<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------- -------
COMMISSION FILE NUMBER 0-22972
CELLSTAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2479727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1730 BRIERCROFT COURT
CARROLLTON, TEXAS 75006
TELEPHONE (972) 466-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
On October 6, 1997, there were 29,245,670 outstanding shares of Common
Stock, $0.01 par value per share.
<PAGE> 2
CELLSTAR CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
PART I - FINANCIAL INFORMATION Number
- ------ --------------------- ------
<S> <C>
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (unaudited) 3
August 31, 1997 and November 30, 1996
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) 4
Three and nine months ended August 31, 1997 and 1996
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited) 5
Nine months ended August 31, 1997
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 6
Nine months ended August 31, 1997 and 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
- ------- -----------------
Item 1. LEGAL PROCEEDINGS 17
Item 2. CHANGES IN SECURITIES 17
Item 3. DEFAULTS UPON SENIOR SECURITIES 17
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17
Item 5. OTHER INFORMATION 17
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 17
</TABLE>
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
August 31, November 30,
1997 1996
--------- -------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 26,088 27,296
Accounts receivable (less allowance for doubtful accounts of
$27,036 and $29,023, respectively) 168,944 131,812
Inventories 187,602 94,473
Deferred income taxes 4,030 4,274
Prepaid expenses 3,279 1,513
--------- -------
Total current assets 389,943 259,368
Property and equipment, net 22,616 20,134
Goodwill (less accumulated amortization of $2,168
and $1,330, respectively) 17,874 16,597
Other assets 2,672 2,452
--------- -------
$ 433,105 298,551
========= ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 172,436 116,091
Notes payable to financial institutions 81,800 56,136
Accrued expenses 15,678 12,250
Income taxes payable 11,504 1,852
Deferred income taxes 1,349 1,106
Current portion of long-term debt 588 568
--------- -------
Total current liabilities 283,355 188,003
Long-term debt, less current portion 5,796 6,285
--------- -------
Total liabilities 289,151 194,288
--------- -------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized; none issued -- --
Common stock, $.01 par value, 45,000,000 shares
authorized; 29,204,554 and 28,910,343 shares
issued and outstanding, respectively 292 193
Additional paid-in capital 72,348 68,167
Common stock warrants 4 4
Foreign currency translation adjustments (5,469) (4,520)
Retained earnings 76,779 40,419
--------- -------
Total stockholders' equity 143,954 104,263
--------- -------
$ 433,105 298,551
========= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months Nine months
ended August 31, ended August 31,
1997 1996 1997 1996
--------- -------- ---------- --------
<S> <C> <C> <C> <C>
Revenues:
Net product sales $ 432,405 195,679 1,044,838 573,168
Activation income 6,927 24,454 22,811 70,786
Residual income 2,774 3,457 8,664 10,182
--------- -------- ---------- --------
Total revenues 442,106 223,590 1,076,313 654,136
Cost of sales 398,190 192,798 959,900 561,711
--------- -------- ---------- --------
Gross profit 43,916 30,792 116,413 92,425
Selling, general and
administrative expenses 20,427 37,285 64,190 97,872
--------- -------- ---------- --------
Operating income (loss) 23,489 (6,493) 52,223 (5,447)
--------- -------- ---------- --------
Other income (expense):
Interest expense (2,009) (1,886) (5,514) (6,861)
Other, net 1,160 (1,236) 2,236 (721)
--------- -------- ---------- --------
Total other income (expense) (849) (3,122) (3,278) (7,582)
--------- -------- ---------- --------
Income (loss) before income taxes 22,640 (9,615) 48,945 (13,029)
Provision for income taxes 6,470 2,716 12,585 1,617
--------- -------- ---------- --------
Net income (loss) $ 16,170 (12,331) 36,360 (14,646)
========= ======== ========== ========
Net income (loss) per share $ 0.53 (0.43) 1.20 (0.51)
========= ======== ========== ========
Weighted average number of shares
and equivalent shares outstanding 30,569 28,910 30,290 28,910
========= ======== ========== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 5
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Nine months ended August 31, 1997
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Foreign
Additional Common currency
Common Stock paid-in stock translation Retained
Shares Amount capital warrants adjustments earnings Total
------ ------ ------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at November 30, 1996 28,910 $ 193 68,167 4 (4,520) 40,419 104,263
Net income -- -- -- -- -- 36,360 36,360
Shares issued under stock
option plans 122 1 1,530 -- -- -- 1,531
Shares issued for acquisition
of minority interest 173 1 2,748 -- -- -- 2,749
Three-for-two common stock
split -- 97 (97) -- -- -- --
Foreign currency translation
adjustment -- -- -- -- (949) -- (949)
------ ------ ------- ----- ------ ------ --------
Balance at August 31, 1997 29,205 $ 292 72,348 4 (5,469) 76,779 143,954
====== ====== ======= ===== ====== ====== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 6
CELLSTAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended August 31, 1997 and 1996
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 36,360 (14,646)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 3,792 4,074
Deferred income taxes 487 1,017
Changes in certain operating assets and liabilities:
Accounts receivable (38,081) (1,607)
Inventories (93,129) 15,633
Prepaid expenses (1,766) 419
Other assets (163) 887
Accounts payable 56,345 2,587
Accrued expenses 4,757 4,816
Income taxes payable 9,652 (2,669)
-------- -------
Net cash (used in) provided by operating activities (21,746) 10,511
-------- -------
Cash flows from investing activities:
Purchases of property and equipment (5,274) (4,049)
Acquisition of minority interest (502) --
Equity investments in foreign subsidiary and joint ventures (412) --
-------- -------
Net cash used in investing activities (6,188) (4,049)
-------- -------
Cash flows from financing activities:
Net borrowings (payments) on notes payable to financial institutions 25,664 (26,729)
Principal payments on long-term debt (469) (458)
Proceeds from issuance of common stock 1,531 --
-------- -------
Net cash provided by (used in) financing activities 26,726 (27,187)
-------- -------
Net decrease in cash and cash equivalents (1,208) (20,725)
Cash and cash equivalents at beginning of period 27,296 31,508
-------- -------
Cash and cash equivalents at end of period $ 26,088 10,783
======== =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 7
CELLSTAR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
Although the interim consolidated financial statements of CellStar
Corporation (the "Company" or "CellStar") are unaudited, it is the opinion
of the Company's management that all adjustments (consisting of only
normal recurring adjustments) necessary for a fair statement of the
results have been reflected therein. Operating revenues and net earnings
for any interim period are not necessarily indicative of the results that
may be expected for the entire year.
These statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended November 30, 1996. Certain prior
year amounts have been reclassified to conform to the current year's
presentation.
(2) Concentration of Credit Risk and Major Customer Information
Pacific Bell Mobile Services accounted for 18.4%, or $81.3 million, and
13.1%, or $140.8 million, of total revenues for the three and nine month
periods ended August 31, 1997. This level of revenues as compared to total
revenues resulted from the rollout of PCS product into certain west coast
markets and is not indicative of future performance.
(3) Stock Split
On May 20, 1997, the Board of Directors approved a three-for-two common
stock split, which split was effected in the form of a stock dividend that
was distributed on June 17, 1997 to stockholders of record on June 2,
1997. All weighted average historical share and net income (loss) per
share amounts have been retroactively adjusted for the stock split.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is a global provider of wireless handsets and other wireless
communications products. From fiscal 1992 to fiscal 1996, the Company's total
revenues grew from $181.0 million to $947.6 million. The Company has
accomplished this growth in both U.S. and international sales primarily by
focusing its efforts on the cellular phone industry. To date, U.S. sales of
cellular phone products have increased primarily as a result of greater market
penetration and decreasing unit prices. The Company's international sales of
wireless communications products have increased primarily as a result of its
entry into the Asia-Pacific and Latin American Regions.
The Company expects that with future increases, if any, to its revenues,
more funds will be required to support corresponding increases in the Company's
inventory and accounts receivable levels. In addition, more funds may be
required to fund new ventures. See "Liquidity and Capital Resources" below.
This Quarterly Report on Form 10-Q contains forward-looking statements
relating to such matters as anticipated financial performance and business
prospects. When used in this Quarterly Report, the words "anticipates,"
"expects," "plans," "may," "intend," "believe," "continue" and similar
expressions are intended to be among the statements that identify
forward-looking statements. From time to time, the Company may also publish
forward-looking statements. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors,
including foreign currency risks, political instability, changes in foreign
laws, regulations, and tariffs, new technologies, competition, customer and
vendor relationships, seasonality, inventory obsolescence and availability,
"gray market" resales and inflation, could cause the Company's actual results
and experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements.
8
<PAGE> 9
RESULTS OF OPERATIONS
The following table sets forth certain unaudited consolidated statements
of operations data for the Company expressed as a percentage of total revenues
for the three and nine months ended August 31, 1997 and 1996:
<TABLE>
<CAPTION>
Three months Nine months
ended August 31, ended August 31,
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Revenues:
Net product sales 97.8% 87.5% 97.1% 87.6%
Activation income 1.6 10.9 2.1 10.8
Residual income 0.6 1.6 0.8 1.6
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
Cost of sales 90.1 86.2 89.2 85.9
----- ----- ----- -----
Gross profit 9.9 13.8 10.8 14.1
Selling, general and administrative expenses 4.6 16.7 5.9 14.9
----- ----- ----- -----
Operating income (loss) 5.3 (2.9) 4.9 (0.8)
----- ----- ----- -----
Other income (expense):
Interest expense (0.5) (0.8) (0.5) (1.1)
Other, net 0.3 (0.6) 0.2 (0.1)
----- ----- ----- -----
Total other income (expense) (0.2) (1.4) (0.3) (1.2)
----- ----- ----- -----
Income (loss) before income taxes 5.1 (4.3) 4.6 (2.0)
Provision for income taxes 1.4 1.2 1.2 0.2
----- ----- ----- -----
Net income (loss) 3.7% (5.5)% 3.4% (2.2)%
===== ===== ===== =====
</TABLE>
9
<PAGE> 10
THREE MONTHS ENDED AUGUST 31, 1997 COMPARED TO THREE MONTHS ENDED
AUGUST 31, 1996
Revenues. Total revenues increased $218.5 million, or 97.7%, from $223.6
million in the third fiscal quarter of 1996 to $442.1 million in the third
fiscal quarter of 1997.
U.S. revenues increased $121.6 million, or 82.6%, primarily from an
increase in net product sales of $139.3 million, or 111.8%, from $124.6 million
to $263.9 million. The increase in net product sales was due to the increase
in revenues from distribution and fulfillment contracts for the provision of
products and value-added services and from marked growth in sales from the
Company's Miami, Florida warehouse to customers exporting into South American
countries. As expected for fiscal 1997, U.S. activation income decreased,
primarily as a result of the sale of substantially all of the Communication
Centers on November 26, 1996. In August 1997, the Company closed its remaining
Communication Centers.
Net product sales in the Asia-Pacific Region increased $61.5 million, or
140.4%, from $43.8 million to $105.3 million. The Company's operations in Hong
Kong, CellStar Asia, provided $74.7 million in net product sales in the third
fiscal quarter of 1997, an increase of $43.7 million compared to $31.0 million
for the same period a year earlier. The higher revenue levels resulted from
the expansion in overall demand for wireless handsets in the region,
particularly in Hong Kong and the People's Republic of China (the "PRC"),
coupled with increased availability of product during the third quarter of
fiscal 1997. Net product sales in the Company's Singapore operations, CellStar
Pacific, increased by $14.1 million, or 114.6%, from $12.3 million to $26.4
million. This increase was primarily due to increased demand in The
Philippines and Indonesia. The Company's operations in Taiwan, which commenced
in the second quarter of fiscal 1996, provided $4.2 million of net product
sales in the third fiscal quarter of 1997.
Net product sales in the Latin American Region increased $12.3 million, or
47.1%, from $26.1 million to $38.4 million. The Company's operations in Mexico
provided $25.9 million in net product sales in the third fiscal quarter of
1997, an increase of $17.1 million, or 194.3%, compared to $8.8 million for the
same period a year earlier. This higher sales volume was primarily due to an
increase in overall demand for wireless handsets, coupled with stronger
economic conditions in Mexico. The increase in net product sales in Mexico was
partially offset by a $5.9 million decrease in net product sales by the
Company's operations in Brazil. The decline in Brazil arose from the continued
deterioration in the business climate in Brazil for the cellular phone
industry, primarily due to the failure of Brazil's government to authorize
additional lines.
Net product sales in the Company's European operation in the United
Kingdom, which commenced in the second quarter of fiscal 1996, were $24.8
million in the third quarter of fiscal 1997, an increase of $23.6 million
compared to $1.2 million for the same period a year earlier.
Gross Profit. Gross profit increased $13.1 million, from $30.8 million to
$43.9 million, while, as a percentage of total revenues, gross profit decreased
from 13.8% to 9.9%. The increase in gross profit was primarily due to the
increase in CellStar Asia's net product sales of high-end products, which
increased gross profit as a percentage of total revenues as well. This
increase in gross profit and gross profit percentage in CellStar Asia was
partially offset by a decrease in U.S. retail revenue, which has a higher gross
profit margin than wholesale net product sales. The gross profit percentage
for the third fiscal quarter of 1997 decreased primarily due to the sale in
November 1996 of substantially all of the
10
<PAGE> 11
Company's Communication Centers and to the increase in revenues from
distribution and fulfillment contracts that reflect lower margins and reduced
accounts receivable and inventory obsolescence risks.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $16.9 million, or 45.3%, from $37.3 million
to $20.4 million. A reduction in bad debt expense of $9.3 million, or 55.0% of
the total reduction, was attributable to the continuing strategy of increasing
direct sales to South American customers from the Company's Miami, Florida
warehouse. See "International Operations." Approximately $5.6 million, or
33.1%, of the decrease was attributable to the reduction of employees related
to the sale of the Communication Centers. The sale of the Communication
Centers also gave rise to other decreases in selling, general and
administrative expenses totaling approximately $1.8 million. Additionally,
reductions in other administrative expenses of $1.3 million contributed to the
total reduction in selling, general and administrative expenses. These
decreases were partially offset by a $2.2 million increase in employee-related
costs. Overall, the Company reduced selling, general and administrative
expenses as a percentage of total revenues from 16.7% to 4.6%.
Operating Income (Loss). Operating income (loss) increased from a loss of
$6.5 million to income of $23.5 million due to increased revenues and the
decrease in selling, general and administrative expenses. Correspondingly,
operating income (loss) as a percentage of total revenues increased from (2.9%)
to 5.3%.
Income Taxes. Income tax expense increased $3.8 million in the third
fiscal quarter of 1997 compared to the same period a year earlier. The
increase was primarily due to higher income before income taxes for the third
fiscal quarter of 1997. The effective tax rate was lower for the third fiscal
quarter of 1997 compared to the same period a year earlier, primarily due to
increased income before income taxes in the Asia-Pacific Region where the tax
rate is less than the U.S. statutory tax rate and reduced losses in the South
American operations.
NINE MONTHS ENDED AUGUST 31, 1997 COMPARED TO NINE MONTHS ENDED
AUGUST 31, 1996
Revenues. Total revenues increased $422.2 million, or 64.5%, from $654.1
million in the nine-month period ended August 31, 1996 to $1,076.3 million in
the nine-month period ended August 31, 1997.
U.S. revenues increased $225.8 million, or 58.4%, primarily from an
increase in net product sales of $274.4 million, or 85.8%, from $320.0 million
to $594.4 million. The increase in net product sales was largely due to the
increase in revenues from distribution and fulfillment contracts for the
provision of products and value-added services. In addition, the U.S.
operations achieved growth due to the continuation of the strategy to shift
in-country product sales by the Company's South American subsidiaries to sales
from the Company's Miami, Florida warehouse to customers exporting into South
American countries. As expected for fiscal 1997, U.S. activation income
decreased primarily as a result of the sale of substantially all of the
Communication Centers on November 26, 1996. In August 1997, the Company closed
its remaining Communication Centers.
Net product sales in the Asia-Pacific Region increased $149.6 million, or
86.2%, from $173.6 million to $323.2 million. The Company's operations in Hong
Kong, CellStar Asia, provided $245.2 million in net product sales in the first
nine months of fiscal 1997, an increase of $104.8 million
11
<PAGE> 12
compared to $140.4 million for the same period a year earlier. The higher
revenue levels resulted from the expansion in overall demand for wireless
handsets in the region, particularly in Hong Kong and the PRC, coupled with the
increased availability of product during the period. Net product sales by the
Company's Singapore operations, CellStar Pacific, increased $32.7 million, or
100.3%, from $32.6 million to $65.3 million. This increase was primarily due to
increased demand in The Philippines and Indonesia. The Company's operations in
Taiwan, which commenced in the second quarter of fiscal 1996, provided $12.6
million of net product sales in the first nine months of fiscal 1997.
Net product sales in the Latin American Region increased $3.6 million, or
4.6%, from $78.4 million to $82.0 million. The Company's operations in Mexico
provided $43.4 million in net product sales in the first nine months of fiscal
1997, an increase of $21.4 million, or 97.3%, compared to $22.0 million for the
same period a year earlier. This higher sales volume was primarily due to an
increase in overall demand for wireless handsets, coupled with stronger
economic conditions in Mexico. Conversely, net product sales by the Company's
operations in Brazil decreased $18.2 million, or 72.2%, from $25.2 million to
$7.0 million. The decline in Brazil arose from the continued deterioration in
the business climate in Brazil for the cellular phone industry, primarily due
to the failure of Brazil's government to authorize additional lines. The
Company's operations in Venezuela provided $9.2 million in net product sales in
the first nine months of fiscal 1997, an increase of $4.4 million, or 91.7%,
compared to $4.8 million for the same period a year earlier fueled by demand
from the prepaid cellular business. Net product sales by the Company's
operations in Argentina increased $4.8 million, or 33.1%, from $14.5 million to
$19.3 million. This increase was due primarily to improved market penetration
and a new pricing strategy by the local carrier whereby the calling party pays
for the call. Net product sales by the Company's operations in Colombia and
Chile decreased $7.1 million and $1.1 million, respectively, as the Company
continued its strategy to shift in-country product sales by certain of the
Company's South American subsidiaries to sales from the Company's Miami,
Florida warehouse to customers exporting into South American countries. The
Company adopted this strategy in the second fiscal quarter of 1996 to reduce
currency, accounts receivable and inventory risks.
Net product sales in the Company's European operation in the United
Kingdom, which commenced in the second quarter of fiscal 1996, were $45.3
million for the first nine months of fiscal 1997, an increase of $44.1 million
compared to $1.2 million for the same period a year earlier.
Gross Profit. Gross profit increased $24.0 million, from $92.4 million to
$116.4 million, while, as a percentage of total revenues, gross profit
decreased from 14.1 % to 10.8%. The increase in gross profit was primarily due
to the increase in CellStar Asia's net product sales of high-end products,
which increased gross profit as a percentage of total revenues as well. This
increase in gross profit and gross profit percentage in CellStar Asia was
partially offset by a decrease in U.S. retail revenue, which has a higher gross
profit margin than wholesale net product sales. The gross margin percentage
for the first nine months of fiscal 1997 decreased primarily due to the sale in
November 1996 of substantially all of the Company's Communication Centers and
to the increase in revenues from distribution and fulfillment contracts that
reflect lower margins and reduced accounts receivable and inventory
obsolescence risks. Additionally, the Company experienced a decrease in Latin
American foreign currency losses of $2.4 million.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $33.7 million, or 34.4%, from $97.9 million
to $64.2 million. Approximately $16.8 million, or 49.9%, of the decrease was
attributable to the reduction of employees related to the sale of the
Communication Centers. The sale of the Communication Centers also gave rise to
other decreases in selling, general and administrative expenses totaling
approximately $7.3 million. A reduction in bad
12
<PAGE> 13
debt expense of $9.5 million, or 28.2% of the total decrease, was attributable
to the continuing strategy of increasing direct sales to South American
customers from the Company's Miami, Florida warehouse. See "International
Operations." Additionally, reductions in other administrative expenses of $1.7
million contributed to the total reduction in selling, general and
administrative expenses. These decreases were partially offset by a $2.8
million increase in employee-related costs. Overall, the Company reduced
selling, general and administrative expenses as a percentage of total revenues
from 14.9% to 5.9%.
Operating Income (Loss). Operating income (loss) increased from a loss of
$5.4 million to income of $52.2 million due to the decrease in selling,
general and administrative expenses and the increase in revenues.
Correspondingly, operating income (loss) as a percentage of total revenues
increased from (0.8%) to 4.9%.
Interest Expense. Interest expense declined in the nine months ending
August 31, 1997 to $5.5 million from $6.9 million in the nine months ended
August 31, 1996. The decrease in interest expense resulted primarily from the
maintenance of lower balances under the Company's revolving credit agreements.
Income Taxes. Income tax expense increased $11.0 million in the nine-month
period ended August 31, 1997 compared to the same period a year earlier. The
increase was primarily due to higher income before income taxes for the
nine-month period ended August 31, 1997. The effective tax rate was lower for
the nine-month period ended August 31, 1997 compared to the same period a year
earlier primarily due to increased income before income taxes in the
Asia-Pacific Region where the tax rate is less than the U.S. statutory tax rate
and reduced losses in the South American operations.
13
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
The Company primarily relies on cash generated from operations and
borrowings under its revolving credit agreement (the "Revolving Credit
Facility") to fund working capital, capital expenditures and expansions. The
Company also receives extended credit terms from key suppliers.
The Company's Revolving Credit Facility is with a group of five banks and
currently has a maximum borrowing limit of $90.0 million. Fundings under the
line are limited by a borrowing base computed as a percentage of certain U.S.
accounts receivable and inventories. Borrowings are secured primarily by U.S.
accounts receivable and inventories. At September 25, 1997, the borrowing base
limited borrowings to $90.0 million ($90.0 million at August 31, 1997) and
$78.7 million was outstanding. The Revolving Credit Facility contains, among
other provisions, covenants relating to minimum net worth and certain financial
provisions, capital expenditures, dividend payments, additional debt, mergers,
and acquisitions and dispositions of assets. Additionally, the Company's
subsidiary in Argentina has a short-term credit facility with a bank for
general working capital purposes. There were no borrowings outstanding under
this credit facility at September 25, 1997.
The Company expects that with future increases, if any, to its revenues,
more funds will be required to support corresponding increases in the Company's
inventory and accounts receivable levels. In addition, more funds may be
required to fund new ventures. As a result, the Company anticipates that its
need for liquidity and capital resources will increase. In light of the
Company's anticipated working capital and expansion plans and the amount
presently available under the Company's Revolving Credit Facility, the Company
has begun to seek outside sources of funds in addition to those available from
operations and under such Revolving Credit Facility to provide the resources
necessary to continue its growth. If the Company is unable to obtain
additional financing in sufficient amounts, it will have to modify its growth
plans.
The Company is negotiating with a group of banks a new $135.0 million
multicurrency revolving credit facility (the "New Credit Facility"). The New
Credit Facility will replace the Company's existing $90.0 million Revolving
Credit Facility, which matures in July 1998, will have a term of approximately
five years, will provide for borrowings and other credit accommodations in a
manner similar to the Revolving Credit Facility and will be secured by
substantially the same assets. Borrowings will initially bear interest in a
manner consistent with the Revolving Credit Facility, but at more favorable
rates. The Company expects to enter into the New Credit Facility
contemporaneously with the consummation of the offering discussed below.
On October 8, 1997, the Company announced that it had priced $130.0
million of Convertible Subordinated Notes (the "Notes"). The offering was made
in reliance on Rule 144A and other registration exemptions under the Securities
Act of 1933, as amended, to qualified institutional buyers. The Notes will be
unsecured obligations, bear interest at an annual rate of 5.0%, are convertible
into the Company's common stock at a price of $55.335 per share and mature on
October 15, 2002. The Notes are not callable for three years. In addition, the
Company granted the initial purchasers a 30-day option to purchase an additional
$20.0 million principal amount of the Notes to cover over-allotments, if any.
The Company will use the net proceeds of the offering to repay certain
indebtedness and intends to use any remaining net proceeds for working capital
and other general corporate purposes, including investments in support of the
Company's growth strategy.
14
<PAGE> 15
At August 31, 1997, the Company had $26.1 million of cash and cash
equivalents, which balance was comparable to the balance at November 30, 1996.
A majority of the Company's cash resides outside the United States, primarily
in its Asia-Pacific Region subsidiaries. While the Company has historically
retained cash in that region to support the subsidiaries in that region, the
Company is currently evaluating alternatives to better utilize its cash on a
global basis while minimizing income taxes. The Company's U.S. growth and
South American operating losses have caused these operations to require working
capital from external sources. As a result, the Company receives extended
credit terms from key suppliers. The Company anticipates that such extended
credit terms will continue to be made available to the Company for the
near-term. Additionally, the Company's accounts receivable, inventories and
accounts payable have increased in the United States and Asia-Pacific Region
since November 30, 1996 primarily as a result of increased net product sales.
The Company's guarantee for bank borrowings by its Malaysian joint venture
has been increased from up to RM6.4 (Malaysian ringgits), $2.5 million as of
November 30, 1996, to up to RM13.2 million, $4.6 million as of August 31, 1997.
Cash used in investing activities of $5.3 million related to the purchase
of additional prepaid cellular hardware and software in Venezuela for $1.4
million, acquisition of office space in Shanghai, PRC for $1.2 million and
purchases of various computer and office equipment amounting to $2.7 million.
INTERNATIONAL OPERATIONS
The Company's international operations are subject to political and
economic risks, including but not limited to political instability, currency
devaluations and controls, increased credit risks and changing tax and trade
regulations. Although the Company experienced no material foreign currency
transaction gains or losses during the third quarter of 1997, the Company has
historically experienced material foreign currency transaction losses related
primarily to its operations in the Latin American Region. The Company
maintains a significant presence in Hong Kong, and with the transfer of Hong
Kong from the United Kingdom to the PRC on July 1, 1997, the Company's
operations in the Asia-Pacific Region will be exposed to the possibility of a
higher degree of currency volatility and economic instability than has
historically been the case.
In early 1996, the Company instituted a strategy to reduce the overall
level of assets maintained in the Latin American Region. The intent of this
strategy was to reduce the Company's working capital requirements related to its
operations in the Latin American Region and to reduce the Company's exposure to
financial and operating risks in the region. Other changes to the Company's
business strategy in the Latin American Region include sales of products from
the Miami, Florida warehouse to customers exporting into South American
countries. While these initiatives have reduced the Company's exposure to
certain economic and political risks associated with transacting business in
the Latin American Region, the Company continues to maintain a significant
presence in the region. As such, the Company will remain subject to the risks
created by the volatile political and economic conditions that have
historically prevailed in the region. The Company expects to continue pursuit
of these strategies in the future; however, the impact on the Company of
continuing such strategies is not expected to be as significant in fiscal year
1997 as was the case in fiscal year 1996.
15
<PAGE> 16
ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" ("Statement 128"), which is effective for interim
or annual periods ending after December 15, 1997. Statement 128 will change
how the Company calculates its earnings per share and will require earnings per
share amounts for all prior periods to be restated to conform with the new
presentation. Management does not believe that the adoption of Statement 128
will have a material effect on the Company's earnings per share amounts.
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material developments have occurred in the Company's legal proceedings
previously reported in the Company's Annual Report on Form 10-K for its 1996
fiscal year.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
3.1 Amended and Restated Certificate of Incorporation of CellStar
Corporation. (1)
3.2 Amended and Restated Bylaws of CellStar Corporation. (3)
4.1 The Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws of CellStar Corporation filed as Exhibits 3.1 and 3.2
are incorporated into this item by reference. (1)(3)
4.2 Specimen Common Stock Certificate of CellStar Corporation. (2)
4.3 Rights Agreement, dated as of December 30, 1996, by and between
CellStar Corporation and Chase Mellon Shareholder Services, L.L.C., as
Rights Agent ("Rights Agreement"). (4)
4.4 First Amendment to Rights Agreement, dated as of June 18, 1997. (5)
17
<PAGE> 18
4.5 Form of Certificate of Designation, Preferences and Rights of Series A
Preferred Stock of CellStar Corporation. (4)
4.6 Form of Rights Certificate. (4)
4.7 Certificate of Correction to Certificate of Designation, Preferences
and Rights of Series A Preferred Stock of CellStar Corporation. (5)
10.1 Agreement by and between Motorola Inc., by and through its Pan
American Cellular Subscriber Group, and CellStar, Ltd., effective
January 1, 1997 (6) (7)
27.1 Financial Data Schedule. (6)
___________________________
(1) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1995, and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended November 30, 1995, and
incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Registration
Statement on Form 8-A (File No. 000- 22972).
(5) Previously filed as an exhibit to the Company's Registration
Statement on Form 8-A/A, Amendment No. 1 (File No. 000-22972),
filed June 30, 1997, and incorporated herein by reference.
(6) Filed herewith.
(7) Certain provisions of this exhibit are subject to a request
for confidential treatment filed with the Securities and
Exchange Commission.
(b) REPORTS ON FORM 8-K.
None.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CELLSTAR CORPORATION
By: /s/ Mark Q. Huggins
-------------------------------
Mark Q. Huggins,
Senior Vice President-Administration
and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Evelyn Henry Miller
-------------------------------
Evelyn Henry Miller
Vice President and Corporate
Controller
Date: October 9, 1997
19
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of CellStar
Corporation. (1)
3.2 Amended and Restated Bylaws of CellStar Corporation. (3)
4.1 The Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws of CellStar Corporation filed as Exhibits 3.1 and 3.2
are incorporated into this item by reference. (1)(3)
4.2 Specimen Common Stock Certificate of CellStar Corporation. (2)
4.3 Rights Agreement, dated as of December 30, 1996, by and between
CellStar Corporation and Chase Mellon Shareholder Services, L.L.C., as
Rights Agent ("Rights Agreement"). (4)
4.4 First Amendment to Rights Agreement, dated as of June 18, 1997. (5)
4.5 Form of Certificate of Designation, Preferences and Rights of Series A
Preferred Stock of CellStar Corporation. (4)
4.6 Form of Rights Certificate. (4)
4.7 Certificate of Correction to Certificate of Designation, Preferences
and Rights of Series A Preferred Stock of CellStar Corporation. (5)
10.1 Agreement by and between Motorola Inc., by and through its Pan
American Cellular Subscriber Group, and CellStar, Ltd., effective
January 1, 1997 (6) (7)
27.1 Financial Data Schedule. (6)
</TABLE>
__________________________
(1) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1995, and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended November 30, 1995, and
incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Registration
Statement on Form 8-A (File No. 000- 22972).
(5) Previously filed as an exhibit to the Company's Registration
Statement on Form 8-A/A, Amendment No. 1 (File No. 000-22972),
filed June 30, 1997, and incorporated herein by reference.
(6) Filed herewith.
(7) Certain provisions of this exhibit are subject to a request
for confidential treatment filed with the Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT 10.1
AGREEMENT
This Agreement is entered into between Motorola, Inc., by and through its Pan
American Cellular Subscriber Group, having a place of business at 600 North
U.S. Highway 45, Libertyville, Illinois 60048-1286 (hereinafter "Seller" or
"MOTOROLA") and CellStar, Ltd., with a place of business at 1730 Briercroft
Drive, Carrollton, Texas 75006 (hereinafter "Buyer").
Buyer agrees to purchase and Seller agrees to sell [REDACTED] cellular
subscriber units (hereinafter "Products") over a term beginning January 1,
1997 and ending December 31, 1997 ("Initial Term"), under the terms and
Conditions set forth in this Agreement including the following attachments:
o Attachment A - Products and Prices
o Attachment B - Terms and Conditions
o Attachment C - Supplemental Terms and Conditions
o Attachment D - Limited Warranty
o Attachment E - CellStar Authorized Markets
Premier Line and Signature Line cellular subscriber units may only be purchased
by Buyer under terms contained in a separate written agreement with Motorola
applicable to those products.
Buyer also agrees to purchase and Seller agrees to sell cellular subscriber
accessories (hereinafter "Accessories") during the Initial Term under the terms
and conditions set forth in the following attachment:
o Attachment F - Accessories Program.
This Agreement constitutes the entire and final expression of agreement between
the parties pertaining to the subject matter hereof and supersedes all other
communications between the parties.
Unless this Agreement is superseded by a new agreement, or otherwise terminated
pursuant to the terms contained herein, this Agreement will continue in effect
beyond its initial term until terminated by either party upon thirty (30) days'
prior written notice.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives effective as of January 1, 1997.
MOTOROLA, INC. CELLSTAR LTD.
/s/ FRANK WAPOLE By: National Auto Center, Inc.
- ----------------------------------- General Partner
Frank Wapole
Corporate Vice President and
General Manager
Pan American Cellular Subscriber Group
DATE: 7-22-97
---------------------------
/s/ SUZETTE STEIGER /s/ ALAN H. GOLDFIELD
- --------------------------- ---------------------------
Suzette Steiger Alan H. Goldfield
Corporate Vice President & Assistant Chairman of the Board and CEO
General Manager
Pan American Cellular Subscriber Group
DATE: 7/22/97 DATE: July 8, 1997
--------------------------- ----------------------
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Cover
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT BY "[REDACTED]"
<PAGE> 2
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION> INVOICE
PORTFOLIO PRODUCTS MODEL INCLUDES PRICE
- ------------------ ----- -------- -----
<S> <C> <C> <C>
POWER PAK 1500 19133WAJS 3 YR WARRANTY [REDACTED]
(WITHOUT BATTERY)
POWER PAK 1500 19145WAJD 3 YR WARRANTY
(WITH BATTERY) BATTERY & CHGR. KIT
2900 MOBILE TELEPHONE 19402WAMS 3 YR WARRANTY
FULL DUPLEX
HANDS FREE
2900 ATTACHE 19413WAAB 3 YR WARRANTY
(WITHOUT BATTERY)
2900 ATTACHE 19412WAAS 3 YR WARRANTY
(WITH BATTERY) BATTERY AND CHARGER
2900 CARRY PHONE 19414WALS 3 YR WARRANTY
(WITH BATTERY) BATTERY AND CHARGER
2900 CARRY PHONE 19415WALB 3 YR WARRANTY
(WITHOUT BATTERY)
CLASSIC II 89011WNCB 1 YR WARRANTY
STANDARD BATTERY
ULTRA CLASSIC II 89013WNUB 1 YR WARRANTY
BASE MODEL STANDARD BATTERY
DPC 550 Travel Pak 34006WARE 1 YR WARRANTY
CHARGING TRANSFORMER
& TALKPAK BATT.
DPC 550 34013WARS 1 YR WARRANTY
SLOW DESK CHARGER
& TALKPAK BATT.
Contour 34068WANB 1 YR WARRANTY
CHARGING TRANSFORMER
& TALKPAK BATT.
</TABLE>
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 3
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
INVOICE
PREMIER PRODUCTS MODEL INCLUDES PRICE
- ------------------ ----- -------- -----
<S> <C> <C> <C>
Populous Generic 99901SACP 1 YR WARRANTY [REDACTED]
Co-branded(minimum 600 units/order) 99907SACP CHARGING TRANSFORMER
& NiCd Battery Pak
Profile 300 34146WAKE 1 YR WARRANTY
CHARGING TRANSFORMER
& Std. Slim NiMH
Battery
DPC 650 34103WADP 1 YR WARRANTY
SLOW DESK CHARGER &
NiMH BATT.
Profile 500 34151WAKE 1 YR WARRANTY
Overnight charger &
Std. Slim NiMH Battery
MICRO T*A*C LITE(TM) II 34032WAHB 1 YR WARRANTY
ENTRY PAK DESKTOP OVERNIGHT
CHARGER & NiMH BATT.
MICRO T*A*C LITE(TM) II 34041WAHP 3 YR WARRANTY
PRO PAK INCL. VIBRACALL DESKTOP RAPID CHARGER
& NiMH SLIM BATT.
Profile 700 76753WNXE 1 YR WARRANTY
ENTRY PAK INCL. VIBRACALL NiMH BATTERY
CHARGING TRANSFORMER
MICRO T*A*C ELITE(TM) 76730WNXE 1 YR WARRANTY
ENTRY PAK INCL. VIBRACALL ANSWERING MACHINE
SLIM NiMH BATTERY
CHARGING TRANSFORMER
MICRO T*A*C ELITE(TM) 76469WNXP 3 YR WARRANTY
PRO PAK INCL. VIBRACALL ANSWERING MACHINE
SLIM Li ION BATTERY
DUAL POCKET EP CHARGER
& TRANSFORMER
StarTAC(TM) 6000c CHARCOAL: 80029WNBL 1 YR WARRANTY
Wearable Cellular Telephone SUNSET: 80030WNBL STD MAIN NiMH
PRO PAK BATTERY
EP(TM) POWER SUPPLY
HOLSTER
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 4
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
INVOICE
SIGNATURE PRODUCTS MODEL INCLUDES PRICE
- ------------------ ----- -------- -----
<S> <C> <C> <C>
MICRO T*A*C ELITE(TM) 76863WNXE 1 YR WARRANTY [REDACTED]
ENTRY PAK INCL. VIBRACALL ANSWERING MACHINE
Li ION BATTERY
CHARGING TRANSFORMER
MICRO T*A*C ELITE(TM) 76867WNXP 3 YR WARRANTY
PRO PAK INCL. VIBRACALL ANSWERING MACHINE
EXTENDED TALK Li
ION BATTERY
DUAL POCKET EP CHARGER
& TRANSFORMER
StarTAC(TM) 6500c CHARCOAL: 80081WNBL 1 YR WARRANTY
Wearable Cellular Telephone SUNSET: 80082WNBL STD MAIN NiMH BATTERY
PRO PAK INCL. VIBRACALL EP(TM) POWER SUPPLY
HOLSTER
StarTAC(TM) 8500ex CHARCOAL: 8007lWNBP 3 YR WARRANTY
Wearable Cellular Telephone SUNSET: 80072WNBP SLIM MAIN Li
PRO PAK INCL. VIBRACALL ION BATTERY
EP(TM) POWER SUPPLY
HOLSTER
VIDEO
StarTAC(TM) 8600 CHARCOAL: 80101WNBP 3 YR WARRANTY
Wearable Cellular Telephone SUNSET: 80102WNBP SLIM MAIN Li ION
PRO PAK INCL. VIBRACALL BATTERY
SLIM AUXILIARY Li
ION BATTERY
DESKTOP CHARGER &
EP(TM) POWER SUPPLY
HOLSTER
VIDEO
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 5
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
PORTFOLIO PRODUCTS MODEL REBATE
- ------------------ ----- ------
<S> <C> <C>
POWER PAK 1500 19133WAJS [REDACTED]
(WITHOUT BATTERY)
POWER PAK 1500 19145WAJD
(WITH BATTERY)
2900 MOBILE TELEPHONE 19402WAMS
2900 ATTACHE 19413WAAB
(WITHOUT BATTERY)
2900 ATTACHE 19412WAAS
(WITH BATTERY)
2900 CARRY PHONE 19414WALS
(WITH BATTERY)
2900 CARRY PHONE 19415WALB
(WITHOUT BATTERY)
CLASSIC II 89011WNCB
ULTRA CLASSIC II 89013WNUB
BASE MODEL
DPC 550 Travel Pak 34006WARE
DPC 550 34013WARS
Contour 34068WANB
</TABLE>
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 6
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
PREMIER PRODUCTS MODEL REBATE
- ------------------ ----- ------
<S> <C> <C>
Populous Generic 99901SACP [REDACTED]
Co-branded(minimum 600 units/order) 99907SACP
Profile 300 34146WAKE
DPC 650 34103WADP
Profile 500 34151WAKE
MICRO T*A*C LITE(TM) II 34032WAHB
ENTRY PAK
MICRO T*A*C LITE(TM) II 34041WAHP
PRO PAK INCL. VIBRACALL
Profile 700 76753WNXE
ENTRY PAK INCL. VIBRACALL
MICRO T*A*C ELITE(TM) 76730WNXE
ENTRY PAK INCL. VIBRACALL
MICRO T*A*C ELITE(TM) 76469WNXP
PRO PAK INCL. VIBRACALL
StarTAC(TM) 6000c CHARCOAL: 80029WNBL
Wearable Cellular Telephone SUNSET: 80030WNBL
PRO PAK
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 7
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
SIGNATURE PRODUCTS MODEL REBATE
- ------------------ ----- ------
<S> <C> <C>
MICRO T*A*C ELITE(TM) 76863WNXE [REDACTED]
ENTRY PAK INCL. VIBRACALL
MICRO T*A*C ELITE(TM) 76867WNXP
PRO PAK INCL. VIBRACALL
StarTAC(TM) 6500c CHARCOAL: 80081WNBL
Wearable Cellular Telephone SUNSET: 80082WNBL
PRO PAK INCL. VIBRACALL
StarTAC(TM) 8500ex CHARCOAL: 80071WNBP
Wearable Cellular Telephone SUNSET: 80072WNBP
PRO PAK INCL. VIBRACALL
StarTAC(TM) 8600 CHARCOAL: 80101WNBP
Wearable Cellular Telephone SUNSET: 80102WNBP
PRO PAK INCL. VIBRACALL
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 8
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
NON-WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION> INVOICE
PORTFOLIO PRODUCTS MODEL INCLUDES PRICE
- ------------------ ----- -------- -----
<S> <C> <C> <C>
POWER PAK 150 19134NAJS 3 YR WARRANTY [REDACTED]
(WITHOUT BATTERY)
POWER PAK 150 19146NAJD 3 YR WARRANTY
(WITH BATTERY) BATTERY & CHARGER KIT
TX400 MOBILE TELEPHONE 19403NAMS 3 YR WARRANTY
FULL DUPLEX
HANDS FREE
TX400 ATTACHE 19417NAAB 3 YR WARRANTY
(WITHOUT BATTERY)
TX400 ATTACHE 19416NAAS 3 YR WARRANTY
(WITH BATTERY) BATTERY & CHARGER KIT
TX400 CARRY PHONE 19420NALS 3 YR WARRANTY
(WITH BATTERY) BATTERY & CHARGER KIT
TX400 CARRY PHONE 19421NALB 3 YR WARRANTY
(WITHOUT BATTERY)
CLASSIC II 89087NACB 1 YR WARRANTY
STANDARD BATTERY
ULTRA CLASSIC II 89088NAUB 1 YR WARRANTY
BASE MODEL STANDARD BATTERY
DPC-550 Travel Pak 34007NARE 1 YR WARRANTY
CHARGING TRANSFORMER &
TALK PAK BATT.
DPC-550 34014NARS 1 YR WARRANTY
SLOW CHARGER & TALK
PAK BATT.
Courier 34069NANB 1 YR WARRANTY
CHARGING TRANSFORMER &
TALK PAK BATT.
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 9
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
NON-WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
INVOICE
PREMIER PRODUCTS MODEL INCLUDES PRICE
- ---------------- ----- -------- -----
<S> <C> <C> <C>
Populous Generic 99901SACP 1 YR WARRANTY [REDACTED]
Co-branded(minimum 600 units/order) 99907SACP CHARGING TRANSFORMER
& NiCd Battery Pak
Profile 300 34147NAKE 1 YR WARRANTY
CHARGING TRANSFORMER
& Std. Slim NiMH
Battery
Piper 34104NADP 1 YR WARRANTY
SLOW DESK CHARGER &
NiMH BATT.
Profile 500 34152NAKE 1 YR WARRANTY
Overnight charger &
Std. Slim NiMH Battery
MICRO T*A*C LITE(TM) XL 34033NAHB 1 YR WARRANTY
ENTRY PAK DESKTOP OVERNIGHT
CHARGER & NiMH BATT.
MICRO T*A*C LITE(TM) XL 34042NAHP 3 YR WARRANTY
PRO PAK INCL. VIBRACALL NiMH SLIM BATTERY &
DeskTop Rapid Charger
Profile 700 76754NAXE 1 YR WARRANTY
ENTRY PAK INCL. VIBRACALL NiMH BATTERY
CHARGING TRANSFORMER
MICRO T*A*C ELITE(TM) 76731NAXE 1 YR WARRANTY
ENTRY PAK INCL. VIBRACALL ANSWERING MACHINE
SLIM NiMH BATTERY
CHARGING TRANSFORMER
MICRO T*A*C ELITE(TM) 76471NAXP 3 YR WARRANTY
PRO PAK INCL. VIBRACALL ANSWERING MACHINE
SLIM Li ION BATTERY
DUAL POCKET EP CHARGER
& TRANSFORMER
StarTAC(TM) 6000c STEEL: 80033NABL 1 YR WARRANTY
Wearable Cellular Telephone BLUE: 80035NABL STD MAIN NiMH BATTERY
PRO PAK EP(TM) POWER SUPPLY
HOLSTER
</TABLE>
- --------------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 10
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
NON-WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
INVOICE
SIGNATURE PRODUCTS MODEL INCLUDES PRICE
- ------------------ ----- -------- -----
<S> <C> <C> <C>
MICRO T*A*C ELITE(TM) 76864NAXE 1 YR WARRANTY [REDACTED]
ENTRY PAK INCL. VIBRACALL ANSWERING MACHINE
Li ION BATTERY
CHARGING TRANSFORMER
MICRO T*A*C ELITE(TM) 76868NAXP 3 YR WARRANTY
PRO PAK INCL. VIBRACALL ANSWERING MACHINE
EXTENDED TALK Li ION
BATTERY DUAL POCKET
EP CHARGER &
TRANSFORMER
StarTAC(TM) 6500c STEEL: 80086NNBL 1 YR WARRANTY
Wearable Cellular Telephone BLUE: 80088NNBL STD MAIN NiMH BATTERY
PRO PAK INCL. VIBRACALL EP(TM) POWER SUPPLY
HOLSTER
StarTAC(TM) 8500ex STEEL: 80073NABP 3 YR WARRANTY
Wearable Cellular Telephone BLUE: 80077NABP SLIM MAIN Li ION
PRO PAK INCL. VIBRACALL BATTERY SLIM
AUXILIARY Li ION
BATTERY EP(TM) POWER
SUPPLY HOLSTER
VIDEO
StarTAC(TM) 8600 STEEL: 80106NNBP 3 YR WARRANTY
Wearable Cellular Telephone BLUE: 80108NNBP SLIM MAIN Li ION
PRO PAK INCL. VIBRACALL BATTERY SLIM
AUXILIARY Li ION
BATTERY DESKTOP
CHARGER & EP(TM) POWER
SUPPLY HOLSTER
VIDEO
</TABLE>
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 11
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
NON-WIRELINE PRODUCT DISTRIBUTION
Effective May 5,1997
<TABLE>
<CAPTION>
PORTFOLIO PRODUCTS MODEL REBATE
- ------------------ ----- ------
<S> <C> <C>
POWER PAK 150 19134NAJS [REDACTED]
(WITHOUT BATTERY)
POWER PAK 150 19146NAJD
(WITH BATTERY)
TX400 MOBILE TELEPHONE 19403NAMS
TX400 ATTACHE 19417NAAB
(WITHOUT BATTERY)
TX400 ATTACHE 19416NAAS
(WITH BATTERY)
TX400 CARRY PHONE 19420NALS
(WITH BATTERY)
TX400 CARRY PHONE 19421NALB
(WITHOUT BATTERY)
CLASSIC II 89087NACB
ULTRA CLASSIC II 89088NAUB
BASE MODEL
DPC-550 Travel Pak 34007NARE
DPC-550 34014NARS
Courier 34069NANB
</TABLE>
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 12
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
NON-WIRELINE PRODUCT DISTRIBUTION
Effective May 5, 1997
<TABLE>
<CAPTION>
PREMIER PRODUCTS MODEL REBATE
- ---------------- ----- ------
<S> <C> <C>
Populous Generic 99901SACP [REDACTED]
Co-branded(minimum 600 units/order) 99907SACP
Profile 300 34147NAKE
Piper 34104NADP
Profile 500 34152NAKE
MICRO T*A*C LITE(TM) XL 34033NAHB
ENTRY PAK
MICRO T*A*C LITE(TM) XL 34042NAHP
PRO PAK INCL. VIBRACALL
Profile 700 76754NAXE
ENTRY PAK INCL. VIBRACALL
MICRO T*A*C ELITE(TM) 76731NAXE
ENTRY PAK INCL. VIBRACALL
MICRO T*A*C ELITE(TM) 76471NAXP
PRO PAK INCL. VIBRACALL
StarTAC(TM) 6000c STEEL: 80033NABL
Wearable Cellular Telephone BLUE: 80035NABL
PROPAK
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 13
Confidential Business Information - Do Not copy or reproduce
AMENDMENT TO THE AGREEMENT
BETWEEN MOTOROLA AND CELLSTAR
ATTACHMENT A- PRICING
NON-WIRELINE PRODUCT DISTRIBUTION
Effective May 5,1997
<TABLE>
<CAPTION>
SIGNATURE PRODUCTS MODEL REBATE
- ------------------ ----- ------
<S> <C> <C>
MICRO T*A*C ELITE(TM) 76864NAXE [REDACTED]
ENTRY PAK INCL. VIBRACALL
MICRO T*A*C ELITE(TM) 76868NAXP
PRO PAK INCL. VIBRACALL
StarTAC(TM) 6500c STEEL: 80086NNBL
Wearable Cellular Telephone BLUE: 80088NNBL
PRO PAK INCL. VIBRACALL
StarTAC(TM) 8500ex STEEL: 80073NABP
Wearable Cellular Telephone BLUE: 80077NABP
PRO PAK INCL. VIBRACALL
StarTAC(TM) 8600 STEEL: 80106NNBP
Wearable Cellular Telephone BLUE: 80108NNBP
PRO PAK INCL. VIBRACALL
</TABLE>
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 14
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
1. Contract prices are based on a firm commitment by Buyer to take delivery
of the agreed quantity of Products during the Initial Term. Products may
be aggregated to reach the contract volume commitment. If Buyer takes
delivery of less than the committed quantity during the Initial Term, a
volume shortfall adjustment will be calculated and billed to Buyer based
on unit shipment shortfall from the committed quantity during the Initial
Term. The charge per unit short will be [REDACTED] for up to [REDACTED]
units short, [REDACTED] for more than [REDACTED] units and up to
[REDACTED] units short, and [REDACTED] for more than [REDACTED] units
short of the committed quantity. [REDACTED]
2. Motorola will issue any applicable rebates promptly after the month in
which the Products were delivered and after Product payment is received,
in the form of a credit memo that may be applied to the purchase of
additional Products.
3. Motorola may sell other cellular subscriber equipment to Buyer if
requested. Any such sale during the term of this Agreement will be at
Motorola's price, and in accordance with the terms and conditions herein
unless otherwise specified by Motorola.
4. Buyer will exercise its best efforts to submit purchase orders no less
than thirty (30) days prior to the requested shipment dates and
acknowledges that shipment on the requested date is more likely as the
lead time is increased. If Motorola accepts a purchase order requesting
shipment within thirty (30) days from the date Motorola receives the
order, Buyer agrees that the ordered Products will be shipped when it is
practicable for Motorola to do so.
5. Payment terms are net 30 days.
6. For applicable Products purchased under this Agreement, Motorola will
make available to Buyer a cooperative promotional allowance fund. Funds
available are based upon the number of applicable units purchased and the
net sales prices of those units. As used in this paragraph 6, net sales
price is calculated as the invoice price less any applicable rebates.
Applicable Products, and the manner in which funds may be applied, are
set forth in the Motorola Cellular Co-op Advertising and Promotion Plan,
US Version
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-1
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 15
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
January 1997, incorporated herein by reference, as the same may be
revised from time to time by Motorola.
7. All orders and shipments shall be in multiples of 5 units per model.
8. (a) Buyer shall be a non-exclusive distributor of the Products in
those geographical areas identified in Attachment E, and in any other
market attachment that may later be agreed upon by the parties as an
amendment to this Agreement (Buyer's "Territory").
(b) This Agreement may be amended by adding markets to Buyer's
Territory. Any such additional markets will be added by mutual agreement
and will be identified in separate attachments. It is the intention of
the parties that any market additions to this Agreement will have
purchase volume commitments, market development funds, and other similar
incentives and obligations, separate from and in addition to those
incentives and requirements associated with the markets identified in
Attachment E.
(c) Any markets may be withdrawn from Buyer's Territory by Motorola on
ninety (90) days advance notice to Buyer. Buyer agrees that Motorola may
withdraw markets from Buyer's Territory at Motorola's discretion, with or
without cause, without any liability or obligation to Buyer or its
customers; provided, however, that Motorola will reimburse Buyer for a
reasonable cancellation fee paid to terminate a lease commitment(s)
reasonably occasioned by Buyer's obligation to sell Products in that
market by this Agreement.
(d) From time to time Motorola may request Buyer to service a certain
market not on the current Attachment E for a limited period of time. The
terms of any such arrangement shall be in writing and mutually agreeable
to the parties.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-2
<PAGE> 16
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
(e) Buyer's distribution of the Products is limited to Buyer's
Territory. Buyer shall not transship, sell, or otherwise transfer
Products outside its Territory, and Buyer shall incorporate this
limitation into all of its agent and distributor equipment agreements as
a condition of resale of the Products and reasonably enforce same. Sales
within the Territory without transshipment is a material condition to
Buyer's rights under this Agreement, and it is agreed that any direct or
indirect distribution, transshipment and/or sale of Products outside the
Territory by Buyer or others purchasing through Buyer shall be a material
breach of this Agreement and will result in substantial damage to
Motorola which will be difficult to quantify. Accordingly, in the event
of such the parties agree that Motorola, in addition to any other
remedies it may have under applicable law and this Agreement, may reject
some or all purchase orders from Buyer for any model or models of
Product, including Premier products, until Buyer can demonstrate that
Buyer has instituted policies and procedures to prevent any such
occurrences in the future.
9. All units will carry mutually agreed upon designated logos. Buyer will
provide photographic quality artwork 30 days prior to requested ship
date. Buyer represents and warrants that it has the right by way of
ownership or otherwise, to use such logo and further agrees to indemnify
and hold Motorola harmless for any losses, damages or other liabilities
resulting from the use of the designated logo.
10. Buyer shall provide Motorola on a quarterly basis, not less than thirty
(30) days prior to the start of the next quarter, a continuous usage
forecast for the next two (2) calendar quarters (the "Quarterly
Forecast") to assist Motorola in maintaining an orderly production flow
for the purpose of Buyer's delivery requirements. Buyer shall indicate
the Product model number and projected purchase volume by units for each
month of the quarter.
11. Buyer shall provide Motorola on a quarterly basis, not less than thirty
(30) days prior to the start of the next quarter, a firm processable
purchase order for the first month of the Quarterly Forecast; provided,
however, that a delivery(ies) scheduled in such first month may be
rescheduled by Buyer into the second month on notice to Motorola not less
than [REDACTED] days prior to the scheduled delivery date.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-3
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 17
CELLSTAR LTD.
ATTACHMENT B
TERMS AND CONDITIONS
12. (a) During the Initial Term of this Agreement, if Motorola reduces
the price of a particular model of Product, then Buyer shall be entitled
to the benefit of price protection for Eligible Units (defined below) of
Products. Eligible Units are the greater of (i) all units shipped to
Buyer within thirty-five (35) days prior to the new price effective date
[REDACTED]
(b) Motorola will make a price adjustment for each Eligible Unit
equal to the difference between Buyer's net purchase price (invoice price
less rebate and any promotional amounts) and the new net price (invoice
price less rebate and any promotional amounts). Price protection will be
paid as a credit against future purchases within fifteen (15) days after
the end of the month of receipt of price protection claim and required
documentation.
13. As a condition to the price protection described herein, Buyer shall
furnish Motorola with accurate monthly reports of Buyer inventory (by
major product category) of Products. Each such inventory report shall be
received by your Motorola Account Executive no later than the first
Thursday following the last Saturday of a calendar month and shall
include all inventories maintained by Buyer and its affiliates, including
inventories maintained by major agents or at drop ship distribution
points. It is specifically understood that inventories maintained at
Sam's Club kiosk locations shall be estimates only. If any such report
is received after the applicable date listed below, the time period for
shipments protected against price reductions shall be reduced by one day
for each day such report is late.
14. [REDACTED]
15. Motorola will offer its Signature Products (including the StarTAC(TM)
cellular phone) to Buyer for distribution to Buyer's dealers and agents
at locations pre-approved by Motorola under the terms of Motorola's
Signature program in effect from time to time. Signature Products
delivered to a location may not be transshipped to any other location nor
offered for sale from any other location without Motorola's express prior
written consent.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page B-4
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 18
CELLSTAR LTD.
ATTACHMENT C
SUPPLEMENTAL TERMS AND CONDITIONS
1. PRICES The prices for the Products purchased hereunder shall be as set
forth in Attachment A to the Agreement.
2. ORDERS AND FORECASTS (a) Orders. All orders by Buyer shall be only upon
the terms and conditions of this Agreement. The only effect of any terms
and conditions in Buyer's orders or elsewhere shall be to request the time
and place of delivery and number of units to be delivered, subject to
Seller's acceptance, but they shall not change, alter or add to the terms
and conditions of this Agreement in any other way. Seller's invoice shall
also not change the terms and conditions of this Agreement. (b) Forecasts.
During the term of this Agreement, Buyer shall use its best efforts to
update, on a quarterly basis, a continuous usage forecast to assist Seller
in maintaining an orderly production flow for the purpose of meeting
Buyer's delivery requirements. Buyer's failure to provide such information
may be considered cause by Seller for excusable delivery delay.
3. CANCELLATION Buyer may cancel orders placed in accordance with the terms
and conditions of this Agreement upon payment of cancellation charges which
shall include all costs incurred or committed for unless such costs are
otherwise recoverable through the sale of the product on a timely basis.
Payment shall be due within thirty (30) days of the date of invoice.
Seller agrees to divert completed material and work in process from
canceled orders to other requirements wherever possible in order to
minimize cancellation charges.
4. DELIVERY AND PAYMENT (a.) All deliveries are FOB Motorola's plant. Each
such delivery will be separately invoiced and payment from Buyer shall be
due thirty (30) days from the date thereof without regard to other
deliveries. DELIVERY DATES ARE BEST ESTIMATES ONLY. (b.) Title to the
Products sold shall pass to Buyer at the FOB point.
5. FORCE MAJEURE Neither party shall be liable for any delay or failure to
perform due to any cause beyond its reasonable control except the
obligation to pay money when due. Causes include but are not limited to
strikes, acts of God, acts of the other party, interruptions of
transportation or inability to obtain necessary labor, materials or
facilities, or default of any supplier, or delays in FCC frequency
authorization or license grant. The delivery schedule shall be considered
extended by a period of time equal to the time lost because of any
excusable delay. To the extent that MOTOROLA is unable to manufacture and
deliver the annual commitment, it shall be reduced on a pro-rata basis. In
the event MOTOROLA is unable to wholly or partially perform for a period
greater than forty-five (45) days because of any cause beyond its
reasonable control, either party may terminate any delayed order without
any liability.
6. WARRANTY MOTOROLA warrants the Products to the original subscriber buyers
or lessees only in accordance with its Limited Warranty attached to the
Agreement, or as the Limited Warranty may be revised by Motorola from time
to time (to be applicable to units shipped by Motorola on or after the
effective date of the revision), and makes no representation or warranty of
any other kind, express or implied. EXCEPT AS OTHERWISE PROVIDED IN THE
LIMITED WARRANTY, MOTOROLA SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7. PATENT AND COPYRIGHT INDEMNIFICATION (a) MOTOROLA agrees to defend, at its
expense, any suits against Buyer and third parties purchasing Motorola
products from Buyer based upon a claim that any products furnished
hereunder directly infringes a U.S. patent or copyright and to pay costs
and damages finally awarded in any such suit, provided that MOTOROLA is
notified promptly in writing of the suit and at Motorola's request and at
its expense is given control of said suit and all
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page C-1
<PAGE> 19
CELLSTAR LTD.
ATTACHMENT C
SUPPLEMENTAL TERMS AND CONDITIONS
requested assistance for defense of same. If the use or sale of any
product(s) furnished hereunder is enjoined as a result of such suit,
MOTOROLA at its option and at no expense to Buyer, shall obtain for Buyer
the right to use or sell said product(s) or shall substitute an equivalent
product reasonably acceptable to Buyer and extend this indemnity thereto or
shall accept the return of the product(s) and reimburse Buyer the purchase
price therefor, less a reasonable charge for reasonable wear and tear.
This indemnity does not extend to any suit based upon any infringement or
alleged infringement of any patent or copyright by the alteration of any
products furnished by MOTOROLA or by the combination of any products(s)
furnished by MOTOROLA and other elements nor does it extend to any
products(s) of Buyer's design or formula. The foregoing states the entire
liability of MOTOROLA for patent or copyright infringement. (b) IN NO
EVENT SHALL MOTOROLA BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES
ARISING FROM INFRINGEMENT OR ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS,
OR OTHER INTELLECTUAL PROPERTY RIGHTS.
8. LICENSE DISCLAIMER Nothing contained herein shall be deemed to grant
either directly or by implication, estoppel, or otherwise, any license
under any patents, copyrights, trademarks or trade secrets of MOTOROLA.
9. TAXES Except for the amount, if any, of state and local tax stated in the
Agreement, the prices set forth herein are exclusive of any amount for
Federal, State and/or Local excise, sales, use, property, retailer's,
occupation or any other assessment in the nature of taxes however
designated, on the products and/or services provided under this Agreement.
If any such excluded tax, exclusive however, of any taxes measured by
Seller's net income or taxes based on Seller's gross receipts or based on
Seller's franchise, is determined to be applicable to this transaction or
to the extent MOTOROLA is required to pay or bear the burden thereof, one
hundred percent (100%) thereof shall be added to the prices set forth
herein and paid by Buyer. Personal property taxes assessable on the
products shall be the responsibility of Buyer. In the event Buyer claims
exemption from sales, use or other such taxes under this Agreement, Buyer
shall hold Motorola harmless of any subsequent assessments levied by a
proper taxing authority for such taxes, including interest, penalties, and
late charges.
10. TECHNICAL ASSISTANCE Motorola's warranty shall not be enlarged, and no
obligation or liability shall arise out of Motorola's rendering of
technical advice, facilities or service in connection with Buyer's purchase
of the products furnished.
11. LIMITATION OF LIABILITY EXCEPT FOR PERSONAL INJURY, AND EXCEPT FOR
PARAGRAPH 7 PATENT AND COPYRIGHT INDEMNIFICATION, MOTOROLA'S TOTAL
LIABILITY, WHETHER FOR BREACH OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT
LIABILITY IN TORT OR OTHERWISE, IS LIMITED TO THE PRICE OF THE PARTICULAR
PRODUCTS SOLD HEREUNDER WITH RESPECT TO WHICH LOSSES OR DAMAGES ARE
CLAIMED. BUYER'S SOLE REMEDY IS TO REQUEST MOTOROLA AT MOTOROLA'S OPTION
TO EITHER REFUND THE PURCHASE PRICE, REPAIR OR REPLACE PRODUCT(S) THAT ARE
NOT AS WARRANTED. IN NO EVENT WILL MOTOROLA BE LIABLE FOR ANY LOSS OF USE,
LOSS OF TIME, INCONVENIENCE, COMMERCIAL LOSS, LOST PROFITS OR SAVINGS OR
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES TO THE FULL EXTENT SUCH MAY BE
DISCLAIMED BY LAW.
12. LOGOS AND TRADEMARKS In order that Seller may protect its trademarks,
trade names, corporate slogans, corporate logo, goodwill and product
designations, Buyer, without the express written consent of Seller, shall
have no right to use any such marks, names, slogans or designations of
Seller in the sales, lease or advertising of any products or on any product
container, component part, business forms, sales, advertising and
promotional materials or other business supplies or material, whether in
writing, orally or otherwise.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page C-2
<PAGE> 20
CELLSTAR LTD.
ATTACHMENT C
SUPPLEMENTAL TERMS AND CONDITIONS
13. PARTY RELATIONSHIP This Agreement does not create any agency, joint
venture or partnership between Buyer and Seller. Buyer shall not impose or
create any obligation or responsibility, express or implied, or make any
promises, representations or warranties on behalf of Seller, other than as
expressly provided herein.
14. WAIVER The failure of either party to insist in any one or more instances,
upon the performance of any of the terms or conditions herein or to
exercise any right hereunder shall not be construed as a waiver or
relinquishment of the future performance of any such terms or conditions or
the future exercise of such right but the obligation of the other party
with respect to such future performance shall continue in full force and
effect.
15. DEFAULT In the event that either party shall be in breach or default of
any of the terms or conditions of this Agreement and such breach or default
shall continue for a period of thirty (30) days after the giving of written
notice to the breaching party, then subject to the other terms and
conditions of this Agreement, the other party, in addition to other rights
and remedies it may have in law or equity, shall have the right to
immediately cancel this Agreement without any charge or liability
whatsoever.
16. GOVERNMENT SALES In the event that Buyer elects to sell Motorola Products
or services to the U.S. Government or any state, local, or non-U.S.
Government entity (including but not limited to a non-U.S. Government
entity that receives funding from the U.S. Government), or to a prime
contractor or other subcontractor selling to such entities, Buyer does so
solely at its own option and risk. Except as Motorola expressly accepts
specific terms in writing, Buyer remains exclusively responsible for
compliance with all procurement laws, regulations or guidelines governing
such sales and agrees not to obligate Motorola as a subcontractor or
otherwise to such entities. Further, Motorola makes no representations,
certifications or warranties whatsoever with respect to the ability of its
Products, services, or prices to satisfy any such statutes, regulations, or
guidelines.
17. DISPUTE RESOLUTION. The parties agree that any claims or disputes will be
submitted to non-binding mediation prior to initiation of any formal legal
process. Costs of mediation will be shared equally.
18. EDI. In order to facilitate transactions under this Agreement, the parties
may electronically transmit and receive data in agreed formats in
substitution for conventional paper-based documents as provided in the
Electronic Data Interchange Trading Partner Agreement between the parties
dated as of April 20, 1993.
19. GENERAL No alterations or modifications of this Agreement shall be binding
upon either Buyer or Seller unless made in writing and signed by an
authorized representative of each. If any term or condition of this
Agreement shall to any extent be held by a court or other tribunal to be
invalid, void or unenforceable, then that term or condition shall be
inoperative and void insofar as it is in conflict with law, but the
remaining rights and obligations of the parties shall be construed and
enforced as if this Agreement did not contain the particular term or
condition held to be invalid, void or unenforceable. No assignment of this
Agreement or of any right granted herewith shall be made by Buyer without
the prior written consent of MOTOROLA. This Agreement shall be governed by
the laws of the State of Illinois.
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page C-3
<PAGE> 21
ATTACHMENT D
MOTOROLA LIMITED WARRANTY FOR THE UNITED STATES
CELLULAR SUBSCRIBER RADIOTELEPHONE PRODUCTS
I. WHAT THIS WARRANTY COVERS AND FOR HOW LONG: MOTOROLA INC. (MOTOROLA)
warrants the MOTOROLA Cellular Subscriber Radiotelephone products and
accessories against defects in material and workmanship under normal use and
service for a period of time specified by the product's serial number from the
date of installation. (NOTE: installation, in the case of radiotelephones,
accessories or batteries that are not installed in a vehicle, means the date
that the product is placed into subscriber service. Installation will be deemed
to be no later than thirty (30 days from date of delivery of the Product to
you the owner.) The warranty time period is specified by the last digit of the
mechanical serial number found on each cellular product. Products sold under
this warranty may have either a "P", "Y", "A", "B", "C" or "D" or nothing in
the eleventh position of the serial number. If there is no letter or an "A",
the product comes with a (1) one year warranty. Products that have a "D" have a
(2) two year warranty. Products that have a "Y" or a "B" have a (3) three year
warranty, and products that have a "P" or a "C" have a (5) five year warranty
commencing from the date of installation. The warranty time period for
radiotelephone accessories and batteries is as follows:
<TABLE>
<S> <C>
Transportable and Carry Phone batteries: 1 year
Portable or Digital Personal Communicator (TM)
(DPC) telephone batteries: 1 year
Carrying cases Defect free at time
(excluding leather briefcases): of shipment
Other radiotelephone accessories: 1 year
</TABLE>
MOTOROLA, at its option, will at no charge either repair, replace, or refund
the purchase price of the Cellular Subscriber Radiotelephone Product during the
warranty period, provided it is returned in accordance with the terms of this
warranty to the MOTOROLA Cellular Service Center or distributor's service shop
qualified by MOTOROLA. Repair, at MOTOROLA's option, may include the
replacement of parts or boards with functionally equivalent reconditioned or
new parts or boards. Replaced parts, accessories, batteries, or boards are
warranted for the balance of the original time period. All replaced
accessories, batteries, parts and cellular telephone equipment shall become the
property of MOTOROLA.
II. WARRANTY CONDITIONS:
This express limited warranty is extended by MOTOROLA to the original
subscriber buyer or lessee only and is not assignable or transferrable to
subsequent subscriber buyers or lessees. This is the complete warranty for
Cellular Subscriber Radiotelephone Products by MOTOROLA. MOTOROLA assumes no
obligation or liability for additions or modifications to this warranty unless
made in writing and signed by an officer of MOTOROLA. Unless made in separate
written agreement between MOTOROLA and you, MOTOROLA does not warrant the
installation, maintenance or service of the equipment, accessories, batteries
or parts. Portable or DPC (Nickel Cadmium) batteries are warranted only if
battery capacity falls below 80% of rated capacity, or the battery develops
leakage. This warranty becomes void for all types of batteries if:
a. the batteries are charged by other than MOTOROLA approved battery
chargers specified for the charging of the battery.
b. any of the seals on the battery are broken or show evidence of
tampering.
c. the battery is used in equipment or service other than the cellular
telephone equipment for which it is specified.
MOTOROLA cannot be responsible in any way for any ancillary equipment not
furnished by MOTOROLA which is attached to or used in connection with
MOTOROLA's Cellular Subscriber Radiotelephone Products, or for operation of our
equipment with any ancillary equipment and all such equipment is expressly
excluded from this warranty. Furthermore, MOTOROLA cannot be responsible for
any damage to MOTOROLA equipment resulting from the use of ancillary equipment
not furnished by MOTOROLA for use with cellular subscriber equipment.
When the product is used in conjunction with ancillary or peripheral equipment
not manufactured by MOTOROLA, MOTOROLA does not warrant the operation of the
product/peripheral combination, and MOTOROLA will honor no warranty claim where
the product is used in such a combination and it is determined by MOTOROLA that
there is no fault with the MOTOROLA product. MOTOROLA specifically disclaims
any responsibility for any damage caused in any way by the use of portable
radiotelephone accessories and peripherals (specific examples include, but are
not limited to: batteries, chargers, adapters, and power supplies) when such
accessories and peripherals are not manufactured or supplied by MOTOROLA.
MOTOROLA disclaims liability for range, coverage, availability, or operation of
the Cellular System which is provided by the Carrier.
III. WHAT THIS WARRANTY DOES NOT COVER:
(a) Defects or damage resulting from use of the product in other than its
normal and customary manner. (b) Defects or damage from misuse, accident or
neglect. (c) Defects or damage from improper testing, operation, maintenance,
installation, adjustment, or any alteration or modification of any kind. (d)
Breakage or damage to antennas unless caused directly by defects in material or
workmanship. (e) Products disassembled or repaired in such a manner as to
adversely affect performance or prevent adequate inspection and testing to
verify any warranty claim. (f) Products which have had the serial number
removed or made illegible. (g) Defects or damage due to spills of food or
liquid. (h) Control Unit Coil Cords that are stretched or have the modular tab
broken. (i) All plastic surfaces and all other externally exposed parts that
are scratched or damaged due to customer normal use. (j) Leather briefcases
(which are covered under separate manufacturers' warranties). (k) Products
rented on a month-to-month basis. (l) The control unit keypad assembly, control
unit displays, and control unit coil cords are not covered after the first year
from installation.
<PAGE> 22
IV. HOW TO GET WARRANTY SERVICE:
To receive warranty service, present your equipment to the facility described
below, along with your bill of sale or comparable substitute proof of sale or
lease bearing the date of installation, transceiver serial number, electronic
serial number, and installation facility if applicable.
Warranty service is available by returning MOTOROLA branded Radiotelephone
Products to a MOTOROLA Cellular Service Center authorized in writing by a
MOTOROLA Area Service Manager to perform warranty work on MOTOROLA Cellular
Subscriber Radiotelephone products. A Carrier or Distributor branded
Radiotelephone Produce may be returned to either (a) the specific cellular
service shop qualified by MOTOROLA's Cellular Subscriber Services Department in
writing and operated by or affiliated with the cellular distributor which the
Distributor designates or (b) a MOTOROLA Authorized Cellular Service Center. In
most cases the service shop which installed your Cellular Radiotelephone and
accessories will provide warranty service. If you need additional information,
contact the shop that installed your Radiotelephone, the customer service
department of your cellular system operator, or MOTOROLA at the address at the
bottom of this page.
In the case of vehicular installation, the vehicle in which the Radiotelephone
Product is installed should be driven to the service shop, as analysis of any
problem may require inspection of the entire vehicular installation. In the
case of non-vehicular installation, the unit or accessories, together with any
detachable parts such as antennas, battery packs, and chargers, must be
delivered to a qualified MOTOROLA Cellular Service Center, or a
MOTOROLA-qualified service shop, transportation and insurance prepaid. When
sent or brought to the servicer, the Radiotelephone Product must be accompanied
by your name, address, and telephone number, name of cellular Carrier, and a
description of the problem.
V. GENERAL PROVISIONS:
This warranty sets forth our responsibilities regarding this product. Repair,
replacement or refund of the purchase price at MOTOROLA's option, is your
exclusive remedy. THIS WARRANTY IS GIVEN IN LIEU OF ALL OTHER EXPRESS
WARRANTIES. IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE LIMITED TO THE
DURATION OF THIS LIMITED WARRANTY. FURTHER, AS THE CELLULAR CARRIER IS NOT
CONTROLLED BY MOTOROLA, NO WARRANTY IS MADE AS TO COVERAGE, AVAILABILITY OR
GRADE OF SERVICE PROVIDED BY THE CELLULAR CARRIER. IN NO EVENT SHALL MOTOROLA
BE LIABLE FOR DAMAGES IN EXCESS OF THE PURCHASE PRICE OF THE CELLULAR
RADIOTELEPHONE PRODUCT, FOR ANY LOSS OF USE, LOSS OF TIME, INCONVENIENCE,
COMMERCIAL LOSS, LOST PROFITS OR SAVINGS OR OTHER INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE SUCH PRODUCT,
TO THE FULL EXTENT SUCH MAY BE DISCLAIMED BY LAW.
VI. PATENT AND SOFTWARE PROVISIONS:
MOTOROLA will defend at its own expense, any suit brought against you to the
extent that it is based on a claim that the Cellular Subscriber Radiotelephone
Product parts infringes a United States patent, and MOTOROLA will pay those
costs and damages finally awarded against you in any such suit which are
attributable to any such claim, but such defense and payments are conditioned
on the following: (i) that MOTOROLA will be notified promptly in writing by you
of any notice of such claim; and (ii) that MOTOROLA will have sole control of
the defense of such suit and all negotiations for its settlement or compromise;
and (iii) should the Cellular Radiotelephone, accessory, battery or parts
become, or in MOTOROLA's opinion be likely to become the subject of a claim of
infringement of a United States patent that you will permit MOTOROLA, at its
option and expense, either to procure for you the right to continue using the
Cellular Radiotelephone or parts or to replace or modify the same so that it
becomes non-infringing or to grant you a credit for such Cellular
Radiotelephone or parts as depreciated and accept its return. The depreciation
will be an equal amount per year over the lifetime of the Cellular Subscriber
Radiotelephone, accessories, battery or parts as established by MOTOROLA.
MOTOROLA will have no liability to you with respect to any claim of patent
infringement which is based upon the combination of the Cellular Radiotelephone
or parts furnished hereunder with software, apparatus or devices not furnished
by MOTOROLA, nor will MOTOROLA have any liability for the use of ancillary
equipment or software not furnished by MOTOROLA which is attached to or used in
connection with the Cellular Radiotelephone. The foregoing states the entire
liability of MOTOROLA with respect to infringement of patents by the Cellular
Radiotelephone, accessories, batteries or any parts thereof.
Laws in the United States and other countries preserve for MOTOROLA certain
exclusive rights for copyrighted MOTOROLA software such as the exclusive rights
to reproduce in copies and distribute copies of such MOTOROLA software.
MOTOROLA software may be copied into, used in and redistributed with only the
Cellular Subscriber Radiotelephone Product associated with such MOTOROLA
software. No other use, including without limitation disassembly, of such
MOTOROLA software or exercise of exclusive rights in such MOTOROLA software is
permitted.
VII. STATE LAW RIGHTS:
SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR
CONSEQUENTIAL DAMAGES, OR LIMITATIONS ON HOW LONG AN IMPLIED WARRANTY LASTS SO
THE ABOVE LIMITATIONS OR EXCLUSIONS MAY NOT APPLY TO YOU.
This warranty gives you specific legal rights, and you may also have other
rights which vary from state to state.
MOTOROLA INC.
Cellular Subscriber Services Department
630 North U.S. Highway 45
Libertyville, IL 60048
<PAGE> 23
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
------ ---------------------- ----------- -------
<S> <C> <C> <C>
IOWA
416 IA 5-Jackson US Cellular A
417 IA 6-Iowa CommNET B
418 IA 7-Audubon US Cellular A
419 IA 8-Monona CommNET B
420 IA 9-Ida CommNET B
421 IA 10-Humboldt US Cellular A
422 IA 11-Hardin US Cellular A
424 IA 13-Mitchell US Cellular A
425 IA 14-Kossuth US Cellular A
425 IA 14-Kossuth CommNET B
426 IA 15-Dicksun CommNET B
427 IA 16-Lyon CommNET B
KANSAS
89 Wichita SBMS B
179 Topeka SBMS B
301 Lawrence SBMS B
428 KS 1-Cheyenne Mercury A
428 KS 1-Cheyenne Kansas B
429 KS 2-Norton Mercury A
429 KS 2-Norton Kansas B
430 KS 3-Jewell Kansas B
431 KS 4-Marshall Kansas B
432 KS 5-Brown US Cellular A
432 KS 5-Brown Kansas B
433 KS 6-Wallace Mercury A
433 KS 6-Wallace Kansas B
434 KS 7-Trego Mercury A
434 KS 7-Trego Kansas B
435 KS 8-Ellsworth Kansas B
436 KS 9-Morris Kansas B
437 KS 10-Franklin Kansas B
438 KS 11-Hamilton Mercury A
438 KS 11-Hamilton Kansas B
439 KS 12-Hodgeman Mercury A
439 KS 12-Hodgeman Kansas B
440 KS 13-Edwards Kansas B
441 KS 14-Reno Kansas B
442 KS 15-Elk Kansas A
KENTUCKY
37 Louisville GTE A
116 Lexington GTE A
293 Owensboro GTE B
443 KY 1-Fulton GTE B
444 KY 2-Union GTE B
445 KY 3-Meade Blue Grass B
446 KY 4-Spencer Blue Grass B
447 KY 5-Barren Blue Grass B
448 KY 6-Madison Cell Phone KY B
449 KY 7-Trimble GTE A
451 KY 9-Elliott Appalachian B
452 KY 10-Powell Kentucky Cell B
453 KY 11-Clay Litchfield B
LOUISIANA
100 Shreveport Century B
184 Houma Mobile Tel B
197 Lake Charles Mercury B
205 Alexandria Century B
219 Monroe Century B
454 LA 1-Claiborne Century B
455 LA 2-Morehouse Century B
456 LA 3-DeSoto Mercury B
457 LA 4-Caldwell Century B
458 LA 5-Beauregard Mercury B
459 LA 6-Iberville Iberia Cellular A
461 LA 8-St. James Mobile Tel B
462 LA 9-Plaquemines Mobile Tel B
</TABLE>
Page 3 CONFIDENTIAL
<PAGE> 24
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
------ ---------------------- ----------- -------
<S> <C> <C> <C>
MAINE
224 Bangor US Cellular A
279 Lewiston US Cellular A
463 ME 1-Oxford US Cellular A
464 ME 2-Somerset US Cellular A
465 ME 3-Kennebec US Cellular A
466 ME 4-Washington US Cellular B
MARYLAND
257 Hagerstown US Cellular A
257 Hagerstown Dobson B
269 Cumberland Dobson A
269 Cumberland US Cellular B
467 MD 1-Garret US Cellular B
468 MD 2-Kent Dobson A
469 MD 3-Frederick Dobson A
MASSACHUSETTS
6 Boston SBMS A
55 Worcester SBMS A
63 Springfield BANMS A
63 Springfield SNET B
76 New Bedford BANMS A
76 New Bedford SNET B
213 Pittsfield BANMS A
213 Pittsfield SNET B
470 MA 1-Franklin SNET B
471 MA 2-Barnstable SBMS A
MICHIGAN
64 Grand Rapids Century B
78 Lansing Century B
94 Saginaw Century B
132 Kalamasoo Century B
177 Battle Creek Century B
181 Mushegon Century B
193 Benton Harbor Century B
207 Jackson Century B
472 MI 1-Gogebie PTI B
473 MI 2- Alger PTI B
474 MI 3-Emmet Century B
476 MI 5-Manistee Century B
477 MI 6-Roscommon Century B
478 MI 7-Newaygo Century B
479 MI 8-Allegan Century B
480 MI 9-Cass Century B
MINNESOTA
198 St. Cloud Cell Mobile B
482 MN 1-Kittson Rural Cellular A
483 MN 2-Lake of the Woods Rural Cellular B
484 MN 3-Koochiching Rural Cellular B
486 MN 5-Wilkin Rural Cellular B
487 MN 6-Hubbard Rural Cellular B
488 MN 7-Chippewa Triad Cellular A
488 MN 7-Chippewa Midwest Wire B
489 MN 8-Lac Qui Parle Midwest Wire A
489 MN 8-Lac Qui Parle Triad Cellular B
490 MN 9-Pipestone Midwest Wire A
490 MN 9-Pipestone Triad Cellular B
491 MN 10-LeSueur Frontier A
491 MN 10-LeSeur Midwest Wire B
492 MN 11-Goodhue Midwest Wire B
MISSISSIPPI
106 Jackson Century A
173 Biloxi/Gulfport Century A
173 Biloxi/Gulfport Cell South B
252 Pascagoula Century A
252 Pascagoula Cell South B
493 MS 1-Tunica Mercury A
493B2 MS 1-Tunica Cell South B
</TABLE>
Page 4 CONFIDENTIAL
<PAGE> 25
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
------ ------------------------ ----------- -------
MISSISSIPPI
<S> <C> <C> <C>
494 MS 2-Benton Century A
495 MS 3-Bolivar Mercury A
495B1 MS 3-Bolivar Cell South B
496 MS 4-Yalobusha Century A
496B2 MS 4-Yalobusha Cell South B
497 MS 5-Washington Bay Cellular A
497B1 MS 5-Washington Cell South B
498 MS 6-Montgomery Century A
498B2 MS 6-Montgomery Cell South B
499 MS 7-Leak County Century A
500 MS 8-Clairborne Cell South B
501 MS 9-Copiah Cell South A
502 MS 10-Smith Cellular XL A
502B1 MS 10-Smith Cell South B
503 MS 11-Lamar Cellular XL A
503B1 MS 11-Lamar Cell South B
MISSOURI
11 St. Louis SBMS B
24 Kansas City SBMS B
239 Joplin US Cellular B
275 St. Joseph SBMS B
278 Columbia US Cellular B
504 MO 1-Atchison US Cellular A
505 MO 2-Harrison Florida Cellular A
506 MO 3-Schuyler US Cellular A
507 MO 4-De Kalb US Cellular A
508 MO 5-Linn US Cellular A
508 MO 5-Linn Charlton Valley B
506 MO 6-Jefferson Cell Tel A
509 MO 6-Jefferson US Cellular B
510 MO 7-Saline Mid Missouri B
511 MO 8-Callaway SBMS B
512 MO 9-Bates SBMS B
514 MO 11-Moniteau A1 Cell Comm A
514 MO 11-Moniteau SBMS B
515 MO 12-Maries SBMS B
516 MO 13-Washington US Cellular A
516 MO 13-Washington SBMS B
518 MO 15-Stone US Cellular A
519 MO 16-Laclede US Cellular A
520 MO 17-Shannon US Cellular B
521 MO 18-Perry SBMS B
522 MO 19-Stoddard SBMS B
MONTANA
268 Billings CommNET B
297 Great Falls CommNET B
523 MT 1-Lincoln CommNET B
524 MT 2-Toole CommNET B
525 MT 3-Phillips Montana Wire B
526 MT 4-Daniels CommNET B
527 MT 5-Mineral CommNET B
528 MT 6-Deer Lodge CommNET B
529 MT 7-Fergus CommNET B
530 MT 8-Beaverhead CommNET B
531 MT 9-Carbon CommNET B
532 MT 10-Prairie CommNET B
NEVADA
93 Las Vegas ATT A
171 Reno ATT A
545 NV 3-Storey ATT A
NEW HAMPSHIRE
133 Manchester US Cellular B
548 NH 1-Coos US Cellular B
549 NH 2-Carroll SBMS A
NEW JERSEY
121 Trenton BANMS B
</TABLE>
Page 5 CONFIDENTIAL
<PAGE> 26
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
------ ---------------------- --------------- -------
<S> <C> <C> <C>
NEW JERSEY
134 Atlantic City BANMS B
228 Vineland BANMS B
NEW MEXICO
86 Albuquerque BANMS A
285 Las Cruces BANMS A
285 Las Cruces GTE B
553 NM 1-San Juan CommNET A
554 NM 2-Colfax Plateau Cellular B
555 NM 3-Catron GTE B
556B2 NM 4-Santa Fe Plateau Cellular B
557 NM 5-Grant GTE B
558B1 NM 6-Lincoln GTE B
558B2 NM 6-Lincoln Plateau Cellular B
NEW YORK
25 Buffalo SBMS A
34 Rochester SBMS A
44 Albany SBMS A
53 Syracuse SBMS A
115 Utica SBMS A
562 NY 4-Ithaca SBMS A
NORTH CAROLINA
61 Charlotte BANMS A
166 Hickory BANMS A
183 Asheville US Cellular B
565 NC 1-Cherokee BANMS A
566 NC 2-Yancey Blue Ridge A
566B1 NC 2-Yancey Carolina West B
566B3 NC 2-Yancey US Cellular B
567 NC 3-Ashe US Cellular A
567 NC 3-Ashe Carolina West B
568 NC 4-Henderson US Cellular B
569 NC 5-Anson BANMS A
570 NC 6-Chatham US Cellular A
571 NC 7-Rockingham US Cellular A
572 NC 8-Northhampton US Cellular A
573 NC 9-Camden US Cellular A
574 NC 10-Harnett US Cellular A
575 NC 11-Hoke US Cellular A
576 NC 12-Sampson US Cellular A
577 NC 13-Greene US Cellular A
578 NC 14-Pitt US Cellular B
NORTH DAKOTA
298 Bismark CommNET B
580 ND 1-Divide CommNET B
581 ND 2-Bottineau CommNET B
583 ND 4-McKenzie CommNET B
584 ND 5-Kidder CommNET B
OHIO
593 OH 9-Ross US Cellular B
OKLAHOMA
45 Oklahoma City SBMS B
57 Tulsa US Cellular B
260 Lawton US Cellular B
302 Enid Dobson Cell A
302 Enid Enid Cellular B
596 OK 1-Cimarron Panhandle Cell B
597 OK 2-Harper Dobson Cell A
597 OK 2-Harper Pioneer Cell B
598B1 OK 3-Grant SBMS B
598B2 OK 3-Grant Pioneer Cell B
599 OK 4-Nowata US Cellular B
600B1 OK 5-Roger Mills Dobson Cell B
600B2 OK 5-Roger Mills Pioneer Cell B
601 OK 6-Seminole US Cellular A
601 OK 6-Seminole Pioneer Cell B
602 OK 7-Beckham Triad Cellular A
</TABLE>
Page 6 CONFIDENTIAL
<PAGE> 27
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
------ ----------------------- ----------- -------
<S> <C> <C> <C>
OKLAHOMA
602B1 OK 7-Beckham Dobson Cell B
602B2 OK 7-Beckham US Cellular B
603 OK 8-Jackson US Cellular A
603 OK 8-Jackson Texahoma LP B
604 OK 9-Garvin US Cellular A
604 OK 9-Garvin SBMS B
605 OK 10-Haskell US Cellular A
OREGON
229 Medford US Cellular B
607 OR 2-Hood River US Cellular B
608 OR 3-Umatilla US Cellular B
610 OR 5-Coos US Cellular A
611 OR 6-Crook US Cellular B
PENNSYLVANIA
4 Philadelphia BANMS B
13 Pittsburg BANMS B
58 Allentown BANMS B
118 Reading BANMS B
613 PA 2-McKean BANMS B
617 PA 6-Lawrence BANMS B
618 PA 7-Jefferson BANMS B
620 PA 9-Greene BANMS B
621B2 PA 10-Bedford US Cellular B
622B2 PA 11-Huntington BANMS B
RHODE ISLAND
38 Providence BANMS A
38 Providence SNET B
624 RI 1-Newport BANMS A
624 RI 1-Newport SNET B
SOUTH CAROLINA
628 SC 4-Chesterfield US Cellular A
SOUTH DAKOTA
267 Sioux Falls CommNET B
289 Rapid City CommNET B
634 SD 1-Harding CommNET B
635 SD 2-Carson CommNET B
636 SD 3-McPherson CommNET B
637 SD 4-Marshall PTI B
638 SD 5-Custer CommNET B
639 SD 6-Harkon CommNET B
640 SD 7-Sully CommNET B
641 SD 8-Kingsburg CommNET B
642 SD 9-Hanson CommNET B
TENNESSEE
36 Memphis GTE A
46 Nashville GTE A
79 Knoxville GTE A
79 Knoxville US Cellular B
85 Tri-Cities GTE A
88 Chattanooga GTE A
209 Clarksville GTE A
643 TN 1-Lake GTE A
645 TN 3-Macon GTE A
645 TN 3-Macon US Cellular B
646 TN 4-Hamblen US Cellular B
647 TN 5-Fayette GTE A
648 TN 6-Giles GTE A
649 TN 7-Bledsoe GTE A
649B2 TN 7-Bledsoe Bledsoe Tele B
649B3 TN 7-Bledsoe US Cellular B
651 TN 9-Maury GTE A
TEXAS
9 Dallas/Ft. Worth SBMS B
10 Houston GTE B
33 San Antonio SBMS B
75 Austin GTE B
</TABLE>
Page 7 CONFIDENTIAL
<PAGE> 28
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
------ ---------------------- ----------- -------
<S> <C> <C> <C>
TEXAS
81 El Paso BANMS A
81 El Paso GTE B
101 Beaumont GTE B
112 Corpus Christi US Cellular A
112 Corpus Christi SBMS B
128 Mc Allen/Harlingen Century A
128 Mc Allen/Harlingen SBMS B
161 Lubbock SBMS B
162 Brownsville Century A
162 Brownsville SBMS B
170 Galveston GTE B
188 Amarillo Cell One A
188 Amarillo SBMS B
220A2 Abilene Lone Star A
220 Abilene SBMS B
233 Wichita Falls US Cellular B
240 Texarkana Century B
255 Odessa SBMS B
281 Laredo US Cellular A
281 Laredo SBMS B
287 Bryan GTE B
292 Sherman/Denison SBMS B
294 San Angelo West Central B
295 Midland SBMS B
300 Victoria US Cellular A
300 Victoria GTE B
652 TX 1-Dallas Triad Cellular A
652 TX 1-Dallas XIT Cellular B
653 TX 2-Hansford Triad Cellular A
653 TX 2-Hansford Dobson Cell B
654B1 TX 3-Parmer Poka Lambro B
654B2 TX 3-Parmer Plateau Cell B
655 TX 4-Briscoe Triad Cellular A
655B1 TX 4-Briscoe Poka Lambro B
655B2 TX 4-Briscoe US Cellular B
656 TX 5-Hardeman Triad Cellular A
656B1 TX 5-Hardeman US Cellular B
656B2 TX 5-Hardeman Brazos Cell B
656B3 TX 5-Hardeman Taylor Tele B
657 TX 6-Jack SBMS B
658B1 TX 7-Fannin SBMS B
658B3 TX 7-Fannin Peoples Cell B
658B5 TX 7-Fannin Lamar Cell B
658B6 TX 7-Fannin Century B
659 TX 8-Gaines Poka Lambro B
660 TX 9-Runnels Lone Star Cell A
660B1 TX 9-Runnels SBMS B
660B2 TX 9-Runnels Mid Texas B
661B1 TX 10-Navarro SBMS B
661B3 TX 10-Navarro GTE B
662 TX 11-Cherokee GTE B
663 TX 12-Hudspeth ENMR B
664 TX 13-Reeves ENMR B
665 TX 14-Loving ENMR B
666 TX 15-Concho Five Star Cell B
667 TX 16-Burleson GTE B
668 TX 17-Newton GTE B
669 TX 18-Edwards US Cellular A
669 TX 18-Edwards SBMS B
670 TX 19-Atascosa US Cellular A
670 TX 19-Atascosa SBMS B
671 TX 20-Wilson US Cellular A
671B1 TX 20-Wilson SBMS B
671B2 TX 20-Wilson La Ward Cell B
672 TX 21-Chambers GTE B
</TABLE>
CONFIDENTIAL
Page 8
<PAGE> 29
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT
- ------------------------------------------------------------------
<S> <C> <C> <C>
UTAH
675 UT 3 - Juab Triad Cellular A
675 UT 3 - Juab CommNET B
676 UT 4 - Beaver Triad Cellular A
676 UT 4 - Beaver CommNET B
677 UT 5 - Carbon CommNET B
678 UT 6 - Piute Triad Cellular A
678 UT 6 - Piute CommNET B
VERMONT
248 Burlington Atlantic A
679 VT 1 - Franklin Atlantic A
680 VT 2 - Addison Atlantic A
VIRGINIA
43 Norfolk GTE B
59 Richmond GTE B
104 Newport News GTE B
157 Roanoke US Cellular A
157 Roanoke GTE B
203 Lynchburg US Cellular A
235 Petersberg GTE B
256 Charlottesville US Cellular A
262 Danville GTE A
681 VA 1 - Lee BANMS A
682 VA 2 - Tazewell US Cellular A
683 VA 3 - Giles Blue Ridge Cell A
683 VA 3 - Giles GTE B
684 VA 4 - Bedford US Cellular A
684 VA 4 - Bedford GTE B
685 VA 5 - Bath US Cellular A
685 VA 5 - Bath GTE B
686 VA 6 - Highland Virginia Cellular A
686 VA 6 - Highland CFW Cellular B
687 VA 7 - Buckingham US Cellular A
687 VA 7 - Buckingham GTE B
688 VA 8 - Amelia GTE B
689 VA 9 - Greensville GTE B
691 VA 11 - Madison GTE B
692 VA 12 - Caroline GTE B
WASHINGTON
191 Yakima US Cellular B
214 Richland US Cellular B
696 WA 4 - Grays Harbor US Cellular A
697 WA 5 - Kittitas US Cellular B
698 WA 6 - Pacific US Cellular B
699 WA 7 - Skamania Columbia A
699 WA 7 - Skamania US Cellular B
WEST VIRGINIA
703 WV 3 - Monongalia US Cellular B
704 WV 4 - Grant US Cellular B
705 WV 5 - Tucker US Cellular B
707 WV 7 - Raleigh Highland A
707 WV 7 - Raleigh US Cellular B
WISCONSIN
21 Milwaukee US Cellular A
113 Madison US Cellular A
125 Appleton US Cellular A
125 Appleton PTI B
186 Green Bay US Cellular A
189 Racine US Cellular A
216 Janesville US Cellular A
232 Eau Claire PTI B
244 Kenosha US Cellular A
263 Wausau US Cellular B
277 Sheboygan US Cellular A
290 Lacrosse US Cellular A
290 Lacrosse Century B
708 WI 1 - Burnett PTI B
</TABLE>
CONFIDENTIAL
Page 9
<PAGE> 30
ATTACHMENT E
CELLSTAR AUTHORIZED MARKETS
<TABLE>
<CAPTION>
MARKET STATE/CITIES CARRIER PRODUCT MARKET STATE/CITIES CARRIER PRODUCT
- ------ --------------- ----------- ------- ------ ------------ ------- -------
<S> <C> <C>
709 WI 2-Bayfield PTI B
712 WI 5-Pierce US Cellular A
713 WI 6-Trempeleau US Cellular A
713 WI 6-Trempeleau PTI B
714 WI 7-Wood US Cellular A
714 WI 7-Wood PTI B
715 WI 8-Vernon US Cellular A
716 WI 9-Columbia US Cellular A
716 WI 9-Columbia PTI B
717 WI 10-Door US Cellular A
718 WY 1-Park CommNET B
719 WY 2-Sheridan CommNET B
720 WY 3-Lincoln CommNET A
</TABLE>
CONFIDENTIAL
Page 10
<PAGE> 31
CELLSTAR LTD.
ATTACHMENT F
ACCESSORIES PROGRAM
The following terms apply to Buyer's purchase of Accessories:
1. The attached Exhibit A sets forth the Accessories and the
applicable prices. Notwithstanding any other provision of the Agreement,
Seller may modify Exhibit A in any way at any time, including deleting or
substituting Accessories, by delivering or mailing a copy of such
modification(s) to Buyer, to be effective on the date therein stated.
2. The following provisions of the Agreement apply to the
Accessories as if they were Products, subject to the noted modifications:
(a) The cover page, except: Accessories are not considered in
determining the number of cellular subscriber units purchased, and Attachment A
is not applicable to Accessories.
(b) Attachment B, Paragraphs 4, 5, 8 (a) only, and 10 through 15.
(c) Attachment C, Paragraphs 2 through 5, 6 ( except that the Limited
Warranty for Accessories is attached to this Attachment F as Exhibit B, which
is subject to revision as provided in Paragraph 6), 7 through 11, 12(b), and
13 through 19.
3. Except as listed in Paragraph 2 above, the provisions of the
Agreement do not apply to the Accessories.
4. The following provisions also apply to the Accessories:
(a) Buyer agrees to exercise reasonable commercial efforts to
purchase a minimum of [REDACTED] of Accessories (net of any returns) from
Seller under the Agreement during the period January 1, 1997 to December 31,
1997. Buyer has set the following quarterly goals for such purchases:
<TABLE>
<S> <C>
Q1 $ [REDACTED]
Q2 $ [REDACTED]
Q3 $ [REDACTED]
Q4 $ [REDACTED]
</TABLE>
(b) For each calendar quarter stated in paragraph 4(a), if Buyer has
purchased (including taking delivery) a minimum of [REDACTED] (net of any
returns) of Accessories during such quarter, then Seller will, within 60 days
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page F-1
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 32
CELLSTAR LTD.
ATTACHMENT F
ACCESSORIES PROGRAM
after the end of such quarter, credit Buyer's account [REDACTED] of the amount
paid by Buyer for such Accessories purchased during such quarter.
(c) If, after the end of each calendar month, Buyer substantiates to
Seller (in a form reasonably satisfactory to Seller) that at least [REDACTED] of
the dollar volume of its sales of aftermarket accessories for Motorola cellular
phones during that month were sales of Accessories Buyer purchased from Seller
under the Agreement, then Seller will, within 30 days after such substantiation,
credit Buyer's account [REDACTED] of the total dollar volume of Accessories
purchased by Buyer from Seller (including taking delivery and net of returns)
during that month. If after December 31, 1996 Buyer substantiates a level of at
least [REDACTED] instead of [REDACTED], then Seller will credit Buyer's account
an additional [REDACTED] of the total dollar volume purchased from the Seller.
(d) Seller will provide Buyer the following stock balancing options
on Accessories:
(i) Any Accessories returned within 60 days will be accepted
by Seller, provided that (i) Seller is notified of the
return request within 60 days of the invoice date, (ii)
Buyer submits an offsetting order for Accessories of equal
or greater value, and (iii) such offsetting order is
received by Seller within 20 days of Seller's return
authorization.
Example: Accessory return value equals $100,000. New
order to be placed for $100,000.
(ii) Any Accessories returned within 90 days will be accepted
by Seller, provided that (i) Seller is notified of the
return request within 90 days of the invoice date, (ii)
Buyer submits an offsetting order for Accessories of twice
the value or greater, and (iii) such offsetting order is
received by Seller within 20 days of Seller's return
authorization.
Example: Accessory return value equals $100,000. New
order to be placed for $200,000.
Exhibits included:
Exhibit A: Accessories and Prices
Exhibit B: Limited Warranty for Accessories
Distributor Business Confidential Proprietary Rev. 6.4
Do Not Copy or Reproduce Page F-2
- ---------------------
"[REDACTED]" indicates confidential portions omitted and filed separately
with the Commission.
<PAGE> 33
EXHIBIT A
PLATINUM PRICE PAGES
MARCH 1997
PERSONAL PHONE ACCESSORIES
- --------------------------
CHARGERS & ADAPTERS
<TABLE>
<CAPTION>
PLATINUM
PART # PKG. # DESCRIPTION PRICE
- ------ ------ ----------- --------
<S> <C> <C> <C>
S1754 99332 INTELLICHARGE XT DESKTOP CHARGER KIT [REDACTED]
S6335 99591 OVERNIGHT DESKTOP CHARGER KIT
SKN4380 TBS EXTENSION CABLE
SLN9231 99333 DC CAR CHARGER
SLN9347 REPLACEMENT CHARGER BASE FOR S1754
SLN9700 99416 OVERNIGHT TRAVEL CHARGER
SLN9739 99401 ULTRA SAVER (ORIGINAL)
SLN9933 99457 ULTRA SAVER II (ELITE)
SPN2071 99456 INTELLICHARGE E-P DESKTOP CHARGER KIT
SPN4029 REPLCMNT TRANSFORMER S1754
SPN4139 99491 OVERNIGHT AC CHARGER TRANSFORMER
SPN4226 AC ELITE POWER SUPPLY/CHARGER TRANSFORMER
SPN4216 REPLACEMENT CHARGER BASE FOR SPN2071
SPN218 99466 COMPACT RAPID E-P CHARGER
SPN4321 REPLACEMENT CHARGER BASE FOR S6335
SPN4324 SINGLE POCKET E-P DESKT0P CHARGER KIT
SPN4340 REPLACEMENT TRANSFORMER FOR S6335
SPN4353 OVERNIGHT AC TRANSFORMER POWER SUPPLY
SPN4434 POPULOUS AC STANDARD CHARGER
SPN4469 99606 POPULOUS ULTRA SAVER
CARRY CASES
PART # PKG # DESCRIPTION
- ------- ----- -----------
<S> <C> <C>
SLN6047 99412 OPEN-FACE CASE FOR MICROTAC 550/ALPHA PHONES
SLN6048 99413 OPEN-FACE CASE FOR MICROTAC LITE/ULTRA LITE PHONES
SLN6651 LEATHER POUCH FOR MICROTAC ELITE PHONES
SLN6652 VINYL POUCH FOR MICROTAC ELITE PHONES
SLN8499 VINYL POUCH FOR MICROTAC/POCKET PHONES
SLN8500 LEATHER POUCH FOR MICROTAC/POCKET PHONES
SYN4236 99473 OPEN-FACE CASE FOR MICROTAC ELITE PHONES
SYN4634 99557 PURSE PAK CARRY CASE - BLACK
SYN4635 99558 PURSE PAK CARRY CASE - BROWN
SYN5212 99566 OPEN-FACE CASE FOR CONTOUR/COURIER PHONES
SYN5214 99564 OPEN-FACE CASE FOR MICROTAC 650/PIPER PHONES
SYN5215 99565 OPEN-FACE CASE FOR LITE II/XL PHONES
SYN5654 99582 OPEN-FACE CASE FOR TELETAC/POCKET PHONES
</TABLE>
- ---------------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 34
PLATINUM PRICE PAGES
MARCH 1997
LITHIUM ION BATTERIES
<TABLE>
<CAPTION>
PART # PKG # DESCRIPTION PRICE
<S> <C> <C> <C>
SNN4554 99500 LI ION SLIM BATTERY BLACK [REDACTED]
SNN4555 99470 LI ION SLIM BATTERY CHARCOAL
SNN4556 99554 LI ION SLIM BATTERY STEEL
SNN4557 99472 LI ION SLIM BATTERY SLATE
SNN4697 99552 LI ION SLIM EXTRA CAPACITY BATTERY BLACK
SNN4698 99553 LI ION SLIM EXTRA CAPACITY BATTERY CHARCOAL
SNN4699 99554 LI ION SLIM EXTRA CAPACITY BATTERY STEEL
SNN4700 99556 LI ION SLIM EXTRA CAPACITY BATTERY SLATE
SNN4458 99499 LI ION EXTRA CAPACITY BATTERY BLACK
SNN4459 99467 LI ION EXTRA CAPACITY BATTERY CHARCOAL
SNN4460 99468 LI ION EXTRA CAPACITY BATTERY STEEL
SNN4479 99469 LI ION EXTRA CAPACITY BATTERY SLATE
</TABLE>
NICKEL METAL HYDRIDE BATTERIES
<TABLE>
<CAPTION>
<S> <C> <C>
PART # PKG # DESCRIPTION
SNN4887 99583 BELT CLIP NIMH SLIM BATTERY BLACK
SNN4888 99584 BELT CLIP NIMH SLIM BATTERY CHARCOAL
SNN4889 99585 BELT CLIP NIMH SLIM BATTERY STEEL
SNN4890 99586 BELT CLIP NIMH SLIM BATTERY SLATE
SNN4239 99449 NIMH SLIM BATTERY BLACK
SNN4238 99429 NIMH SLIM BATTERY CHARCOAL
SNN4241 99430 NIMH SLIM BATTERY STEEL
SNN4336 99450 NIMH SLIM BATTERY SLATE
SNN4836 99587 NIMH STANDARD SLIM BATTERY BLACK
SNN4834 99588 NIMH STANDARD SLIM BATTERY CHARCOAL
SNN4835 99589 NIMH STANDARD SLIM BATTERY STEEL
SNN4837 99590 NIMH STANDARD SLIM BATTERY SLATE
SNN4310 99442 NIMH SLIM EXTRA CAPACITY BATTERY BLACK
SNN4309 99432 NIMH SLIM EXTRA CAPACITY BATTERY CHARCOAL
SNN4312 99433 NIMH SLIM EXTRA CAPACITY BATTERY STEEL
SNN4488 99563 NIMH SLIM EXTRA CAPACITY BATTERY SLATE
SNN4204 NIMH STANDARD BATTERY BLACK
SNN4203 NIMH STANDARD BATTERY CHARCOAL
SNN4206 NIMH STANDARD BATTERY STEEL
SNN4259 99443 NIMH EXTRA CAPACITY BATTERY BLACK
SNN4258 99435 NIMH EXTRA CAPACITY BATTERY CHARCOAL
SNN4261 99436 NIMH EXTRA CAPACITY BATTERY STEEL
SNN4378 99451 NIMH EXTRA CAPACITY BATTERY SLATE
SNN4934 99605 POPULOUS NIMH BATTERY
</TABLE>
MARCH '97 Prepared by Motorola, Inc. Page 2
- ---------------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 35
PLATINUM PRICE PAGES
MARCH 1997
NICKEL CADMIUM BATTERIES
<TABLE>
<CAPTION>
PART # PKG # DESCRIPTION PRICE
- ------ ----- ----------- -----
<S> <C> <C> <C>
SNN4564 99548 BELT CLIP SLIM BATTERY BLACK [REDACTED]
SNN4565 99549 BELT CLIP SLIM BATTERY CHARCOAL
SNN4566 99550 BELT CLIP SLIM BATTERY STEEL
SNN4567 99551 BELT CLIP SLIM BATTERY SLATE
SNN4132 SLIM BATTERY BLACK
SNN4131 99311 SLIM BATTERY CHARCOAL
SNN4147 99313 SLIM BATTERY STEEL
SNN4492 99559 SLIM BATTERY SLATE
SNN4102 99326 SLIM EXTRA CAPACITY BATTERY BLACK
SNN4104 SLIM EXTRA CAPACITY BATTERY CHARCOAL
SNN4148 SLIM EXTRA CAPACITY BATTERY STEEL
SNN4217 99560 SLIM EXTRA CAPACITY BATTERY SLATE
SNN4027 99327 STANDARD BATTERY BLACK
SNN4019 STANDARD BATTERY CHARCOAL
SNN4149 STANDARD BATTERY STEEL
SNN4491 99561 STANDARD BATTERY SLATE
SNN4058 EXTRA CAPACITY BATTERY BLACK
SNN4057 99314 EXTRA CAPACITY BATTERY CHARCOAL
SNN4150 99316 EXTRA CAPACITY BATTERY STEEL
SNN4474 EXTRA CAPACITY BATTERY SLATE
SNN4933 99604 POPULOUS NICD BATTERY
</TABLE>
ALKALINE BATTERIES
<TABLE>
<CAPTION>
PART # PKG # DESCRIPTION
- ------ ----- -----------
<S> <C> <C>
99322 ALKALINE BLACK
99323 ALKALINE CHARCOAL
99324 ALKALINE STEEL GRAY
</TABLE>
CONTOUR/COURIER NICAD BATTERIES
<TABLE>
<CAPTION>
PART # PKG # DESCRIPTION
- ------ ----- -----------
<S> <C> <C>
SNN4263 NICD CONTOUR/COURIER BATTERY - CHARCOAL
SNN4324 NICD CONTOUR/COURIER BATTERY - BLACK
SNN4487 NICD CONTOUR/COURIER BATTERY - STEEL
</TABLE>
MARCH '97 Prepared by Motorola, Inc. Page 3
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 36
PLATINUM PRICE PAGES
MARCH 1997
<TABLE>
<CAPTION>
KITS AND PAKS
- -------------
SMART PAK
- ---------
PLATINUM
PART # PKG # DESCRIPTION PRICE
------ ----- ----------- --------
<S> <C> <C> <C>
99613 SMART PAK (Standard Slim Liion & Single Pocket EP charger) BLACK [REDACTED]
99614 SMART PAK (Standard Slim Liion & Single Pocket EP charger) CHARCOAL
99615 SMART PAK (Standard Slim Liion & Single Pocket EP charger) STEEL
99616 SMART PAK (Standard Slim Liion & Single Pocket EP charger) SLATE
99612 SMART PAK XT (Extra Capacity Liion & Single Pocket EP charger) BLACK
99609 SMART PAK XT (Extra Capacity Liion & Single Pocket EP charger) CHARCOAL
99610 SMART PAK XT (Extra Capacity Liion & Single Pocket EP charger) STEEL
99611 SMART PAK XT (Extra Capacity Liion & Single Pocket EP charger) SLATE
ESSENTIALS
PART # PKG # DESCRIPTION
------ ----- -----------
99608 ESSENTIALS (SLN9739 Ultra Saver & SYN5654 TeleTAC Case)
STARTER KITS (ULTRA SAVER, BATTERY, LEATHER CASE)
550/ALPHA
PART # PKG # DESCRIPTION
------ ----- -----------
99404 STARTER KIT: MICROTAC 550/ALPHA-CHARCOAL EXTRA CAPACITY NICD
99406 STARTER KIT: MICROTAC 550/ALPHA-STEEL EXTRA CAPACITY NICD
99483 STARTER KIT: MICROTAC 550/Alpha w/SLIM NICD BATTERY-CHARCOAL
99484 STARTER KIT: MICROTAC 550/Alpha w/SLIM NICD BATTERY-STEEL
99485 STARTER KIT: MICROTAC 550/Alpha w/SLIM NICD BATTERY-SLATE
99501 STARTER KIT: MICROTAC 550/Alpha w/SLIM NIMH BATTERY-CHARCOAL
99502 STARTER KIT: MICROTAC 550/Alpha w/SLIM NIMH BATTERY-STEEL
99503 STARTER KIT: MICROTAC 550/Alpha w/SLIM NIMH BATTERY-SLATE
LITE/ULTRA LITE
- ---------------
99410 STARTER KIT: MICROTAC LITE/ULTRA LITE - EXTRA CAPACITY NICD - CHARCOAL
99411 STARTER KIT: MICROTAC LITE/ULTRA LITE - EXTRA CAPACITY NICD - STEEL
99486 STARTER KIT: MICROTAC LITE/ULTRA w/ SLIM NICD BATTERY - CHARCOAL
99487 STARTER KIT: MICROTAC LITE/ULTRA w/ SLIM NICD BATTERY - STEEL
99488 STARTER KIT: MICROTAC LITE/ULTRA w/ SLIM NICD BATTERY - SLATE
99504 STARTER KIT: MICROTAC LITE/ULTRA w/ SLIM NIMH BATTERY - CHARCOAL
99505 STARTER KIT: MICROTAC LITE/ULTRA w/ SLIM NIMH BATTERY - STEEL
99506 STARTER KIT: MICROTAC LITE/ULTRA w/ SLIM NIMH BATTERY - SLATE
650/PIPER
- ---------
99567 STARTER KIT: MICROTAC 650/PIPER - EXTRA CAPACITY NICD - CHARCOAL
99568 STARTER KIT: MICROTAC 650/PIPER - EXTRA CAPACITY NICD - STEEL
99569 STARTER KIT: MICROTAC 650/PIPER - EXTRA CAPACITY NICD - SLATE
99592 STARTER KIT: MICROTAC 650/PIPER w/ SLIM NICD BATTERY - CHARCOAL
99593 STARTER KIT: MICROTAC 650/PIPER w/ SLIM NICD BATTERY - STEEL
99594 STARTER KIT: MICROTAC 650/PIPER w/ SLIM NICD BATTERY - SLATE
99595 STARTER KIT: MICROTAC 650/PIPER w/ SLIM NIMH BATTERY - CHARCOAL
99596 STARTER KIT: MICROTAC 650/PIPER w/ SLIM NIMH BATTERY - STEEL
99597 STARTER KIT: MICROTAC 650/PIPER w/ SLIM NIMH BATTERY - SLATE
LITE II/LITE XL
- ---------------
99570 STARTER KIT: MICROTAC LITE II/LITE XL - EXTRA CAPCITY NICD - CHARCOAL
99571 STARTER KIT: MICROTAC LITE II/LITE XL - EXTRA CAPACITY NICD - STEEL
99572 STARTER KIT: MICROTAC LITE II/LITE XL - EXTRA CAPACITY NICD - SLATE
99598 STARTER KIT: MICROTAC LITE II/LITE XL w/ SLIM NICD BATTERY - CHARCOAL
99599 STARTER KIT: MICROTAC LITE II/LITE XL w/ SLIM NICD BATTERY - STEEL
99600 STARTER KIT: MICROTAC LITE II/LITE XL w/ SLIM NICD BATTERY - SLATE
99601 STARTER KIT: MICROTAC LITE II/LITE XL w/ SLIM NIMH BATTERY - CHARCOAL
99602 STARTER KIT: MICROTAC LITE II/LITE XL w/ SLIM NIMH BATTERY - STEEL
99603 STARTER KIT: MICROTAC LITE II/LITE XL w/ SLIM NIMH BATTERY - SLATE
</TABLE>
MARCH 97 PAGE 4
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 37
PLATINUM PRICE PAGES
MARCH 1997
VEHICLE KITS
<TABLE>
<CAPTION>
PART # PKG # DESCRIPTION PLATINUM
PRICE
HANDSFREE SYSTEMS
<S> <C> <C> <C>
SYN5377 99580* ZERO INSTALL PRODUCT 1000 - HANDSFREE SYSTEM [REDACTED]
SLN3835 ZERO INSTALL PRODUCT 1000 WITH PHONE GRIP
SYN4937 99465 MICROTAC ELITE HEADSET ACCESSORY
S1757 MICROTAC HANDS-FREE ADAPTER W/ANTENNA
S1757 T70BA MICROTAC HANDS-FREE ADAPTER W/O ANTENNA
S4223 ELITE/PROFILE 700/UL TIMA HANDS-FREE ADAPTER W/ANTENNA
</TABLE>
*AVAILABLE IN PACKAGING 3RD WEEK OF MARCH
3 WATT SYSTEMS
<TABLE>
<S> <C>
S4143 3 - WATT VEHICULAR ADAPTER (AMPS)
S4144 3 - WATT VEHICULAR ADPATER (NAMPS)
S4226 ELITE 3 - WATT VEHICULAR ADAPTER KIT (AMPS)
S4292 ELITE 3 - WATT VEHICULAR ADAPTER KIT (NAMPS)
S5093 3-WATT VEHICLE SYSTEM: ELITE/ULTIMA PHONES
S5415 3-WATT VEHICLE SYSTEM: MICROTAC
</TABLE>
MISC.
<TABLE>
<S> <C>
S1758 MICROTAC VEHICULAR CHARGER/HOLDER
S4224 MICROTAC - ELITE: HANDS-FREE/3-WATT VA (2.9) ADAPTER KIT
S4225 MICROTAC - ELITE: 3 WATT (2.5) VEHICULAR ADAPTER KIT (AMPS)
S4227 MICROTAC - ELITE: EXTENDED SYSTEM (J2) ADAPTER KIT
S4422 MICROTAC - ELITE: 3 WATTS (2.5) VEHICULAR ADAPTER KIT (NAMPS)
SAF4080 WINDOW MOUNT 5 DB ANTENNA
SCN4044 PASSIVE HANDSET
SKN4291 COIL CORD CABLLE
SKN4347 VEHICULAR CHARGER CABLE
SKN4370 FUSE KIT (POWER CABLE) SERIES I/II COMPATIBLE
SKN4372 CHARGER CABLE EXTENDED SYSTEM
SKN4467 DATA CONTROL CABLE (5 METERS)
SKN4597 POWER/CONTROL CABLE
SKN4636 ACCESSORY COIL CORD CABLE
SKN4734 MOUNTING HARDWARE
SKN4774 5 METER RF CABLE
SKN4775 BOOSTER CABLE
SKN4802 COIL CORD WITH CAP FILTER CABLE
SKN4803 COIL CORD WITH CAP FILTER CABLE FOR MICROTAC ELITE/ULTIMA PHONES
SLN3400 ULTRA SAVER/MICROTAC PASSIVE HOLDER KIT
SLN3482 MICROTAC VEHICLE CRADLE
SLN3506 MICROTAC ELITE/ULTIMA VEHICLE CRADLE
SLN3569 8.5 VOLT REGULATOR
SLN5216 ACCESSORY MOUNTING POST
SLN5316 MANUAL VEHICULAR ADAPTOR
SLN5898 POCKET/FLIP PHONE CRADLE
SLN6780 8 VOLT REGULATOR
SLN6966 MICROTAC ELITE CRADLE ADAPTOR
SLN9583 SERIES IV PHONE HANG-UP CUP ASSEMBLY
SMN4031 MICROPHONE
SMN4083 MICROPHONE
SPN2012 JUNCTION BOX WITH POWER CABLE
SPN4253 MICROTAC CHARGER HOLDER
SSN4005 MOLEX DVSP SPEAKER
SYN4637 PASSIVE HOLDER - MICROTAC
SYN4638 PASSIVE HOLDER - ELITE/ULTIMA
TMN6162 MICROPHONE
TRN5502 MOUNTING HARDWARE
</TABLE>
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 38
PLATINUM PRICE PAGES
MARCH 1997
<TABLE>
<CAPTION>
DATA ACCESSORIES
NEW
MONTANA 33.6
PLATINUM
Part# Pkg # Description PRICE
<S> <C> <C> <C>
S5615 99621* MONTANA 33.6 MODEM KIT FOR MICROTAC [REDACTED]
S6202 99622* MONTANA 33.6 MODEM KIT FOR ELITE/PROFILE 700/ULTIMA
* RETAIL PACKAGE AVAILABLE END OF MARCH
MARINER 33.6
S5616 99618* MARINER 33.6 MODEM KIT FOR MICROTAC
S6204 99619* MARINER 33.6 MODEM KIT FOR ELITE/PROFILE 700/ULTIMA
* RETAIL PACKAGE AVAILABLE END OF MARCH
MONTANA/MARINER CABLES
SKN4826 MICROTAC DIRECT CONNECT CABLE
SKN4827 ELITE/PROFILE 700/ULTIMA DIRECT CONNECT CABLE
MISC. DATA ACCESSORIES
S3027 MICROTAC CELLULAR CONNECTION
S4229 MICROTAC ELITE CELLULAR CONNECTION
SKN4567 MICROTAC DATA CABLE FOR CELLULAR CONNECTION
SKN4581 COMPAQ/MICROTAC CELLULAR CONNECTION CABLE
SKN4635 MICROTAC ELITE CELLULAR CONNECTION CABLE
SKN4681 PCMCIA CABLE FOR MICROTAC ELITE 14.4
SKN4682 POCKET MODEM CABLE FOR MICROTAC ELITE 14.4
SKN4685 COMPAQ CABLE FOR MICROTAC ELITE
SLN3232 MICROTAC INTERFACE BOX
SLN9729 MICROTAC DESKTOP STAND
</TABLE>
MARCH '97 Prepared by Motorola, Inc. Page 6
- ----------
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
<PAGE> 39
EXHIBIT B
MOTOROLA
LIMITED WARRANTY
MOTOROLA, INC. (Motorola) warrants this Motorola cellular accessory against
defects in material and workmanship under normal use for ONE YEAR from the date
of original retail purchase. This warranty extends to the original retail
purchaser only and is not transferrable. Motorola, at its option, will at no
charge either repair the accessory (with new or reconditioned parts) or replace
the accessory or refund the purchase price of the accessory during the warranty
period. Repaired/replacement accessories are warranted for either ninety days
or the remainder of the original warranty period, whichever is longer. All
replaced items become Motorola's property. This warranty does not cover defects
or damage resulting from abnormal use, misuse, mishandling, neglect, accident
or tampering.
You can obtain warranty service through your original place of purchase in
most cases. Or you can obtain warranty service by returning the accessory
directly to Motorola. In either case, you must return the accessory with
transportation prepaid and provide proof that the accessory is within the
warranty period (for example, a dated purchase receipt). For more information,
including about returning an accessory to Motorola, please call the Motorola
Cellular Information Center toll-free at 1-800-331-6456 in the USA.
THIS IS THE COMPLETE WARRANTY FOR THE ACCESSORY BY MOTOROLA AND SETS FORTH YOUR
EXCLUSIVE REMEDIES. THIS WARRANTY IS GIVEN IN LIEU OF ALL OTHER EXPRESS
WARRANTIES. IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE LIMITED
TO THE DURATION OF THIS LIMITED WARRANTY. IN NO EVENT SHALL MOTOROLA BE LIABLE
FOR DAMAGES IN EXCESS OF THE PURCHASE PRICE OF THE ACCESSORY OR FOR ANY
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR
INABILITY TO USE SUCH ACCESSORY, TO THE FULL EXTENT SUCH MAY BE DISCLAIMED BY
LAW.
Some states do not allow the exclusion or limitation of incidental or
consequential damages, or limitations on how long an implied warranty lasts, so
the above limitations or exclusions may not apply to you. This warranty gives
you specific legal rights, and you may also have other rights which vary from
state to state.
This warranty is valid only in the USA.
68P09372A83
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> NOV-30-1997 NOV-30-1997
<PERIOD-START> JUN-01-1997 DEC-01-1996
<PERIOD-END> AUG-31-1997 AUG-31-1997
<CASH> 26,088 26,088
<SECURITIES> 0 0
<RECEIVABLES> 195,980 195,980
<ALLOWANCES> 27,036 27,036
<INVENTORY> 187,602 187,602
<CURRENT-ASSETS> 389,943 389,943
<PP&E> 32,793 32,793
<DEPRECIATION> 10,177 10,177
<TOTAL-ASSETS> 433,105 433,105
<CURRENT-LIABILITIES> 283,355 283,355
<BONDS> 0 0
0 0
0 0
<COMMON> 292<F1> 292
<OTHER-SE> 143,662 143,662
<TOTAL-LIABILITY-AND-EQUITY> 433,105 433,105
<SALES> 442,106 1,076,313
<TOTAL-REVENUES> 442,106 1,076,313
<CGS> 398,190 959,900
<TOTAL-COSTS> 398,190 959,900
<OTHER-EXPENSES> 18,924 57,171
<LOSS-PROVISION> 343 4,783
<INTEREST-EXPENSE> 2,009 5,514
<INCOME-PRETAX> 22,640 48,945
<INCOME-TAX> 6,470 12,585
<INCOME-CONTINUING> 16,170 36,360
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 16,170 36,360
<EPS-PRIMARY> 0.53 1.20
<EPS-DILUTED> 0.0 0.0
<FN>
<F1>A THREE-FOR-TWO COMMON STOCK SPLIT WAS DISTRIBUTED ON JUNE 17, 1997 TO
STOCKHOLDERS OF RECORD ON JUNE 2, 1997. PRIOR FINANCIAL DATA SCHEDULES,
EXCLUDING MAY 31, 1997, HAVE NOT BEEN RESTATED FOR THIS RECAPITALIZATION.
</FN>
</TABLE>
