
Company who resigned prior to November 30, 1996 (collectively, the "Named
Executive Officers"); (iii) each director and nominee for director of the
Company; and (iv) all directors and executive officers of the Company as a
group. Unless otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock beneficially
owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER OR GROUP BENEFICIAL OWNERSHIP PERCENT OF CLASS
--------------------------------- --------------------- -----------------
<S> <C> <C>
Audiovox Corporation(1) 1,775,000 (2) 9.2%
Audiovox Holding Corp.(1)
Hong An Hsein(3) 1,028,439 (4) 5.5%
George D. Bjurman & Associates(5) 988,320 (6) 5.1%
George Andrew Bjurman(5)
Owen Thomas Barry III(5)
MANAGEMENT AND DIRECTORS
Alan H. Goldfield(7) 8,312,870 (8) 43.1%
Timothy L. Maretti 27,293 (9) *
Daniel T. Bogar 33,683 (10) *
Michael S. Hedge 31,043 (11) *
Evelyn Henry Miller 1,250 (12) *
Terry S. Parker 2,500 (13) *
Kenneth E. Kerby 3,500 *
James L. Johnson 10,000 (13) *
John T. Stupka -- *
Sheldon I. Stein 12,500 (13) *
Current Directors and Executive Officers
as a Group(14) 8,451,225 (15) 43.8%
</TABLE>
- --------------------
* Less than 1%.
(1) The address for Audiovox Corporation ("Audiovox") and Audiovox Holding
Corp. is 150 Marcus Boulevard, Hauppauge, New York 11788.
6
<PAGE>
(2) Based on an amendment to Form 4 filed to report changes in beneficial
ownership during the month of January 1997, which was filed with the
Securities and Exchange Commission by Audiovox and Audiovox Holding Corp.,
a wholly-owned subsidiary of Audiovox and the direct owner of such shares
(collectively "Audiovox Owners"). According to an amendment to
Schedule13G, dated March 3, 1997, filed with the Securities and Exchange
Commission by the Audiovox Owners, as of February 28, 1997 the Audiovox
Owners beneficially owned 1,015,000 shares, representing 5.2% of the
Company's outstanding common stock.
(3) The address for Mr. Hong An Hsein (also known as A.S. Horng) is 81 Chung
Cheng Road, Sec 2 No. 46-1 Fl. 3, Taipei, Taiwan ROC.
(4) Includes 28,439 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days. Also includes 1,000,000
shares subject to a revocable (upon 90 days written notice) proxy to vote
such shares held by Alan H. Goldfield.
(5) The address for George D. Bjurman & Associates ("GDBA"), George Andrew
Bjurman and Owen Thomas Barry III is 10100 Santa Monica Boulevard, Suite
1200, Los Angeles, California 90067.
(6) Based on a Schedule 13G, dated February 13, 1995, which was jointly filed
with the Securities and Exchange Commission by GDBA, George Andrew Bjurman
and Owen Thomas Barry III. According to such Schedule 13D, Messrs. Bjurman
and Barry may, as a result of their ownership in and positions with GDBA,
be deemed to be indirect beneficial owners of the securities held by GDBA.
(7) The address for Mr. Goldfield is 1730 Briercroft Court, Carrollton, Texas
75006.
(8) Includes 1,000,000 shares that are subject to a revocable (upon 90 days
written notice) proxy granted to Mr. Goldfield by Mr. Hong An Hsein, which
proxy gives Mr. Goldfield the right to vote such shares. Does not include
250,000 shares subject to options granted under the 1993 Plan, which
options vest based on the market price of the Common Stock and therefore
could be exercisable within 60 days.
(9) Includes 27,293 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
(10) Includes 31,043 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
(11) Includes 31,043 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
(12) Includes 1,250 shares subject to options granted under the 1993 Plan, which
options are exercisable within 60 days.
(13) Includes 2,500 shares subject to options granted under the 1994 Amended and
Restated Director Nonqualified Stock Option Plan, which options are
exercisable within 60 days.
(14) Does not include ownership by Mr. Kerby.
(15) In addition to the ownership of the directors and executive officers listed
in the table and more fully described in footnotes 8 through 13 above,
includes 19,886 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid to the Named Executive Officers for each of the Company's last three fiscal
years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
--------------------- --------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ COMPEN-
PRINCIPAL SALARY BONUS SATION AWARDS(S) SARS SATION
POSITION YEAR ($) ($) ($) ($) (#)(1) ($)
- ----------------------------- --------- --------- -------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan H. Goldfield 1996 850,000 -- -- -- 62,870 22,484(2)
Chairman of the Board 1995 850,000 -- 59,145(3) -- 250,000 --
and Chief Executive 1994 400,000 400,000 -- -- -- --
Officer
Timothy L. Maretti 1996 200,000 60,000 -- -- 24,793 --
Vice President - Mexican 1995 203,333 -- -- -- 10,000 --
Operations 1994 270,000 -- -- -- 10,000 --
Daniel T. Bogar 1996 200,000 40,000 -- -- 29,793 --
Vice President - South 1995 203,333 -- -- -- 10,000 --
American Operations 1994 240,000 -- -- -- 10,000 --
and Director
Michael S. Hedge 1996 200,000 -- -- -- 29,793 --
Vice President - Wholesale 1995 198,583 -- -- -- 10,000 --
Sales 1994 182,750 -- -- -- 10,000 --
Evelyn Henry Miller 1996 136,667 37,500 -- -- 5,000 --
Vice President -- Corporate 1995 7,968 -- -- -- -- --
Controller 1994 -- -- -- -- -- --
Terry S. Parker 1996 343,189 -- -- -- 39,482(4) --
Former President and 1995 397,756 -- -- -- 250,000(5) --
Chief Operating Officer/ 1994 -- -- -- -- -- --
Current Director
Kenneth E. Kerby 1996 206,027 -- -- -- 29,793(6) 16,667(7)
Former Vice President - 1995 214,823 -- -- -- 10,000(6) --
Retail Sales and 1994 90,000 71,740 -- -- 10,000(6) --
Director
</TABLE>
- -----------------
(1) Reflects options to acquire shares of Common Stock. The Company has not
granted stock appreciation rights.
(2) Life insurance premiums.
(3) Represents $59,145 paid or reimbursed by the Company for medical expenses
of Mr. Goldfield and his family. See " -- Employment Contracts and
Termination of Employment and Change in Control Arrangements."
8
<PAGE>
(4) All but 2,500 of such options have expired due to Mr. Parker's resignation
from employment.
(5) All such options have expired due to Mr. Parker's resignation from
employment.
(6) All such options have expired due to Mr. Kerby's resignation from
employment.
(7) Amount paid in fiscal 1996 in connection with Mr. Kerby's resignation.
See "--Employment Contracts and Termination of Employment and Change in
Control Arrangements."
OPTION GRANTS DURING 1996 FISCAL YEAR
The following table provides information related to options granted to the
Named Executive Officers during fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (1)
- -------------------------------------------------------------------------------------------- ------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE
NAME GRANTED(#)(2) FISCAL YEAR ($/SH)(3) EXPIRATION DATE 5% ($) 10% ($)
- ---- ------------- ------------- ------------ --------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Goldfield 62,870(4) 13.5% 22.50 January 16, 1998 144,994 297,061
Timothy L. Maretti 10,000(5) 2.6% 22.75 January 10, 2006 143,100 362,600
14,793(4) 3.2% 22.50 January 16, 1998 34,116 69,897
Daniel T. Bogar 15,000(5) 3.2% 22.75 January 10, 2006 214,650 543,900
14,793(4) 3.2% 22.50 January 16, 1998 34,116 69,897
Michael S. Hedge 15,000(5) 3.2% 22.75 January 10, 2006 214,650 543,900
14,793(4) 3.2% 22.50 January 16, 1998 34,116 69,897
Evelyn Henry Miller 5,000(5) 1.1% 22.75 January 10, 2006 71,550 181,300
Terry S. Parker 36,982(5)(6) 8.0% 22.50 (6) -- --
2,500(7) 0.5% 7.625 August 1, 2006 11,988 30,383
Kenneth E. Kerby 15,000(6) 3,2% 22.75 (6)
14,793(5)(6) 3.2% 22.50 (6)
- --------------------
</TABLE>
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability, or vesting over periods of up to ten years.
(2) Reflects options to acquire shares of Common Stock. The Company has not
granted stock appreciation rights.
(3) The option exercise price may be paid as follows: (a) in cash or by
certified check, bank draft, or money order payable to the order of the
Company, (b) with Common Stock (including Restricted Stock), valued at its
Fair Market Value on the date of exercise, and/or (c) in any other form of
valid consideration that is acceptable to the
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<PAGE>
Committee in its sole discretion. See "Proposal II -- Approval of the
Amended and Restated 1993 Plan -- Current Provisions of the 1993 Plan."
(4) The options became exercisable with respect to 100% of the shares covered
thereby on July 16, 1996. In the event of a "change of control" (as
defined in the 1993 Plan) of the Company, however, any unexercisable
portion of the options will become immediately exercisable. See "Proposal
II -- Approval of the Amended and Restated 1993 Plan -- Current Provisions
of the 1993 Plan." The exercise price is equal to the fair market value of
the Common Stock on the date of grant.
(5) The options become exercisable with respect to 25% of the shares covered
thereby on each of January 10, 1997, 1998, 1999 and 2000. In the event of
a "change of control" (as defined in the 1993 Plan) of the Company,
however, any unexercisable portion of the options will become immediately
exercisable. See "Proposal II -- Approval of the Amended and Restated 1993
Plan -- Current Provisions of the 1993 Plan." The exercise price is equal
to the fair market value of the Common Stock on the date of grant.
(6) Such options have expired in connection with the executive's resignation as
an executive officer of the Company.
(7) The options became fully exercisable on February 1, 1997.
OPTION EXERCISES DURING 1996 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by
the Named Executive Officers during the 1996 fiscal year and the number and
value of options held at fiscal year end. The Company does not have any
outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#) AT FY-END ($)(1)
----------------------- ----------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------ --------------- ------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Goldfield -- -- 62,870 250,000 -- --
Timothy L. Maretti -- -- 19,793 32,500 450 900
Daniel T. Bogar -- -- 22,293 37,500 900 900
Michael S. Hedge -- -- 22,293 37,500 900 900
Evelyn Henry Miller -- -- -- 15,000 -- --
Terry S. Parker -- -- -- 2,500 -- 10,158
Kenneth E. Kerby -- -- -- -- -- --
- --------------------
</TABLE>
(1) The closing price for the Company's Common Stock as reported by the
NASDAQ/National Market System on November 29, 1996 was $11.688. Value is
calculated on the basis of the difference between the option exercise price
and $11.688 multiplied by the number of shares of Common Stock underlying
the option.
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<PAGE>
(2) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise related.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an officer or other employee of the
Company (an "Independent Director") is entitled to receive an annual retainer
fee of $25,000, plus $1,500 for each meeting of the Board or committee of the
Board that he attends. In addition, pursuant to the Company's 1994 Amended and
Restated Director Nonqualified Stock Option Plan (the "Directors' Plan"), each
Independent Director automatically receives an option to purchase 2,500 shares
of Common Stock upon becoming a non-employee director of the Company.
Directors who are also employees of the Company receive no additional
compensation for serving as directors. All directors of the Company are
entitled to reimbursement of their reasonable out-of-pocket expenses in
connection with their travel to and attendance at meetings of the Board of
Directors or committees thereof.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has entered into an employment agreement (the "Employment
Agreement") with Mr. Goldfield, effective December 1, 1994. Mr. Goldfield's
Employment Agreement provides for his employment as Chairman of the Board and
Chief Executive Officer at an annual base salary of $850,000, subject to
increase by the Compensation Committee of the Board of Directors. In addition,
the Employment Agreement provides that Mr. Goldfield is eligible to receive an
annual incentive payment determined in accordance with the Incentive Plan.
The Company is also obligated under the Employment Agreement to provide to
Mr. Goldfield (i) a life insurance policy with a face amount of $5,000,000, and
(ii) a disability insurance policy with an annual disability benefit of
$300,000, until attainment of age 65. In addition, the Company is obligated to
pay or reimburse Mr. Goldfield for all medical and dental expenses incurred by
him or his spouse or dependents. The Company has in place insurance to cover a
portion of such expenses.
The Employment Agreement expires on the fifth anniversary of the date on
which the Board of Directors notifies Mr. Goldfield that it has determined to
fix the expiration date of the Employment Agreement, unless earlier terminated
(i) by the Company (a) due to the disability of Mr. Goldfield, (b) for "cause,"
or (c) without "cause"; or (ii) by Mr. Goldfield (a) upon a material breach by
the Company of the Employment Agreement ("Company Breach"), (b) within 12 months
of a "change in control" or (c) without "good reason" (i.e., for any reason
other than Company Breach). If Mr. Goldfield terminates his employment due to
Company Breach or if he is terminated by the Company without "cause," he will be
entitled to receive his accrued but unpaid base salary and annual incentive
payments through the date of termination plus five times the sum of (a) his base
salary plus (b) the average of his annual incentive payments for the preceding
two years. If Mr. Goldfield's employment is terminated upon a "change in
control," he will be entitled to receive three times his "annualized includable
compensation," which is the maximum payment permitted by the Internal Revenue
Code that does not constitute an "excess parachute payment."
Under the Employment Agreement, a termination will be deemed to be "without
cause" if it is for any reason other than (i) due to the disability of Mr.
Goldfield or (ii) for "cause." A termination will be considered to be for
"cause" if it is due to Mr. Goldfield's (i) willful gross misconduct, (ii)
conviction of a felony, or (iii) material breach by Mr. Goldfield of his
Employment Agreement. For purposes of the Employment Agreement, a "change in
control" will be deemed to occur upon the occurrence of any of the following:
(1) any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger; (2) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; (3) any
approval by the stockholders of the Company
11
<PAGE>
of any plan or proposal for the liquidation or dissolution of the Company; (4)
the cessation of control (by virtue of their not constituting a majority of
directors) of the Company's Board of Directors by the Continuing Directors (as
defined); (5) the acquisition of beneficial ownership of 15% of the voting power
of the Company's outstanding voting securities by any person or group who
beneficially owned less than 10% of such voting power on the date of the
Employment Agreement or the acquisition of beneficial ownership of an additional
5% of the voting power of the Company's outstanding voting securities by any
person or group who beneficially owned at least 10% of such voting power on the
date of the Employment Agreement, in each case subject to certain exceptions; or
(6) subject to applicable law, in a Chapter 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving the Company to a
case under Chapter 7.
The Employment Agreement also provides that Mr. Goldfield will be
indemnified by the Company to the fullest extent permitted by law. His right to
indemnification is protected by a right to require the Company to establish and
fund a trust for his indemnification after a change in control or a potential
change in control. The Employment Agreement also includes non-competition and
confidentiality provisions.
Effective October 25, 1996, the Company and Mr. Kenneth E. Kerby entered
into a Separation Agreement in connection with Mr. Kerby's resignation as an
executive officer and employee of the Company. The Separation Agreement provides
that the Company will make severance payments to Mr. Kerby in the total
amount of $200,000, payable $16,667 per month through November 1, 1997, along
with other incidental benefits.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
General. Subject to existing contractual obligations, the Compensation
Committee of the Board of Directors is primarily responsible for the Company's
executive compensation policies and practices and administers the Company's 1993
Plan and Incentive Plan. Until April 11, 1996, when Mr. Richard A. Harris
resigned from the Board of Directors, the Compensation Committee was composed of
Mr. Harris and Mr. James L. Johnson. Mr. Alan H. Goldfield joined the
Compensation Committee from May 24, 1996, until Mr. Sheldon I. Stein's
appointment to the Compensation Committee on August 1, 1996. Mr. John T.
Stupka was appointed to the Compensation Committee on January 2, 1997. During
fiscal 1996, Messrs. Harris, Johnson and/or Goldfield were responsible for
initial determinations with respect to executive base salaries, option grants
and bonus criteria. Messrs. Johnson, Stein and Stupka were responsible for
determinations regarding satisfaction of bonus criteria for fiscal 1996 under
the Incentive Plan, as well as discretionary bonuses.
Compensation Philosophy. The Company's executive compensation philosophy
reflects its belief that the compensation of executives (i) should be linked to
achievement of the Company's business and strategic goals; (ii) should be
aligned with the interests of stockholders through awards of stock options and
other stock-based compensation; (iii) should recognize individual contributions,
as well as overall business results; and (iv) should have the ultimate result of
attracting, motivating, and retaining highly-talented executives for the
Company. To achieve these objectives, the Company's current compensation
program consists of the following elements:
. Base salary
. Annual incentive compensation, the receipt of which is based on (i)
the financial performance of the Company and its divisions from year
to year and/or (ii) significant individual contributions
. Long-term incentive compensation, primarily in the form of stock
options
Chief Executive Officer's Fiscal 1996 Compensation. The fiscal 1996
compensation of the Company's Chief Executive Officer, Alan H. Goldfield, was
based in large part on the recommendations of an outside consulting firm hired
by the Company. In accordance with such recommendations, the Company entered
into an employment agreement with Mr. Goldfield, effective December 1, 1994.
Such agreement provides for an annual base salary of $850,000, or such greater
amount as may be approved by the Compensation Committee. In addition, such
agreement provides that Mr. Goldfield is
12
<PAGE>
eligible for an annual bonus pursuant to an incentive plan approved by the
Compensation Committee. During fiscal 1996, Mr. Goldfield's base salary remained
at $850,000, and he was eligible to receive a cash bonus under the Incentive
Plan of up to 60% of his base salary. Mr. Goldfield's bonus was contingent upon
the achievement of certain earnings goals established by the Compensation
Committee in accordance with the terms of the Company's Incentive Plan. Thus, a
significant percentage of Mr. Goldfield's fiscal 1996 compensation was tied to
performance of the Company. Mr. Goldfield did not receive a cash bonus for
fiscal 1996, since all earnings objectives were not achieved. In order to
incentivize Mr. Goldfield, in lieu of increasing Mr. Goldfield's base salary for
fiscal 1996 or granting a discretionary cash award, the Compensation Committee
granted to Mr. Goldfield a stock option to purchase 62,870 shares of Common
Stock, which option will expire two years from the date of grant. See "Executive
Compensation -- Option Grants During Fiscal 1996." The Compensation Committee
believes that this emphasis on equity compensation is in the best interests of
the Company's stockholders because it more closely aligns the interests of Mr.
Goldfield and the Company's stockholders for both near and long term.
Compensation of Other Executive Officers. In fiscal 1996, the compensation
package received by other executives of the Company consisted of base salary,
stock options and, in some cases, bonus awards. Each element is consistent with
the compensation philosophy set forth above, and the determinations of the
Compensation Committee regarding the appropriate form and level of executive
compensation were based in part on the recommendations of management. Such
recommendations reflected the performance of each individual, his or her
individual contribution to the business, and the Compensation Committee's
ongoing assessment and understanding of the Company's business.
In establishing salary and bonus levels for fiscal 1996, the Compensation
Committee considered the overall performance of the Company, as well as each
executive's level of responsibility, experience, and individual contributions.
The Compensation Committee generally did not increase executive base salaries
for fiscal 1996. The Compensation Committee established bonus criteria for
executives under the Incentive Plan based on the same earnings targets as were
established for the Chief Executive Officer. In addition, with respect to
certain executives, bonus criteria were also based in part on the performance of
the executive's operating unit. The Company's executives were eligible to
receive incentive bonuses under the Company's Incentive Plan ranging from 25
percent to 60 percent of their base salaries. Thus, as with the Chief Executive
Officer, a significant percentage of each executive's total compensation
opportunity was tied to performance of the Company. None of the Company's
executives received cash bonuses for fiscal 1996 pursuant to the Company's
Incentive Plan, since all earnings objectives were not achieved. The
Compensation Committee did, however, grant discretionary bonuses to a limited
number of executives based on such individuals' specific contributions to the
Company during fiscal 1996.
In granting stock options to the Company's executives, the Compensation
Committee, with the input of management, considered each executive's current and
future ability to impact achievement of strategic goals and objectives, as well
as internal equity within the executive's peer group. Like incentive bonuses,
stock option grants were designed to align executive compensation with
stockholder interests. Because executives generally were not granted base
salary increases for fiscal 1996 and did not receive cash bonuses for fiscal
1995, the Compensation Committee placed an extra emphasis on stock options
during fiscal 1996. The Compensation Committee believes this emphasis on
equity compensation is in the best interests of the Company's stockholders
because it more closely aligns the interests of the executives and the Company's
stockholders for both near and long term. All options granted during fiscal
1996 to the Company's executives were granted at the fair market value on the
date of grant. Fifty-eight percent of such options vested on the six month
anniversary of the date of grant and the remainder will vest 25% per year over a
period of four years. See "Executive Compensation -- Option Grants During
Fiscal 1996." Therefore, an executive will receive full benefits from his or
her option grant only if the Company's stock price appreciates and only if the
executive remains with the Company for the full term of vesting. See "Proposal
II -- Approval of the Amended and Restated 1993 Plan."
Internal Revenue Code Section 162(m). In August 1993, as part of the
Omnibus Budget Reconciliation Act of 1993, Section 162(m) of the Internal
Revenue Code (the "Code") was enacted, which section provides for an annual one
million dollar limitation (the "Deduction Limitation") on the deduction that an
employer may claim for compensation of certain executives. Section 162(m) of
the Code provides an exception (the "Performance-Based Compensation Exception")
to the Deduction Limitation for certain performance-based compensation, and it
is the intent of the Compensation Committee to qualify executive compensation
for such exception to the extent necessary, feasible and in the best interests
of the Company.
13
<PAGE>
Proposal II ("Approval of the Amended and Restated 1993 Plan") is being
submitted for approval by the Company's stockholders in part to continue to
qualify certain compensation under the 1993 Plan for the Performance-Based
Compensation Exception to the Deduction Limitation.
James L. Johnson
Sheldon I. Stein
John T. Stupka
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Goldfield served on the Compensation Committee from May 24, 1996 to
August 1, 1996.
From the beginning of fiscal year 1996 through February 28, 1997, the
Company sold approximately $373,000 in inventory to National Tape, a sole
proprietorship owned by Mr. Goldfield. The Company's cost of sales for such
inventory was approximately $359,000. National Tape, a retailer of cellular
telephones and related products in Dallas and a sub-agent of the Company,
receives the Company's activation commission from Southwestern Bell Mobile
Systems ("SBMS") when it performs activations for customers who subscribe for
cellular service; the Company receives the residual payments from SBMS for
subscriber usage. The Company believes that the terms of these transactions
between National Tape and the Company are not substantially less favorable to
the Company than terms given to unrelated parties.
The Company leases a 16,500 square foot facility with retail and warehouse
space from Mr. Goldfield in Irving, Texas. The lease agreement, which was
entered into in October 1993, has a five-year term and provides for a monthly
rental payment of $11,500, subject to an annual adjustment based on changes in
the consumer price index. Lease payments from the beginning of fiscal year 1996
through February 28, 1997 totaled $172,000. The Company believes that the terms
of the lease are no less favorable than terms available from unrelated parties
for comparable retail/warehouse premises.
14
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return on the stocks comprising
the NASDAQ Market Value Index (the "NASDAQ Index") and the Media General
Financial Services Retail -- Miscellaneous -- Radio - TV Distributors Industry
Group Index (the "MG Group Index") over the period commencing December 7, 1993
(the first day after the effective date of the Company's initial public
offering) and ending November 30, 1996. The comparison assumes $100 was
invested on December 7, 1993 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET (NASDAQ)
FISCAL YEAR ENDING
-----------------------------------------
COMPANY 1993 1994 1995 1996
- ------- -------- -------- -------- --------
CELLSTAR CORP 100.00 137.04 194.44 86.57
INDUSTRY INDEX-MG GROUP (PEER) 100.00 87.90 83.59 106.71
BROAD MARKET-NASDAQ 100.00 107.70 136.55 169.42
15
<PAGE>
CERTAIN TRANSACTIONS
During fiscal year 1996, the Company purchased approximately $500,000 in
inventory from Audiovox Corporation, which, as of February 28, 1997, owns
approximately 5.2% of the Company's outstanding common stock.
During fiscal year 1996, Mr. Daniel T. Bogar was indebted to the Company
pursuant to two promissory notes, executed effective February 11, 1994 (the
"1994 Note"), and February 1, 1996 (the "1996 Note"), respectively. The 1994
Note bears interest at a rate equal to the prime rate published by Texas
Commerce Bank, National Association, plus 0.5%. The 1996 Note bears interest at
an annual rate of 6.0%. As of January 31, 1997, Mr. Bogar was indebted to the
Company under the 1994 Note for the full principal amount of $85,000 and under
the 1996 Note for the full principal amount of $40,000. Each such amount
represented the largest amount of indebtedness outstanding since the beginning
of fiscal year 1996 under such notes.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC"). Such persons are required by
SEC regulation to furnish the Company with copies of all Section 16(a) reports
that they file.
To the Company's knowledge, based solely on its review of the copies of
such reports received by it with respect to fiscal 1996, or written
representations from certain reporting persons, all of the Company's officers,
directors, and holders of more than 10% of its Common Stock timely filed all
reports required by Section 16(a) of the Exchange Act.
16
<PAGE>
PROPOSAL II - APPROVAL OF THE AMENDED AND RESTATED 1993 PLAN
The 1993 Plan was originally approved by the stockholders of the Company
in December 1993. The Company has grown significantly since adoption of the
Plans, and the Board of Directors believes that the continued success of the
Company continues to depend upon its ability to attract and retain highly
qualified and competent key employees. The Board of Directors believes that
incentive-based compensation enhances that ability and provides motivation to
such persons to advance the interests of the Company and its stockholders. The
Board's approval and recommendation of the amendment to the 1993 Plan follows a
review and evaluation of the Plan by the Compensation Committee.
A copy of the 1993 Plan, as proposed to be amended and restated, is
attached to this Proxy Statement as Appendix A. The following is a brief
summary of certain provisions of the 1993 Plan, which summary is qualified in
its entirety by reference to the full text of the 1993 Plan.
CURRENT PROVISIONS OF THE 1993 PLAN
The 1993 Plan is currently administered by the Compensation Committee of
the Board of Directors. The Compensation Committee has, subject to the terms of
the 1993 Plan, the sole authority to grant Awards (as hereinafter defined)
thereunder, to construe and interpret the 1993 Plan, and to make all other
determinations and take any and all actions necessary or advisable for the
administration of such plan. Any employee, director or advisor of the Company
or its subsidiaries is eligible to participate in the 1993 Plan; however, only
employees of the Company and its subsidiaries are eligible to receive incentive
stock options. As of February 28, 1997, approximately 1,000 persons were
eligible for participation in the 1993 Plan, of which 47 persons were
participating. Unless earlier terminated by action of the Board of Directors or
the Compensation Committee, the Plan will terminate on December 3, 2003.
The 1993 Plan provides for the grant of any or all of the following types
of awards (collectively, "Awards"): (i) stock options, including "incentive
stock options," within the meaning of Section 422 of the Code, and non-qualified
stock options; (ii) stock appreciation rights, in tandem with stock options or
freestanding; (iii) restricted stock; and (iv) cash awards. Awards may be
granted singly, in combination, or in tandem, as determined by the Compensation
Committee in its discretion. The Compensation Committee generally has the
authority to fix the terms and number of Awards to be granted under the 1993
Plan; provided that no participant may receive during any fiscal year Awards
covering an aggregate of more than 250,000 shares of Common Stock under the 1993
Plan. With respect to any restrictions ("Mandated Restrictions") under the 1993
Plan that are based on the requirements of Rule 16b-3 of the Exchange Act,
Sections 422 or 162(m) of the Code, the rules of any exchange upon which the
Company's securities are listed, or any other applicable law, rule or
restriction ("Applicable Law"), to the extent that any such Mandated
Restrictions are no longer required by Applicable Law, the Compensation
Committee has the sole discretion and authority to grant awards under the 1993
Plan that are not subject to such restrictions and/or to waive any such
restrictions with respect to outstanding awards.
Stock options are exercisable to purchase Common Stock of the Company
during a period specified in each option agreement and are exercisable in
installments pursuant to a vesting schedule designated by the Compensation
Committee. Stock appreciation rights entitle the holder to receive cash or (in
the discretion of the Compensation Committee) shares of Common Stock having a
value equal to the appreciation in the fair market value of the Common Stock
underlying the stock appreciation right from the date of grant to the date of
exercise. Restricted stock awards give the recipient the right to receive a
specified number of shares of Common Stock, subject to such terms, conditions
and restrictions as the Compensation Committee deems appropriate. Restrictions
may include limitations on the right to transfer or encumber the restricted
stock until the expiration of a specified period of time and forfeiture of the
restricted stock upon the occurrence of certain events such as termination of
employment prior to the expiration of a specified period of time. As of March
25, 1997, stock options were the only type of Award that had been granted under
the 1993 Plan.
An aggregate of 1,500,000 shares of Common Stock is currently authorized
and reserved for issuance under the 1993 Plan, subject to adjustments as are
appropriate to reflect any stock dividend, stock split, share combination,
exchange of shares, recapitalization or increase or decrease in shares of Common
Stock without receipt of consideration by the Company.
17
<PAGE>
At January 31, 1997, options to purchase 1,639,765 shares of Common Stock had
been granted, options to purchase 1,148,218 shares of Common Stock were
outstanding, and 335,907 shares of Common Stock remained available for issuance
under the 1993 Plan (all of which have become re-eligible for issuance due to
options that have expired or been forfeited upon termination of employment).
The 1993 Plan requires that the purchase price per share under any option
or stock appreciation right may not be less than 100% of the fair market value
of the underlying shares of Common Stock on the date of grant, or 110% of such
value in the case of incentive stock options granted to any employee owning more
than ten percent of the outstanding capital stock of the Company (a "Ten Percent
Owner"). In addition, the term of any option or stock appreciation right may
not exceed ten years, or five years in the case of incentive stock options
granted to a Ten Percent Owner. Outstanding options granted under the 1993 Plan
have terms ranging from two to ten years, with the majority having terms of ten
years. Vesting schedules for outstanding options range from immediate vesting
to vesting over a period of five years, with the majority having a four-year
vesting schedule. In addition, the vesting of certain options is tied to the
achievement of performance goals. The aggregate fair market value of Common
Stock with respect to which incentive stock options are exercisable for the
first time by any individual during any calendar year may not exceed $100,000.
The 1993 Plan provides that, in the event of a Change of Control, all
unvested options and stock appreciation rights will become fully exercisable,
and all restrictions will lapse with respect to outstanding shares of restricted
stock. "Change of Control" is defined as the occurrence of any of the following
events: (i) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of the surviving corporation immediately after the
merger; (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company; (iii) approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company; (iv) the cessation
of control (by virtue of their not constituting a majority of directors) of the
Board by the individuals (the "Continuing Directors") who (x) at the effective
date of the 1993 Plan were directors or (y) become directors after the effective
date of the 1993 Plan and whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then in office who were directors at the effective date of the 1993
Plan or whose election or nomination for election was previously so approved;
(v) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving the Company to a case under Chapter 7; or (vi)
the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of an aggregate of 15% or more of the voting power of the
Company's outstanding voting securities by any person or persons acting as a
group (within the meaning of Rule 13d-5 under the Exchange Act) who beneficially
owned less than 10% of the voting power of the Company's outstanding voting
securities on the effective date of the 1993 Plan, or the acquisition of
beneficial ownership of an additional 5% of the voting power of the Company's
outstanding voting securities by any person or group who beneficially owned at
least 10% of the voting power of the Company's outstanding voting securities on
the effective date of the 1993 Plan; provided, however, that, notwithstanding
the foregoing, an acquisition will not constitute a Change of Control under the
1993 Plan if the acquiror is (v) Alan H. Goldfield ("Goldfield"), (w) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company and acting in such capacity, (x) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of voting securities of the Company; (y) a person
or group meeting the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1)
under the Exchange Act; or (z) any other person whose acquisition of shares of
voting securities is approved in advance by a majority of the Continuing
Directors; and provided further that no Change of Control will be deemed to have
occurred from a transfer of the Company's voting securities by Goldfield to (v)
a member of Goldfield's immediate family (within the meaning of Rule 16a-1(e) of
the Exchange Act) either during Goldfield's lifetime or by will or the laws of
descent and distribution; (w) any trust as to which Goldfield or a member (or
members) of his immediate family is the beneficiary; (x) any trust as to which
Goldfield is the settlor with sole power to revoke; (y) any entity over which
Goldfield has the power, directly or indirectly, to direct or cause the
direction of the management and policies of the entity, whether through the
ownership of voting securities, by contract or otherwise; or (z) any charitable
trust, foundation or corporation under Section 501(c)(3) of the Code that is
funded by Goldfield. To the extent that a participant's employment agreement
differs from the 1993 Plan with respect to the meaning of "Change of Control,"
if such employment agreement has been approved by the Compensation Committee of
the Board of Directors, the definition included in such employment agreement
will govern.
18
<PAGE>
The exercise price for any option may be paid as follows: (a) in cash or
by certified check, bank draft, or money order payable to the order of the
Company, (b) with Common Stock (including Restricted Stock), valued at its Fair
Market Value on the date of exercise, (c) by delivery to the Company or its
designated agent of an executed irrevocable option exercise form together with
irrevocable instructions from the Participant to a broker or dealer, reasonably
acceptable to the Company, to sell certain of the shares of Common Stock
purchased upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price, and/or (d) in any other form
of valid consideration that is acceptable to the Committee in its sole
discretion. The closing price of the Company's Common Stock on February 28,
1997, as reported in the NASDAQ/NMS transactions was $25.875.
The 1993 Plan provides that, unless otherwise permitted by the Compensation
Committee, in its sole discretion, in the event of termination of a
participant's service with the Company (i) any options and/or stock appreciation
rights held by such participant may be exercised, to the extent exercisable on
the date of termination, (a) for 12 months after termination, if termination is
due to death or disability; (b) for three months after termination, if
termination is due to retirement; and (c) for 30 days after termination, if
termination is due to any reason other than death, disability or retirement;
provided that no option or stock appreciation right may be exercisable beyond
its original expiration date; and (ii) any unvested shares of restricted stock
held by such participant will be forfeited. If a participant forfeits unvested
shares of restricted stock and has paid consideration to the Company for such
forfeited restricted stock, the Company is required to repay such consideration
to the participant.
The Board of Directors or, if authorized, the Compensation Committee, may
from time to time discontinue or amend the 1993 Plan without the consent of the
stockholders unless stockholder approval is required under the Code, the rules
of any exchange upon which the Company's securities are listed, or any other
applicable law, rule or restriction.
PROPOSED AMENDMENTS TO THE 1993 PLAN
The Board of Directors of the Company has unanimously approved the adoption
of an amendment to the 1993 Plan to increase the number of shares of the
Company's Common Stock available for issuance under such plan from 1,500,000
shares to 2,000,000 shares.
Appendix A reflects certain other amendments to the 1993 Plan that have
been unanimously approved by the Board of Directors, none of which are deemed
material by the Board. Stockholders should, however, carefully review Appendix
A in its entirety.
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 1993 PLAN
Incentive Stock Options. No taxable income is realized by a participant
and no tax deduction is available to the Company upon either the grant or
exercise of an incentive stock option. If a participant holds the shares
acquired upon the exercise of an incentive stock option for more than one year
after the issuance of the shares upon exercise of the incentive stock option and
more than two years after the date of the grant of the incentive stock option
(the "ISO Holding Period"), the difference between the exercise price and the
amount realized upon the sale of the shares will be treated as a long-term
capital gain or loss and no deduction will be available to the Company. If the
shares are transferred before the expiration of the ISO Holding Period, the
participant will realize ordinary income and the Company will be entitled to a
deduction on the portion of the gain, if any, equal to the difference between
the incentive stock option exercise price and the fair market value of the
shares on the date of exercise or, if less, the difference between the amount
realized on the disposition and the adjusted basis of the stock; provided
however, that the deduction will not be allowed if such amount exceeds the
Deduction Limitation and does not satisfy an exception to the Deduction
Limitation. See "Executive Compensation -- Report of the Compensation Committee
on Executive Compensation -- Internal Revenue Code Section 162(m)." Any further
gain or loss from an arm's-length sale or exchange will be taxable as a long-
term or short-term capital gain or loss, depending upon the holding period
before disposition. Certain special rules apply if an incentive stock option is
exercised by tendering stock.
The difference between the incentive stock option exercise price and the
fair market value, at the time of exercise, of the Common Stock acquired upon
the exercise of an incentive stock option may give rise to alternative minimum
taxable
19
<PAGE>
income subject to an alternative minimum tax. Special rules also may apply in
certain cases where there are subsequent sales of shares in disqualifying
dispositions and to determine the basis of the stock for purposes of computing
alternative minimum taxable income on subsequent sale of the shares.
Non-qualified Stock Options. No taxable income generally is realized by
the participant upon the grant of a non-qualified stock option, and no deduction
generally is then available to the Company. Upon exercise of a non-qualified
stock option, the excess of the fair market value of the shares on the date of
exercise over the exercise price will be taxable to the participant as ordinary
income. Such amount will also be deductible by the Company unless such amount
exceeds the Deduction Limitation and does not satisfy an exception to the
Deduction Limitation. The tax basis of shares acquired by the participant will
be the fair market value on the date of exercise. When a participant disposes
of shares acquired upon exercise of a non-qualified stock option, any amount
realized in excess of the fair market value of the shares on the date of
exercise generally will be treated as a capital gain and will be long-term or
short-term, depending on the holding period of the shares. The holding period
commences upon exercise of the non-qualified stock option. If the amount
received is less than such fair market value, the loss will be treated as a
long-term or short-term capital loss, depending on the holding period of the
shares. The exercise of a non-qualified stock option will not trigger the
alternative minimum tax consequences applicable to incentive stock options.
Stock Appreciation Rights. No taxable income will be realized by a
participant upon the grant of a stock appreciation right and no deduction will
be available to the Company. Upon the exercise of the stock appreciation right,
the participant will realize taxable income equal to the cash or the fair market
value (on the date of exercise) of the shares, or both, received, and the
Company will be entitled to a deduction unless such amount exceeds the Deduction
Limitation and does not satisfy an exception to the Deduction Limitation. See
"Executive Compensation -- Report of the Compensation Committee on Executive
Compensation -- Internal Revenue Code Section 162(m)." The tax basis in any
shares received will be the fair market value on the date of exercise and, if
shares received are held for more than one year, the participant will realize
long-term capital gain or loss upon disposition.
Restricted Stock. Unless a participant otherwise elects to be taxed upon
receipt of shares of restricted stock under the 1993 Plan, the participant must
include in his or her taxable income the difference between the fair market
value of the shares and the amount paid, if any, for the shares, as of the first
date the participant's interest in the shares is no longer subject to a
substantial risk of forfeiture or such shares become transferable. A
participant's rights in restricted stock awarded under the 1993 Plan are subject
to a substantial risk of forfeiture if the rights to full enjoyment of the
shares are conditioned, directly or indirectly, upon the future performance of
substantial services by the participant. Where shares of restricted stock
received under the 1993 Plan are subject to a substantial risk of forfeiture,
the participant can elect to report the difference between the fair market value
of the shares on the date of receipt and the amount paid, if any, for the stock
as ordinary income in the year of receipt. To be effective, the election must
be filed with the Internal Revenue Service within 30 days after the date the
shares are transferred to the participant. The Company is entitled to a Federal
income tax deduction equal in amount to the amount includable as compensation in
the gross income of the participant, unless such amount exceeds the Deduction
Limitation and does not satisfy an exception to the Deduction Limitation. See
"Executive Compensation -- Report of the Compensation Committee on Executive
Compensation -- Internal Revenue Code Section 162(m)." The amount of taxable
gain arising from a participant's sale of shares of restricted stock acquired
pursuant to the 1993 Plan is equal to the excess of the amount realized on such
sale over the sum of the amount paid, if any, for the stock and the compensation
element included by the participant in taxable income. For stock held for more
than one year, the participant will realize long-term capital gain or loss upon
disposition.
Cash Awards. A participant who receives a cash award will not recognize
any taxable income for Federal income tax purposes until the award is no longer
subject to substantial risk of forfeiture. Any cash or shares of Common Stock
received pursuant to the award generally will be treated as compensation income
in the year in which the award becomes no longer subject to substantial risk of
forfeiture. If a cash award is paid in whole or part in shares of Common Stock
and the participant is subject to Section 16(b) of the Exchange Act on the date
of receipt of such shares, the participant generally will not recognize
compensation income until the expiration of six months from the date of receipt,
unless the participant makes an election under Section 83(b) of the Code to
recognize compensation income on the date of receipt. In each case, the amount
of compensation income will equal the amount of cash and the fair market value
of the shares Common Stock on the date compensation income is recognized. The
Company or one of its subsidiaries generally will be entitled to a compensation
20
<PAGE>
deduction for the amount of compensation income the participant recognizes. Any
stock options received pursuant to such an award will not be subject to taxation
upon the issuance of the option, and no deduction would be available to the
Company at that time. Taxation to the participant (and deductibility for the
Company) will be governed by the same rules as set forth above in the summary
of certain federal income tax consequences relating to non-qualified stock
options.
Other Tax Matters. If unmatured installments of Awards are accelerated as
a result of a Change of Control, any amounts received from the exercise by a
participant of a stock option, the lapse of restrictions on restricted stock or
the deemed satisfaction of conditions of performance-based awards may be
included in determining whether or not a participant has received an "excess
parachute payment" under Section 280G of the Code, which could result in (i) the
imposition of a 20% Federal excise tax (in addition to Federal income tax)
payable by the participant on certain payments of Common Stock or cash resulting
from such exercise or deemed satisfaction of conditions of performance awards
or, in the case of restricted stock, on all or a portion of the fair market
value of the shares on the date the restrictions lapse and (ii) the loss by the
Company of a compensation deduction.
21
<PAGE>
PRIOR ISSUANCES OF OPTIONS UNDER THE 1993 PLAN
The following table sets forth certain information regarding options
received under the 1993 Plan from its inception through January 31, 1997, by (i)
the Named Executive Officers, (ii) all current executive officers as a group,
(iii) all current directors who are not executive officers as a group, (iv) each
nominee for election as a director, (v) each associate of any of the persons
listed in (i)-(iv) above, (vi) each person who has received 5% or more of such
options and (vii) all employees, including current officers who are not
executive officers, as a group.
<TABLE>
<CAPTION>
AGGREGATE AMOUNT OF COMMON STOCK
SUBJECT TO 1993 PLAN OPTIONS GRANTED
NAME OF INDIVIDUAL OR GROUP FROM INCEPTION THROUGH FEBRUARY 28, 1997
--------------------------- -------------------------------------------
<S> <C>
Alan H. Goldfield, Chairman of the
Board and Chief Executive Officer............. 312,870
Timothy L. Maretti, Vice President -
Mexican Operations............................ 54,793
Daniel T. Bogar, Vice President - South
American Operations and Director.............. 59,793
Michael S. Hedge, Vice President -
Wholesale Sales and Director.................. 59,793
Evelyn Henry Miller, Vice President -
Corporate Controller.......................... 15,000
Terry S. Parker, Former President and
Chief Operating Officer/Current Director 286,982(2)
Kenneth E. Kerby, Former Vice President
- Retail Sales and Former Director............ 49,793(2)
James L. Johnson............................... --
John T. Stupka................................. --
All current executive officers as a group...... 827,074
All current directors who are not
executive officers as a group................. --
All employees, including current officers
who are not executive officers, as a group (1) 1,639,765
</TABLE>
- --------------------
(1) Includes options that expired or were terminated prior to their exercise
and that became eligible to be regranted under the 1993 Plan. Also
includes options granted to current executive officers.
(2) All such options have expired.
The amounts that would be receivable by the individuals or groups named in
the table above under the 1993 Plan as proposed to be amended are not
determinable at this time.
22
<PAGE>
VOTE REQUIRED
The affirmative vote of a majority of the shares present in person or
represented by Proxy at the Meeting and entitled to vote on the subject matter
is required to approve the amended and restated 1993 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDED AND RESTATED 1993 PLAN.
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee, has
appointed KPMG Peat Marwick LLP as the independent auditors of the Company for
the fiscal year ending November 30, 1997. Representatives of KPMG Peat Marwick
LLP are expected to be present at the Meeting with the opportunity to make a
statement if they so desire and to be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Stockholders of the Company may submit proposals on matters appropriate for
stockholder action at subsequent annual meetings of the Company consistent with
Rule 14a-8 promulgated under the Exchange Act and the Company's Certificate of
Incorporation. For such proposals to be considered for inclusion in the Proxy
Statement and Proxy relating to the 1998 Annual Meeting of Stockholders, such
proposals must be received by the Company no later than December 2, 1997. Such
proposals should be directed to CellStar Corporation, 1730 Briercroft Court,
Carrollton, Texas 75006, Attention: General Counsel.
OTHER BUSINESS
The Board of Directors knows of no matter other than those described herein
that will be presented for consideration at the Meeting. However, should any
other matter(s) properly come before the Meeting or any adjournment thereof, it
is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment in the interest of the Company.
MISCELLANEOUS
All costs incurred in the solicitation of proxies will be borne by the
Company. In addition to solicitation by mail, directors, officers and employees
of the Company may solicit proxies personally or by telephone or telegram,
without additional compensation. The Company may also make arrangements with
brokerage houses and other custodians, nominees and fiduciaries for forwarding
of solicitation materials to the beneficial owners of shares of Common Stock
held by such persons, and the Company may reimburse such brokerage houses and
other custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.
Accompanying this Proxy Statement is a copy of the Company's Annual Report
for the fiscal year ended November 30, 1996 (the "Annual Report"). The Annual
Report is not to be deemed a part of this Proxy Statement.
23
<PAGE>
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED NOVEMBER 30, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
STATEMENT SCHEDULES, IF ANY, BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO
CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON THE WRITTEN
REQUEST OF SUCH PERSON ADDRESSED TO CELLSTAR CORPORATION, ATT.: DIRECTOR OF
INVESTOR RELATIONS, 1730 BRIERCROFT COURT, CARROLLTON, TEXAS 75006.
By Order of the Board of Directors,
Elaine Flud Rodriguez
Vice President, Secretary
and General Counsel
April 2, 1997
24
<PAGE>
APPENDIX A
CELLSTAR CORPORATION
1993 AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
--------------------------------------------------
(as amended and restated through _____________, 1997)
This Plan amends and restates the CellStar Corporation 1993 Stock Option
Plan, as previously amended and restated, which first became effective on
December 3, 1993. Capitalized terms used herein are defined in Article 2
hereof.
To the extent permitted under Rule 16b-3, Sections 162(m) and 422 of the
Code, and any other applicable law or regulation, the Committee shall have the
power, in its sole discretion, to apply any or all of the amendments effected
hereby to outstanding Stock Options previously granted under the Plan; provided
that, to the extent that the application of any such amendment to an outstanding
Stock Option shall have an Adverse Consequence for the Company and/or a
Participant, such amendment shall not apply unless it is specifically approved
by the Committee and consented to by the Participant.
This Plan, as amended and restated, shall be effective as of __________,
1997, subject to stockholder approval of the amendments effected hereby;
provided that any Discretionary Amendment shall not be subject to stockholder
approval.
ARTICLE 1
PURPOSE
-------
The purpose of the Plan is to attract and retain key Employees, Nonemployee
Directors and Advisors of the Company and its Subsidiaries and to provide such
persons with a proprietary interest in the Company through the granting of Stock
Options, Stock Appreciation Rights, Restricted Stock, and/or Cash Awards,
whether granted singly, in combination, or in tandem. The Plan is designed to
(a) increase the interest of such persons in the welfare of the
Company and its Subsidiaries;
(b) furnish an incentive to such persons to continue their services
for the Company and/or its Subsidiaries; and
(c) provide a means through which the Company and its Subsidiaries
may attract able persons to enter their employ or serve as
Advisors.
Unless otherwise specified by the Compensation Committee at the time of
grant, with respect to Reporting Participants, the Plan and all transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3. To the extent any provision of the Plan or action by the Committee fails
to so comply, it shall be deemed null and void ab initio, to the extent
permitted by law and deemed advisable by the Committee.
ARTICLE 2
DEFINITIONS
-----------
For purposes of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
2.1 "Adverse Consequence" means (i) the loss of qualification of a
Stock Option for special treatment under Rule 16b-3 or the commencement of
a new holding period under such rule; (ii) the disqualification of a Stock
Option as an Incentive Stock Option or the repricing of such Stock Option;
or (iii) the Company's inability to claim the Section 162(m) Exception with
respect to a Stock Option or the repricing of such Stock Option.
<PAGE>
2.2 "Advisor" means any person performing advisory or consulting
services for the Company or any Subsidiary, with or without compensation,
to whom the Company chooses to grant an Award in accordance with the Plan,
provided that bona fide services must be rendered by such person and such
services shall not be rendered in connection with the offer or sale of
securities in a capital raising transaction.
2.3 "Applicable Law" shall have the meaning set forth in Article 3
below.
2.4 "Award" means the grant under the Plan of any Stock Options,
Stock Appreciation Rights, shares of Restricted Stock, or Cash Award,
whether granted singly, in combination, or in tandem (sometimes
individually referred to herein as an "Incentive").
2.5 "Award Agreement" means a written agreement between a Participant
and the Company that sets out the terms of the grant of an Award.
2.6 "Award Period" means the period during which one or more
Incentives granted under an Award may be exercised.
2.7 "Board" means the Board of Directors of the Company.
2.8 "Cash Award" means an Award granted pursuant to Article 9 of the
Plan.
2.9 "Change of Control" means any of the following: (i) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of the surviving corporation immediately after the
merger; (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company; (iii) approval by the stockholders of the
Company of any plan or proposal for the liquidation or dissolution of the
Company; (iv) the cessation of control (by virtue of their not constituting
a majority of directors) of the Board by the individuals (the "Continuing
Directors") who (x) at the effective date of this Plan were directors or
(y) become directors after the effective date of this Plan and whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then in office
who were directors at the effective date of this Plan or whose election or
nomination for election was previously so approved; (v) in a Title 11
bankruptcy proceeding, the appointment of a trustee or the conversion of a
case involving the Company to a case under Chapter 7; or (vi) the
acquisition of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of an aggregate of 15% or more of the voting power of the
Company's outstanding voting securities by any person or persons acting as
a group (within the meaning of Rule 13d-5 under the Exchange Act) who
beneficially owned less than 10% of the voting power of the Company's
outstanding voting securities on the effective date of this Plan, or the
acquisition of beneficial ownership of an additional 5% of the voting power
of the Company's outstanding voting securities by any person or group who
beneficially owned at least 10% of the voting power of the Company's
outstanding voting securities on the effective date of this Plan; provided,
however, that, notwithstanding the foregoing, an acquisition shall not
constitute a Change of Control hereunder if the acquiror is (v) Alan H.
Goldfield ("Goldfield"), (w) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company and acting in such
capacity, (x) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of voting securities of the Company; (y) a person or group
meeting the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1) under
the Exchange Act; or (z) any other person whose acquisition of shares of
voting securities is approved in advance by a majority of the Continuing
Directors; and provided further that no Change of Control shall be deemed
to have occurred from a transfer of the Company's voting securities by
Goldfield to (v) a member of Goldfield's immediate family (within the
meaning of Rule 16a-1(e) of the Exchange Act) either during Goldfield's
lifetime or by will or the laws of descent and distribution; (w) any trust
as to which Goldfield or a member (or members) of his immediate family is
the beneficiary; (x) any trust as to which Goldfield is the settlor with
sole power to revoke; (y) any entity over which Goldfield has the power,
directly or indirectly, to direct or cause the direction of the management
and policies of the entity, whether through the ownership of voting
securities, by contract or otherwise; or (z) any charitable trust,
foundation or corporation under Section 501(c)(3) of the Code that is
A-2
<PAGE>
funded by Goldfield. To the extent that a Participant's Employment
Agreement differs from the Plan with respect to the meaning of "Change of
Control," if such Employment Agreement has been approved by the
Compensation Committee of the Board of Directors, the definition included
in such Employment Agreement shall govern.
2.10 "Code" means the Internal Revenue Code of 1986, as amended.
2.11 "Committee" means the committee(s) appointed or designated by
the Board to administer the Plan in accordance with Article 3 of this Plan.
2.12 "Common Stock" means the Common Stock, par value, $.01 per
share, of the Company or, in the event that the outstanding shares of such
Common Stock are hereafter changed into or exchanged for shares of a
different stock or security of the Company or another corporation, such
other stock or security.
2.13 "Company" means CellStar Corporation, a Delaware corporation.
2.14 "Date of Grant" means the effective date on which an Award is
made to a Participant as set forth in the applicable Award Agreement.
2.15 "Discretionary Amendment" means any amendment to the Plan that
does not require stockholder approval.
2.16 "Employee" means any employee (including any employee who is
also a director and/or officer) of the Company or its Subsidiaries.
2.17 "Employment Agreement" means an agreement between the Company or
any Subsidiary and a Participant, setting forth the terms and conditions of
the Participant's employment by the Company or such Subsidiary. For
purposes of the Plan, such term shall also be deemed to include any
agreement between the Company or any Subsidiary and an Advisor, setting
forth the terms and conditions of the Advisor's services for the Company or
such Subsidiary.
2.18 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
2.19 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.20 "Fair Market Value" of a share of Common Stock means such value
as is determined by the Committee on the basis of such factors as it deems
appropriate; provided that, if the Common Stock is traded on a national
securities exchange or transactions in the Common Stock are quoted on the
NASDAQ National Market System, such value shall be determined by the
Committee on the basis of the last reported sale price for the Common Stock
on the date for which such determination is relevant, as reported on the
national securities exchange or the NASDAQ National Market System, as the
case may be. If the Common Stock is not listed and traded upon a
recognized securities exchange or in the NASDAQ National Market System, the
Committee shall make a determination of Fair Market Value on the basis of
the closing bid and asked quotations for such stock on the date for which
such determination is relevant (as reported by a recognized stock quotation
service) or, in the event that there are no bid or asked quotations for
such stock on the date for which such determination is relevant, then on
the basis of the mean between the closing bid and asked quotations on the
date nearest preceding the date for which such determination is relevant
for which such bid and asked quotations were available. In no event shall
"Fair Market Value" be less than the par value of the Common Stock.
2.21 "Incentive" shall have the meaning given it in Section 2.3
above.
2.22 "Incentive Stock Option" or "ISO" means a Stock Option that by
its terms is intended to be treated as an "incentive stock option" within
the meaning of Section 422 of the Code.
2.23 "Mandated Restrictions" shall have the meaning set forth in
Article 3 below.
A-3
<PAGE>
2.24 "Nonemployee Director" means a member of the Board of Directors
of the Company or any Subsidiary who is not an Employee.
2.25 "Non-qualified Stock Option" means any Stock Option that does
not qualify as an Incentive Stock Option.
2.26 "Option Exercise Price" means the price that must be paid by a
Participant upon exercise of a Stock Option to purchase a share of Common
Stock.
2.27 "Option Period" means the period during which a Stock Option may
be exercised.
2.28 "Participant" shall mean an Employee, Nonemployee Director or
Advisor to whom an Award is granted under this Plan.
2.29 "Plan" means this CellStar Corporation 1993 Amended and Restated
Long-Term Incentive Plan, as amended from time to time.
2.30 "Reporting Participant" means a Participant who is subject to
the reporting requirements of Section 16 of the Exchange Act.
2.31 "Restricted Stock" means shares of Common Stock issued or
transferred to a Participant pursuant to this Plan, which shares are
subject to the restrictions or limitations set forth in Article 7 of this
Plan and in the related Restricted Stock Agreement.
2.32 "Restricted Stock Agreement" means a written agreement between
the Company and a Participant with respect to an Award of Restricted Stock.
2.33 "Retirement" means Termination of Service at or after the
Company's established retirement age, unless otherwise defined in a
particular Award Agreement. To the extent that a Participant's Employment
Agreement differs from the Plan with respect to the meaning of
"Retirement," if such Employment Agreement has been approved by the
Compensation Committee of the Board of Directors, the definition included
in such Employment Agreement shall govern.
2.34 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as amended from time to time.
2.35 "SAR Price" means the price that must be paid by a Participant
upon exercise of an SAR, which shall be at least the Fair Market Value of
each share of Common Stock covered by the SAR, determined on the Date of
Grant of the SAR.
2.36 "Section 162(m)" means Section 162(m) of the Code and the
regulations promulgated thereunder from time to time.
2.37 "Section 162(m) Exception" means the exception under Section
162(m) for "qualified performance-based compensation."
2.38 "Stock Appreciation Right" or "SAR" means the right to receive a
payment equal to the excess of the Fair Market Value of a specified number
of shares of Common Stock on the date the SAR is exercised over the SAR
Price for such shares.
2.39 "Stock Appreciation Right Agreement" means an agreement between
the Company and a Participant setting forth the terms and conditions of an
Award of Stock Appreciation Rights.
2.40 "Stock Option" means a Non-qualified Stock Option or an
Incentive Stock Option to purchase Common Stock.
A-4
<PAGE>
2.41 "Stock Option Agreement" means a written agreement between the
Company and a Participant setting forth the terms and conditions of an
Award of Stock Options.
2.42 "Subsidiary" means a subsidiary corporation of the Company,
within the meaning of Section 424(f) of the Code; provided that, with
respect to any Awards under the Plan other than Incentive Stock Options,
the term "Subsidiary" shall be deemed to include (i) any limited
partnership, if the Company or any subsidiary corporation owns a majority
of the general partnership interest and a majority of the limited
partnership interests entitled to vote on the removal and replacement of
the general partner, and (ii) any partnership, if the partners thereof are
composed only of the Company, any subsidiary corporation, or any limited
partnership listed in item (i) above.
2.43 "Ten Percent Owner" means a person who owns, or is deemed within
the meaning of Section 422(b)(6) of the Code to own, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company (or its parent (within the meaning of Section 424(e) of the Code)
or Subsidiaries). Whether a person is a Ten Percent Owner shall be
determined with respect to a Stock Option based on the facts existing
immediately prior to the Date of Grant of such Stock Option.
2.44 "Termination of Service" occurs when a Participant who is an
Employee, Nonemployee Director or Advisor shall cease to serve as an
Employee, Nonemployee Director or Advisor for any reason; provided that,
with respect to Incentive Stock Options, Termination of Service occurs when
a Participant ceases to serve as an Employee.
2.45 "Total and Permanent Disability" of a Participant means that the
Participant is qualified for long-term disability benefits under the
Company's disability plan or insurance policy; or, if no such plan or
policy is then in existence, that the Participant, because of ill health,
physical or mental disability or any other reason beyond his or her
control, is unable to perform his or her duties of employment for a period
of six (6) continuous months, as determined in good faith by the Committee;
provided that, with respect to any Incentive Stock Option, Total and
Permanent Disability shall have the meaning given it under the rules
governing Incentive Stock Options under the Code. With respect to any
Award other than an Incentive Stock Option, to the extent that a
Participant's Employment Agreement differs from the Plan with respect to
the meaning of "Total and Permanent Disability," if such Employment
Agreement has been approved by the Compensation Committee of the Board of
Directors, the definition included in such Employment Agreement shall
govern.
ARTICLE 3
ADMINISTRATION
--------------
The Plan shall be administered by a committee appointed by the Board,
consisting of at least two members of the Board; provided that, (i) with respect
to any Award that is intended to satisfy the requirements of Rule 16b-3, such
committee shall consist of at least such number of directors as are required
from time to time by Rule 16b-3, and each such committee member shall qualify as
a "Non-Employee Director," within the meaning of Rule 16b-3, if so required;
and (ii) with respect to any Award that is also intended to satisfy the
requirements of the Section 162(m) Exception, such committee shall consist of at
least such number of directors as are required from time to time to satisfy the
Section 162(m) Exception, and each such committee member shall qualify as an
"outside director" within the meaning of Section 162(m). Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board. Any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.
The Committee shall select one of its members to act as its Chairman. A
majority of the Committee shall constitute a quorum, and the act of a majority
of the members of the Committee present at a meeting at which a quorum is
present shall be the act of the Committee.
Subject to the provisions of the Plan, the Committee shall have the sole
discretion and authority to determine and designate from time to time the
eligible persons to whom Awards will be granted and to determine and interpret
the terms and provisions of each Award Agreement, including without limitation
the Award Period, the Date of Grant, and such other terms, provisions,
limitations, and performance requirements, as are approved by the Committee.
The
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Committee shall determine whether an Award shall include one type of Incentive,
two or more Incentives granted in combination, or two or more Incentives granted
in tandem (that is, a joint grant where exercise of one Incentive results in
cancellation of all or a portion of the other Incentive).
Subject to the provisions of the Plan, the Committee shall also have sole
discretion and authority to (i) interpret the Plan; (ii) prescribe, amend, and
rescind any rules and regulations necessary or appropriate for the
administration of the Plan; (iii) modify or amend any Award Agreement or waive
any conditions or restrictions applicable to any Stock Option or SAR (or the
exercise thereof) or to any shares of Restricted Stock; and (iv) make such other
determinations and take such other action as it deems necessary or advisable in
the administration of the Plan. Any interpretation, determination, or other
action made or taken by the Committee shall be final, binding, and conclusive on
all interested parties.
With respect to restrictions ("Mandated Restrictions") in the Plan that are
based on the requirements of Rule 16b-3, Section 422 of the Code, the Section
162(m) Exception, the rules of any exchange upon which the Company's securities
are listed, or any other applicable law, rule or restriction (collectively,
"Applicable Law"), to the extent that any such Mandated Restrictions are no
longer required by Applicable Law, the Committee shall have the sole discretion
and authority to grant Awards that are not subject to such Mandated Restrictions
and/or to waive any such Mandate Restrictions with respect to outstanding
Awards.
ARTICLE 4
ELIGIBILITY
-----------
Any Employee, Nonemployee Director, or Advisor whose judgment, initiative,
and efforts contributed or may be expected to contribute to the successful
performance of the Company is eligible to participate in the Plan; provided that
only Employees shall be eligible to receive Incentive Stock Options; and
provided further that, to the extent required by Applicable Law, no member of
the Committee shall be eligible to participate in the Plan. The Committee, upon
its own action, may grant, but shall not be required to grant, an Award to any
Employee, Nonemployee Director, or Advisor. Awards may be granted by the
Committee at any time and from time to time to new Participants, or to then
Participants, or to a greater or lesser number of Participants, and may include
or exclude previous Participants, as the Committee shall determine; provided
that no Participant may receive during any fiscal year of the Company Awards in
the form of shares of Common Stock, including Stock Options, SARs or Restricted
Stock, the aggregate of which shall exceed 250,000 shares of Common Stock.
Except as required by this Plan, Awards granted at different times need not
contain similar provisions. The Committee's determinations under the Plan
(including without limitation determinations of which persons, if any, are to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among Employees, Nonemployee Directors
and/or Advisors who receive, or are eligible to receive, Awards under the Plan.
ARTICLE 5
SHARES SUBJECT TO PLAN
----------------------
The number of shares of Common Stock that may be issued pursuant to Awards
granted under the Plan is 2,000,000 (as may be adjusted in accordance with
Articles 12 and 13 hereof). Such shares of Common Stock may be made available
from either authorized but unissued Common Stock or Common Stock held by the
Company in its treasury. To the extent permitted by the stockholder approval
requirements of Rule 16b-3, Sections 162(m) and 422 of the Code, and any other
applicable law or regulation, shares of Common Stock previously subject to
Awards which are forfeited, terminated, settled in cash in lieu of Common Stock,
or exchanged for Awards that do not involve Common Stock, or that are subject to
expired and unexercised Stock Options or SARs, shall immediately become
available for Awards under the Plan.
During the term of this Plan, the Company will at all times reserve and
keep available a number of shares of Common Stock sufficient to satisfy the
requirements of this Plan.
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ARTICLE 6
STOCK OPTIONS
-------------
6.1 GRANT OF STOCK OPTIONS. The Committee may, in its sole discretion,
grant Stock Options in accordance with the terms and conditions set forth in the
Plan. The grant of a Stock Option shall be evidenced by a Stock Option
Agreement setting forth the Date of Grant, the total number of shares
purchasable pursuant to the Stock Option, the Option Period, the vesting
schedule (if any), and such other terms and provisions as are consistent with
the Plan.
6.2 OPTION EXERCISE PRICE. The Option Exercise Price for any Stock Option
shall be determined by the Committee and shall be no less than One Hundred
Percent (100%) of the Fair Market Value per share of Common Stock on the Date of
Grant; provided that, with respect to any Incentive Stock Option that is granted
to a Ten Percent Owner, the Option Exercise Price shall be at least 110% of the
Fair Market Value of the Common Stock on the Date of Grant.
6.3 OPTION PERIOD. The Option Period for any Stock Option shall be
determined by the Committee; provided that no portion of any Stock Option may be
exercised after the expiration of ten (10) years from its Date of Grant; and
provided further that, with respect to any Incentive Stock Option that is
granted to a Ten Percent Owner, the term of such Incentive Stock Option (to the
extent required by the Code at the time of grant) shall be no more than five (5)
years from the Date of Grant.
6.4 MAXIMUM ISO GRANTS. The Committee may not grant Incentive Stock
Options under the Plan to any Employee which would permit the aggregate Fair
Market Value (determined on the Date of Grant) of the Common Stock with respect
to which Incentive Stock Options (under this and any other plan of the Company
and its Subsidiaries or parent) are exercisable for the first time by such
Employee during any calendar year to exceed $100,000. To the extent that any
Stock Option is granted under the Plan that is first exercisable in excess of
the foregoing limitations, such Stock Option shall be deemed to be a Non-
qualified Stock Option.
6.5 EXERCISE OF STOCK OPTIONS. Subject to the terms, conditions, and
restrictions of the Plan, each Stock Option may be exercised in accordance with
the terms of the Stock Option Agreement pursuant to which the Stock Option is
granted. If the Committee imposes conditions upon exercise of any Stock Option,
the Committee may, in its sole discretion, accelerate the date on which all or
any portion of the Stock Option may be exercised; provided that, the Committee
shall not, without the Participant's consent, accelerate any Incentive Stock
Option if such acceleration would disqualify such Stock Option as an Incentive
Stock Option. Notwithstanding anything in the Plan to the contrary, to the
extent required by Rule 16b-3, a Reporting Participant may not exercise a Stock
Option or Stock Appreciation Right until at least six month have expired from
the "date of grant" (within the meaning of Rule 16b-3).
Subject to such administrative regulations as the Committee may from time
to time adopt, a Stock Option will be deemed exercised for purposes of the Plan
when (i) written notice of exercise has been received by the Company at its
principal office (which notice shall set forth the number of shares of Common
Stock with respect to which the Stock Option is to be exercised and the date of
exercise thereof, which shall be at least three (3) days after giving such
notice, unless an earlier time shall have been mutually agreed upon) and (ii)
payment of the Option Exercise Price is received by the Company in accordance
with Section 6.6 below; provided that, with respect to a cashless exercise of
any Stock Option (in accordance with clause (c) of Section 6.6 below), such
Stock Option will be deemed exercised for purposes of the Plan on the date of
sale of the shares of Common Stock received upon exercise. No Stock Option may
be exercised for a fractional share of Common Stock.
6.6 PAYMENT OF OPTION EXERCISE PRICE. The Option Exercise Price may be
paid as follows: (a) in cash or by certified check, bank draft, or money order
payable to the order of the Company, (b) with Common Stock (including Restricted
Stock), valued at its Fair Market Value on the date of exercise, (c) by delivery
(including by FAX) to the Company or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions from the
Participant to a broker or dealer, reasonably acceptable to the Company, to sell
certain of the shares of Common Stock purchased upon exercise of the Stock
Option or to pledge such shares as collateral for a loan and promptly deliver to
the Company the amount of sale or loan proceeds necessary to pay such purchase
price, and/or (d) in any other form of valid consideration that is acceptable to
the Committee in its sole discretion. In the event that shares of Restricted
Stock are tendered as consideration for the exercise of a Stock Option, a number
of shares of Common Stock issued upon the exercise of the Stock Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted.
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Upon payment of all amounts due from the Participant, the Company shall
cause certificates for the Common Stock then being purchased to be delivered to
the Participant (or the person exercising the Participant's Stock Option in the
event of his death) at its principal business office or other mutually agreed
upon location within ten (10) business days after the exercise.
If the Participant fails to pay for any of the Common Stock specified in
such notice or fails to accept delivery thereof, the Participant's right to
purchase such Common Stock may be terminated by the Company.
6.7 LIMITATION ON INCENTIVE STOCK OPTION CHARACTERIZATION. To the extent
that any Stock Option fails to qualify as an Incentive Stock Option, such Stock
Option will be considered a Non-qualified Stock Option.
6.8 TERMINATION OF SERVICE.
Unless otherwise permitted by the Committee, in its sole discretion, in the
event of Termination of Service of a Participant, any Stock Options held by such
Participant shall be exercisable as follows:
(a) Termination Due to Death or Total and Permanent Disability. In
the event of a Participant's Termination of Service due to death or Total
and Permanent Disability, such Participant's Stock Options may be
exercised, to the extent such Stock Options could have been exercised by
the Participant on the date of the Participant's death or Total and
Permanent Disability (as applicable), for a period of twelve (12) months
after the Participant's death or Total and Permanent Disability (as
applicable) or until the expiration of the original Option Period (if
sooner).
(b) Termination Due to Retirement. In the event of a Participant's
Termination of Service due to Retirement, such Participant's Stock Options
may be exercised, to the extent such Stock Options could have been
exercised by the Participant on the date of the Participant's Retirement,
for a period of three (3) months after the date of the Participant's
Retirement or until the expiration of the original Option Period (if
sooner).
(c) Termination for Reasons Other than Death, Total and Permanent
Disability, or Retirement. In the event of a Participant's Termination of
Service for any reason other than death, Total and Permanent Disability, or
Retirement, such Participant's Stock Options may be exercised, to the
extent such Stock Options could have been exercised by the Participant on
the date of such Termination of Service, for a period of thirty (30) days
after the date of such Termination of Service or until the expiration of
the original Option Period (if sooner).
6.9 TRANSFERABILITY OF STOCK OPTIONS.
(a) Incentive Stock Options. Incentive Stock Options may not be
transferred or assigned other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the Participant
only by the Participant or the Participant's legally authorized
representative, and each Stock Option Agreement in respect of an Incentive
Stock Option shall so provide. The designation by a Participant of a
beneficiary will not constitute a transfer of the Stock Option.
The Committee may waive or modify any limitation contained in this
Section 6.9(a) that is not required for compliance with Section 422 of the
Code.
(b) Non-qualified Stock Options.
(1) Participants Other Than Reporting Participants. With
respect to Non-qualified Stock Options granted hereunder to any
Participant who is not a Reporting Participant, the Committee may, in
its sole discretion, provide in any Stock Option Agreement (or in an
amendment to any existing Stock Option Agreement) such provisions
regarding transferability of the Non-qualified Stock Options as the
Committee, in its sole discretion, deems appropriate.
(2) Reporting Participants. Except as may be specified by the
Committee in accordance with the following paragraph, a Non-qualified
Stock Option granted to a Reporting Participant may
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not be transferred or assigned other than by will or the laws of
descent and distribution or pursuant to the terms of a qualified
domestic relations order, as defined by the Code or Title I of ERISA,
or the rules thereunder. The designation by a Reporting Participant of
a beneficiary will not constitute a transfer of the Stock Option.
The Committee may, in its sole discretion, provide in any Stock
Option Agreement (or in an amendment to any existing Stock Option
Agreement) that Non-qualified Stock Options granted hereunder to a
Reporting Participant may be transferred to members of the Reporting
Participant's immediate family, trusts for the benefit of such
immediate family members and partnerships in which such immediate
family members are the only partners, provided that there cannot be
any consideration for the transfer.
The Committee may waive or modify any limitation contained in
this Section 6.9(b)(2) that is not required from compliance with Rule
16b-3.
ARTICLE 7
RESTRICTED STOCK
----------------
7.1 GRANT OF RESTRICTED STOCK. The Committee may, in its sole discretion,
grant Restricted Stock Awards in accordance with the terms and conditions set
forth in the Plan. The grant of an Award of Restricted Stock shall be evidenced
by a Restricted Stock Agreement setting forth (i) the Date of Grant, (ii) the
number of shares of Restricted Stock awarded, (iii) the price, if any, to be
paid by the Participant for such Restricted Stock, (iv) the time or times within
which such Award may be subject to forfeiture, (v) specified performance goals,
or other criteria, if any, that the Committee determines must be met in order to
remove any restrictions (including vesting) on such Award, and (vi) such other
terms and provisions as are consistent with the Plan. The provisions of
Restricted Stock Awards need not be the same with respect to each Participant.
7.2 RESTRICTIONS AND CONDITIONS. Each Restricted Stock Award shall confer
upon the recipient thereof the right to receive a specified number of shares of
Common Stock in accordance with the terms and conditions of each Participant's
Restricted Stock Agreement and the restrictions and conditions set forth below:
(a) The shares of Common Stock awarded hereunder to a Participant
shall be restricted for a period of time (the "Restriction Period") to be
determined by the Committee for each Participant at the time of the Award.
The restrictions shall prohibit the sale, transfer, pledge, assignment or
other encumbrance of such shares and shall provide for possible reversion
thereof to the Company in accordance with subparagraph (f) during the
Restriction Period. The Restriction Period shall commence on the Date of
Grant and, unless otherwise established by the Committee in the Restricted
Stock Agreement, shall expire upon satisfaction of the conditions set forth
in the Award Agreement, which conditions may provide for vesting based on
(i) length of continuous service, (ii) achievement of specific business
objectives, (iii) increases in specified indices, (iv) attainment of
specified growth rates, or (v) any other factor, as determined by the
Committee in its sole discretion. The Committee may, in its sole
discretion, remove any or all of the restrictions on such Restricted Stock
whenever it may determine that, by reason of changes in applicable laws or
other changes in circumstances arising after the date of the Award, such
action is appropriate.
(b) From the Date of Grant of a Restricted Stock Award, the
Participant shall have, with respect to his or her shares of Restricted
Stock, all of the rights of a stockholder of the Company, including the
right to vote the shares, and the right to receive any dividends thereon,
subject to forfeiture of such rights, as provided in subparagraph (f)
below.
(c) Each Participant who is awarded Restricted Stock shall be issued a
stock certificate or certificates in respect of such shares of Common
Stock, which shall be registered in the name of the Participant, but shall
be delivered by the Participant to the Company together with a stock power
endorsed in blank. Each such certificate shall be registered in the name
of the Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock,
substantially in the following form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE,
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER TERMS AND CONDITIONS SET
FORTH IN THE CELLSTAR CORPORATION 1993 AMENDED AND RESTATED LONG-TERM
INCENTIVE PLAN AND IN A RELATED AWARD AGREEMENT ENTERED INTO BETWEEN
THE REGISTERED OWNER AND CELLSTAR CORPORATION. COPIES OF SUCH PLAN
AND AGREEMENT ARE ON FILE AT THE PRINCIPAL PLACE OF BUSINESS OR
REGISTERED OFFICE OF, AND WILL BE FURNISHED WITHOUT CHARGE UPON
WRITTEN REQUEST BY THE RECORD HOLDER, TO CELLSTAR CORPORATION, 1730
BRIERCROFT COURT, CARROLLTON, TEXAS 75006.
Each Restricted Stock Agreement shall require that (i) each
Participant, by his or her acceptance of Restricted Stock, shall
irrevocably grant to the Company a power of attorney to transfer any shares
so forfeited to the Company and agrees to execute any documents requested
by the Company in connection with such forfeiture and transfer, and (ii)
such provisions regarding returns and transfers of stock certificates with
respect to forfeited shares of Common Stock shall be specifically
performable by the Company in a court of equity or law.
(d) Upon the lapse of a Restriction Period, the Company will return
the stock certificates representing shares of Common Stock with respect to
which the restrictions have lapsed to the Participant or his or her legal
representative, and pursuant to the instruction of the Participant or his
or her legal representative will issue a certificate for such shares that
does not bear the legend set forth in subparagraph (c) above.
(e) Any other securities or assets (other than ordinary cash
dividends) that are received by a Participant with respect to shares of
Restricted Stock awarded to such Participant, which shares are still
subject to restrictions established in accordance with subparagraph (a)
above, will be subject to the same restrictions and will be delivered by
the Participant to the Company as provided in subparagraph (c) above.
(f) Subject to the provisions of the particular Award Agreement, and
unless otherwise permitted by the Committee in its sole discretion, upon
Termination of Service for any reason during the Restriction Period, any
nonvested shares of Restricted Stock held by such Participant shall be
forfeited by the Participant. In the event a Participant has paid any
consideration to the Company for forfeited Restricted Stock, the Company
shall, as soon as practicable after the event causing forfeiture (but in
any event within 5 business days), pay to the Participant, in cash, an
amount equal to the total consideration paid by the Participant for such
forfeited shares. Upon any forfeiture, all rights of a Participant with
respect to the forfeited shares of Restricted Stock shall cease and
terminate, without any further obligation on the part of the Company.
7.3 NOTICE TO COMPANY OF SECTION 83(B) ELECTION. Any Participant who
exercises an election under Section 83(b) of the Code to have his or her receipt
of shares of Restricted Stock taxed currently, without regard to restrictions,
must give notice to the Company of such election immediately upon making such
election. Any such election must be made within 30 days after the effective
date of issuance and cannot be revoked except with the consent of the Internal
Revenue Service.
ARTICLE 8
STOCK APPRECIATION RIGHTS
-------------------------
8.1 GRANTS OF SARS. The Committee may, in its sole discretion, grant
Stock Appreciation Rights in accordance with the terms and conditions set forth
in the Plan. Each SAR Agreement may contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as are determined by
the Committee in its sole discretion. An SAR may be granted in combination
with, in addition to, or completely independent of, a Stock Option or any other
Award. An SAR shall entitle a Participant to surrender to the Company all or a
portion of the SAR in exchange for an amount equal to the excess of the Fair
Market Value of a share of Common Stock on the date of
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exercise over the SAR Price, multiplied by the total number of shares of Common
Stock with respect to which the SAR shall have been exercised.
8.2 SAR PRICE. The SAR Price for any share of Common Stock subject to an
SAR shall be no less than One Hundred Percent (100%) of the Fair Market Value of
the share on the Date of Grant.
8.3 AWARD PERIOD. Subject to Section 8.9 below, the Award Period for any
Stock Appreciation Right shall be determined by the Committee; provided that no
portion of any Stock Appreciation Right may be exercised after the expiration of
ten (10) years from its Date of Grant.
8.4 FORM OF PAYMENT. In the discretion of the Committee, the Company may
satisfy its payment obligation upon a Participant's exercise of an SAR (a) in
cash, (b) in shares of Common Stock valued at their Fair Market Value on the
date of exercise, or (c) in part with cash and in part with shares of Common
Stock.
8.5 EXERCISE OF SARS. Subject to the following paragraph, each Stock
Appreciation Right shall be exercisable in accordance with the terms of the
Stock Appreciation Rights Agreement pursuant to which the Stock Appreciation
Right is granted. Subject to the conditions of this Section 8.5 and such
administrative regulations as the Committee may from time to time adopt, an SAR
may be exercised by the delivery of written notice to the Committee setting
forth the number of shares of Common Stock with respect to which the SAR is to
be exercised and the date of exercise thereof, which shall be at least three (3)
days after giving such notice unless an earlier time shall have been mutually
agreed upon. On the date of exercise, the Participant shall receive from the
Company in exchange therefor payment in an amount equal to the excess (if any)
of the Fair Market Value (as of the date of the exercise of the SAR) of one
share of Common Stock over the SAR Price per share specified in such SAR,
multiplied by the total number of shares of Common Stock of the SAR being
surrendered.
A transaction under the Plan involving the exercise of an SAR and the
receipt of cash in complete or partial settlement of the SAR by a Reporting
Participant shall be subject to the satisfaction of all of the following
conditions:
(a) the Company shall have been subject to and complied with the
reporting requirements of Section 13(a) of the Exchange Act for at least
one year prior to the exercise of the SAR;
(b) the Company regularly releases for publication quarterly and
annual summary statements of sales and earnings;
(c) any election by the Reporting Participant to receive cash in full
or partial settlement of the SAR, as well as the exercise by the insider of
the SAR for cash, shall have been made during the period beginning on the
third business day following the date of release of the financial data
specified in clause (ii) of this sentence and ending on the twelfth day
following such date, unless the exercise by the participant of the SAR is
for cash and the date of exercise is automatic or fixed in advance under
the Plan and is outside the control of the participant, in which case the
condition in this subparagraph (c) shall not be applicable; and
(d) The SAR must be held for six months from the date of acquisition
to the date of cash settlement.
If the conditions to the exercise of an SAR by a Reporting Participant
contained in Rule 16b-3 are subsequently modified, the foregoing conditions
shall automatically be deemed amended to incorporate such modifications.
Furthermore, the Committee may waive any limitation contained in this Section
that is not required for compliance with Rule 16b-3.
8.6 EFFECT ON STOCK OPTIONS AND VICE-VERSA. Whenever a Stock Appreciation
Right is granted in relation to a Stock Option and the exercise of one affects
the right to exercise the other, the number of shares of Stock available under
the Stock Option to which the Stock Appreciation Right relates will decrease by
a number equal to the number of shares of Common Stock for which the Stock
Appreciation Right is exercised. Upon the exercise of a Stock Option, any
related SAR will terminate as to any number of shares of Common Stock subject to
such Stock Appreciation Right that exceeds the total number of shares of Common
Stock for which the Stock Option remains unexercised.
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8.7 TERMINATION OF EMPLOYMENT OR SERVICE. Unless otherwise permitted by
the Committee, in its sole discretion, in the event of Termination of Service of
a Participant, any Stock Appreciation Rights held by such Participant shall be
exercisable as set forth below; provided that, whenever a Stock Appreciation
Right is granted in relation to a Stock Option and the exercise of one affects
the right to exercise the other, the Stock Appreciation Right may be exercised
only during the period, if any, within which the Stock Option to which it
relates may be exercised.
(a) Termination Due to Death or Total and Permanent Disability. In
the event of a Participant's Termination of Service due to death or Total
and Permanent Disability, such Participant's Stock Appreciation Rights may
be exercised, to the extent such Stock Appreciation Rights could have been
exercised by the Participant on the date of the Participant's death or
Total and Permanent Disability (as applicable), for a period of twelve (12)
months after the Participant's death or Total and Permanent Disability (as
applicable) or until the expiration of the original Award Period (if
sooner).
(b) Termination Due to Retirement. In the event of a Participant's
Termination of Service due to Retirement, such Participant's Stock
Appreciation Rights may be exercised, to the extent such Stock Appreciation
Rights could have been exercised by the Participant on the date of the
Participant's Retirement, for a period of three (3) months after the date
of the Participant's Retirement or until the expiration of the original
Award Period (if sooner).
(c) Termination for Reasons Other than Death, Total and Permanent
Disability, or Retirement. In the event of a Participant's Termination of
Service for any reason other than death, Total and Permanent Disability, or
Retirement, such Participant's Stock Appreciation Rights may be exercised,
to the extent such Stock Appreciation Rights could have been exercised on
the date of such Termination of Service, for a period of thirty (30) days
after the date of such Termination of Service or until the expiration of
the original Award Period (if sooner).
8.8 TRANSFERABILITY OF STOCK APPRECIATION RIGHTS.
(a) Participants Other Than Reporting Participants. Subject to
Section 8.9 below, with respect to SARs granted hereunder to any
Participant who is not a Reporting Participant, the Committee may, in its
sole discretion, provide in any Stock Appreciation Rights Agreement (or in
an amendment to any existing Stock Appreciation Rights Agreement) such
provisions regarding transferability of the SARs as the Committee, in its
sole discretion, deems appropriate.
(b) Reporting Participants. Subject to Section 8.9 below, and except
as may be specified by the Committee in accordance with the following
paragraph, a Stock Appreciation Right granted to a Reporting Participant
may not be transferred or assigned other than by will or the laws of
descent and distribution or pursuant to the terms of a qualified domestic
relations order, as defined by the Code or Title I of ERISA, or the rules
thereunder. The designation by a Reporting Participant of a beneficiary
will not constitute a transfer of the SAR.
Subject to Section 8.9 below, the Committee may, in its sole
discretion, provide in any Stock Appreciation Rights Agreement (or in an
amendment to any existing Stock Appreciation Rights Agreement) that Stock
Appreciation Rights granted hereunder to a Reporting Participant may be
transferred to members of the Reporting Participant's immediate family,
trusts for the benefit of such immediate family members and partnerships in
which such immediate family members are the only partners, provided that
there cannot be any consideration for the transfer.
The Committee may waive or modify any limitation contained in this
Section 8.8(b) that is not required from compliance with Rule 16b-3.
8.9 TANDEM INCENTIVE STOCK OPTION - STOCK APPRECIATION RIGHT. Whenever an
Incentive Stock Option and a Stock Appreciation Right are granted together and
the exercise of one affects the right to exercise the other, the following
requirements shall apply:
(a) The Stock Appreciation Right shall expire no later than the
expiration of the underlying Incentive Stock Option;
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(b) The Stock Appreciation Right may be for no more than the
difference between the Stock Option Exercise Price of the underlying
Incentive Stock Option and the Fair Market Value of the Common Stock
subject to the underlying Incentive Stock Option at the time the SAR is
exercised;
(c) The Stock Appreciation Right is transferable only when the
underlying Incentive Stock Option is transferable, and under the same
conditions;
(d) The Stock Appreciation Right may be exercised only when the
underlying Incentive Stock Option is eligible to be exercised; and
(e) The Stock Appreciation Right may be exercised only when the Fair
Market Value of the Common Stock subject to the underlying Incentive Stock
Option exceeds the Option Exercise Price of the underlying Incentive Stock
Option.
ARTICLE 9
CASH AWARDS
-----------
9.1 GRANT OF CASH AWARDS. The Committee may, in its sole discretion,
grant Cash Awards in accordance with the terms and conditions set forth in the
Plan. Each related Award Agreement shall set forth (i) the amount of the Cash
Award, (ii) the time or times within which such Award may be subject to
forfeiture, if any, (iii) specified performance goals, or other criteria, if
any, as the Committee may determine must be met in order to remove any
restrictions (including vesting) on such Award, and (iv) any other terms,
limitations, restrictions, and conditions of the Incentive that are consistent
with this Plan.
The Award Agreement shall also set forth the vesting period for the Cash
Award, if any, which shall commence on the Date of Grant and, unless otherwise
established by the Committee in the Award Agreement, shall expire upon
satisfaction of the conditions set forth in the Award Agreement; such conditions
may provide for vesting based on (i) length of continuous service, (ii)
achievement of specific business objectives, (iii) increases in specified
indices, (iv) attainment of specified growth rates, or (v) other comparable
measurements of Company performance, as may be determined by the Committee in
its sole discretion.
9.2 TERMINATION OF SERVICE. Subject to the provisions of the particular
Award Agreement, and unless otherwise permitted by the Committee, in its sole
discretion, upon Termination of Service for any reason during a vesting period
(if any), the nonvested portion of a Cash Award shall be forfeited by the
Participant. Upon any forfeiture, all rights of a Participant with respect to
the forfeited Cash Award shall cease and terminate, without any further
obligation on the part of the Company.
9.3 FORM OF PAYMENT. In the sole discretion of the Committee, the Company
may satisfy its obligation under a Cash Award by the distribution of that number
of shares of Common Stock, Stock Options, or Restricted Stock, or any
combination thereof, having an aggregate Fair Market Value (as of the date of
payment) equal to the amount of cash otherwise payable to the Participant, with
a cash settlement to be made for any fractional share interests, or the Company
may settle such obligation in part with shares of Common Stock and in part with
cash. If required by Rule 16b-3 at the time of distribution, any shares of
Common Stock distributed to a Reporting Participant must be held by such
Participant for at least six months from the date of distribution.
ARTICLE 10
AMENDMENT OR DISCONTINUANCE
---------------------------
The Plan may be amended or discontinued by the Board, or, if the Board has
specifically delegated this authority to the Committee, by the Committee,
without the approval of the stockholders; provided that no amendment shall be
made without approval of the stockholders of the Company if such approval is
required under the Code, Rule 16b-3, the requirements of any exchange upon which
the Company's securities are listed, or any other applicable law or regulation.
In addition, no termination or amendment of the Plan may, without the consent of
the Participant to whom any Award has theretofore been granted, adversely affect
the rights of such Participant with respect to such Award.
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<PAGE>
ARTICLE 11
TERM
----
Unless sooner terminated by action of the Board, the Plan will terminate on
December 3, 2003.
ARTICLE 12
CAPITAL ADJUSTMENTS
-------------------
If at any time while the Plan is in effect, or while unexercised Stock
Options or SARs or unvested shares of Restricted Stock are outstanding, there
shall be any increase or decrease in the number of issued and outstanding shares
of Common Stock resulting from (1) the declaration or payment of a stock
dividend, (2) any recapitalization resulting in a stock split-up, combination,
or exchange of shares of Common Stock, or (3) other increase or decrease in such
shares effected without receipt of consideration by the Company, then and in
such event:
(a) An appropriate adjustment shall be made in the maximum number of
shares of Common Stock then subject to being awarded under the Plan and in
the maximum number of shares of Common Stock then subject to being awarded
to a Participant, to the end that the same proportion of the Company's
issued and outstanding shares of Common Stock shall continue to be subject
to being so awarded;
(b) Appropriate adjustments shall be made in the number of shares of
Common Stock purchasable under outstanding, unexercised Stock Options and
the Option Exercise Price therefor, to the end that the same proportion of
the Company's issued and outstanding shares of Common Stock in each such
instance shall remain subject to purchase at the same aggregate Option
Exercise Price;
(c) Appropriate adjustments shall be made in the number of shares of
Common Stock subject to outstanding, unexercised SARs and the SAR Price
therefor, to the end that the same proportion of the Company's issued and
outstanding shares of Common Stock in each instance shall remain subject to
exercise at the same aggregate SAR Price; and
(d) Appropriate adjustments shall be made in the number of outstanding
shares of Restricted Stock with respect to which restrictions have not yet
lapsed prior to any such change.
Except as otherwise expressly provided herein, the issuance by the Company
of shares of its capital stock of any class, or securities convertible into
shares of capital stock of any class, either in connection with direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, (i) the number, or Option Exercise Price, of shares of
Common Stock then subject to outstanding Stock Options granted under the Plan,
(ii) the number, or SAR Price, of SARs then subject to outstanding SARs granted
under the Plan, or (iii) the number of outstanding shares of Restricted Stock.
Upon the occurrence of each event requiring an adjustment with respect to
Stock Options, SARs, or shares of Restricted Stock, the Company shall mail to
each affected Participant its computation of such adjustment which shall be
conclusive and shall be binding upon each such Participant.
ARTICLE 13
RECAPITALIZATION, MERGER AND CONSOLIDATION
------------------------------------------
(a) The existence of this Plan and Incentives granted hereunder shall
not affect in any way the right or power of the Company or its stockholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in the Company's capital structure and
its business, or
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<PAGE>
any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or preference stocks ranking prior to or otherwise
affecting the Common stock or the rights thereof (or any rights, options,
or warrants to purchase same), or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(b) Subject to any required action by the stockholders, if the Company
shall be the surviving or resulting corporation in any merger or
consolidation, any Incentive granted hereunder shall pertain to and apply
to the securities or rights (including cash, property, or assets) to which
a holder of the number of shares of Common Stock subject to the Incentive
would have been entitled.
(c) In the event of any merger or consolidation pursuant to which the
Company is not the surviving or resulting corporation, there shall be
substituted for each share of Common Stock subject to the unexercised or
unvested portions of outstanding Incentives, that number of shares of each
class of stock or other securities or that amount of cash, property, or
assets of the surviving or consolidated company that were distributed or
distributable to the stockholders of the Company in respect to each share
of Common Stock held by them, such outstanding Incentives be thereafter
pertain to such stock, securities, cash, or property in accordance with
their terms (subject to subparagraph (d) below). Notwithstanding the
foregoing, however, all such Incentives may be cancelled by the Board as of
the effective date of any such reorganization, merger, or consolidation, by
giving notice to each holder thereof or his personal representative of its
intention to do so and by permitting the exercise during the thirty (30)
day period next preceding such effective date of any outstanding Stock
Options or SARs, whether or not vested in accordance with their original
terms, and by waiving all restrictions on outstanding shares of Restricted
Stock.
(d) In the event of a Change of Control, then, notwithstanding any
other provision in this Plan to the contrary, all unmatured installments of
Incentives outstanding shall thereupon automatically be accelerated and
exercisable in full, and all restrictions and/or performance goals with
respect to any Incentive shall be deemed satisfied. The determination of
the Committee that any of the foregoing conditions has been met shall be
binding and conclusive on all parties.
ARTICLE 14
LIQUIDATION OR DISSOLUTION
--------------------------
In case the Company shall, at any time while any Incentive under this Plan
shall be in force and remain unexpired, (i) sell all or substantially all of its
property, or (ii) dissolve, liquidate, or wind up its affairs, then each
Participant may thereafter receive upon exercise of any Option or SAR (in lieu
of each share of Common Stock of the Company which such Participant would have
been entitled to receive) the same kind and amount of any securities or assets
as may be issuable, distributable, or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each share of Common Stock of the
Company. If the Company shall, at any time prior to the expiration of any
Incentive, make any partial distribution of its assets, in the nature of a
partial liquidation, whether payable in cash or in kind (but excluding the
distribution of a cash dividend payable out of earned surplus and designated as
such), then in such event the exercise prices then in effect with respect to any
outstanding Stock Options or SARs shall be reduced, on the payment date of such
distribution, in proportion to the percentage reduction in the tangible book
value of the shares of the Company's Common Stock (determined in accordance with
generally accepted accounting principles) resulting by reason of such
distribution.
ARTICLE 15
INCENTIVES IN SUBSTITUTION FOR
INCENTIVES GRANTED BY OTHER CORPORATIONS
----------------------------------------
Stock Options, SARs and shares of Restricted Stock may be granted under the
Plan from time to time in substitution for options, stock appreciation rights or
shares of restricted stock held by employees of a corporation who become or are
about to become Employees of the Company or any Subsidiary as a result of a
merger or consolidation of the employing corporation with the Company or the
acquisition by the Company of stock of the employing corporation. The terms and
conditions of the substitute Incentives so granted may vary from the terms and
conditions
A-15
<PAGE>
set forth in this Plan to such extent as the Board at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the options,
stock appreciation rights or shares of restricted stock in substitution for
which they are granted.
ARTICLE 16
MISCELLANEOUS PROVISIONS
------------------------
16.1 INVESTMENT INTENT. The Company may require that there be presented to
and filed with it by any Participant under the Plan, such evidence as it may
deem necessary to establish that the Incentives granted or the shares of Common
Stock to be purchased or transferred are being acquired for investment and not
with a view to their distribution.
16.2 NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor any Incentive
granted under the Plan shall confer upon any Participant any right with respect
to continuance of employment by the Company or any Subsidiary.
16.3 INDEMNIFICATION OF BOARD AND COMMITTEE. No member of the Board or the
Committee, nor any officer or Employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination, or interpretation.
16.4 EFFECT OF THE PLAN. Neither the adoption of this Plan nor any action
of the Board or the Committee shall be deemed to give any person any right to be
granted an Award or any other rights except as may be evidenced by an Award
Agreement, or any amendment thereto, duly authorized by the Committee and
executed on behalf of the Company, and then only to the extent and upon the
terms and conditions expressly set forth therein.
16.5 COMPLIANCE WITH SECURITIES LAWS AND OTHER RULES AND REGULATIONS. The
Plan, the grant and exercise of Incentives hereunder, and the obligation of the
Company to sell and deliver shares of Common Stock, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Company shall
have no obligation to sell or issue shares of Common Stock under any Incentive
if the Committee determines, in its sole discretion, that issuance thereof would
constitute a violation by the Participant or the Company of any provisions of
any law or regulation of any governmental authority (including Section 16 of the
Exchange Act) or any securities exchange or other forum in which shares of
Common Stock are traded; and, as a condition of any sale or issuance of shares
of Common Stock under an Incentive, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation.
16.6 WITHHOLDING; NOTICE OF DISPOSITION OF STOCK PRIOR TO EXPIRATION OF ISO
HOLDING PERIOD.
(a) Condition Precedent. Whenever shares of Common Stock are to be
issued pursuant an Award, the Company shall have the right to require the
Participant to remit to the Company an amount sufficient to satisfy
federal, state, local or other withholding tax requirements prior to the
delivery of any certificate or certificates for such shares of Common
Stock.
(b) Manner of Satisfying Withholding Obligation. When a Participant
is required to pay to the Company an amount required to be withheld under
applicable tax laws in connection with an Award, such payment may be made
(i) in cash, (ii) by check, (iii) if permitted by the Committee, by
delivery to the Company of shares of Common Stock already owned by the
Participant having a Fair Market Value on the date the amount of tax to be
withheld is to be determined (the "Tax Date") equal to the amount required
to be withheld, (iv) with respect to Stock Options, through the withholding
by the Company ("Company Withholding") of a portion of the shares of Common
Stock acquired upon the exercise of the Stock Options (provided that, with
respect to any Stock Option held by a Reporting Participant, at least six
months has elapsed between the Date of Grant of such Stock Option and the
exercise involving tax withholding) having a Fair Market Value on the Tax
Date equal to the amount required to be withheld, or (v) in any other form
of valid consideration, as permitted by the Committee in its discretion;
provided that a Reporting Participant
A-16
<PAGE>
shall not be permitted to satisfy his or her withholding obligation through
Company Withholding unless required to do so by the Committee, in its sole
discretion. The Committee may waive or modify any limitation contained in
this Section that is not required for compliance with Rule 16b-3.
(c) Notice of Disposition of Stock Acquired Pursuant to Incentive
Stock Options. If shares of Common Stock acquired upon exercise of an
Incentive Stock Option are disposed of by a Participant prior to the
expiration of either two (2) years from the Date of Grant of such Stock
Option or one (1) year from the transfer of shares of Common Stock to the
Participant pursuant to the exercise of such Stock Option, or in any other
disqualifying disposition within the meaning of Section 422 of the Code,
such Participant shall notify the Company in writing of the date and terms
of such disposition. A disqualifying disposition by a Participant shall
not affect the status of any other Stock Option granted under the Plan as
an Incentive Stock Option within the meaning of Section 422 of the Code.
16.7 USE OF PROCEEDS. Proceeds from the sale of shares of Common Stock
pursuant to Incentives granted under this Plan shall constitute general funds of
the Company.
16.8 LEGEND. Each certificate representing shares of Common Stock issued
to a Participant pursuant to the Plan shall bear the following legend, or a
similar legend deemed by the Company to constitute an appropriate notice of the
provisions hereof and the applicable security laws (any such certificate not
having such legend shall be surrendered upon demand by the Company and so
endorsed):
On the face of the certificate:
"Transfer of this stock is restricted in accordance with
conditions printed on the reverse of this certificate."
On the reverse:
"The shares of stock evidenced by this certificate are subject to
and transferrable only in accordance with that certain CellStar
Corporation 1993 Amended and Restated Long-Term Incentive Plan,
as amended from time to time, a copy of which is on file at the
principal office of the Company in Carrollton, Texas. No
transfer or pledge of the shares evidenced hereby may be made
except in accordance with and subject to the provisions of said
Plan. By acceptance of this certificate, any holder, transferee
or pledge hereof agrees to be bound by all of the provisions of
said Plan."
Insert the following legend on the certificate if the shares were not
issued in a transaction registered under the applicable federal and
state securities laws:
"Shares of stock represented by this certificate have been
acquired by the holder for investment and not for resale,
transfer or distribution, have been issued pursuant to exemptions
from the registration requirements of applicable state and
federal securities laws, and may not be offered for sale, sold or
transferred other than pursuant to effective registration under
such laws, or in transactions otherwise in compliance with such
laws, and upon evidence satisfactory to the Company of compliance
with such laws, as to which the Company may rely upon an opinion
of counsel satisfactory to the Company."
A copy of this Plan shall be kept on file in the principal office of the
Company in Carrollton, Texas.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of , 1997, by its President and Secretary pursuant to prior action
taken by the Board.
A-17
<PAGE>
CELLSTAR CORPORATION
By:
--------------------------------
President
Attest:
- ------------------------------
Secretary
A-18
<PAGE>
PROXY
CELLSTAR CORPORATION
1730 BRIERCROFT COURT
CARROLLTON, TEXAS 75006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Alan H. Goldfield and Elaine F. Rodriguez as
Proxies, each with the power to act without the other and to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as designated
on the other side, all the shares of common stock of CellStar Corporation held
of record by the undersigned on February 27, 1997 at the Annual Meeting of
Stockholders of the Company to be held on April 23, 1997 or any adjournment
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THE Please mark your
PROPOSALS. PLEASE REVIEW CAREFULLY THE PROXY STATEMENT DELIVERED WITH THIS PROXY. votes as indicated [X]
in this example
1. Proposal to elect JAMES L. JOHNSON and JOHN T. STUPKA as directors for a term of three years
or until their successors are elected and qualified.
FOR all nominees WITHHOLD INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
listed above (except as AUTHORITY WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
marked to the contrary to vote for all nominees
to the right) listed above ----------------------------------------------------------------------
[ ] [ ]
2. Proposal to approve the amendment and restatement
of the CellStar Corporation 1993 Amended and
Restated Long-Term Incentive Plan.
The Proxies are authorized to vote, in their discretion, upon
FOR AGAINST ABSTAIN such other business as may properly come before the meeting.
[ ] [ ] [ ]
Dated:________________________________________________, 1997
____________________________________________________________
Signature
____________________________________________________________
Signature if held jointly
Please sign exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full
corporate name by the President or other authorized officer.
If a partnership, please sign in partnership name by an
authorized person.
- ------------------------------------------------------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
</TABLE>
