<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CellStar Corporation
--------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-1 1(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF CELL STAR]
March 29, 2000
To CellStar Corporation Stockholders:
You are cordially invited to attend the Annual Meeting of
Stockholders (the "Meeting") of CellStar Corporation (the "Company")
to be held at the Omni Dallas Hotel Park West, 1590 LBJ Freeway,
Dallas, Texas, on Monday, May 8, 2000, at 10:00 a.m., Dallas time.
The attached Notice of Annual Meeting and Proxy Statement fully
describe the formal business to be transacted at the Meeting, which
includes (i) the election of three Class II directors of the
Company; (ii) approval of the CellStar Corporation Amended and
Restated Annual Incentive Compensation Plan; and (iii) approval of a
proposal to increase the number of shares of the Company's common
stock available for issuance under the CellStar Corporation 1993
Amended and Restated Long-Term Incentive Plan from 8,000,000 shares
to 11,000,000 shares. In addition, we will review with you the
affairs and progress of the Company during the past fiscal year.
Directors and officers of the Company will be present to help host
the Meeting and to respond to any questions that our stockholders
may have. I hope you will be able to attend.
The Company's Board of Directors believes that a favorable vote on
each of the matters to be considered at the Meeting is in the best
interests of the Company and its stockholders and unanimously
recommends a vote "FOR" each such matter. Accordingly, we urge you
to review the accompanying material carefully and to return the
enclosed Proxy promptly.
Please sign, date and return the enclosed Proxy without delay. If
you attend the Meeting, you may vote in person even if you have
previously mailed a Proxy.
I look forward to seeing you at the Meeting.
Sincerely,
Alan H. Goldfield
Chairman of the Board and
Chief Executive Officer
<PAGE>
CELLSTAR CORPORATION
1730 Briercroft Court
Carrollton, Texas 75006
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 8, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of CellStar Corporation, a Delaware corporation (the "Company"),
will be held at the Omni Dallas Hotel Park West, 1590 LBJ Freeway, Dallas,
Texas, on Monday, May 8, 2000, at 10:00 a.m., Dallas time, for the following
purposes:
(1) To elect three Class II directors for terms expiring in 2003;
(2) To consider and approve the CellStar Corporation Amended and Restated
Annual Incentive Compensation Plan;
(3) To consider and approve a proposal to increase the number of shares of
the Company's Common Stock available for issuance under the CellStar
Corporation 1993 Amended and Restated Long-Term Incentive Plan from 8,000,000
to 11,000,000 shares; and
(4) To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
The close of business on March 15, 2000, has been fixed by the Company's
Board of Directors as the record date for determining stockholders entitled to
notice of and to vote at the Meeting or any adjournment or adjournments
thereof. For a period of at least ten days prior to the Meeting, a complete
list of stockholders entitled to vote at the Meeting will be open to the
examination of any stockholder during ordinary business hours at the Company's
offices located at 1870 Crown Drive Suite 1510, Farmers Branch, Texas 75234.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXIES FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS
REQUESTED BY THEM.
By Order of the Board of Directors,
Elaine Flud Rodriguez
Senior Vice President, Secretary and
General Counsel
Carrollton, Texas
March 29, 2000
<PAGE>
CELLSTAR CORPORATION
1730 Briercroft Court
Carrollton, Texas 75006
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 8, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies ("Proxies") by the Board of Directors of CellStar Corporation (the
"Company" or "CellStar") for use at the Annual Meeting of Stockholders (the
"Meeting") of the Company to be held at the Omni Dallas Park West, 1590 LBJ
Freeway, Dallas, Texas, on Monday, May 8, 2000, at 10:00 a.m., Dallas time, or
at such other time and place to which the Meeting may be adjourned. The
approximate date on which this Proxy Statement and accompanying Proxy are
first being sent or given to stockholders is March 29, 2000.
All shares represented by valid Proxies, unless the stockholder specifies
otherwise, will be voted (i) FOR the election of the three persons named under
"Proposal I--Election of Directors" as nominees for election as Class II
directors; (ii) FOR the approval and adoption of the CellStar Corporation
Amended and Restated Annual Incentive Compensation Plan (the "Incentive
Plan"); and (iii) FOR the proposal to increase the number of shares of the
Company's Common Stock available for issuance under the CellStar Corporation
1993 Amended and Restated Long-Term Incentive Plan (the "1993 Plan") from
8,000,000 to 11,000,000. The Board of Directors knows of no other business to
be presented at the Meeting. If any other business is properly presented, the
persons named in the enclosed Proxy have authority to vote on such matters in
accordance with such persons' discretion. Where a stockholder has
appropriately specified how a Proxy is to be voted, it will be voted
accordingly.
A stockholder executing a Proxy retains the right to revoke it at any time
prior to exercise at the Meeting. A Proxy may be revoked by delivery of
written notice of revocation to the Secretary of the Company, by execution and
delivery of a later Proxy, or by voting the shares in person at the Meeting.
Record Date and Voting Securities
The record date for determining the stockholders entitled to notice of and
to vote at the Meeting and any adjournments thereof was the close of business
on March 15, 2000 (the "Record Date"), at which time the Company had issued
and outstanding 60,127,221 shares of Common Stock. Common Stock is the only
class of outstanding voting securities of the Company.
Quorum and Voting
The presence at the Meeting, in person or by proxy, of the holders of at
least a majority of the outstanding shares of Common Stock as of the Record
Date is necessary to constitute a quorum. Each share of Common Stock
represented at the Meeting in person or by Proxy will be counted toward a
quorum. If a quorum should not be present, the Meeting may be adjourned from
time to time until a quorum is obtained. Each share of Common Stock is
entitled to one vote with respect to all matters (including election of
directors) presented for stockholder vote at the Meeting.
To be elected, each nominee for election as a Class II Director must receive
the affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented at the Meeting. Votes may be cast in favor or
withheld with respect to each nominee. Votes that are withheld will be counted
toward the determination of whether or not a quorum exists, but will be
excluded entirely from the tabulation of votes for election of the specified
nominee and, therefore, will not affect the outcome of the vote on such
proposal.
1
<PAGE>
Approval of the proposals to adopt the Incentive Plan and to increase in the
number of shares of Company Common Stock available for issuance under the 1993
Plan each require the affirmative vote of a majority of the shares of Common
Stock present or represented at the Meeting. Abstentions may be specified on
either or both proposals and will have the same effect as a vote against such
proposal.
"Broker non-votes" (i.e., shares held by brokers or nominees as to which the
brokers have no discretionary power to vote on a particular matter and have
received no instructions from the persons entitled to vote such shares), if
any, will be counted as present for purposes of determining the presence of a
quorum. However, for purposes of determining the outcome of any matter as to
which the broker has indicated on the Proxy that it does not have
discretionary authority to vote, those shares will be treated as not entitled
to vote with respect to that matter. Therefore, with respect to approval of
Proposals II and III, which require the affirmative vote of a majority of the
shares represented and entitled to vote, broker non-votes will be excluded
from the tabulation and will have no effect on either proposal. Broker non-
votes will have no effect on Proposal I.
PROPOSAL I
Election of Directors
The Company's Certificate of Incorporation provides for a Board of Directors
divided into three classes, as nearly equal in number as possible, with the
term of office of one class expiring each year at the Company's Annual Meeting
of Stockholders. Each class of directors is elected for a term of three years,
except in the case of elections to fill vacancies or newly created
directorships.
There are three Class II directors to be elected for terms expiring at the
Company's Annual Meeting of Stockholders in 2003 or until their successors
have been elected and qualified. It is intended that the names of the nominees
indicated below will be placed in nomination and that the persons named in the
Proxy will vote for their election. Each of the nominees has indicated his
willingness to serve as a member of the Board of Directors if elected;
however, in case any nominee shall become unavailable for election to the
Board of Directors for any reason not presently known or contemplated, the
Proxy holders will have discretionary authority in that instance to vote the
Proxy for a substitute. Proxies cannot be voted for more than three nominees.
On October 1, 1999, John T. Stupka, a Class II director, resigned from
Company's Board of Directors. On October 28, 1999, Jere W. Thompson accepted
an appointment to the Company's Board of Directors as a Class II director and
on March 10, 2000, Sheldon I. Stein, a Class I director, resigned from the
Company's Board.
Information concerning the three nominees proposed by the Board of Directors
for election as Class II directors, along with information concerning the
present Class I and Class III directors, whose terms of office will continue
after the Meeting, is set forth below.
The nominees for election as Class II directors are as follows:
Class II Nominees--Terms Expiring in 2003
<TABLE>
<CAPTION>
Name Age Current Position
- ---- --- ----------------
<S> <C> <C>
James L. Johnson........................................... 72 Director
J.L. Jackson............................................... 68 Director
Jere W. Thompson........................................... 68 Director
</TABLE>
The present directors whose terms will expire after 2000 are as follows:
Class III Directors--Terms Expiring in 2001
<TABLE>
<CAPTION>
Name Age Current Position
- ---- --- ----------------
<S> <C> <C>
Alan H. Goldfield................. 56 Chairman of the Board and Chief Executive
Officer
Terry S. Parker................... 55 Director
</TABLE>
2
<PAGE>
Class I Directors--Terms Expiring in 2002
<TABLE>
<S> <C> <C>
Dale V. Kesler..................................................... 61 Director
</TABLE>
Set forth below is a description of the backgrounds of each of the directors
of the Company.
James L. Johnson has served as a director of the Company since March 1994.
Mr. Johnson has been Chairman Emeritus of GTE Corporation since May 1992 and
served as GTE's Chairman and Chief Executive Officer from April 1988 to April
1992. Mr. Johnson began his career with Southwestern Associated Telephone
Company (the predecessor company of GTE Central) in 1949. He was a member of
GTE's Board of Directors from 1985 to May 1999. He is currently a director of
Harte Hanks Communications, Inc., M.O.N.Y (Mutual of New York, Inc.), Valero
Energy Corp., Walter Industries Incorporated and Finova Group Incorporated
(formerly GFC Financial). Mr. Johnson is also past Chairman of the United
States Telephone Association. Mr. Johnson presently serves on the Audit,
Nominating and Compensation Committees of CellStar's Board of Directors.
J.L. Jackson has served as a director of the Company since March 1999. Mr.
Jackson is the former Chairman and Chief Executive Officer of GLOBAL
INDUSTRIAL TECHNOLOGIES, INC. (formerly, INDRESCO), where he served in that
capacity from 1993 to 1998. Prior to joining GLOBAL INDUSTRIAL TECHNOLOGIES,
Mr. Jackson was engaged in private executive business consulting from 1987 to
1993. From 1983 to 1987, Mr. Jackson served as a Director and as the President
and Chief Operating Officer of Diamond Shamrock Corporation and was Executive
Vice President of Diamond Shamrock and President of its then newly formed coal
unit from 1979 to 1983. Mr. Jackson has served on numerous boards, including
the Fourth District Federal Reserve Bank of Cleveland, First Republic Bank,
American Federal Bank, Hadsen Energy Resources and National Gypsum Company.
Mr. Jackson presently serves as Chairman of the Nominating and Compensation
Committees of CellStar's Board of Directors and also serves on the Audit
Committee of CellStar's Board of Directors.
Jere W. Thompson has served as a director of the Company since October 1999.
Mr. Thompson is the former President and Chief Executive Officer of The
Southland Corporation, where he served in that capacity from 1986 to 1991. Mr.
Thompson joined Southland in 1954 and was made Vice President of store
operations in 1962. He became Southland's President in 1973 and was elected to
Southland's board of directors in 1961. Mr. Thompson was engaged in private
business consulting from 1991 to 1996 when he became the President of The
Williamsburg Corporation. Mr. Thompson serves on the board of directors and is
the former Chairman of The National Center for Policy Analysis. He is also a
member and former Chairman of The Development Board and the College and
Graduate School of Business Foundation Advisory Council for The University of
Texas at Austin. Mr. Thompson currently serves on the Compensation Committee
of the CellStar Board of Directors.
Alan H. Goldfield is a founder of the Company and has been the Chairman of
the Board and Chief Executive Officer of the Company since its formation. Mr.
Goldfield served as President of the Company from its formation until March
1995, and from August 1996 until December 1996. Mr. Goldfield serves as an
officer and director of the Company pursuant to his employment agreement. See
"Executive Compensation--Employment Contracts and Termination of Employment
and Change in Control Arrangements."
Terry S. Parker has served as a director of the Company since March 1995 and
served as President and Chief Operating Officer of the Company from March 1995
through July 1996. Mr. Parker served as Senior Vice President of GTE
Corporation and President of GTE's Personal Communications Services, GTE's
wireless division, from October 1993 until he joined the Company. From 1991 to
1993, Mr. Parker served as President of GTE Telecommunications Products and
Services. Prior to 1991, Mr. Parker served as President of GTE Mobile
Communications. Mr. Parker serves on the Board of Directors for Nucontrix
Corporation. Mr. Parker served on the Audit Committee of the CellStar Board of
Directors until January 21, 2000, when the CellStar Board of Directors
restructured the composition and duties of the Audit Committee.
3
<PAGE>
Dale V. Kesler has served as a director of the Company since March 1999. Mr.
Kesler retired as an active partner of the professional accounting firm of
Arthur Andersen LLP in 1996 and served as the Managing Partner of Arthur
Andersen's Dallas/Fort Worth office from 1983 to 1994. Mr. Kesler was
responsible for strategic planning on a world wide basis for the Audit and
Business Advisory practices of Arthur Andersen in 1982 and 1983 and served as
the head of the Audit Practice in the firm's Dallas office from 1973 to 1982.
Mr. Kesler also serves on the Boards of Elcor Corporation, American Homestar
Corporation, New Millennium Homes, Resource Services, Inc., Triad Hospitals,
Inc. and Compass Bank--Dallas. Mr. Kesler currently serves on the Audit and
Nominating Committees of CellStar's Board of Directors. Mr. Kesler served on
the Compensation Committee of the CellStar Board of Directors from March 1999
until January 21, 2000.
The Board of Directors recommends a vote FOR the election of the nominees
for Class II Directors named above.
MEETINGS OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis during its fiscal
year to review significant developments affecting the Company and to act on
matters requiring Board approval. It also holds special meetings when an
important matter requires Board action between scheduled meetings. The Board
of Directors met 13 times and acted by unanimous written consent six times
during the 1999 fiscal year. During the 1999 fiscal year, each member of the
Board participated in at least 75% of all Board and applicable committee
meetings held during the period for which he was a director.
The Board of Directors has established audit, compensation and governance
and nominating committees to devote attention to specific subjects and to
assist it in the discharge of its responsibilities. The functions of those
committees, their current members and the number of meetings held during the
1999 fiscal year are described below.
Audit Committee. The Board of Directors has a standing Audit Committee,
which has been charged with certain powers and duties including, among others,
authority to (i) recommend to the Board the appointment of the firm selected
to be independent certified public accountants for the Company and monitor the
performance of such firm; (ii) review and approve the scope of the annual
audit and evaluate with the independent certified public accountants the
Company's annual audit and annual consolidated financial statements; (iii)
review with management the status of internal accounting controls and internal
audit procedures and results; (iv) evaluate problem areas having a potential
financial impact on the Company that may be brought to its attention by
management, the independent certified public accountants or the Board; and (v)
evaluate the public financial reporting documents of the Company. The Audit
Committee shall have at least three members, at least two of which shall be
independent directors. Messrs. Johnson (Chairman), Kesler and Jackson are the
current members of the Audit Committee. Messrs. Parker and Stein also served
as members of the Audit Committee during the 1999 fiscal year but resigned
their Committee positions as of January 21, 2000. The Audit Committee met
eight times during the 1999 fiscal year.
Compensation Committee. The Board of Directors has a standing Compensation
Committee, which has the power to establish the compensation policies of the
Company and the specific compensation of the executives of the Company. The
Compensation Committee also has the power to administer the 1993 Plan, the
Incentive Plan and the 1994 Amended and Restated Non-Employee Director
Nonqualified Stock Option Plan (the "Directors' Plan"). During fiscal 1999,
the Compensation Committee delegated to an Employee Stock Option Committee
comprised of Richard M. Gozia, then-President and Chief Operating Officer of
the Company, and Alan H. Goldfield, Chairman and Chief Executive Officer of
the Company, certain authority to issue up to 10,000 stock options under the
1993 Plan to non-executive employees of the Company. Mr. Gozia resigned as a
member of the Employee Stock Option Committee in April 1999. The Board of
Directors has determined to terminate the Employee Stock Option Committee in
favor of a new arrangement for the granting and issuance of stock options
under the 1993 Plan to non-executive officers of the Company. See "Proposal
III--Approval of Proposal to Increase the Number of Shares of Company Common
Stock Available for Issuance Under the 1993 Plan." Messrs. Jackson (Chairman),
Johnson and Thompson are the current members of the Compensation Committee.
4
<PAGE>
Mr. Kesler served as a member of the Compensation Committee from March 1999
until January 21, 2000. The Compensation Committee met three times and acted
by unanimous consent seven times during the 1999 fiscal year and the Employee
Stock Option Committee acted by unanimous written consent 15 times during the
1999 fiscal year.
Nominating Committee. In fiscal 1999, the Board of Directors established a
Governance and Nominating Committee ("Nominating Committee") and charged it
with the responsibility to (i) evaluate and select candidates to fill
vacancies on the Board of Directors, (ii) consider director nominees presented
by stockholders, (iii) review the performance of current directors, (iv)
evaluate and seek to improve Board processes, including the setting of
agendas, the conduct of Board meetings and the flow of information from
Company officers to the directors. Messrs. Jackson (Chairman), Kesler and
Johnson are the current members of the Nominating Committee. The Nominating
Committee met one time in fiscal 1999.
The Certificate of Incorporation provides that a stockholder may nominate a
person for election to the Board of Directors at a meeting of the Company's
stockholders only if written notice of such nomination(s) (a "Stockholder's
Notice") is received by the Secretary of the Company no less than 60 days
prior to the meeting; provided, however, that, in the event that less than 70
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, the Stockholder's Notice must be received by the Company
no later than the close of business on the tenth day following the first to
occur of the date on which such notice was mailed or the date that public
disclosure of the date of the meeting was made. In accordance with the
requirements of the Certificate of Incorporation, the Stockholder's Notice
must include certain specified information, including, for example, (i) the
name and address of the nominating stockholder, (ii) the name, address and
principal occupation of the nominee and (iii) any other information relating
to such nominee that is required to be disclosed in a proxy statement or
Schedule 13D filing.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned as of February 29, 2000, by (i) each
person known by the Company to beneficially own more than five percent (5%) of
the outstanding shares of Common Stock; (ii) the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers who were serving as such on November 30, 1999 (based on salary and
bonus earned during fiscal 1999) (collectively, the "Named Executive
Officers"); (iii) each director and nominee for director of the Company; and
(iv) all directors and executive officers of the Company as a group. Unless
otherwise noted, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial Owner or Group of Beneficial Ownership of Class
- --------------------------------- ----------------------- --------
<S> <C> <C>
Lord, Abbet & Co.(1)....................... 5,702,954(2) 9.5%
Alan H. Goldfield(3)....................... 20,726,110(4) 34.5%
A.S. Horng................................. 2,752,500(5) 4.6%
Dale H. Allardyce(6)....................... -- *
Austin P. Young(6)......................... -- *
Daniel T. Bogar............................ 169,802(7) *
Timothy L. Maretti......................... 100,000(8) *
Richard M. Gozia(9)........................ 6,000 *
James L. Johnson........................... 36,250(10)(11) *
Terry S. Parker............................ 13,750(10)(11) *
Dale V. Kesler............................. 8,500(10) *
J.L. Jackson............................... 17,500(10) *
Sheldon I. Stein(12)....................... 28,150(10) *
Jere W. Thompson(13)....................... 9,950(10) *
Current Directors and Executive Officers as
a Group................................... 21,563,962(14) 35.8%
</TABLE>
- --------
* Less than 1%.
(1) The address for Lord, Abbet & Co. is 90 Hudson Street, Jersey City, New
Jersey 07302.
(2) Based on a Schedule 13G, dated January 24, 2000, filed with the
Securities and Exchange Commission by Lord, Abbet & Co. Lord, Abbet & Co.
reported sole voting power and sole dispositive power with respect to all
5,702,954 shares.
(3) The address for Mr. Goldfield is 1730 Briercroft Court, Carrollton, Texas
75006.
(4) Includes 17,506,110 held jointly with Mr. Goldfield's wife. Also includes
2,370,000 shares that are subject to a revocable (upon 90 days written
notice) proxy granted to Mr. Goldfield by Mr. A.S. Horng, which proxy
gives Mr. Goldfield the right to vote such shares. Also includes 850,000
shares subject to options granted under the 1993 Plan, which options are
exercisable within 60 days.
(5) Includes 2,370,000 shares that are subject to a revocable (upon 90 days
written notice) proxy to vote such shares held by Alan H. Goldfield. Also
includes 382,500 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
(6) Messrs. Allardyce and Young entered into employment agreements with the
Company in November 1999.
(7) Includes 1,450 shares held by Mr. Bogar's wife and 850 shares held
jointly with Mr. Bogar's wife. Also includes 167,502 shares subject to
options granted under the 1993 Plan, which options are exercisable within
60 days.
(8) Includes 100,000 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
(9) Mr. Gozia resigned as a member of the Company's Board of Directors in
April 1999, but continued to serve as the Company's President, Chief
Operating Officer and acting Chief Financial Officer until November 16,
1999.
(10) Includes 7,500 shares subject to options granted under the Directors'
Plan, which options are exercisable within 60 days.
(11) Includes 6,250 shares subject to options granted under the 1993 Plan,
which options are exercisable within 60 days.
(12) Includes an aggregate of 4,800 shares held in each of three separate
trusts for the benefit of Mr. Stein's three children. Mr. Stein has no
voting or dispositive power with respect to these shares and, therefore,
disclaims beneficial ownership of such shares. Mr. Stein resigned from
his position as a member of the Company's Board of Directors effective
March 10, 2000.
(13) Mr. Thompson became a member of the Company's Board of Directors in
October 1999.
(14) In addition to the ownership of the directors and executive officers
listed in the table and more fully described in footnotes 4 through 13
above, includes 126,000 shares subject to options granted under the 1993
Plan, which options are exercisable within 60 days.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid to the Named Executive Officers for each of the Company's last three
fiscal years.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------- ---------------------------
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Options/ Compen-
Principal Salary Bonus sation Awards(s) SARs sation
Position Year ($) ($) ($) ($) (#)(1)(2) ($)
--------- ---- ------- ------- ------- ----------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan H. Goldfield....... 1999 850,000 -- -- -- -- 26,434(3)
Chairman of the Board 1998 850,000 -- -- -- 200,000 26,434(3)
and Chief Executive
Officer 1997 850,000 850,000 -- -- -- 22,284(3)
A.S. Horng.............. 1999 800,000 -- 36,472(4) -- 100,000 --
Chairman, Chief
Executive 1998 800,000 -- 34,607(4) -- 200,000 --
Officer and General
Manager 1997 666,662 800,000 -- -- 90,000 --
of CellStar (Asia)
Corporation Limited
Dale H. Allardyce....... 1999(5) 17,375 -- -- -- -- --
President, Chief
Operating 1998(6) -- -- -- -- -- --
Officer and Director 1997(6) -- -- -- -- -- --
Austin P. Young......... 1999(7) 24,006 -- -- -- -- --
Senior Vice President, 1998(6) -- -- -- -- -- --
Chief Financial Officer 1997(6) -- -- -- -- -- --
and Treasurer
Richard M. Gozia(8)..... 1999 400,000 -- -- -- -- 919,206(9)
President, Chief
Operating 1998 400,000 -- -- -- 200,000 7,683(10)
Officer and Director 1997 392,115 397,655 -- -- 225,000 8,217(11)
Daniel T. Bogar......... 1999 300,000 -- -- -- -- --
Senior Vice President-- 1998 295,000 -- -- -- -- --
Americas Region 1997 240,000 240,000 -- -- 15,000 4,750(12)
Timothy L. Maretti...... 1999 300,000 -- -- -- -- --
Senior Vice President-- 1998 295,000 -- -- -- -- --
Brazilian Region 1997 200,000 200,000 -- -- 15,000 --
</TABLE>
- --------
(1) Reflects options to acquire shares of Common Stock. The Company has not
granted stock appreciation rights.
(2) All figures in this column reflect an adjustment for the Company's three-
for-two Common Stock split that was effected in the form of a stock
dividend in June 1997 and a two-for-one Common Stock split that was
effected in the form of a stock dividend in June 1998.
(3) Consists of life insurance premiums paid by the Company.
(4) Represents amounts paid or reimbursed by the Company to Mr. Horng as an
annual housing allowance. See "--Employment Contracts and Termination of
Employment and Change in Control Arrangements."
(5) Mr. Allardyce became the Company's President and Chief Operating Officer
in November 1999. Mr. Allardyce's annual cash compensation is $400,000.
(6) In accordance with Item 402 of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended, no information is included
for fiscal years during which the Named Executive Officer did not serve
as an executive officer of the Company.
(7) Mr. Young became the Company's Senior Vice President and Chief Financial
Officer in November 1999. Mr. Young's annual cash compensation is
$350,000.
(8) Mr. Gozia resigned as a member of the Company's Board of Directors in
April 1999, but continued to serve as CellStar's President, Chief
Operating Officer and acting Chief Financial Officer until November 16,
1999.
7
<PAGE>
(9) Consists of $3,522 in life insurance premiums paid by the Company, $3,355
of Company contributions to the Company's 401(k) plan, and a severance
payment of $912,329 pursuant to the Separation and Release Agreement
dated April 21, 1999.
(10) Consists of $3,522 in life insurance premiums paid by the Company and
$4,161 of Company contributions to the Company's 401(k) plan.
(11) Consists of $3,271 in life insurance premiums paid by the Company and
$4,750 of Company contributions to the Company's 401(k) plan.
(12) Consists of Company contributions to the Company's 401(k) plan.
Option Grants During 1999 Fiscal Year
The following table provides information related to options granted to the
Named Executive Officers during fiscal 1999.
<TABLE>
<CAPTION>
Potential Realizable
Value
at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(1)
- ---------------------------------------------------------------------------------- ---------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price
Name Granted(#)(2) Fiscal Year ($/Sh)(3) Expiration Date 5% ($) 10% ($)
---- ------------- ------------ ----------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Goldfield....... -- -- -- -- -- --
Richard M. Gozia(4)..... -- -- -- -- -- --
A.S. Horng.............. 100,000(5) 6.9 6.219 November 30, 2008 498,642 875,388
Dale H. Allardyce(6).... 200,000 13.8 8.375 November 11, 2009 378,213 632,356
Austin P. Young(6)...... 150,000 10.4 7.813 November 4, 2009 414,436 692,919
Daniel T. Bogar......... 100,000 6.9 7.9475(7) January 20, 2009(8) 268,195 427,060
Timothy L. Maretti...... 50,000 3.5 8.25 January 20, 2009 104,062 174,300
</TABLE>
- --------
(1) The potential realizable value portion of the table illustrates value that
might be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability or vesting over periods of up to ten years.
(2) Reflects options to acquire shares of Common Stock. The Company has not
granted stock appreciation rights. The options become exercisable with
respect to 25% of the shares covered thereby on each of the first four
anniversaries of the date of grant. In the event of a "change of control"
(as defined in the 1993 Plan) of the Company, any unexercisable portion of
the options will become immediately exercisable. See "Proposal III--
Current Provisions of the 1993 Plan."
(3) The exercise price is equal to the fair market value of the Common Stock
on the date of grant. The option exercise price may be paid as follows:
(a) in cash or by certified check, bank draft or money order payable to
the order of the Company; (b) with Common Stock (including restricted
stock), valued at its fair market value on the date of exercise; (c) by
delivery to the Company or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions from the
optionee to a broker or dealer, reasonably acceptable to the Company, to
sell certain of the shares of Common Stock purchased upon exercise of the
stock option or to pledge such shares as collateral for a loan and
promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay such purchase price; and/or (d) in any other form of
valid consideration that is acceptable to the Compensation Committee in
its sole discretion.
(4) Mr. Gozia resigned as a member of the Company's Board of Directors in
April 1999, but continued to serve as the Company's President, Chief
Operating Officer and acting Chief Financial Officer until November 16,
1999.
(5) The options granted to Mr. Horng vest 100% on the first anniversary of the
date of grant.
(6) Messrs. Allardyce and Young joined the Company in November 1999.
(7) Represents the weighted average of two stock option grants of 50,000
shares each.
(8) Represents the expiration date for 50,000 options. The remaining 50,000
options expire April 29, 2009.
8
<PAGE>
Option Exercises During 1999 Fiscal Year and Fiscal Year End Option Values
The following table provides information related to options exercised by the
Named Executive Officers during the 1999 fiscal year and the number and value
of options held at fiscal year end. The Company does not have any outstanding
stock appreciation rights.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
Shares Value at FY-End (#) at FY-End ($)(1)
Acquired on Realized ------------------------- -------------------------
Name Exercise (#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Goldfield....... -- -- 800,000 150,000 201,000 --
A.S. Horng.............. -- -- 341,250 63,750 21,900 --
Dale H. Allardyce(3).... -- -- -- 200,000 -- 250,000
Austin P. Young(3)...... -- -- -- 150,000 -- 271,800
Richard M. Gozia(4)..... 337,500 846,138 87,500 -- 110,175 --
Daniel T. Bogar......... -- -- 112,252 201,250 27,605 --
Timothy L. Maretti...... -- -- 47,500 147,500 2,010 --
</TABLE>
- --------
(1) The closing price for the Company's Common Stock as reported by the
NASDAQ/National Market System on November 30, 1999 (the last trading day
of fiscal 1999) was $9.625. Value is calculated on the basis of the
difference between the option exercise price and $9.625 multiplied by the
number of shares of Common Stock underlying the option.
(2) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise related.
(3) Messrs. Allardyce and Young joined the Company in November 1999.
(4) Mr. Gozia resigned as a member of the Company's Board of Directors in
April 1999, but continued to serve as the Company's President, Chief
Operating Officer and acting Chief Financial Officer until November 16,
1999.
Compensation of Directors
During fiscal 1999, each director of the Company who was not an officer or
other employee of the Company (an "Independent Director") was entitled to
receive an annual retainer fee of $25,000, plus $1,500 for each meeting of the
Board or committee of the Board that he attended. Beginning in fiscal 1998,
each Independent Director received $750 for each telephonic Board or committee
meeting attended. In addition, to the extent that any committee meeting is
held on the same day as a full Board meeting or another committee meeting,
only one $1,500 or $750 fee (as applicable) will be paid. Beginning in 2000,
the Company will pay a per diem fee of $1,500 to each non-employee director
for each day such director performs additional services for the Company at the
request of the Chief Executive Officer.
Pursuant to the Directors' Plan, each Independent Director automatically
receives an option (the "Initial Option") to purchase 7,500 shares of Common
Stock upon becoming a non-employee director of the Company. Also beginning in
fiscal 1998, in addition to the Initial Option, each Independent Director
receives an annual grant pursuant to the 1993 Plan of an option (the "Annual
Option") to purchase 5,000 shares of Common Stock, which option will be
automatically granted on the date of the first full Board meeting following
the end of each fiscal year. The Annual Option will vest with respect to 25%
of the shares covered thereby on each anniversary of the date of grant and
will expire ten years following the date of grant. The exercise price of all
options granted to Independent Directors must be equal to the fair market
value of the Company's Common Stock on the date of grant.
Directors who are also employees of the Company receive no additional
compensation for serving as directors. All directors of the Company are
entitled to reimbursement of their reasonable out-of-pocket expenses in
connection with their travel to, and attendance at, meetings of the Board of
Directors or committees thereof.
9
<PAGE>
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Company has entered into employment agreements (collectively, the
"Employment Agreements" or individually, an "Employment Agreement") with Mr.
Goldfield, Mr. Horng, Mr. Allardyce and Mr. Young (collectively, the
"Executives" and individually, an "Executive"), effective December 1, 1994,
January 22, 1998, November 12, 1999 and November 5, 1999, respectively. The
Employment Agreements of Messrs. Goldfield, Horng, Allardyce and Young provide
for annual base salaries of $850,000, $800,000, $400,000 and $350,000,
respectively, subject to increase by the Compensation Committee of the Board
of Directors. Each of the Employment Agreements also provides that the
Executive is eligible to receive an annual bonus.
The Company is obligated under the Employment Agreements to provide to
Messrs. Goldfield and Horng (i) life insurance policies with face amounts of
$5,000,000 and $4,000,000, respectively, and (ii) disability insurance
policies with annual disability benefits of $640,000 and $300,000,
respectively, until attainment of age 65. In addition, the Company is
obligated to pay or reimburse each Executive for all medical and dental
expenses incurred by him or his spouse or dependents. The Company has in place
insurance to cover a portion of such expenses. Messrs. Allardyce and Young are
eligible to participate in the life, health and disability insurance programs
customarily made available to executives of the Company.
Mr. Goldfield's Employment Agreement expires on the fifth anniversary of the
date on which the Board of Directors notifies Mr. Goldfield that it has
determined to fix the expiration date of the Employment Agreement. The
Employment Agreements of Messrs. Horng, Allardyce and Young have terms of five
years, four years and four years, respectively. All of the Employment
Agreements are subject to earlier termination as follows: (i) by the Company
(a) due to the disability of the Executive, (b) for "cause" or (c) without
"cause"; or (ii) by the Executive (a) upon a material breach by the Company of
the Employment Agreement ("Company Breach"), (b) within twelve months of a
"change in control" or (b) without "good reason" (i.e., for any reason other
than Company Breach). If Mr. Goldfield terminates his employment due to
Company Breach or if he is terminated by the Company without "cause," he will
be entitled to receive his accrued but unpaid base salary and annual incentive
payments through the date of termination plus five times the sum of (a) his
base salary plus (b) the average of his annual incentive payments for the
preceding two years. If any of Messrs. Horng, Allardyce or Young terminates
his employment due to Company Breach or if any of them is terminated by the
Company without "cause," he will be entitled to receive his accrued but unpaid
base salary and annual incentive payments through the date of termination plus
an amount equal to the product of (i)(a) his base salary plus (b) the average
of his annual incentive payments for the preceding two years (one year for Mr.
Horng) divided by 365 and multiplied by (ii) the number of days remaining in
the term of his Employment Agreement. In the event of termination of
employment after a "change in control," each of the Executives will be
entitled to receive an amount equal to $100 less than three times his
"annualized includable compensation," which is the maximum payment permitted
by the Internal Revenue Code that does not constitute an "excess parachute
payment."
Under the Employment Agreements, a termination will be deemed to be "without
cause" if it is for any reason other than due to the disability of the
Executive or for "cause." Under the Employment Agreements for Messrs.
Goldfield and Horng, a termination will generally be considered to be for
"cause" if it is due to the Executive's (i) willful gross misconduct, (ii)
conviction of a felony, (iii) gross incompetence; (iv) willful failure to
follow the directives of the Board of Directors, or (v) any other material
breach of his Employment Agreement. Under the Employment Agreements for
Messrs. Allardyce and Young, a termination will generally be considered to be
for "cause," as determined by the Board of Directors in the exercise of good
faith, if it is due to the Executive's (i) willful failure to perform his
duties, (ii) misconduct that causes or is likely to cause material economic
harm to, or material discredit to the reputation of, the Company or its
affiliated entities, (iii) failure to follow the directions of senior
management or the Board of Directors of the Company, (iv) conviction or a plea
of nolo contendre of a felony involving moral turpitude or the entry of an
order by any federal or state regulatory agency prohibiting the Executive from
participating in the affairs of the Company, or (v) any other material breach
of his Employment Agreement.
For purposes of the Employment Agreements, a "change in control" will be
deemed to occur upon the occurrence of any of the following: (1) any
consolidation or merger of the Company in which the Company is
10
<PAGE>
not the continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger; (2) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; (3) any approval by the
stockholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company; (4) the cessation of control (by virtue of their
not constituting a majority of directors) of the Company's Board of Directors
by the Continuing Directors (as defined); (5) the acquisition of beneficial
ownership of 15% of the voting power of the Company's outstanding voting
securities by any person or group who beneficially owned less than 10% of such
voting power on the date of the Employment Agreement or the acquisition of
beneficial ownership of an additional 5% of the voting power of the Company's
outstanding voting securities by any person or group who beneficially owned at
least 10% of such voting power on the date of the Employment Agreement, in
each case subject to certain exceptions; or (6) subject to applicable law, in
a Chapter 11 bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving the Company to a case under Chapter 7. In
addition, the Employment Agreements of Messrs. Horng, Allardyce and Young each
provide that a "change in control" will be deemed to occur (subject to certain
exceptions) upon the execution by the Company and a stockholder of a contract
that by its terms grants such stockholder (in its, his or her capacity as a
stockholder) or such stockholder's affiliate, including, without limitation,
such stockholder's nominee to the Board of Directors (in its, his or her
capacity as an affiliate of such stockholder), the right to veto or block
decisions or actions of the Board of Directors.
The Employment Agreements also provide that the Executives will be
indemnified by the Company to the fullest extent permitted by law. The right
of Messrs. Goldfield and Horng to indemnification is protected by a right to
require the Company to establish and fund a trust for their indemnification
after a change in control or a potential change in control. The Employment
Agreements of all Executives include non-competition and confidentiality
provisions.
Report of the Compensation Committee on Executive Compensation
General. Subject to existing contractual obligations, the Compensation
Committee of the Board of Directors is primarily responsible for the Company's
executive compensation policies and practices, and administers executive
awards under the Company's 1993 Plan and Incentive Plan. The Compensation
Committee is currently composed of Messrs. J.L. Jackson (Chairman), James L.
Johnson and Jere W. Thompson. Mr. Stupka served as the Chairman of the
Compensation Committee from December 1998 until October 1999 when he resigned
his position as a member of the Company's Board of Directors. Mr. Kesler
served on the Compensation Committee from March 1999 until January 21, 2000.
Compensation Philosophy. The Company's executive compensation philosophy
reflects its belief that the compensation of executives (i) should be linked
to achievement of the Company's business and strategic goals; (ii) should be
aligned with the interests of stockholders through awards of stock options and
other stock-based compensation; (iii) should recognize individual
contributions, as well as overall business results; and (iv) should have the
ultimate result of attracting, motivating and retaining highly-talented
executives for the Company. To achieve these objectives, the Company's current
compensation program consists of the following elements:
. Base salary
. Annual incentive compensation, the receipt of which is based on (i) the
financial performance of the Company and its divisions from year to year
and/or (ii) significant individual contributions
. Long-term incentive compensation, primarily in the form of stock options
Chief Executive Officer's Fiscal 1999 Compensation. The structure of Mr.
Goldfield's fiscal 1999 compensation was based in large part on the
recommendations of an outside consulting firm hired by the Company. In
accordance with such recommendations, the Company entered into an employment
agreement with Mr. Goldfield, effective December 1, 1994. Such agreement
provides for an annual base salary of $850,000 or
11
<PAGE>
such greater amount as may be approved by the Compensation Committee. In
addition, such agreement provides that Mr. Goldfield is eligible for an annual
bonus pursuant to an incentive plan approved by the Compensation Committee.
Mr. Goldfield's base salary has not been raised from the $850,000 amount
provided for in 1994; however, during fiscal 1999, Mr. Goldfield was eligible
to receive a cash bonus under the Incentive Plan of up to 100% of his base
salary (the "Maximum Bonus"), subject to achievement by the Company of an
earnings threshold specified by the Compensation Committee. The percentage of
the Maximum Bonus that Mr. Goldfield was eligible to receive was based on a
range of earnings per share targets established by the Compensation Committee.
Because the Company did not achieve the specified earnings per share target,
Mr. Goldfield did not receive a bonus in fiscal 1999. Thus, a significant
percentage of Mr. Goldfield's fiscal 1999 compensation was tied to performance
of the Company. The Compensation Committee believes that the structure of Mr.
Goldfield's compensation, with its strong emphasis on Company performance, is
in the best interests of the Company's stockholders because it more closely
aligns the interests of Mr. Goldfield and the Company's stockholders. Mr.
Goldfield declined an award of stock options for fiscal 1999 but was awarded a
grant of 100,000 options under the 1993 Plan in January 2000.
In fiscal 1999, the Company commissioned a new compensation survey to review
its compensation practices in light of the practices of certain of its
competitors and industry peers. The report, delivered in January 2000,
confirmed that the range of cash compensation, bonus awards and option grants
to executives and managers of the Company are competitive and that the
thresholds and performance targets set by management of the Company are
generally consistent with those of its peers and competitors.
Compensation of Other Executive Officers. In fiscal 1999, the compensation
package received by other executives of the Company consisted of base salary,
stock options and bonus awards. Each element is consistent with the
compensation philosophy set forth above, and the determinations of the
Compensation Committee regarding the appropriate form and level of executive
compensation were based in part on the recommendations of management. Such
recommendations reflected each individual's level of responsibility,
experience and contribution to the business, as well as the Compensation
Committee's ongoing assessment and understanding of the Company's business.
The Compensation Committee continues to place its emphasis on compensation
that would more closely align the executives' interests with the stockholders'
interest. Therefore, as with the Chief Executive Officer, a significant
percentage of each executive's total compensation opportunity was tied to
performance of the Company and individual achievement through (i) bonus
eligibility, based on a combination of Company performance, and (ii) stock
option awards.
Subject to achievement by the Company of an earnings threshold specified by
the Compensation Committee, the Company's executives are eligible to receive
incentive bonuses under the Incentive Plan ranging from 33% to 100% of their
base salaries. The percentage of the bonus amount awarded is based in part on
a range of targets established by the Compensation Committee involving the
Company's earnings per share, return on capital employed and operating income
generated.
In granting stock options to the Company's executives, the Compensation
Committee, with the input of management, considered each executive's current
and future ability to impact achievement of strategic goals and objectives, as
well as internal equity within the executive's peer group. The Compensation
Committee believes this emphasis on equity compensation is in the best
interests of the Company's stockholders because it more closely aligns the
interests of the executives and the Company's stockholders for both near and
long-term. All options granted during fiscal 1999 to the Company's executives
were granted at the fair market value on the date of grant. All of such
options vest at a rate of 25% per year, beginning on the first anniversary of
the date of grant, except the options granted to Mr. Horng, which vest 100% on
the first anniversary of the date of grant. See "Executive Compensation--
Option Grants During Fiscal 1999." Therefore, an executive will receive full
benefits from the option grant only if the Company's stock price appreciates
and only if the executive remains with the Company for the full term of
vesting. See "Proposal III--Approval of Proposal to Increase the Number of
Shares of Company Common Stock Available for Issuance Under the 1993 Plan."
12
<PAGE>
Internal Revenue Code Section 162(m). In August 1993, as part of the Omnibus
Budget Reconciliation Act of 1993, Section 162(m) of the Internal Revenue Code
(the "Code") was enacted, which section provides for an annual one million
dollar limitation (the "Deduction Limitation") on the deduction that an
employer may claim for Compensation of certain executives. Section 162(m) of
the Code provides an exception (the "Performance-Based Compensation
Exception") to the Deduction Limitation for certain performance-based
compensation, and it is the intent of the Compensation Committee to qualify
executive compensation for such exception to the extent necessary, feasible
and in the best interests of the Company. Proposal II ("Approval of the
Incentive Plan") and Proposal III ("Approval of Proposal to Increase the
Number of Shares of Company Common Stock Available for Issuance Under the 1993
Plan") are being submitted for approval by the Company's stockholders in part
to continue to qualify certain compensation under the Incentive Plan and the
1993 Plan for the Performance-Based Compensation Exception to the Deduction
Limitation.
J.L. Jackson
James L. Johnson
Jere W. Thompson
Comparative Performance Graph
The following chart compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return on the stocks
comprising The Nasdaq Market Value Index (the "Nasdaq Index") and the
Electronics Wholesale Index over the period commencing January 1, 1994 (the
first day after the effective date of the Company's initial public offering)
and ending November 30, 1999. The comparison assumes $100 was invested on
December 7, 1993 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends.
Comparison of Cumulative Total Return
of CellStar Corporation, Nasdaq Index and Electronics Wholesale Index
[CHART APPEARS HERE]
13
<PAGE>
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons
who own more than 10% of a registered class of the Company's equity
securities, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC"). Such
persons are required by SEC regulation to furnish the Company with copies of
all Section 16(a) reports that they file.
To the Company's knowledge, based solely on its review of the copies of such
reports received by it with respect to fiscal 1999, or written representations
from certain reporting persons, the Company believes that all filing
requirements applicable to its directors, officers and persons who own more
than 10% of a registered class of the Company's equity securities have been
complied with.
Proposals with Respect to the Incentive Plan and the 1993 Plan
The 1993 Plan and the Incentive Plan (collectively, the "Plans") were
originally approved by the stockholders of the Company in December 1993 and
April 1995, respectively. The Company has grown significantly since adoption
of the Plans, and the Board of Directors believes that the continued success
of the Company continues to depend upon its ability to attract and retain
highly qualified and competent key employees. The Board of Directors believes
that incentive-based compensation enhances that ability and provides
motivation to such persons to advance the interests of the Company and its
stockholders.
The Board's approval of each of the Plans follows a review and evaluation of
the Plans by the Compensation Committee. The Plans give the Compensation
Committee greater flexibility to design the terms and restrictions deemed
appropriate for particular awards as facts and circumstances warrant. Such
flexibility would in turn improve the Company's ability (i) to keep pace with
changing developments in management compensation; (ii) to be competitive in
the types of incentives offered to attract and motivate key management
employees; and (iii) to respond to changing circumstances, such as changes in
tax laws, accounting rules, securities regulations, and other rules regarding
benefit plans.
PROPOSAL II
Approval of the Incentive Plan
The Board of Directors has unanimously approved the Incentive Plan and
recommends approval of the Incentive Plan by stockholders of the Company.
Under current federal tax law, an incentive compensation plan, such as the
Incentive Plan, must be approved by stockholders of the plan proponent every
five years in order to continue to receive favorable federal income tax
treatment for awards made under such plan. The Incentive Plan was last
approved by Company stockholders in May 1996. A copy of the Incentive Plan is
attached to this Proxy Statement as Appendix A. The following is a brief
summary of certain provisions of the Incentive Plan, which summary is
qualified in its entirety by reference to the full text of the Incentive Plan.
Stockholders are urged to review carefully the entire text of the Incentive
Plan attached hereto as Appendix A.
Current Provisions of the Incentive Plan
The Incentive Plan is currently administered by the Compensation Committee,
the members of which are not eligible to participate in the Incentive Plan.
The Compensation Committee has the authority to select the employees who will
participate in the Incentive Plan, to establish and certify achievement of
performance goals and corporate thresholds, to interpret the Incentive Plan,
and to make all other determinations necessary to administer the Incentive
Plan. All such actions or determinations made by the Compensation Committee
are final, binding and conclusive on all interested persons. Any key employee
of the Company or its subsidiaries is eligible
14
<PAGE>
to be selected as a participant in the Incentive Plan. For fiscal 1999, two
persons are eligible to receive bonuses ("Incentive Awards") under the
Incentive Plan.
Under the Incentive Plan, each participant is eligible to receive a
percentage of an annual bonus pool established by the Compensation Committee.
Participants will receive incentive compensation only if the Company achieves
a minimum level of Earnings (which is defined under the Incentive Plan as
earnings before income taxes and extraordinary items, but after accrual for
the expense of Incentive Awards under the Incentive Plan) established by the
Compensation Committee for the fiscal year. For each fiscal year in which the
Compensation Committee determines that it is advisable to grant Incentive
Awards under the Incentive Plan, the Compensation Committee must, within 90
days after the beginning of such fiscal year, establish the following: the
Corporate Threshold, the Annual Incentive Pool, each participant's Target
Allocation, and each participant's Performance Goals, each of which is
described in detail below.
Corporate Threshold. The Corporate Threshold is a minimum level of Earnings
established by the Compensation Committee, which must be at least 105% of the
Company's Earnings for the preceding fiscal year.
Annual Incentive Pool. The Annual Incentive Pool is a specified percentage
of Earnings above the Corporate Threshold that constitutes the amount that may
be awarded to participants under the Incentive Plan with respect to a
particular fiscal year. There is no limit on the percentage of Earnings above
the Corporate Threshold that may be awarded under the Incentive Plan.
Target Allocation. A participant's Target Allocation is such participant's
maximum percentage share of the Annual Incentive Pool. The Target Allocation
for each participant is equal to his or her base salary for the fiscal year as
a percentage of the sum of the base salaries of all participants for the
fiscal year.
Performance Goals. Performance Goals are the goals established for each
participant that will apply for that fiscal year. Performance Goals need not
be the same for all participants and may be based on criteria in one or more
of three categories; (i) performance of the Company as a whole; (ii)
performance of a segment of the Company's business; and (iii) individual
performance. At the time that the Compensation Committee establishes
Performance Goals, it will also establish the categories and criteria that
will measure achievement of the Performance Goals and the percentage
allocation for each of the criteria (the sum of which shall equal 100
percent).
After the close of the fiscal year, the Compensation Committee must
determine and certify (i) whether the Company's Earnings have exceeded the
Corporate Threshold; (ii) the percent of achievement by the participant of his
or her Performance Goals (the "Performance Percentage"); and (iii) the amount
of the Annual Incentive Pool. Based on these determinations, the Compensation
Committee will multiply each participant's Target Allocation by his or her
Performance Percentage to obtain his or her "Participant Allocation." The
Compensation Committee then must determine each participant's Incentive Award
by multiplying his or her Participant's Allocation by the amount of the Annual
Incentive Pool. Currently, a participant's Incentive Award for any fiscal year
may not exceed $1,000,000. A participant who does not achieve any of his or
her individual Performance Goals will not be awarded any compensation under
the Incentive Plan. The Compensation Committee is not obligated to award the
entire amount of the Annual Incentive Pool for any fiscal year to
participants.
Incentive Awards under the Incentive Plan currently must be paid in cash as
soon as practicable after the Compensation Committee's certification of such
awards. A participant may elect to defer all or a portion of his or her
Incentive Award for a period of two to ten years. In the event an Incentive
Award is so deferred, the amount payable would accrue interest at a rate equal
to the Company's cost of funds on the date such Incentive Award is certified.
If a participant's employment with the Company and all of its subsidiaries
terminates before the end of a fiscal year for one of the reasons set forth
below, such participant will be entitled to receive a pro rated portion
15
<PAGE>
of the participant's certified Incentive Award ("Pro Rated Incentive
Compensation"), based on the portion of the fiscal year such participant was
employed by the Company or a subsidiary. A participant will be entitled to
receive Pro Rated Incentive Compensation if (i) within one year following a
"change of control" (as defined under Proposal III below), the Company
terminates the participant's employment for any reason (or for no reason);
(ii) the Company terminates the participant's employment other than for
"cause"; (iii) the participant voluntarily terminates his or her employment
with "good reason"; (iv) the participant retires; (v) the participant dies; or
(vi) the participant becomes disabled.
For purposes of the Incentive Plan, "cause" is defined to include (a) any
act of dishonesty or moral turpitude (including, without limitation, any act
involving a felony or fraud or that causes or reasonably may be expected to
cause substantial injury to the Company); or (b) the failure of a participant
to perform his or her duties of employment. A participant's termination of
employment will be deemed to be for "good reason" if, without the
participant's written consent, the Company (a) assigns the participant duties
for which a participant is not reasonably equipped by his or her skills and
experience, (b) reduces the base salary of the participant, (c) requires the
participant to be based anywhere other than the Company's offices located in
the greater Dallas-Fort Worth area, or (d) terminates benefit or compensation
plans or reduces or limits the participant's participation therein relative to
the participation level of other employees of similar positions and titles. To
the extent that a participant's employment agreement differs from the
Incentive Plan with respect to the meaning of "cause" or "good reason," if
such employment agreement has been approved by the Compensation Committee of
the Board of Directors, the definition included in such employment agreement
will govern.
The Compensation Committee may, in its discretion, reduce or eliminate a
participant's Incentive Award under the Incentive Plan based upon such
objective or subjective criteria as it deems appropriate or to take into
account circumstances that could not have been anticipated when it established
the Performance Goals. The Compensation Committee also has the sole discretion
and authority to change any participant's Performance Goals or criteria for
any fiscal year to the extent the Compensation Committee deems such changes
advisable in light of extraordinary circumstances not foreseen at the time of
grant of an Incentive Award; provided that, the Compensation Committee may not
retroactively change Performance Goal(s) or criteria relating to any Incentive
Award intended to satisfy an exception to the Deduction Limitation, except (i)
in the event of changes in accounting practices or, (ii) to the extent
consistent with Code Section 162(m) and its regulations, in the event of
circumstances that could not have been anticipated when it established such
Performance Goals and criteria. See "Executive Compensation--Report of the
Compensation Committee on Executive Compensation--Internal Revenue Code
Section 162(m)."
The Incentive Plan may be amended or discontinued by the Compensation
Committee, without the approval of the stockholders; provided that, no
amendment may be made without approval of the stockholders of the Company if
such approval is required under the Code, Rule 16b-3, the requirements of any
exchange upon which the Company's securities are listed, or any other
applicable law.
Summary of Certain Federal Income Tax Consequences of the Incentive Plan
An Incentive Award under the Incentive Plan will generally be deductible by
the Company and will be taxable as ordinary income to a participant in the
year or years in which the Incentive Award is paid or made available to the
participant. The Company shall have the right to deduct from all payments made
under the Incentive Plan any taxes required by law to be withheld with respect
to such payments.
If a termination occurs after a change of control, any amounts paid under
the Incentive Plan could be included in determining whether or not a
participant has received an "excess parachute payment" under Section 280G of
the Code, which could result in a loss of deduction to the Company and the
imposition of a 20% federal excise tax (in addition to federal income tax)
payable by the participant.
For a discussion of the tax consequences relating to receipt by Incentive
Plan participants of Awards under the 1993 Plan in lieu of cash under the
Incentive Plan, see "Proposal III--Approval of Proposal to Increase the
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<PAGE>
Number of Shares of Company Common Stock Available for Issuance Under the 1993
Plan--Summary of Certain Federal Income Tax Consequences of the 1993 Plan."
No amounts were issued, paid or earned under the Incentive Plan in fiscal
1999 to any of the Named Executive Officers. See "Executive Compensation--
Report of the Compensation Committee on Executive Compensation."
Vote Required
The affirmative vote of a majority of the shares present in person or
represented by Proxy at the Meeting and entitled to vote on the subject matter
is required to approve the adoption of the Incentive Plan.
The Board of Directors recommends a vote FOR the proposal to adopt and
approve the Incentive Plan.
PROPOSAL III
Approval of Proposal to Increase the Number of Shares of
Company Common Stock Available for Issuance
Under the 1993 Plan
The Board of Directors of the Company has unanimously approved an increase
in the number of shares of Company Common Stock available for issuance under
the 1993 Plan from 8,000,000 shares to 11,000,000 shares. The 1993 Plan was
last approved by Company stockholders in May 1998. A copy of the 1993 Plan is
attached to this Proxy Statement as Appendix B. The following is a brief
summary of certain provisions of the 1993 Plan, which summary is qualified in
its entirety by reference to the full text of the 1993 Plan. Stockholders are
urged to review carefully the entire text of the 1993 Plan attached hereto as
Appendix B.
Certain Current Provisions of the 1993 Plan
The 1993 Plan is currently administered by the Compensation Committee of the
Board of Directors. References to the "Committee" in this discussion shall
mean the Compensation Committee. The Committee has, subject to the terms of
the 1993 Plan, the sole authority to grant Awards (as hereinafter defined)
thereunder, to construe and interpret the 1993 Plan and to make all other
determinations and take any and all actions necessary or advisable for the
administration of such Plan. During fiscal 1999, the Compensation Committee
delegated to an Employee Stock Option Committee comprised of Richard M. Gozia,
then-President and Chief Operating Officer of the Company, and Alan H.
Goldfield, Chairman and Chief Executive Officer of the Company, certain
authority to issue up to 10,000 stock options under the 1993 Plan to non-
executive employees of the Company. Mr. Gozia resigned as a member of the
Employee Stock Option Committee in April 1999. The Board of Directors has
determined to terminate the Employee Stock Option Committee in favor of a new
arrangement for the granting and issuance of stock options under the 1993 Plan
to non-executive officers of the Company. This new arrangement calls for a
specified number of options (as determined by the Compensation Committee) to
be made available to each of the Company's regions, which options may be
dispensed at the discretion of the regional management to eligible non-
executive employees within that region during the course of the fiscal year.
In the event regional management uses up all of the allotted options prior to
end of the fiscal year, the Compensation Committee may, but is not obligated
to, allocate an additional number of options to the region for distribution to
non-executive employees within that region.
Any employee, director or advisor of the Company or its subsidiaries is
eligible to participate in the 1993 Plan; however, only employees of the
Company and its subsidiaries are eligible to receive incentive stock options.
As of February 29, 2000, approximately 1,450 persons were eligible for
participation in the 1993 Plan, of which approximately 120 persons were
participating, and no stock options have been issued to any non-
17
<PAGE>
employee of the Company, except Independent Directors. Unless earlier
terminated by action of the Board of Directors or the Compensation Committee,
the 1993 Plan will terminate on December 3, 2003.
The 1993 Plan provides for the grant of any or all of the following types of
awards (collectively, "Awards"): (i) stock options, including "incentive stock
options," within the meaning of Section 422 of the Code, and non-qualified
stock options; (ii) stock appreciation rights, in tandem with stock options or
freestanding; (iii) restricted stock; and (iv) cash awards. Awards may be
granted singly, in combination, or in tandem, as determined by the Committee
in its discretion. The Committee generally has the authority to fix the terms
and number of Awards to be granted under the 1993 Plan; provided that no
participant may receive during any fiscal year Awards covering an aggregate of
more than 750,000 shares of Common Stock under the 1993 Plan. With respect to
any restrictions ("Mandated Restrictions") under the 1993 Plan that are based
on the requirements of Rule 16b-3 of the Exchange Act, Sections 422 or 162(m)
of the Code, the rules of any exchange upon which the Company's securities are
listed, or any other applicable law, rule or restriction ("Applicable Law"),
to the extent that any such Mandated Restrictions are no longer required by
Applicable Law, the Committee has the sole discretion and authority to grant
awards under the 1993 Plan that are not subject to such restrictions and/or to
waive any such restrictions with respect to outstanding awards.
Stock options are exercisable to purchase Common Stock of the Company during
a period specified in each option agreement and are exercisable in
installments pursuant to a vesting schedule designated by the Committee. Stock
appreciation rights entitle the holder to receive cash or (in the discretion
of the Committee) shares of Common Stock having a value equal to the
appreciation in the fair market value of the Common Stock underlying the stock
appreciation right from the date of grant to the date of exercise. Restricted
stock awards give the recipient the right to receive a specified number of
shares of Common Stock, subject to such terms, conditions and restrictions as
the Committee deems appropriate. Restrictions may include limitations on the
right to transfer or encumber the restricted stock until the expiration of a
specified period of time and forfeiture of the restricted stock upon the
occurrence of certain events such as termination of employment prior to the
expiration of a specified period of time. As of the date of this Proxy
Statement, stock options were the only type of Award that had been granted
under the 1993 Plan.
An aggregate of 8,000,000 shares of Common Stock are currently authorized
and reserved for issuance under the 1993 Plan, subject to adjustments as are
appropriate to reflect any stock dividend, stock split, share combination,
exchange of shares, recapitalization or increase or decrease in shares of
Common Stock without receipt of consideration by the Company. At February 29,
2000, options to purchase approximately 7,350,000 shares of Common Stock were
outstanding, and approximately 650,000 shares of Common Stock remained
available for issuance under the 1993 Plan.
The 1993 Plan requires that the purchase price per share under any option or
stock appreciation right may not be less than 100% of the fair market value of
the underlying shares of Common Stock on the date of grant, or 110% of such
value in the case of incentive stock options granted to any Employee owning
more than ten percent of the outstanding capital stock of the Company (a "Ten
Percent Owner"). In addition, the term of any option or stock appreciation
right may not exceed ten years, or five years in the case of incentive stock
options granted to a Ten Percent Owner. Outstanding options granted under the
1993 Plan have ten-year terms. Vesting schedules for outstanding options range
from 100% vesting on the first anniversary of the date of grant to 25% vesting
per year, generally beginning on the first anniversary of the date of grant.
In addition, the vesting of certain outstanding options was tied to the
achievement of performance goals. The aggregate fair market value of Common
Stock with respect to which incentive stock options are exercisable for the
first time by any individual during any calendar year may not exceed $100,000.
The 1993 Plan provides that, in the event of a Change of Control, all
unvested options and stock appreciation rights will become fully exercisable,
and all restrictions will lapse with respect to outstanding shares of
restricted stock. "Change of Control" is defined as the occurrence of any of
the following events: (i) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's Common Stock would be converted into cash,
securities or other
18
<PAGE>
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of the surviving corporation immediately after the
merger; (ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the assets
of the Company; (iii) approval by the stockholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company; (iv) the
cessation of control (by virtue of their not constituting a majority of
directors) of the Board by the individuals (the "Continuing Directors") who
(x) at the effective date of the 1993 Plan were directors or (y) become
directors after the effective date of the 1993 Plan and whose election or
nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds of the directors then in office who were directors at
the effective date of the 1993 Plan or whose election or nomination for
election was previously so approved; (v) in a Title 11 bankruptcy proceeding,
the appointment of a trustee or the conversion of a case involving the Company
to a case under Chapter 7; or (vi) the acquisition of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of an aggregate of
15% or more of the voting power of the Company's outstanding voting securities
by any person or persons acting as a group (within the meaning of Rule 13d-5
under the Exchange Act) who beneficially owned less than 10% of the voting
power of the Company's outstanding voting securities on the effective date of
the 1993 Plan, or the acquisition of beneficial ownership of an additional 5%
of the voting power of the Company's outstanding voting securities by any
person or group who beneficially owned at least 10% of the voting power of the
Company's outstanding voting securities on the effective date of the 1993
Plan; provided however, notwithstanding the foregoing, an acquisition will not
constitute a Change of Control under the 1993 Plan if the acquiror is (v) Alan
H. Goldfield ("Goldfield"), (w) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company and acting in such
capacity, (x) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
voting securities of the Company; (y) a person or group meeting the
requirements of clauses (i) and (ii) of Rule 13d-1(b)(1) under the Exchange
Act; or (z) any other person whose acquisition of shares of voting securities
is approved in advance by a majority of the Continuing Directors; and provided
further, no Change of Control will be deemed to have occurred from a transfer
of the Company's voting securities by Goldfield to (v) a member of Goldfield's
immediate family (within the meaning of Rule 16a-1(e) of the Exchange Act)
either during Goldfield's lifetime or by will or the laws of descent and
distribution; (w) any trust as to which Goldfield or a member (or members) of
his immediate family is the beneficiary; (x) any trust as to which Goldfield
is the settlor with sole power to revoke; (y) any entity over which Goldfield
has the power, directly or indirectly, to direct or cause the direction of the
management and policies of the entity, whether through the ownership of voting
securities, by contract or otherwise; or (z) any charitable trust, foundation
or corporation under Section 501(c)(3) of the Code that is funded by
Goldfield. To the extent that a participant's employment agreement differs
from the 1993 Plan with respect to the meaning of "Change of Control," if such
employment agreement has been approved by the Committee of the Board of
Directors, the definition included in such employment agreement will govern.
The exercise price for any option may be paid as follows: (a) in cash or by
certified check, bank draft, or money order payable to the order of the
Company; (b) with Common Stock (including restricted stock), valued at its
fair market value on the date of exercise; (c) by delivery to the Company or
its designated agent of an executed irrevocable option exercise form together
with irrevocable instructions from the optionee to a broker or dealer,
reasonably acceptable to the Company, to sell certain of the shares of Common
Stock purchased upon exercise of the option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale
or loan proceeds necessary to pay such purchase price, and/or (d) in any other
form of valid consideration that is acceptable to the Committee in its sole
discretion. The closing price of the Company's Common Stock on February 29,
2000, as reported in The Nasdaq Stock Market was $9.594.
The 1993 Plan provides that, unless otherwise permitted by the Committee, in
its sole discretion, in the event of termination of a participant's service
with the Company (i) any options and/or stock appreciation rights held by such
participant may be exercised, to the extent exercisable on the date of
termination, (a) for 12 months after termination, if termination is due to
death or disability; (b) for three months after termination, if termination is
due to retirement; and (c) for 30 days after termination, if termination is
due to any reason other than death,
19
<PAGE>
disability or retirement; provided that no option or stock appreciation right
may be exercisable beyond its original expiration date; and (ii) any unvested
shares of restricted stock held by such participant will be forfeited. If a
participant forfeits unvested shares of restricted stock and has paid
consideration to the Company for such forfeited restricted stock, the Company
is required to repay such consideration to the participant.
The Board of Directors or, if authorized, the Committee, may from time to
time discontinue or amend the 1993 Plan without the consent of the
stockholders unless stockholder approval is required under the Code, the rules
of any exchange upon which the Company's securities are listed, or any other
applicable law, rule or restriction.
Summary of Certain Federal Income Tax Consequences of the 1993 Plan
Incentive Stock Options. No taxable income is realized by a participant and
no tax deduction is available to the Company upon either the grant or exercise
of an incentive stock option. If a participant holds the shares acquired upon
the exercise of an incentive stock option for more than one year after the
issuance of the shares upon exercise of the incentive stock option and more
than two years after the date of the grant of the incentive stock option (the
"ISO Holding Period"), the difference between the exercise price and the
amount realized upon the sale of the shares will be treated as a long-term
capital gain or loss and no deduction will be available to the Company. If the
shares are transferred before the expiration of the ISO Holding Period, the
participant will realize ordinary income and the Company will be entitled to a
deduction on the portion of the gain, if any, equal to the difference between
the incentive stock option exercise price and the fair market value of the
shares on the date of exercise or, if less, the difference between the amount
realized on the disposition and the adjusted basis of the stock; provided
however, that the deduction will not be allowed if such amount exceeds the
Deduction Limitation and does not satisfy an exception to the Deduction
Limitation. See "Executive Compensation--Report of the Compensation Committee
on Executive Compensation--Internal Revenue Code Section 162(m)." Any further
gain or loss from an arm's-length sale or exchange will be taxable as a long-
term or short-term capital gain or loss, depending upon the holding period
before disposition. Certain special rules apply if an incentive stock option
is exercised by tendering stock.
The difference between the incentive stock option exercise price and the
fair market value, at the time of exercise, of the Common Stock acquired upon
the exercise of an incentive stock option may give rise to alternative minimum
taxable income subject to an alternative minimum tax. Special rules also may
apply in certain cases where there are subsequent sales of shares in
disqualifying dispositions and to determine the basis of the stock for
purposes of computing alternative minimum taxable income on subsequent sale of
the shares.
Non-qualified Stock Options. No taxable income generally is realized by the
participant upon the grant of a non-qualified stock option, and no deduction
generally is then available to the Company. Upon exercise of a non-qualified
stock option, the excess of the fair market value of the shares on the date of
exercise over the exercise price will be taxable to the participant as
ordinary income. Such amount will also be deductible by the Company unless
such amount exceeds the Deduction Limitation and does not satisfy an exception
to the Deduction Limitation. The tax basis of shares acquired by the
participant will be the fair market value on the date of exercise. When a
participant disposes of shares acquired upon exercise of a non-qualified stock
option, any amount realized in excess of the fair market value of the shares
on the date of exercise generally will be treated as a capital gain and will
be long-term or short-term, depending on the holding period of the shares. The
holding period commences upon exercise of the non-qualified stock option. If
the amount received is less than such fair market value, the loss will be
treated as a long-term or short-term capital loss, depending on the holding
period of the shares. The exercise of a non-qualified stock option will not
trigger the alternative minimum tax consequences applicable to incentive stock
options.
Stock Appreciation Rights. No taxable income will be realized by a
participant upon the grant of a stock appreciation right and no deduction will
be available to the Company. Upon the exercise of the stock appreciation
right, the participant will realize taxable income equal to the cash or the
fair market value (on the date of exercise) of the shares, or both, received,
and the Company will be entitled to a deduction unless such amount
20
<PAGE>
exceeds the Deduction Limitation and does not satisfy an exception to the
Deduction Limitation. See "Executive Compensation--Report of the Compensation
Committee on Executive Compensation--Internal Revenue Code Section 162(m)."
The tax basis in any shares received will be the fair market value on the date
of exercise and, if shares received are held for more than one year, the
participant will realize long-term capital gain or loss upon disposition.
Restricted Stock. Unless a participant otherwise elects to be taxed upon
receipt of shares of restricted stock under the 1993 Plan, the participant
must include in his or her taxable income the difference between the fair
market value of the shares and the amount paid, if any, for the shares, as of
the first date the participant's interest in the shares is no longer subject
to a substantial risk of forfeiture or such shares become transferable. A
participant's rights in restricted stock awarded under the 1993 Plan are
subject to a substantial risk of forfeiture if the rights to full enjoyment of
the shares are conditioned, directly or indirectly, upon the future
performance of substantial services by the participant. Where shares of
restricted stock received under the 1993 Plan are subject to a substantial
risk of forfeiture, the participant can elect to report the difference between
the fair market value of the shares on the date of receipt and the amount
paid, if any, for the stock as ordinary income in the year of receipt. To be
effective, the election must be filed with the Internal Revenue Service within
30 days after the date the shares are transferred to the participant. The
Company is entitled to a federal income tax deduction equal in amount to the
amount includable as compensation in the gross income of the participant,
unless such amount exceeds the Deduction Limitation and does not satisfy an
exception to the Deduction Limitation. See "Executive Compensation--Report of
the Compensation Committee on Executive Compensation--Internal Revenue Code
Section 162(m)." The amount of taxable gain arising from a participant's sale
of shares of restricted stock acquired pursuant to the 1993 Plan is equal to
the excess of the amount realized on such sale over the sum of the amount
paid, if any, for the stock and the Compensation element included by the
participant in taxable income. For stock held for more than one year, the
participant will realize long-term capital gain or loss upon disposition.
Cash Awards. A participant who receives a cash award will not recognize any
taxable income for Federal income tax purposes until the award is no longer
subject to substantial risk of forfeiture. Any cash or shares of Common Stock
received pursuant to the award generally will be treated as compensation
income in the year in which the award becomes no longer subject to substantial
risk of forfeiture. If a cash award is paid in whole or part in shares of
Common Stock and the participant is subject to Section 16(b) of the Exchange
Act on the date of receipt of such shares, the participant generally will not
recognize Compensation income until the expiration of six months from the date
of receipt, unless the participant makes an election under Section 83(b) of
the Code to recognize compensation income on the date of receipt. In each
case, the amount of compensation income will equal the amount of cash and the
fair market value of the shares Common Stock on the date compensation income
is recognized. The Company or one of its subsidiaries generally will be
entitled to a compensation deduction for the amount of compensation income the
participant recognizes. Any stock options received pursuant to such an award
will not be subject to taxation upon the issuance of the option, and no
deduction would be available to the Company at that time. Taxation to the
participant (and deductibility for the Company ) will be governed by the same
rules as set forth above in the summary of certain federal income tax
consequences relating to non-qualified stock options.
Other Tax Matters. If unmatured installments of Awards are accelerated as a
result of a Change of Control, any amounts received from the exercise by a
participant of a stock option, the lapse of restrictions on restricted stock
or the deemed satisfaction of conditions of performance-based awards may be
included in determining whether or not a participant has received an "excess
parachute payment" under Section 280G of the Code, which could result in (i)
the imposition of a 20% federal excise tax (in addition to federal income tax)
payable by the participant on certain payments of Common Stock or cash
resulting from such exercise or deemed satisfaction of conditions of
performance awards or, in the case of restricted stock, on all or a portion of
the fair market value of the shares on the date the restrictions lapse and
(ii) the loss by the Company of a compensation deduction.
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<PAGE>
Prior Issuances of Options under the 1993 Plan
The following table sets forth certain information regarding options
received under the 1993 Plan from its inception through February 29, 2000, by
(i) the Named Executive Officers, (ii) all current executive officers as a
group, (iii) all current directors who are not executive officers as a group,
(iv) each nominee for election as a director, (v) each associate of any of the
persons listed in (i)-(iv) above, (v) each person who has received 5% or more
of such options and (vi) all employees, including current officers who are not
executive officers, as a group.
<TABLE>
<CAPTION>
Aggregate Amount of Common Stock
Subject to 1993 Plan Options Granted
Name of Individual or Group from Inception through February 29, 2000(1)
--------------------------- -------------------------------------------
<S> <C>
Alan H. Goldfield.................. 1,238,610
Chairman of the Board and Chief
Executive Officer
A.S. Horng......................... 982,982
Chairman and Chief Executive
Officer of CellStar (Asia)
Corporation Limited
Dale H. Allardyce.................. 200,000(2)
President and Chief Operating
Officer
Austin P. Young.................... 150,000(2)
Senior Vice President, Chief
Financial Officer and Treasurer
Richard M. Gozia................... 800,000(3)
President and Chief Operating
Officer
Daniel T. Bogar.................... 379,382
Senior Vice President--Americas
Region
Timothy L. Maretti................. 333,662
Senior Vice President--Brazil
Region
All current executive officers as a 4,084,636
group.............................
All current directors who are not 55,000
executive officers as a group.....
All employees, including current
officers who are not executive
officers, as a group.............. 4,139,636(4)
</TABLE>
- --------
(1) Figures in this column reflect an adjustment for the Company's three-for-
two stock split that was effected in the form of a stock dividend in June
1997 and the Company's two-for-one stock split that was effected in the
form of a stock dividend in June 1998
(2) Messrs. Allardyce and Young joined the Company in November 1999
(3) Mr. Gozia resigned as a member of the Company's Board of Directors in
April 1999, but continued to serve as the Company's President, Chief
Operating Officer and acting Chief Financial Officer until November 16,
1999.
(4) Includes options that expired or were canceled or terminated prior to
their exercise and that became eligible to be regranted under the 1993
Plan. Also includes options granted to current executive officers.
The Board of Directors recommends a vote FOR the proposal to increase the
number of shares of Company Common Stock available for issuance under the 1993
Plan from 8,000,000 to 11,000,000.
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee, has
appointed KPMG LLP as the independent auditors of the Company for the fiscal
year ending November 30, 2000. Representatives of KPMG LLP are expected to be
present at the Meeting with the opportunity to make a statement if they so
desire and to be available to respond to appropriate questions.
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<PAGE>
STOCKHOLDER PROPOSALS
Stockholders of the Company may submit proposals on matters appropriate for
stockholder action at subsequent annual meetings of the Company consistent
with Rule 14a-8 promulgated under the Exchange Act and the Company's
Certificate of Incorporation. For such proposals to be considered for
inclusion in the Proxy Statement and Proxy relating to the 2001 Annual Meeting
of Stockholders, such proposals must be received by the Company no later than
December 17, 2000. Such proposals should be directed to CellStar Corporation,
1730 Briercroft Court, Carrollton, Texas 75006, Attention: General Counsel.
OTHER BUSINESS
The Board of Directors knows of no matters other than those described herein
that will be presented for consideration at the Meeting. However, should any
other matter(s) properly come before the Meeting or any adjournment thereof,
it is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment in the interest of the Company.
MISCELLANEOUS
All costs incurred in the solicitation of proxies will be borne by the
Company. In addition to solicitation by mail, directors, officers and
employees of the Company may solicit proxies personally or by telephone or
telegram, without additional compensation. The Company may also make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries for forwarding of solicitation materials to the beneficial owners
of shares of Common Stock held by such persons, and the Company may reimburse
such brokerage houses and other custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith.
Accompanying this Proxy Statement is a copy of the Company's Annual Report
for the fiscal year ended November 30, 1999 (the "Annual Report"). The Annual
Report is not to be deemed a part of this Proxy Statement.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
NOVEMBER 30, 1999, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
STATEMENT SCHEDULES, IF ANY, BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT
NO CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON THE
WRITTEN REQUEST OF SUCH PERSON ADDRESSED TO CELLSTAR CORPORATION, ATTN.:
INVESTOR RELATIONS, 1730 BRIERCROFT COURT, CARROLLTON, TEXAS 75006.
By Order of the Board of Directors,
Elaine Flud Rodriguez
Senior Vice President, Secretary and
General Counsel
March 29, 2000
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<PAGE>
APPENDIX A
CELLSTAR CORPORATION
AMENDED AND RESTATED ANNUAL INCENTIVE COMPENSATION PLAN
This Plan amends and restates the CellStar Corporation Annual Incentive
Compensation Plan, which first became effective on December 1, 1994.
Capitalized terms used herein are defined in Article II hereof.
To the extent permitted under Rule 16b-3, Section 162(m), and any other
applicable law or regulation, the Committee shall have the power, in its sole
discretion, to apply any or all of the amendments effected hereby to
outstanding Awards previously granted under the Plan; provided that, to the
extent that the application of any such amendment to an outstanding Award
shall have an Adverse Consequence for the Company and/or a Participant, such
amendment shall not apply unless it is specifically approved by the Committee
and consented to by the Participant.
The Plan shall be effective as of March 22, 1996, subject to stockholder
approval of the amendments effected hereby; provided that any Discretionary
Amendment shall not be subject to stockholder approval.
ARTICLE I
Purpose
The purpose of the Plan is to recognize the contributions to the growth,
success, and profitability of the Company and its Subsidiaries provided by key
employees of the Company through the awarding of incentive compensation. The
Plan is designed to (a) increase the interest of the key employees in the
welfare of the Company and its Subsidiaries; (b) furnish an incentive to such
employees to continue their services for the Company and/or its Subsidiaries;
and (c) provide a means by which the Company and its Subsidiaries may attract
able persons to enter their employ.
The Plan provides for incentive payments to certain key employees of the
Company and its Subsidiaries based on the achievement of preestablished
Performance Goals. Incentive Compensation payable pursuant to certain Awards
under the Plan is intended to be deductible by the Company pursuant to the
Section 162(m) Exception.
With respect to Reporting Participants, the Plan and all transactions under
the Plan are intended to comply with all applicable conditions of Rule 16b-3,
to the extent such Rule is applicable. To the extent that any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null
and void ab initio, to the extent permitted by law and deemed advisable by the
Committee.
ARTICLE II
Definitions
For purposes of this Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
"Adverse Consequence" means (i) the loss of qualification of an Award for
special treatment under Rule 16b-3 or the commencement of a new holding period
under such rule; or (ii) the Company's inability to claim the Section 162(m)
Exception with respect to an Award.
"Annual Incentive Pool" means, with respect to any Fiscal Year, the amount,
if any, equal to the percentage of Earnings for the Fiscal Year in excess of
the Corporate Threshold for the Fiscal Year, as specified in accordance with
Section 5.1 below.
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"Award" means the grant by the Committee to an employee of the Company or
its Subsidiaries of the right to receive Incentive Compensation under the
Plan.
"Award Agreement" means a written agreement between a Participant and the
Company that sets out the terms of the grant of an Award.
"Board" means the Board of Directors of the Company.
"Cause" includes (a) any act of dishonesty or moral turpitude (including,
without limitation, any act involving a felony or fraud or that ceases or
reasonably may be expected to cause substantial injury to the Company); or (b)
the failure of a Participant to perform his or her duties of employment. To
the extent that a Participant's Employment Agreement differs from the Plan
with respect to the meaning of "Cause," if such Employment Agreement has been
approved by the Compensation Committee of the Board, the definition included
in such Employment Agreement shall govern.
"Change of Control" means any of the following: (i) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of Common Stock of the
surviving corporation immediately after the merger; (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; (iii)
approval by the stockholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company; (iv) the cessation of control (by
virtue of their not constituting a majority of directors) of the Board by the
individuals (the "Continuing Directors") who (x) at the effective date of this
Plan were directors or (y) become directors after the effective date of this
Plan and whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors
then in office who were directors at the effective date of this Plan or whose
election or nomination for election was previously so approved); (v) in a
Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion
of a case involving the Company to a case under Chapter 7; or (vi) the
acquisition of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of an aggregate of 15% or more of the voting power of the
Company's outstanding voting securities by any person or persons acting as a
group (within the meaning of Rule 13d-5 under the Exchange Act) who
beneficially owned less than 10% of the voting power of the Company's
outstanding voting securities on the effective date of this Plan, or the
acquisition of beneficial ownership of an additional 5% of the voting power of
the Company's outstanding voting securities by any person or group who
beneficially owned at least 10% of the voting power of the Company's
outstanding voting securities on the effective date of this Plan; provided,
however, that, notwithstanding the foregoing, an acquisition shall not
constitute a Change of Control hereunder if the acquiror is (v) Alan H.
Goldfield ("Goldfield"), (w) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company and acting in such capacity, (x)
a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of voting
securities of the Company; (y) a person or group meeting the requirements of
clauses (i) and (ii) of Rule 13d-1(b)(1) under the Exchange Act; or (z) any
other person whose acquisition of shares of voting securities is approved in
advance by a majority of the Continuing Directors; and provided further that
no change of control shall be deemed to have occurred from a transfer of the
Company's voting securities by Goldfield to (v) a member of Goldfield's
immediate family (within the meaning of Rule 16a-1(e) of the Exchange Act)
either during Goldfield's lifetime or by will or the laws of descent and
distribution; (w) any trust as to which Goldfield or a member (or members) of
his immediate family is the beneficiary; (x) any trust as to which Goldfield
is the settlor with sole power to revoke; (y) any entity over which Goldfield
has the power, directly or indirectly, to direct or cause the direction of the
management and policies of the entity, whether through the ownership of voting
securities, by contract or otherwise; or (z) any charitable trust, foundation
or corporation under Section 501(c)(3) of the Code that is funded by
Goldfield. To the extent that a Participant's Employment Agreement differs
from the Plan with respect to the meaning of "Change of Control," if such
Employment Agreement has been approved by the Compensation Committee of the
Board of Directors, the definition included in such Employment Agreement shall
govern.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee(s) appointed or designated by the Board to
administer the Plan in accordance with Article III.
"Common Stock" means the Common Stock, par value, $.01 per share, of the
Company or, in the event that the outstanding shares of such Common Stock are
hereafter changed into or exchanged for shares of a different stock or
security of the Company or another corporation, such other stock or security.
"Company" means CellStar Corporation, a Delaware corporation.
"Corporate Threshold" means, for any Fiscal Year, the minimum level of
Earnings that must be realized by the Company for the Fiscal Year in order to
establish an Annual Incentive Pool for that Fiscal Year, as determined by the
Committee in accordance with Section 5.2 below.
"Disability" or "Disabled" means that the Participant is qualified for long-
term disability benefits under the Company's disability plan or insurance
policy; or, if no such plan or policy is then in existence, that the
Participant, because of ill health, physical or mental disability or any other
reason beyond his or her control, is unable to perform his or her duties of
employment for a period of six (6) continuous months, as determined in good
faith by the Committee. To the extent that a Participant's Employment
Agreement differs from the Plan with respect to the meaning of "Disability" or
"Disabled," if such Employment Agreement has been approved by the Compensation
Committee of the Board of Directors, the definition included in such
Employment Agreement shall govern.
"Discretionary Amendment" means any amendment to the Plan that does not
require stockholder approval.
"Earnings" means the earnings of the Company before income taxes and
extraordinary items, but after accrual for the expense of Awards under the
Plan.
"Employment Agreement" means an agreement, if any, between the Company or
any Subsidiary and a Participant, setting forth the terms and conditions of
the Participant's employment by the Company or such Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of a share of Common Stock means such value as is
determined by the Committee on the basis of such factors as it deems
appropriate; provided that, if the Common Stock is traded on a national
securities exchange or transactions in the Common Stock are quoted on the
NASDAQ National Market System, such value shall be determined by the Committee
on the basis of the last reported sale price for the Common Stock on the date
for which such determination is relevant as reported on the national
securities exchange or the NASDAQ National Market System, as the case may be.
If the Common Stock is not listed and traded upon a recognized securities
exchange or in the NASDAQ National Market System, the Committee shall make a
determination of Fair Market Value on the basis of the closing bid and asked
quotations for such stock on the date for which such determination is relevant
(as reported by a recognized stock quotation service) or, in the event that
there are no bid or asked quotations for such stock on the date for which such
determination is relevant, then on the basis of the mean between the closing
bid and asked quotations on the date nearest preceding the date for which such
determination is relevant for which such bid and asked quotations were
available. In no event shall "Fair Market Value" be less than the par value of
the Common Stock.
"Fiscal Year" means the fiscal year of the Company, which is the 12-month
period beginning on each December 1, and ending on the next November 30.
"Good Reason" means that, without a Participant's written consent, the
Company (a) assigns the Participant duties for which the Participant is not
reasonably equipped by his or her skills and experience, (b) reduces the
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base salary of the Participant, (c) requires the Participant to be based
anywhere other than the Company's offices located in the greater Dallas-Fort
Worth area, or (d) terminates benefit or compensation plans or reduces or
limits the Participant's participation therein relative to the participation
level of other employees of similar positions and titles. To the extent that a
Participant's Employment Agreement differs from the Plan with respect to the
meaning of "Good Reason," if such Employment Agreement has been approved by
the Compensation Committee of the Board of Directors, the definition included
in such Employment Agreement shall govern.
"Incentive Compensation" means the amount of performance-based compensation
payable under the Plan for a Fiscal Year to a Participant equal to the
Participant's Allocation for such Participant multiplied by the Annual
Incentive Pool for such Fiscal Year; provided, however, that in no event shall
a Participant's Incentive Compensation for any Fiscal Year exceed $1,000,000.
"Participant" shall mean a key employee of the Company or a Subsidiary
selected by the Committee to participate in the Plan.
"Participant's Allocation" means a Participant's allocable percentage of the
Annual Incentive Pool for any Fiscal Year, as determined by the Committee in
accordance with Section 5.6 below.
"Performance Goals" means the performance measures established by the
Committee for each Participant for any Performance Period in accordance with
Sections 5.2--5.4 of the Plan.
"Plan" means this CellStar Corporation Amended and Restated Annual Incentive
Compensation Plan, as amended from time to time.
"Reporting Participant" means a Participant who is subject to the reporting
requirements of Section 16 of the Exchange Act.
"Retirement" means termination of a Participant's employment at or after the
Company's established retirement age, unless otherwise defined in a particular
Award Agreement. To the extent that a Participant's Employment Agreement
differs from the Plan with respect to the meaning of "Retirement," if such
Employment Agreement has been approved by the Compensation Committee of the
Board of Directors, the definition included in such Employment Agreement shall
govern.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as amended
from time to time.
"Section 162(m)" means Section 162(m) of the Code and the regulations
promulgated thereunder from time to time.
"Section 162(m) Exception" means the exception under Section 162(m) for
"qualified performance-based compensation."
"Stock-Based Compensation" means any Options or shares of Common Stock or
Restricted Stock received by a Participant in lieu of cash compensation
pursuant to the terms of the Company's 1993 Amended and Restated Long-Term
Compensation Plan.
"Subsidiary" means (i) any corporation in an unbroken chain of corporations
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing a majority of the
total combined voting power of all classes of stock in one of the other
corporations in the chain, (ii) any limited partnership, if the Company or any
corporation described in item (i) above owns a majority of the general
partnership interest and a majority of the limited partnership interests
entitled to vote on the removal and replacement of the general partner, and
(iii) any partnership, if the partners thereof are composed only of the
Company, any corporation listed in item (i) above or any limited partnership
listed in item (ii) above. "Subsidiaries" means more than one of any such
corporations, limited partnerships or partnerships.
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"Target Allocation" means, for a Participant for any Fiscal Year, his or her
maximum percentage share of the Annual Incentive Pool for achievement of his
or her Performance Goals for the Fiscal Year, determined by the Committee in
accordance with Section 5.5 below.
ARTICLE III
Administration
3.1 Committee's Authority. The Plan shall be administered by a committee
appointed by the Board, consisting of at least two members of the Board;
provided that (i) with respect to any Award that is granted to a Reporting
Participant, such committee shall consist of at least such number of directors
as are required from time to time by Rule 16b-3, and each such committee
member shall qualify as a "disinterested person" under Rule 16b-3; and (ii)
with respect to any Award that is also intended to satisfy the requirements of
the Section 162(m) Exception, such committee shall consist of at least such
number of directors as are required from time to time to satisfy the Section
162(m) Exception, and each such committee member shall qualify as an "outside
director" within the meaning of Section 162(m). Any member of the Committee
may be removed at any time, with or without cause, by resolution of the Board,
and any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board. The Committee shall have exclusive authority to (i)
designate the key employees of the Company and its Subsidiaries who shall
participate in the Plan; (ii) establish Performance Goals for each Participant
and certify the extent of their achievement; (iii) establish and certify the
achievement of the Corporate Threshold; (iv) determine each Participant's
Target Allocation; and (v) determine all other terms and conditions of Awards
and Award Agreements under the Plan.
With respect to restrictions ("mandated restrictions") in the Plan that are
based on the requirements of Rule 16b-3, the Section 162(m) Exception, the
rules of any exchange upon which the Company's securities are listed, or any
other applicable law, rule or restriction (collectively, "applicable law"), to
the extent that any such mandated restrictions are no longer required by
applicable law, the Committee shall have the sole discretion and authority to
grant Awards that are not subject to such mandated restrictions and/or to
waive any such mandated restrictions with respect to outstanding Awards.
3.2 Committee Action. A majority of the Committee shall constitute a quorum,
and the act of a majority of the members of the Committee present at a meeting
at which a quorum is present shall be the act of the Committee.
3.3 Committee's Powers. The Committee shall have the power, in its
discretion, to take such actions as may be necessary to carry out the
provisions and purposes of the Plan and shall have the authority to control
and manage the operation and administration of the Plan. In order to
effectuate the purposes of the Plan, the Committee shall have the
discretionary power and authority to construe and interpret the Plan, to
supply any omissions therein, to reconcile and correct any errors or
inconsistencies, to decide any questions in the administration and application
of the Plan, and to make equitable adjustments for any mistakes or errors made
in the administration of the Plan. All such actions or determinations made by
the Committee, and the application of rules and regulations to a particular
case or issue by the Committee, in good faith, shall not be subject to review
by anyone, but shall be final, binding and conclusive on all persons ever
interested hereunder.
In construing the Plan and in exercising its power under provisions
requiring the Committee's approval, the Committee shall attempt to ascertain
the purpose of the provisions in question and when the purpose is known or
reasonably ascertainable, the purpose shall be given effect to the extent
feasible. Likewise, the Committee is authorized to determine all questions
with respect to the individual rights of all Participants under this Plan,
including, but not limited to, all issues with respect to eligibility. The
Committee shall have all powers necessary or appropriate to accomplish its
duties under this Plan including, but not limited to, the power and duty to:
(a) maintain complete and accurate records of all plan transactions,
contributions, and distributions. The Committee shall maintain the books of
accounts, records, and other data in the manner necessary for proper
administration of the Plan;
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(b) adopt rules of procedure and regulations necessary for the proper and
efficient administration of the Plan, provided the rules and regulations
are not inconsistent with the terms of the Plan as set out herein. All
rules and decisions of the Committee shall be uniformly and consistently
applied to all Participants in similar circumstances;
(c) enforce the terms of the Plan and the rules and regulations it
adopts;
(d) review claims and render decisions on claims for benefits under the
Plan;
(e) furnish the Company or the Participants, upon request, with
information that the Company or the Participants may require for tax or
other purposes;
(f) employ agents, attorneys, accountants or other persons (who also may
be employed by or represent the Company) for such purposes as the Committee
considers necessary or desirable in connection with its duties hereunder;
and
(g) perform any and all other acts necessary or appropriate for the
proper management and administration of the Plan.
ARTICLE IV
Eligibility
Any key employee of the Company or any of its Subsidiaries whose judgment,
initiative and efforts contribute, or may be expected to contribute, in the
opinion of the Committee, to the successful performance of the Company is
eligible to be selected as a Participant.
ARTICLE V
Determination of Goals and Incentive Compensation
5.1 Designation of Annual Incentive Pool. No later than the 90th day of each
Fiscal Year, the Committee shall set forth in writing the Committee's
determinations regarding the establishment of an Annual Incentive Pool for
such Fiscal Year.
5.2 Establishment of Performance Goals. At any time before the 90th day of
each Fiscal Year, the Chairman of the Board may deliver to the Committee his
recommendations for that Fiscal Year regarding designation of Participants and
establishment of Performance Goals for individual Participants.
No later than the 90th day of the Fiscal Year, the Committee shall set forth
in writing (i) the key employees designated as Participants for the Fiscal
Year, (ii) the Corporate Threshold for the Fiscal Year, (iii) the individual
Performance Goals established for each Participant, (iv) the Target Allocation
for each Participant, and (v) the Committee's recommendation for the Annual
Incentive Pool. The Corporate Threshold with respect to any Fiscal Year shall
not be less than 105% of the Earnings for the immediately preceding Fiscal
Year.
5.3 Categories of Performance Goals. The individual Performance Goals
established by the Committee for any Fiscal Year may differ among
Participants. For each Participant, his or her individual Performance Goals
shall be based on criteria in one or more of the following categories: (a)
performance of the Company as a whole, performance of a segment of the
Company's business, and (c) individual performance. In establishing
Performance Goals for a Participant, the Committee shall determine, in its
sole discretion, the categories and criteria to be used in measuring his or
her actual performance and the percentage allocation for each of the criteria
(the sum of which shall equal 100%).
5.4 Performance Criteria for any Fiscal Year. Performance criteria for the
Company shall relate to the achievement of predetermined financial objectives
for the Company and its Subsidiaries on a consolidated basis. Performance
criteria for a segment of the Company's business shall relate to the
achievement of financial and
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operating objectives of the segment for which the Participant is accountable.
Individual performance criteria shall relate to the Participant's overall
performance, taking into account, among other measures of performance, the
attainment of individual goals and objectives.
5.5 Target Allocation. No later than the 90th day of the Fiscal Year, the
Committee shall determine each Participant's Target Allocation for the Fiscal
Year, which shall be his or her base salary for the Fiscal Year as a percent
of the sum of the base salaries of all Participants for the Fiscal Year.
5.6 Certification. As soon as practicable after the end of each Fiscal Year,
the Chairman shall report to the Committee regarding the extent to which each
Participant achieved his or her Performance Goals for the Fiscal Year. As soon
as practicable following verification by the Company's independent public
accountants of the Company's financial results for any Fiscal Year and receipt
of the report of the Chairman of the Board regarding the Participants' actual
performance against the Performance Goal(s) for the Fiscal Year, the Committee
shall certify: (i) whether or not the Company's Earnings exceeded the
Corporate Threshold, (ii) the extent to which each Participant achieved his or
her Performance Goal(s) for the Fiscal Year, and (iii) the calculation of the
Annual Incentive Pool, (iv) the determination by the Committee of the
Participant's Allocation for each Participant and (v) the amount of Incentive
Compensation payable to each Participant under the Plan for the Fiscal Year.
The Committee shall determine each Participant's Allocation by multiplying
his or her Target Allocation by the percent determined by the Committee to
represent the extent to which such Participant achieved his or her individual
Performance Goals for the Fiscal Year. The Committee shall then determine each
Participant's Incentive Compensation by multiplying his or her Participant's
Allocation by the amount in the Annual Incentive Pool; provided that, in no
event shall a Participant's Incentive Compensation during any Fiscal Year
exceed $1,000,000. Further, after the Committee has determined a Participant's
Allocation, the Committee, in its discretion, may reduce any such
Participant's Allocation pursuant to Section 5.7 below.
5.7 Committee Discretion. The Committee may, in its discretion, reduce or
eliminate a Participant's Target Allocation based upon such objective or
subjective criteria as it deems appropriate or to take into account
circumstances that could not have been anticipated when it established the
Performance Goals.
The Committee shall have the sole discretion and authority to change any
Participant's Performance Goals or criteria for any Fiscal Year to the extent
it deems such changes advisable in light of extraordinary circumstances not
foreseen at the time of grant of an Award; provided that, the Committee may
not retroactively change Performance Goal(s) or criteria relating to any Award
intended to satisfy the Section 162(m) Exception, except (i) in the event of
changes in accounting practices or, (ii) to the extent consistent with Code
Section 162(m) and its regulations, circumstances that could not have been
anticipated when it established such Performance Goals and criteria.
5.8 Nonallocation. The Committee shall not be obligated to apply the entire
Annual Incentive Pool for any Fiscal Year to Participants' Incentive
Compensation. Any amount not so applied for a Fiscal Year shall lapse and
remain part of the general assets of the Company; no portion of any such
amount shall be carried over to an Annual Incentive Pool for any subsequent
Fiscal Year.
ARTICLE VI
Payment of Incentive Compensation
6.1 Form and Time of Payment. Subject to any forfeiture provisions set forth
in the Plan or in any Award Agreement, a Participant's Incentive Compensation
for each Fiscal Year shall be paid in a cash lump sum as soon as practicable
following certification by the Committee in accordance with Section 5.4 above,
unless the Participant has elected to defer receipt of all or a portion of the
Participant's Incentive Compensation in accordance with Section 6.2 below;
provided that, in the sole discretion of the Committee, such payment may be
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made in the form of Common Stock, nonqualified stock options, or restricted
stock granted under, and in accordance with, the terms of the Company's 1993
Amended and Restated Long-Term Incentive Compensation Plan. Any Stock-Based
Compensation that is payed in lieu of cash shall be of an equivalent value to
the foregone cash compensation (taking into account, among other factors, the
term of an option and its exercise price, any vesting requirements with
respect to options or shares of Restricted Stock, transferability rights and
all other relevant factors), as verified by the Company's independent public
accountants (and in accordance with the Black Scholes method of valuation when
applicable). The exercise price for any options granted in lieu of cash
Incentive Compensation awarded hereunder shall be no less than the Fair Market
Value per share of the Company's Common Stock on the date of certification by
the Compensation Committee of such Incentive Compensation.
6.2 Participant Deferrals.
(a) General. For each Fiscal Year, a Participant may elect, prior to the
first day of such Fiscal Year (in accordance with procedures and rules
established by the Committee), to defer receipt of, and contribute to his or
her Deferred Account (herein so called) established under this Plan, any part
or all of his Incentive Compensation. Each election made under this Section
6.2(a) shall be made in writing on a form prescribed by and filed with the
Committee, and shall be irrevocable for the Fiscal Year for which it is made.
(b) Deferred Accounts. The Company shall establish and maintain on its books
a Deferred Account for each Participant who elects to defer the receipt of any
amount pursuant to this Section 6.2(b). Such Deferred Account shall be
designated by the name of the Participant for whom it is established and the
Fiscal Year to which it relates. The amount attributable to any Incentive
Compensation elected to be deferred shall be credited to such Deferred
Account. A Participant shall have a separate Deferred Account for each Fiscal
Year for which he makes such an election. Each Deferred Account shall reflect
the credits and charges allocable thereto in accordance with the Plan. The
Committee shall maintain, or cause to be maintained, records which will
adequately disclose at all times the state of each separate Deferred Account
hereunder. The books, forms and methods of accounting shall be entirely
subject to the supervision of the Committee.
(c) Investment of Deferred Accounts. Each Deferred Account shall accrue
interest from the date the Deferred Account is established until the date it
is paid under Section 6.2(e) below, at a rate which is equal to the Company's
cost of funds on the date the Incentive Compensation is certified by the
Committee.
(d) Time of Payment. A Participant shall be entitled to receive the entire
amount in his or her Deferred Account upon the earliest to occur of (i) the
January 2 designated by the Participant on his or her deferral election, which
shall be at least two (2) years but no more than ten (10) years after the end
of the Fiscal Year to which such Deferred Account relates, (ii) termination of
employment for any reason, including death, or (iii) termination of the Plan.
Such payment shall begin within 60 days after the date which causes payment to
become due.
(e) Form of Payment. A Participant's Deferred Account shall be paid in one
cash payment. The Committee shall value such Deferred Account as of the date
which causes payment to become due.
(f) Amounts Nonforfeitable. When payment of all or a portion of a
Participant's Incentive Compensation is deferred, the amount deferred is
nonforfeitable. Deferred Accounts are unfunded and constitute general
obligations of the Company.
ARTICLE VII
Termination of Employment Prior to Certification
7.1 Pro Rata Payment for Certain Terminations. Unless otherwise permitted by
the Committee in its sole discretion, if a Participant's employment with the
Company and all of its Subsidiaries terminates before the end
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of a Fiscal Year for one of the reasons set forth in this Section 7.1, the
Committee shall calculate such Participant's Incentive Compensation as if he
or she remained employed for the entire Fiscal Year, and such Participant
shall be entitled to receive a pro rate portion of such Incentive Compensation
based on the portion of the Fiscal Year such Participant was employed by the
Company or a Subsidiary. The reasons for termination subject to this Section
7.1 are (i) within one year following a Change of Control, the Company
terminates a Participant's employment for any reason (or for nor reason), (ii)
the Company terminates a Participant's employment other than for Cause, (iii)
a Participant voluntarily terminates employment with Good Reason, (iv) the
Retirement of the Participant, (v) the Participant dies, or (vi) the
Participant becomes Disabled.
7.2 Forfeiture Upon Other Terminations. If, prior to the end of a Fiscal
Year, a Participant's employment with the Company and all of its Subsidiaries
terminates for any reason other than those described in Section 7.1 above, the
Participant will immediately forfeit any right to receive any Incentive
Compensation hereunder for such Fiscal Year.
ARTICLE VIII
Death or Disability
8.1 Payment to Beneficiary. Each Participant shall designate, in a manner
prescribed by the Committee, a beneficiary to receive payments due under the
Plan in the event of his or her death. If a Participant dies prior to the date
of payment of his or her Incentive Compensation for a Fiscal Year, such
Incentive Compensation shall be paid to the Participant's named beneficiary,
or if no properly designated beneficiary survives the Participant, such
Participant's Incentive Compensation shall be paid to the Participant's estate
or personal representative.
8.2 Disability. If a guardian or conservator has been appointed for a
Disabled Participant, the Committee shall pay the Participant's Incentive
Compensation to such guardian or conservator.
ARTICLE IX
Miscellaneous Provisions
9.1 Effect of the Plan. Neither the adoption of this Plan nor any action of
the Board or the Committee shall be deemed to give any person any right to be
granted an Award or any other rights except as may be evidenced by an Award
Agreement, or any amendment thereto, duly authorized by the Committee and
executed on behalf of the Company, and then only to the extent and upon the
terms and conditions expressly set forth therein.
9.2 Non-Assignability. A Participant may not alienate, assign, pledge,
encumber, transfer, sell or otherwise dispose of any rights or benefits
awarded hereunder prior to the actual receipt thereof; and any attempt to
alienate, assign, pledge, sell, transfer or assign prior to such receipt, or
any levy, attachment, execution or similar process upon any such rights or
benefits shall be null and void.
9.3 No Right Continue in Employment. Nothing in the Plan confers upon any
employee the right to continue in the employ of the Company or any Subsidiary,
or interferes with or restricts in any way the right of the Company and its
Subsidiaries to discharge any employee at any time (subject to any contract
rights of such employee).
9.4 Indemnification of Committee. No member of the Committee, nor any
officer or employee of the Company acting on behalf of the Committee, shall be
personally liable for any action, determination, or interpretation taken or
made in good faith with respect to the Plan, and all members of the Committee,
and each officer or employee of the Company acting on its behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company
with respect to any such action, determination or interpretation.
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9.5 No Plan Funding. The Plan shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating assets of the
Company for payment of any amounts hereunder. No Participant, beneficiary, or
other person shall have any interest in any particular assets of the Company
by reason of the right to receive incentive compensation under the Plan.
Participants and beneficiaries shall have only the rights of a general
unsecured creditor of the Company.
9.6 Governing Law. This Plan shall be construed in accordance with the laws
of the State of Texas and the rights and obligations created hereby shall be
governed by the laws of the State of Texas.
9.7 Amendment or Discontinuance. The Plan may be amended or discontinued by
the Committee, without the approval of the stockholders; provided that no
amendment shall be made without approval of the stockholders of the Company if
such approval is required under the Code, Rule 16b-3, the requirements of any
exchange upon which the Company's securities are listed, or any other
applicable law. In addition, no termination or amendment of the Plan may,
without the consent of the Participant to whom any Award has theretofore been
granted, adversely affect the rights of such Participant with respect to such
Award.
9.8 Binding Effect. This Plan shall be binding upon and inure to the benefit
of the Company, its successors and assigns, and the Participants, and their
heirs assigns and personal representatives.
9.9 Construction of Plan. The captions used in this Plan are for the
convenience only and shall not be construed in interpreting the Plan. Whenever
the context so requires, the masculine shall include the feminine and neuter,
and the singular shall also include the plural, and conversely.
9.12 Integrated Plan. This Plan constitutes the final and complete
expression of agreement among the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed as
of March 22, 1996, by its President and Secretary pursuant to prior action
taken by the Board.
CellStar Corporation
By: /s/ Terry S. Parker
-----------------------------------
President
Attest:
/s/ Elaine Flud Rodriguez
- -----------------------------------
Secretary
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APPENDIX B
CELLSTAR CORPORATION
1993 AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
(as amended and restated through January 21, 2000)
This Plan amends and restates the CellStar Corporation 1993 Stock Option
Plan, as previously amended and restated, which first became effective on
December 3, 1993. Capitalized terms used herein are defined in Article 2
hereof.
To the extent permitted under Rule 16b-3, Sections 162(m) and 422 of the
Code, and any other applicable law or regulation, the Committee shall have the
power, in its sole discretion, to apply any or all of the amendments effected
hereby to outstanding Stock Options previously granted under the Plan;
provided that, to the extent that the application of any such amendment to an
outstanding Stock Option shall have an Adverse Consequence for the Company
and/or a Participant, such amendment shall not apply unless it is specifically
approved by the Committee and consented to by the Participant.
This Plan, as amended and restated, shall be effective as of January 21,
2000.
ARTICLE 1
Purpose
The purpose of the Plan is to attract and retain key Employees, Nonemployee
Directors and Advisors of the Company and its Subsidiaries and to provide such
persons with a proprietary interest in the Company through the granting of
Stock Options, Stock Appreciation Rights, Restricted Stock, and/or Cash
Awards, whether granted singly, in combination, or in tandem. The Plan is
designed to
(a) increase the interest of such persons in the welfare of the Company
and its Subsidiaries;
(b) furnish an incentive to such persons to continue their services for
the Company and/or its Subsidiaries; and
(c) provide a means through which the Company and its Subsidiaries may
attract able persons to enter their employ or serve as Advisors.
Unless otherwise specified by the Compensation Committee at the time of
grant, with respect to Reporting Participants, the Plan and all transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void ab initio, to the extent
permitted by law and deemed advisable by the Committee.
ARTICLE 2
Definitions
For purposes of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
2.1 "Adverse Consequence" means (i) the loss of qualification of a Stock
Option for special treatment under Rule 16b-3 or the commencement of a new
holding period under such rule; (ii) the disqualification of a Stock Option as
an Incentive Stock Option or the repricing of such Stock Option; or (iii) the
Company's inability to claim the Section 162(m) Exception with respect to a
Stock Option or the repricing of such Stock Option.
2.2 "Advisor" means any person performing advisory or consulting services
for the Company or any Subsidiary, with or without compensation, to whom the
Company chooses to grant an Award in accordance with
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the Plan, provided that bona fide services must be rendered by such person and
such services shall not be rendered in connection with the offer or sale of
securities in a capital raising transaction.
2.3 "Applicable Law" shall have the meaning set forth in Article 3 below.
2.4 "Award" means the grant under the Plan of any Stock Options, Stock
Appreciation Rights, shares of Restricted Stock, or Cash Award, whether
granted singly, in combination, or in tandem (sometimes individually referred
to herein as an "Incentive").
2.5 "Award Agreement" means a written agreement between a Participant and
the Company that sets out the terms of the grant of an Award.
2.6 "Award Period" means the period during which one or more Incentives
granted under an Award may be exercised.
2.7 "Board" means the Board of Directors of the Company.
2.8 "Cash Award" means an Award granted pursuant to Article 9 of the Plan.
2.9 "Change of Control" means any of the following: (i) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of the surviving
corporation immediately after the merger; (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company; (iii) approval by the
stockholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company; (iv) the cessation of control (by virtue of their
not constituting a majority of directors) of the Board by the individuals (the
"Continuing Directors") who (x) at the effective date of this Plan were
directors or (y) become directors after the effective date of this Plan and
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then in office who
were directors at the effective date of this Plan or whose election or
nomination for election was previously so approved; (v) in a Title 11
bankruptcy proceeding, the appointment of a trustee or the conversion of a
case involving the Company to a case under Chapter 7; or (vi) the acquisition
of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of an aggregate of 15% or more of the voting power of the Company's
outstanding voting securities by any person or persons acting as a group
(within the meaning of Rule 13d-5 under the Exchange Act) who beneficially
owned less than 10% of the voting power of the Company's outstanding voting
securities on the effective date of this Plan, or the acquisition of
beneficial ownership of an additional 5% of the voting power of the Company's
outstanding voting securities by any person or group who beneficially owned at
least 10% of the voting power of the Company's outstanding voting securities
on the effective date of this Plan; provided, however, that, notwithstanding
the foregoing, an acquisition shall not constitute a Change of Control
hereunder if the acquiror is (v) Alan H. Goldfield ("Goldfield"); (w) a
trustee or other fiduciary holding securities under an employee benefit plan
of the Company and acting in such capacity; (x) a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of voting securities of the Company; (y) a
person or group meeting the requirements of clauses (i) and (ii) of Rule 13d-
1(b)(1) under the Exchange Act; or (z) any other person whose acquisition of
shares of voting securities is approved in advance by a majority of the
Continuing Directors; and provided further that no Change of Control shall be
deemed to have occurred from a transfer of the Company's voting securities by
Goldfield to (v) a member of Goldfield's immediate family (within the meaning
of Rule 16a-1(e) of the Exchange Act) either during Goldfield's lifetime or by
will or the laws of descent and distribution; (w) any trust as to which
Goldfield or a member (or members) of his immediate family is the beneficiary;
(x) any trust as to which Goldfield is the settlor with sole power to revoke;
(y) any entity over which Goldfield has the power, directly or indirectly, to
direct or cause the direction of the management and policies of the entity,
whether through the ownership of voting securities, by contract or otherwise;
or (z) any charitable trust,
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foundation or corporation under Section 501(c)(3) of the Code that is funded
by Goldfield. To the extent that a Participant's Employment Agreement differs
from the Plan with respect to the meaning of "Change of Control," if such
Employment Agreement has been approved by the Compensation Committee of the
Board of Directors, the definition included in such Employment Agreement shall
govern.
2.10 "Code" means the Internal Revenue Code of 1986, as amended.
2.11 "Committee" means the committee(s) appointed or designated by the Board
to administer the Plan in accordance with Article 3 of this Plan.
2.12 "Common Stock" means the Common Stock, par value, $.01 per share, of
the Company or, in the event that the outstanding shares of such Common Stock
are hereafter changed into or exchanged for shares of a different stock or
security of the Company or another corporation, such other stock or security.
2.13 "Company" means CellStar Corporation, a Delaware corporation.
2.14 "Date of Grant" means the effective date on which an Award is made to a
Participant as set forth in the applicable Award Agreement.
2.15 "Discretionary Amendment" means any amendment to the Plan that does not
require stockholder approval.
2.16 "Employee" means any employee (including any employee who is also a
director and/or officer) of the Company or its Subsidiaries.
2.17 "Employment Agreement" means an agreement between the Company or any
Subsidiary and a Participant, setting forth the terms and conditions of the
Participant's employment by the Company or such Subsidiary. For purposes of
the Plan, such term shall also be deemed to include any agreement between the
Company or any Subsidiary and an Advisor, setting forth the terms and
conditions of the Advisor's services for the Company or such Subsidiary.
2.18 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
2.19 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.20 "Fair Market Value" of a share of Common Stock means such value as is
determined by the Committee on the basis of such factors as it deems
appropriate; provided that, if the Common Stock is traded on a national
securities exchange or transactions in the Common Stock are quoted on the
NASDAQ National Market System, such value shall be determined by the Committee
on the basis of the last reported sale price for the Common Stock on the date
for which such determination is relevant, as reported on the national
securities exchange or the NASDAQ National Market System, as the case may be.
If the Common Stock is not listed and traded upon a recognized securities
exchange or in the NASDAQ National Market System, the Committee shall make a
determination of Fair Market Value on the basis of the closing bid and asked
quotations for such stock on the date for which such determination is relevant
(as reported by a recognized stock quotation service) or, in the event that
there are no bid or asked quotations for such stock on the date for which such
determination is relevant, then on the basis of the mean between the closing
bid and asked quotations on the date nearest preceding the date for which such
determination is relevant for which such bid and asked quotations were
available. In no event shall "Fair Market Value" be less than the par value of
the Common Stock.
2.21 "Incentive" shall have the meaning given it in Section 2.4 above.
2.22 "Incentive Stock Option" or "ISO" means a Stock Option that by its
terms is intended to be treated as an "incentive stock option" within the
meaning of Section 422 of the Code.
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2.23 "Mandated Restrictions" shall have the meaning set forth in Article 3
below.
2.24 "Nonemployee Director" means a member of the Board of Directors of the
Company or any Subsidiary who is not an Employee.
2.25 "Non-qualified Stock Option" means any Stock Option that does not
qualify as an Incentive Stock Option.
2.26 "Option Exercise Price" means the price that must be paid by a
Participant upon exercise of a Stock Option to purchase a share of Common
Stock.
2.27 "Option Period" means the period during which a Stock Option may be
exercised.
2.28 "Participant" shall mean an Employee, Nonemployee Director or Advisor
to whom an Award is granted under this Plan.
2.29 "Plan" means this CellStar Corporation 1993 Amended and Restated Long-
Term Incentive Plan, as amended from time to time.
2.30 "Reporting Participant" means a Participant who is subject to the
reporting requirements of Section 16 of the Exchange Act.
2.31 "Restricted Stock" means shares of Common Stock issued or transferred
to a Participant pursuant to this Plan, which shares are subject to the
restrictions or limitations set forth in Article 7 of this Plan and in the
related Restricted Stock Agreement.
2.32 "Restricted Stock Agreement" means a written agreement between the
Company and a Participant with respect to an Award of Restricted Stock.
2.33 "Retirement" means Termination of Service at or after the Company's
established retirement age, unless otherwise defined in a particular Award
Agreement. To the extent that a Participant's Employment Agreement differs
from the Plan with respect to the meaning of "Retirement," if such Employment
Agreement has been approved by the Compensation Committee of the Board of
Directors, the definition included in such Employment Agreement shall govern.
2.34 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as
amended from time to time.
2.35 "SAR Price" means the price that must be paid by a Participant upon
exercise of an SAR, which shall be at least the Fair Market Value of each
share of Common Stock covered by the SAR, determined on the Date of Grant of
the SAR.
2.36 "Section 162(m)" means Section 162(m) of the Code and the regulations
promulgated thereunder from time to time.
2.37 "Section 162(m) Exception" means the exception under Section 162(m) for
"qualified performance-based compensation."
2.38 "Stock Appreciation Right" or "SAR" means the right to receive a
payment equal to the excess of the Fair Market Value of a specified number of
shares of Common Stock on the date the SAR is exercised over the SAR Price for
such shares.
2.39 "Stock Appreciation Right Agreement" means an agreement between the
Company and a Participant setting forth the terms and conditions of an Award
of Stock Appreciation Rights.
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2.40 "Stock Option" means a Non-qualified Stock Option or an Incentive Stock
Option to purchase Common Stock.
2.41 "Stock Option Agreement" means a written agreement between the Company
and a Participant setting forth the terms and conditions of an Award of Stock
Options.
2.42 "Subsidiary" means a subsidiary corporation of the Company, within the
meaning of Section 424(f) of the Code; provided that, with respect to any
Awards under the Plan other than Incentive Stock Options, the term
"Subsidiary" shall be deemed to include (i) any limited partnership, if the
Company or any subsidiary corporation owns a majority of the general
partnership interest and a majority of the limited partnership interests
entitled to vote on the removal and replacement of the general partner, and
(ii) any partnership, if the partners thereof are composed only of the
Company, any subsidiary corporation, or any limited partnership listed in item
(i) above.
2.43 "Ten Percent Owner" means a person who owns, or is deemed within the
meaning of Section 422(b)(6) of the Code to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
(or its parent (within the meaning of Section 424(e) of the Code) or
Subsidiaries). Whether a person is a Ten Percent Owner shall be determined
with respect to a Stock Option based on the facts existing immediately prior
to the Date of Grant of such Stock Option.
2.44 "Termination of Service" occurs when a Participant who is an Employee,
Nonemployee Director or Advisor shall cease to serve as an Employee,
Nonemployee Director or Advisor for any reason; provided that, with respect to
Incentive Stock Options, Termination of Service occurs when a Participant
ceases to serve as an Employee.
2.45 "Total and Permanent Disability" of a Participant means that the
Participant is qualified for long-term disability benefits under the Company's
disability plan or insurance policy; or, if no such plan or policy is then in
existence, that the Participant, because of ill health, physical or mental
disability or any other reason beyond his or her control, is unable to perform
his or her duties of employment for a period of six (6) continuous months, as
determined in good faith by the Committee; provided that, with respect to any
Incentive Stock Option, Total and Permanent Disability shall have the meaning
given it under the rules governing Incentive Stock Options under the Code.
With respect to any Award other than an Incentive Stock Option, to the extent
that a Participant's Employment Agreement differs from the Plan with respect
to the meaning of "Total and Permanent Disability," if such Employment
Agreement has been approved by the Compensation Committee of the Board of
Directors, the definition included in such Employment Agreement shall govern.
ARTICLE 3
Administration
3.1 In General. The Plan shall be administered by the Board or by a
committee appointed by the Board, consisting of at least two members of the
Board; provided that, (i) with respect to any Award that is intended to
satisfy the requirements of Rule 16b-3, such Award shall be granted and
administered by the full Board or by a committee of the Board consisting of at
least such number of directors as are required from time to time by Rule 16b-
3, and each such Board or committee member shall meet such qualifications as
are required by Rule 16b-3 from time to time; and (ii) with respect to any
Award that is intended to satisfy the requirements of the Section 162(m)
Exception, such Award shall be granted and administered by a committee of the
Board consisting of at least such number of directors as are required from
time to time to satisfy the Section 162(m) Exception, and each such committee
member shall meet such qualifications as are required, from time to time, to
satisfy the Section 162(m) Exception. Any member of the Committee may be
removed at any time, with or without cause, by resolution of the Board. Any
vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
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The Committee shall select one of its members to act as its Chairman. A
majority of the Committee shall constitute a quorum, and the act of a majority
of the members of the Committee present at a meeting at which a quorum is
present shall be the act of the Committee.
3.2 Grants by the Committee. Subject to the provisions of the Plan and
except as provided in Section 3.3 below, the Committee shall have the sole
discretion and authority to determine and designate from time to time the
eligible persons to whom Awards will be granted and to determine and interpret
the terms and provisions of each Award Agreement, including without limitation
the Award Period, the Date of Grant, and such other terms, provisions,
limitations, and performance requirements, as are approved by the Committee.
The Committee shall determine whether an Award shall include one type of
Incentive, two or more Incentives granted in combination, or two or more
Incentives granted in tandem (that is, a joint grant where exercise of one
Incentive results in cancellation of all or a portion of the other Incentive).
3.3 Delegation of Authority by Committee. Subject to the provisions of the
Plan, the Committee may from time to time delegate to the Chief Executive
Officer of the Company (the "CEO") the authority, subject to such terms as the
Committee shall determine, to determine and designate from time to time the
eligible persons to whom Awards may be granted and to perform other specified
functions under the Plan; provided, however, that the CEO may not grant any
Award to, or perform any function related to an Award of, any individual (i)
then subject to Section 16 of the Exchange Act or (ii) who is or, in the
determination of the Committee, may become a "covered employee" as that term
is defined in Section 162(m) of the Code, and any such grant or function
relating to such individuals shall be performed solely by the Committee to
ensure compliance with the applicable requirements of the Exchange Act and the
Code.
Any such delegation of authority by the Committee shall be set forth in
writing and shall specify the all of the terms and conditions of the
delegation. The written delegation of authority may: (i) authorize the CEO to
grant Awards pursuant to Sections 6.1, 7.1, 8.1, and 9.1 of the Plan and may
set forth the types of Awards that may be granted, (ii) specify the number of
shares of Common Stock that may be awarded to any individual Participant and
to all Participants during a specified period of time, (iii) specify the
amount of any Cash Award and any conditions, limitations, or restrictions to
be imposed on Cash Awards, and (iv) specify the exercise price (or the method
for determining the exercise price) of an Award, the Option Period, vesting
schedule, and any other terms, conditions, or restrictions that may be imposed
by the Committee in its sole discretion. The written delegation of the
authority shall require the CEO to provide the Committee, on at least a
quarterly basis, a report that identifies the Awards granted, the Participants
to whom Awards have been granted, the number of shares of Common Stock subject
to each Award, the exercise price, and any other terms which are in the CEO's
discretion as set forth in the written delegation of authority.
Any Award granted by the CEO pursuant to a written delegation of authority
shall be deemed granted by the Committee, and any action properly taken by the
CEO pursuant to a written delegation of authority shall be deemed the action
of the Committee, and all such grants and actions shall be subject to Section
3.4 of the Plan.
3.4 Interpretation of the Plan. Subject to the provisions of the Plan, the
Committee shall have sole discretion and authority to (i) interpret the Plan;
(ii) prescribe, amend, and rescind any rules and regulations necessary or
appropriate for the administration of the Plan; (iii) modify or amend any
Award Agreement or waive any conditions or restrictions applicable to any
Stock Option or SAR (or the exercise thereof) or to any shares of Restricted
Stock; and (iv) make such other determinations and take such other action as
it deems necessary or advisable in the administration of the Plan. Any
interpretation, determination, or other action made or taken by the Committee
shall be final, binding, and conclusive on all interested parties.
With respect to restrictions ("Mandated Restrictions") in the Plan that are
based on the requirements of Rule 16b-3, Section 422 of the Code, the Section
162(m) Exception, the rules of any exchange upon which the Company's
securities are listed, or any other applicable law, rule or restriction
(collectively, "Applicable Law"), to the extent that any such Mandated
Restrictions are no longer required by Applicable Law as determined by the
Committee in the Committee's sole discretion, the Committee and the CEO, as
applicable, shall have the
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authority to grant Awards that are not subject to such Mandated Restrictions
and/or to waive any such Mandated Restrictions with respect to outstanding
Awards.
ARTICLE 4
Eligibility
Any Employee, Nonemployee Director, or Advisor whose judgment, initiative,
and efforts contributed or may be expected to contribute to the successful
performance of the Company is eligible to participate in the Plan; provided
that only Employees shall be eligible to receive Incentive Stock Options; and
provided further that, to the extent required by Applicable Law, no member of
the Committee shall be eligible to participate in the Plan. The Committee,
upon its own action, may grant, but shall not be required to grant, an Award
to any Employee, Nonemployee Director, or Advisor. Awards may be granted by
the Committee at any time and from time to time to new Participants, or to
then Participants, or to a greater or lesser number of Participants, and may
include or exclude previous Participants, as the Committee shall determine;
provided that no Participant may receive during any fiscal year of the Company
Awards in the form of shares of Common Stock, including Stock Options, SARs or
Restricted Stock, the aggregate of which shall exceed 250,000 shares of Common
Stock. Except as required by this Plan, Awards granted at different times need
not contain similar provisions. The Committee's determinations under the Plan
(including without limitation determinations of which persons, if any, are to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among Employees, Nonemployee
Directors and/or Advisors who receive, or are eligible to receive, Awards
under the Plan.
ARTICLE 5
Shares Subject to Plan
The number of shares of Common Stock that may be issued pursuant to Awards
granted under the Plan is 8,000,000 (as may be adjusted in accordance with
Articles 12 and 13 hereof). Such shares of Common Stock may be made available
from either authorized but unissued Common Stock or Common Stock held by the
Company in its treasury. To the extent permitted by the stockholder approval
requirements of Rule 16b-3, Sections 162(m) and 422 of the Code, and any other
applicable law or regulation, shares of Common Stock previously subject to
Awards which are forfeited, terminated, settled in cash in lieu of Common
Stock, or exchanged for Awards that do not involve Common Stock, or that are
subject to expired and unexercised Stock Options or SARs, shall immediately
become available for Awards under the Plan.
During the term of this Plan, the Company will at all times reserve and keep
available a number of shares of Common Stock sufficient to satisfy the
requirements of this Plan.
ARTICLE 6
Stock Options
6.1 Grant of Stock Options. The Committee may, in its sole discretion, grant
Stock Options in accordance with the terms and conditions set forth in the
Plan. The grant of a Stock Option shall be evidenced by a Stock Option
Agreement setting forth the Date of Grant, the total number of shares
purchasable pursuant to the Stock Option, the Option Period, the vesting
schedule (if any), and such other terms and provisions as are consistent with
the Plan.
6.2 Option Exercise Price. The Option Exercise Price for any Stock Option
shall be determined by the Committee and shall be no less than One Hundred
Percent (100%) of the Fair Market Value per share of Common Stock on the Date
of Grant; provided that, with respect to any Incentive Stock Option that is
granted
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to a Ten Percent Owner, the Option Exercise Price shall be at least 110% of
the Fair Market Value of the Common Stock on the Date of Grant.
6.3 Option Period. The Option Period for any Stock Option shall be
determined by the Committee; provided that no portion of any Stock Option may
be exercised after the expiration of ten (10) years from its Date of Grant;
and provided further that, with respect to any Incentive Stock Option that is
granted to a Ten Percent Owner, the term of such Incentive Stock Option (to
the extent required by the Code at the time of grant) shall be no more than
five (5) years from the Date of Grant.
6.4 Maximum ISO Grants. The Committee may not grant Incentive Stock Options
under the Plan to any Employee which would permit the aggregate Fair Market
Value (determined on the Date of Grant) of the Common Stock with respect to
which Incentive Stock Options (under this and any other plan of the Company
and its Subsidiaries or parent) are exercisable for the first time by such
Employee during any calendar year to exceed $100,000. To the extent that any
Stock Option is granted under the Plan that is first exercisable in excess of
the foregoing limitations, such Stock Option shall be deemed to be a Non-
qualified Stock Option.
6.5 Exercise of Stock Options. Subject to the terms, conditions, and
restrictions of the Plan, each Stock Option may be exercised in accordance
with the terms of the Stock Option Agreement pursuant to which the Stock
Option is granted. If the Committee imposes conditions upon exercise of any
Stock Option, the Committee may, in its sole discretion, accelerate the date
on which all or any portion of the Stock Option may be exercised; provided
that, the Committee shall not, without the Participant's consent, accelerate
any Incentive Stock Option if such acceleration would disqualify such Stock
Option as an Incentive Stock Option. Notwithstanding anything in the Plan to
the contrary, to the extent required by Rule 16b-3, a Reporting Participant
may not exercise a Stock Option or Stock Appreciation Right until at least six
months have expired from the "date of grant" (within the meaning of Rule 16b-
3).
Subject to such administrative regulations as the Committee may from time to
time adopt, a Stock Option will be deemed exercised for purposes of the Plan
when (i) written notice of exercise has been received by the Company at its
principal office (which notice shall set forth the number of shares of Common
Stock with respect to which the Stock Option is to be exercised and the date
of exercise thereof, which shall be at least three (3) days after giving such
notice, unless an earlier time shall have been mutually agreed upon) and (ii)
payment of the Option Exercise Price is received by the Company in accordance
with Section 6.6 below; provided that, with respect to a cashless exercise of
any Stock Option (in accordance with clause (c) of Section 6.6 below), such
Stock Option will be deemed exercised for purposes of the Plan on the date of
sale of the shares of Common Stock received upon exercise. No Stock Option may
be exercised for a fractional share of Common Stock.
6.6 Payment of Option Exercise Price. The Option Exercise Price may be paid
as follows: (a) in cash or by certified check, bank draft, or money order
payable to the order of the Company, (b) with Common Stock (including
Restricted Stock), valued at its Fair Market Value on the date of exercise,
(c) by delivery (including by FAX) to the Company or its designated agent of
an executed irrevocable option exercise form together with irrevocable
instructions from the Participant to a broker or dealer, reasonably acceptable
to the Company, to sell certain of the shares of Common Stock purchased upon
exercise of the Stock Option or to pledge such shares as collateral for a loan
and promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay such purchase price, and/or (d) in any other form of valid
consideration that is acceptable to the Committee in its sole discretion. In
the event that shares of Restricted Stock are tendered as consideration for
the exercise of a Stock Option, a number of shares of Common Stock issued upon
the exercise of the Stock Option, equal to the number of shares of Restricted
Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock so submitted.
Upon payment of all amounts due from the Participant, the Company shall
cause certificates for the Common Stock then being purchased to be delivered
to the Participant (or the person exercising the Participant's Stock Option in
the event of his death) at its principal business office or other mutually
agreed upon location within ten (10) business days after the exercise.
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If the Participant fails to pay for any of the Common Stock specified in
such notice or fails to accept delivery thereof, the Participant's right to
purchase such Common Stock may be terminated by the Company.
6.7 Limitation on Incentive Stock Option Characterization. To the extent
that any Stock Option fails to qualify as an Incentive Stock Option, such
Stock Option will be considered a Non-qualified Stock Option.
6.8 Termination of Service. Unless otherwise permitted by the Committee, in
its sole discretion, in the event of Termination of Service of a Participant,
any Stock Options held by such Participant shall be exercisable as follows:
(a) Termination Due to Death or Total and Permanent Disability. In the
event of a Participant's Termination of Service due to death or Total and
Permanent Disability, such Participant's Stock Options may be exercised, to
the extent such Stock Options could have been exercised by the Participant
on the date of the Participant's death or Total and Permanent Disability
(as applicable), for a period of twelve (12) months after the Participant's
death or Total and Permanent Disability (as applicable) or until the
expiration of the original Option Period (if sooner).
(b) Termination Due to Retirement. In the event of a Participant's
Termination of Service due to Retirement, such Participant's Stock Options
may be exercised, to the extent such Stock Options could have been
exercised by the Participant on the date of the Participant's Retirement,
for a period of three (3) months after the date of the Participant's
Retirement or until the expiration of the original Option Period (if
sooner).
(c) Termination for Reasons Other than Death, Total and Permanent
Disability, or Retirement. In the event of a Participant's Termination of
Service for any reason other than death, Total and Permanent Disability, or
Retirement, such Participant's Stock Options may be exercised, to the
extent such Stock Options could have been exercised by the Participant on
the date of such Termination of Service, for a period of thirty (30) days
after the date of such Termination of Service or until the expiration of
the original Option Period (if sooner).
6.9 Transferability of Stock Options.
(a) Incentive Stock Options. Incentive Stock Options may not be transferred
or assigned other than by will or the laws of descent and distribution and may
be exercised during the lifetime of the Participant only by the Participant or
the Participant's legally authorized representative, and each Stock Option
Agreement in respect of an Incentive Stock Option shall so provide. The
designation by a Participant of a beneficiary will not constitute a transfer
of the Stock Option.
The Committee may waive or modify any limitation contained in this Section
6.9(a) that is not required for compliance with Section 422 of the Code.
(b) Non-qualified Stock Options.
(1) Participants Other Than Reporting Participants. With respect to Non-
qualified Stock Options granted hereunder to any Participant who is not a
Reporting Participant, the Committee may, in its sole discretion, provide
in any Stock Option Agreement (or in an amendment to any existing Stock
Option Agreement) such provisions regarding transferability of the Non-
qualified Stock Options as the Committee, in its sole discretion, deems
appropriate.
(2) Reporting Participants. Except as may be specified by the Committee
in accordance with the following paragraph, a Non-qualified Stock Option
granted to a Reporting Participant may not be transferred or assigned other
than by will or the laws of descent and distribution or pursuant to the
terms of a qualified domestic relations order, as defined by the Code or
Title I of ERISA, or the rules thereunder. The designation by a Reporting
Participant of a beneficiary will not constitute a transfer of the Stock
Option.
The Committee may, in its sole discretion, provide in any Stock Option
Agreement (or in an amendment to any existing Stock Option Agreement) that
Non-qualified Stock Options granted hereunder to a Reporting Participant
may be transferred to members of the Reporting Participant's immediate
family,
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trusts for the benefit of such immediate family members and partnerships in
which such immediate family members are the only partners, provided that
there cannot be any consideration for the transfer.
The Committee may waive or modify any limitation contained in this
Section 6.9(b)(2) that is not required for compliance with Rule 16b-3.
ARTICLE 7
Restricted Stock
7.1 Grant of Restricted Stock. The Committee may, in its sole discretion,
grant Restricted Stock Awards in accordance with the terms and conditions set
forth in the Plan. The grant of an Award of Restricted Stock shall be
evidenced by a Restricted Stock Agreement setting forth (i) the Date of Grant,
(ii) the number of shares of Restricted Stock awarded, (iii) the price, if
any, to be paid by the Participant for such Restricted Stock, (iv) the time or
times within which such Award may be subject to forfeiture, (v) specified
performance goals, or other criteria, if any, that the Committee determines
must be met in order to remove any restrictions (including vesting) on such
Award, and (vi) such other terms and provisions as are consistent with the
Plan. The provisions of Restricted Stock Awards need not be the same with
respect to each Participant.
7.2 Restrictions and Conditions. Each Restricted Stock Award shall confer
upon the recipient thereof the right to receive a specified number of shares
of Common Stock in accordance with the terms and conditions of each
Participant's Restricted Stock Agreement and the restrictions and conditions
set forth below:
(a) The shares of Common Stock awarded hereunder to a Participant shall
be restricted for a period of time (the "Restriction Period") to be
determined by the Committee for each Participant at the time of the Award.
The restrictions shall prohibit the sale, transfer, pledge, assignment or
other encumbrance of such shares and shall provide for possible reversion
thereof to the Company in accordance with subparagraph (f) during the
Restriction Period. The Restriction Period shall commence on the Date of
Grant and, unless otherwise established by the Committee in the Restricted
Stock Agreement, shall expire upon satisfaction of the conditions set forth
in the Award Agreement, which conditions may provide for vesting based on
(i) length of continuous service, (ii) achievement of specific business
objectives, (iii) increases in specified indices, (iv) attainment of
specified growth rates, or (v) any other factor, as determined by the
Committee in its sole discretion. The Committee may, in its sole
discretion, remove any or all of the restrictions on such Restricted Stock
whenever it may determine that, by reason of changes in applicable laws or
other changes in circumstances arising after the date of the Award, such
action is appropriate.
(b) From the Date of Grant of a Restricted Stock Award, the Participant
shall have, with respect to his or her shares of Restricted Stock, all of
the rights of a stockholder of the Company, including the right to vote the
shares, and the right to receive any dividends thereon, subject to
forfeiture of such rights, as provided in subparagraph (f) below.
(c) Each Participant who is awarded Restricted Stock shall be issued a
stock certificate or certificates in respect of such shares of Common
Stock, which shall be registered in the name of the Participant, but shall
be delivered by the Participant to the Company together with a stock power
endorsed in blank. Each such certificate shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock,
substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE,
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER TERMS AND CONDITIONS SET
FORTH IN THE CELLSTAR CORPORATION 1993 AMENDED AND RESTATED LONG-TERM
INCENTIVE PLAN AND IN A RELATED AWARD AGREEMENT ENTERED INTO BETWEEN
THE REGISTERED OWNER AND CELLSTAR CORPORATION. COPIES OF SUCH PLAN AND
AGREEMENT ARE ON FILE AT THE PRINCIPAL PLACE OF BUSINESS OR REGISTERED
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OFFICE OF, AND WILL BE FURNISHED WITHOUT CHARGE UPON WRITTEN REQUEST BY
THE RECORD HOLDER TO, CELLSTAR CORPORATION, 1730 BRIERCROFT COURT,
CARROLLTON, TEXAS 75006."
Each Restricted Stock Agreement shall require that (i) each Participant,
by his or her acceptance of Restricted Stock, shall irrevocably grant to
the Company a power of attorney to transfer any shares so forfeited to the
Company and agrees to execute any documents requested by the Company in
connection with such forfeiture and transfer, and (ii) such provisions
regarding returns and transfers of stock certificates with respect to
forfeited shares of Common Stock shall be specifically performable by the
Company in a court of equity or law.
(d) Upon the lapse of a Restriction Period, the Company will return the
stock certificates representing shares of Common Stock with respect to
which the restrictions have lapsed to the Participant or his or her legal
representative, and pursuant to the instruction of the Participant or his
or her legal representative will issue a certificate for such shares that
does not bear the legend set forth in subparagraph (c) above.
(e) Any other securities or assets (other than ordinary cash dividends)
that are received by a Participant with respect to shares of Restricted
Stock awarded to such Participant, which shares are still subject to
restrictions established in accordance with subparagraph (a) above, will be
subject to the same restrictions and will be delivered by the Participant
to the Company as provided in subparagraph (c) above.
(f) Subject to the provisions of the particular Award Agreement, and
unless otherwise permitted by the Committee in its sole discretion, upon
Termination of Service for any reason during the Restriction Period, any
nonvested shares of Restricted Stock held by such Participant shall be
forfeited by the Participant. In the event a Participant has paid any
consideration to the Company for forfeited Restricted Stock, the Company
shall, as soon as practicable after the event causing forfeiture (but in
any event within 5 business days), pay to the Participant, in cash, an
amount equal to the total consideration paid by the Participant for such
forfeited shares. Upon any forfeiture, all rights of a Participant with
respect to the forfeited shares of Restricted Stock shall cease and
terminate, without any further obligation on the part of the Company.
7.3 Notice to Company of Section 83(b) Election. Any Participant who
exercises an election under Section 83(b) of the Code to have his or her
receipt of shares of Restricted Stock taxed currently, without regard to
restrictions, must give notice to the Company of such election immediately
upon making such election. Any such election must be made within 30 days after
the effective date of issuance and cannot be revoked except with the consent
of the Internal Revenue Service.
ARTICLE 8
Stock Appreciation Rights
8.1 Grants of SARs. The Committee may, in its sole discretion, grant Stock
Appreciation Rights in accordance with the terms and conditions set forth in
the Plan. Each SAR Agreement may contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as are determined by the
Committee in its sole discretion. An SAR may be granted in combination with,
in addition to, or completely independent of, a Stock Option or any other
Award. An SAR shall entitle a Participant to surrender to the Company all or a
portion of the SAR in exchange for an amount equal to the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the SAR
Price, multiplied by the total number of shares of Common Stock with respect
to which the SAR shall have been exercised.
8.2 SAR Price. The SAR Price for any share of Common Stock subject to an SAR
shall be no less than One Hundred Percent (100%) of the Fair Market Value of
the share on the Date of Grant.
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8.3 Award Period. Subject to Section 8.9 below, the Award Period for any
Stock Appreciation Right shall be determined by the Committee; provided that
no portion of any Stock Appreciation Right may be exercised after the
expiration of ten (10) years from its Date of Grant.
8.4 Form of Payment. In the discretion of the Committee, the Company may
satisfy its payment obligation upon a Participant's exercise of an SAR (i) in
cash, (b) in shares of Common Stock valued at their Fair Market Value on the
date of exercise, or (c) in part with cash and in part with shares of Common
Stock.
8.5 Exercise of SARs. Subject to the following paragraph, each Stock
Appreciation Right shall be exercisable in accordance with the terms of the
Stock Appreciation Rights Agreement pursuant to which the Stock Appreciation
Right is granted. Subject to the conditions of this Section 8.5 and such
administrative regulations as the Committee may from time to time adopt, an
SAR may be exercised by the delivery of written notice to the Committee
setting forth the number of shares of Common Stock with respect to which the
SAR is to be exercised and the date of exercise thereof, which shall be at
least three (3) days after giving such notice unless an earlier time shall
have been mutually agreed upon. On the date of exercise, the Participant shall
receive from the Company in exchange therefor payment in an amount equal to
the excess (if any) of the Fair Market Value (as of the date of the exercise
of the SAR) of one share of Common Stock over the SAR Price per share
specified in such SAR, multiplied by the total number of shares of Common
Stock of the SAR being surrendered.
A transaction under the Plan involving the exercise of an SAR and the
receipt of cash in complete or partial settlement of the SAR by a Reporting
Participant shall be subject to the satisfaction of all of the following
conditions:
(a) the Company shall have been subject to and complied with the
reporting requirements of Section 13(a) of the Exchange Act for at least
one year prior to the exercise of the SAR;
(b) the Company regularly releases for publication quarterly and annual
summary statements of sales and earnings;
(c) any election by the Reporting Participant to receive cash in full or
partial settlement of the SAR, as well as the exercise by the insider of
the SAR for cash, shall have been made during the period beginning on the
third business day following the date of release of the financial data
specified in subparagraph (b) above and ending on the twelfth day following
such date, unless the exercise by the participant of the SAR is for cash
and the date of exercise is automatic or fixed in advance under the Plan
and is outside the control of the participant, in which case the condition
in this subparagraph (c) shall not be applicable; and
(d) the SAR must be held for six months from the date of acquisition to
the date of cash settlement.
If the conditions to the exercise of an SAR by a Reporting Participant
contained in Rule 16b-3 are subsequently modified, the foregoing conditions
shall automatically be deemed amended to incorporate such modifications.
Furthermore, the Committee may waive any limitation contained in this Section
that is not required for compliance with Rule 16b-3.
8.6 Effect on Stock Options and Vice-Versa. Whenever a Stock Appreciation
Right is granted in relation to a Stock Option and the exercise of one affects
the right to exercise the other, the number of shares of stock available under
the Stock Option to which the Stock Appreciation Right relates will decrease
by a number equal to the number of shares of Common Stock for which the Stock
Appreciation Right is exercised. Upon the exercise of a Stock Option, any
related SAR will terminate as to any number of shares of Common Stock subject
to such Stock Appreciation Right that exceeds the total number of shares of
Common Stock for which the Stock Option remains unexercised.
8.7 Termination of Employment or Service. Unless otherwise permitted by the
Committee, in its sole discretion, in the event of Termination of Service of a
Participant, any Stock Appreciation Rights held by such Participant shall be
exercisable as set forth below; provided that, whenever a Stock Appreciation
Right is granted in relation to a Stock Option and the exercise of one affects
the right to exercise the other, the Stock Appreciation
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Right may be exercised only during the period, if any, within which the Stock
Option to which it relates may be exercised.
(a) Termination Due to Death or Total and Permanent Disability. In the
event of a Participant's Termination of Service due to death or Total and
Permanent Disability, such Participant's Stock Appreciation Rights may be
exercised, to the extent such Stock Appreciation Rights could have been
exercised by the Participant on the date of the Participant's death or
Total and Permanent Disability (as applicable), for a period of twelve (12)
months after the Participant's death or Total and Permanent Disability (as
applicable) or until the expiration of the original Award Period (if
sooner).
(b) Termination Due to Retirement. In the event of a Participant's
Termination of Service due to Retirement, such Participant's Stock
Appreciation Rights may be exercised, to the extent such Stock Appreciation
Rights could have been exercised by the Participant on the date of the
Participant's Retirement, for a period of three (3) months after the date
of the Participant's Retirement or until the expiration of the original
Award Period (if sooner).
(c) Termination for Reasons Other than Death, Total and Permanent
Disability, or Retirement. In the event of a Participant's Termination of
Service for any reason other than death, Total and Permanent Disability, or
Retirement, such Participant's Stock Appreciation Rights may be exercised,
to the extent such Stock Appreciation Rights could have been exercised on
the date of such Termination of Service, for a period of thirty (30) days
after the date of such Termination of Service or until the expiration of
the original Award Period (if sooner).
8.8 Transferability of Stock Appreciation Rights.
(a) Participants Other Than Reporting Participants. Subject to Section 8.9
below, with respect to SARs granted hereunder to any Participant who is not a
Reporting Participant, the Committee may, in its sole discretion, provide in
any Stock Appreciation Rights Agreement (or in an amendment to any existing
Stock Appreciation Rights Agreement) such provisions regarding transferability
of the SARs as the Committee, in its sole discretion, deems appropriate.
(b) Reporting Participants. Subject to Section 8.9 below, and except as may
be specified by the Committee in accordance with the following paragraph, a
Stock Appreciation Right granted to a Reporting Participant may not be
transferred or assigned other than by will or the laws of descent and
distribution or pursuant to the terms of a qualified domestic relations order,
as defined by the Code or Title I of ERISA, or the rules thereunder. The
designation by a Reporting Participant of a beneficiary will not constitute a
transfer of the SAR.
Subject to Section 8.9 below, the Committee may, in its sole discretion,
provide in any Stock Appreciation Rights Agreement (or in an amendment to any
existing Stock Appreciation Rights Agreement) that Stock Appreciation Rights
granted hereunder to a Reporting Participant may be transferred to members of
the Reporting Participant's immediate family, trusts for the benefit of such
immediate family members and partnerships in which such immediate family
members are the only partners, provided that there cannot be any consideration
for the transfer.
The Committee may waive or modify any limitation contained in this Section
8.8(b) that is not required from compliance with Rule 16b-3.
8.9 Tandem Incentive Stock Option--Stock Appreciation Right. Whenever an
Incentive Stock Option and a Stock Appreciation Right are granted together and
the exercise of one affects the right to exercise the other, the following
requirements shall apply:
(a) The Stock Appreciation Right shall expire no later than the
expiration of the underlying Incentive Stock Option;
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(b) The Stock Appreciation Right may be for no more than the difference
between the Stock Option Exercise Price of the underlying Incentive Stock
Option and the Fair Market Value of the Common Stock subject to the
underlying Incentive Stock Option at the time the SAR is exercised;
(c) The Stock Appreciation Right is transferable only when the underlying
Incentive Stock Option is transferable, and under the same conditions;
(d) The Stock Appreciation Right may be exercised only when the
underlying Incentive Stock Option is eligible to be exercised; and
(e) The Stock Appreciation Right may be exercised only when the Fair
Market Value of the Common Stock subject to the underlying Incentive Stock
Option exceeds the Option Exercise Price of the underlying Incentive Stock
Option.
ARTICLE 9
Cash Awards
9.1 Grant of Cash Awards. The Committee may, in its sole discretion, grant
Cash Awards in accordance with the terms and conditions set forth in the Plan.
Each related Award Agreement shall set forth (i) the amount of the Cash Award,
(ii) the time or times within which such Award may be subject to forfeiture,
if any, (iii) specified performance goals, or other criteria, if any, as the
Committee may determine must be met in order to remove any restrictions
(including vesting) on such Award, and (iv) any other terms, limitations,
restrictions, and conditions of the Incentive that are consistent with this
Plan.
The Award Agreement shall also set forth the vesting period for the Cash
Award, if any, which shall commence on the Date of Grant and, unless otherwise
established by the Committee in the Award Agreement, shall expire upon
satisfaction of the conditions set forth in the Award Agreement. Such
conditions may provide for vesting based on (i) length of continuous service,
(ii) achievement of specific business objectives, (iii) increases in specified
indices, (iv) attainment of specified growth rates, or (v) other comparable
measurements of Company performance, as may be determined by the Committee in
its sole discretion.
9.2 Termination of Service. Subject to the provisions of the particular
Award Agreement, and unless otherwise permitted by the Committee, in its sole
discretion, upon Termination of Service for any reason during a vesting period
(if any), the nonvested portion of a Cash Award shall be forfeited by the
Participant. Upon any forfeiture, all rights of a Participant with respect to
the forfeited Cash Award shall cease and terminate, without any further
obligation on the part of the Company.
9.3 Form of Payment. In the sole discretion of the Committee, the Company
may satisfy its obligation under a Cash Award by the distribution of that
number of shares of Common Stock, Stock Options, or Restricted Stock, or any
combination thereof, having an aggregate Fair Market Value (as of the date of
payment) equal to the amount of cash otherwise payable to the Participant,
with a cash settlement to be made for any fractional share interests, or the
Company may settle such obligation in part with shares of Common Stock and in
part with cash. If required by Rule 16b-3 at the time of distribution, any
shares of Common Stock distributed to a Reporting Participant must be held by
such Participant for at least six months from the date of distribution.
ARTICLE 10
Amendment or Discontinuance
The Plan may be amended or discontinued by the Board, or, if the Board has
specifically delegated this authority to the Committee, by the Committee,
without the approval of the stockholders; provided that no amendment shall be
made without approval of the stockholders of the Company if such approval is
required
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under the Code, Rule 16b-3, the requirements of any exchange upon which the
Company's securities are listed, or any other applicable law or regulation. In
addition, no termination or amendment of the Plan may, without the consent of
the Participant to whom any Award has theretofore been granted, adversely
affect the rights of such Participant with respect to such Award.
ARTICLE 11
Term
Unless sooner terminated by action of the Board, the Plan will terminate on
December 3, 2003.
ARTICLE 12
Capital Adjustments
If at any time while the Plan is in effect, or while unexercised Stock
Options or SARs or unvested shares of Restricted Stock are outstanding, there
shall be any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from (1) the declaration or payment of a
stock dividend, (2) any recapitalization resulting in a stock split-up,
combination, or exchange of shares of Common Stock, or (3) other increase or
decrease in such shares effected without receipt of consideration by the
Company, then and in such event:
(a) An appropriate adjustment shall be made in the maximum number of
shares of Common Stock then subject to being awarded under the Plan and in
the maximum number of shares of Common Stock then subject to being awarded
to a Participant, to the end that the same proportion of the Company's
issued and outstanding shares of Common Stock shall continue to be subject
to being so awarded;
(b) Appropriate adjustments shall be made in the number of shares of
Common Stock purchasable under outstanding, unexercised Stock Options and
the Option Exercise Price therefor, to the end that the same proportion of
the Company's issued and outstanding shares of Common Stock in each such
instance shall remain subject to purchase at the same aggregate Option
Exercise Price;
(c) Appropriate adjustments shall be made in the number of shares of
Common Stock subject to outstanding, unexercised SARs and the SAR Price
therefor, to the end that the same proportion of the Company's issued and
outstanding shares of Common Stock in each instance shall remain subject to
exercise at the same aggregate SAR Price; and
(d) Appropriate adjustments shall be made in the number of outstanding
shares of Restricted Stock with respect to which restrictions have not yet
lapsed prior to any such change.
Except as otherwise expressly provided herein, the issuance by the Company
of shares of its capital stock of any class, or securities convertible into
shares of capital stock of any class, either in connection with direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, (i) the number, or Option Exercise
Price, of shares of Common Stock then subject to outstanding Stock Options
granted under the Plan, (ii) the number, or SAR Price, of SARs then subject to
outstanding SARs granted under the Plan, or (iii) the number of outstanding
shares of Restricted Stock.
Upon the occurrence of each event requiring an adjustment with respect to
Stock Options, SARs, or shares of Restricted Stock, the Company shall mail to
each affected Participant its computation of such adjustment which shall be
conclusive and shall be binding upon each such Participant.
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ARTICLE 13
Recapitalization, Merger and Consolidation
(a) The existence of this Plan and Incentives granted hereunder shall not
affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations,
or other changes in the Company's capital structure and its business, or any
merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or preference stocks ranking prior to or otherwise affecting the
Common Stock or the rights thereof (or any rights, options, or warrants to
purchase same), or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
(b) Subject to any required action by the stockholders, if the Company shall
be the surviving or resulting corporation in any merger or consolidation, any
Incentive granted hereunder shall pertain to and apply to the securities or
rights (including cash, property, or assets) to which a holder of the number
of shares of Common Stock subject to the Incentive would have been entitled.
(c) In the event of any merger or consolidation pursuant to which the
Company is not the surviving or resulting corporation, there shall be
substituted for each share of Common Stock subject to the unexercised or
unvested portions of outstanding Incentives, that number of shares of each
class of stock or other securities or that amount of cash, property, or assets
of the surviving or consolidated company that were distributed or
distributable to the stockholders of the Company in respect to each share of
Common Stock held by them, such outstanding Incentives to thereafter pertain
to such stock, securities, cash, or property in accordance with their terms
(subject to subparagraph (d) below). Notwithstanding the foregoing, however,
all such Incentives may be canceled by the Board as of the effective date of
any such reorganization, merger, or consolidation, by giving notice to each
holder thereof or his personal representative of its intention to do so and by
permitting the exercise during the thirty (30) day period next preceding such
effective date of any outstanding Stock Options or SARs, whether or not vested
in accordance with their original terms, and by waiving all restrictions on
outstanding shares of Restricted Stock.
(d) In the event of a Change of Control, then, notwithstanding any other
provision in this Plan to the contrary, all unmatured installments of
Incentives outstanding shall thereupon automatically be accelerated and
exercisable in full, and all restrictions and/or performance goals with
respect to any Incentive shall be deemed satisfied. The determination of the
Committee that any of the foregoing conditions has been met shall be binding
and conclusive on all parties.
ARTICLE 14
Liquidation or Dissolution
In case the Company shall, at any time while any Incentive under this Plan
shall be in force and remain unexpired, (i) sell all or substantially all of
its property, or (ii) dissolve, liquidate, or wind up its affairs, then each
Participant may thereafter receive upon exercise of any Option or SAR (in lieu
of each share of Common Stock of the Company which such Participant would have
been entitled to receive) the same kind and amount of any securities or assets
as may be issuable, distributable, or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each share of Common Stock of the
Company. If the Company shall, at any time prior to the expiration of any
Incentive, make any partial distribution of its assets, in the nature of a
partial liquidation, whether payable in cash or in kind (but excluding the
distribution of a cash dividend payable out of earned surplus and designated
as such), then in such event the exercise prices then in effect with respect
to any outstanding Stock Options or SARs shall be reduced, on the payment date
of such distribution, in proportion to the percentage reduction in the
tangible book value of the shares of the Company's Common Stock (determined in
accordance with generally accepted accounting principles) resulting by reason
of such distribution.
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ARTICLE 15
Incentives in Substitution for
Incentives Granted by Other Corporations
Stock Options, SARs and shares of Restricted Stock may be granted under the
Plan from time to time in substitution for options, stock appreciation rights
or shares of restricted stock held by employees of a corporation who become or
are about to become Employees of the Company or any Subsidiary as a result of
a merger or consolidation of the employing corporation with the Company or the
acquisition by the Company of stock of the employing corporation. The terms
and conditions of the substitute Incentives so granted may vary from the terms
and conditions set forth in this Plan to such extent as the Board at the time
of grant may deem appropriate to conform, in whole or in part, to the
provisions of the options, stock appreciation rights or shares of restricted
stock in substitution for which they are granted.
ARTICLE 16
Miscellaneous Provisions
16.1 Investment Intent. The Company may require that there be presented to
and filed with it by any Participant under the Plan, such evidence as it may
deem necessary to establish that the Incentives granted or the shares of
Common Stock to be purchased or transferred are being acquired for investment
and not with a view to their distribution.
16.2 No Right to Continued Employment. Neither the Plan nor any Incentive
granted under the Plan shall confer upon any Participant any right with
respect to continuance of employment by the Company or any Subsidiary.
16.3 Indemnification of Board and Committee. No member of the Board or the
Committee, nor any officer or Employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to
the Plan, and all members of the Board or the Committee and each and any
officer or employee of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination, or interpretation.
16.4 Effect of the Plan. Neither the adoption of this Plan nor any action of
the Board or the Committee shall be deemed to give any person any right to be
granted an Award or any other rights except as may be evidenced by an Award
Agreement, or any amendment thereto, duly authorized by the Committee and
executed on behalf of the Company, and then only to the extent and upon the
terms and conditions expressly set forth therein.
16.5 Compliance With Securities Laws and other Rules and Regulations. The
Plan, the grant and exercise of Incentives hereunder, and the obligation of
the Company to sell and deliver shares of Common Stock, shall be subject to
all applicable federal and state laws, rules and regulations and to such
approvals by any government or regulatory agency as may be required. The
Company shall have no obligation to sell or issue shares of Common Stock under
any Incentive if the Committee determines, in its sole discretion, that
issuance thereof would constitute a violation by the Participant or the
Company of any provisions of any law or regulation of any governmental
authority (including Section 16 of the Exchange Act) or any securities
exchange or other forum in which shares of Common Stock are traded; and, as a
condition of any sale or issuance of shares of Common Stock under an
Incentive, the Committee may require such agreements or undertakings, if any,
as the Committee may deem necessary or advisable to assure compliance with any
such law or regulation.
B-17
<PAGE>
16.6 Withholding; Notice of Disposition of Stock Prior to Expiration of ISO
Holding Period.
(a) Condition Precedent. Whenever shares of Common Stock are to be issued
pursuant an Award, the Company shall have the right to require the
Participant to remit to the Company an amount sufficient to satisfy
federal, state, local or other withholding tax requirements prior to the
delivery of any certificate or certificates for such shares of Common
Stock.
(b) Manner of Satisfying Withholding Obligation. When a Participant is
required to pay to the Company an amount required to be withheld under
applicable tax laws in connection with an Award, such payment may be made
(i) in cash, (ii) by check, (iii) if permitted by the Committee, by
delivery to the Company of shares of Common Stock already owned by the
Participant having a Fair Market Value on the date the amount of tax to be
withheld is to be determined (the "Tax Date") equal to the amount required
to be withheld, (iv) with respect to Stock Options, through the withholding
by the Company ("Company Withholding") of a portion of the shares of Common
Stock acquired upon the exercise of the Stock Options (provided that, with
respect to any Stock Option held by a Reporting Participant, at least six
months has elapsed between the Date of Grant of such Stock Option and the
exercise involving tax withholding) having a Fair Market Value on the Tax
Date equal to the amount required to be withheld, or (v) in any other form
of valid consideration, as permitted by the Committee in its discretion;
provided that a Reporting Participant shall not be permitted to satisfy his
or her withholding obligation through Company Withholding unless required
to do so by the Committee, in its sole discretion. The Committee may waive
or modify any limitation contained in this Section that is not required for
compliance with Rule 16b-3.
(c) Notice of Disposition of Stock Acquired Pursuant to Incentive Stock
Options. If shares of Common Stock acquired upon exercise of an Incentive
Stock Option are disposed of by a Participant prior to the expiration of
either two (2) years from the Date of Grant of such Stock Option or one (1)
year from the transfer of shares of Common Stock to the Participant
pursuant to the exercise of such Stock Option, or in any other
disqualifying disposition within the meaning of Section 422 of the Code,
such Participant shall notify the Company in writing of the date and terms
of such disposition. A disqualifying disposition by a Participant shall not
affect the status of any other Stock Option granted under the Plan as an
Incentive Stock Option within the meaning of Section 422 of the Code.
16.7 Use of Proceeds. Proceeds from the sale of shares of Common Stock
pursuant to Incentives granted under this Plan shall constitute general funds
of the Company.
16.8 Legend. Each certificate representing shares of Common Stock issued to
a Participant pursuant to the Plan shall bear the following legend, or a
similar legend deemed by the Company to constitute an appropriate notice of
the provisions hereof and the applicable security laws (any such certificate
not having such legend shall be surrendered upon demand by the Company and so
endorsed):
On the face of the certificate:
"Transfer of this stock is restricted in accordance with conditions
printed on the reverse of this certificate."
On the reverse:
"The shares of stock evidenced by this certificate are subject to and
transferable only in accordance with that certain CellStar Corporation 1993
Amended and Restated Long-Term Incentive Plan, as amended from time to
time, a copy of which is on file at the principal office of the Company in
Carrollton, Texas. No transfer or pledge of the shares evidenced hereby may
be made except in accordance with and subject to the provisions of said
Plan. By acceptance of this certificate, any holder, transferee or pledge
hereof agrees to be bound by all of the provisions of said Plan."
Insert the following legend on the certificate if the shares were not issued
in a transaction registered under the applicable federal and state securities
laws:
"Shares of stock represented by this certificate have been acquired by
the holder for investment and not for resale, transfer or distribution,
have been issued pursuant to exemptions from the registration
B-18
<PAGE>
requirements of applicable state and federal securities laws, and may not
be offered for sale, sold or transferred other than pursuant to effective
registration under such laws, or in transactions otherwise in compliance
with such laws, and upon evidence satisfactory to the Company of compliance
with such laws, as to which the Company may rely upon an opinion of counsel
satisfactory to the Company."
A copy of this Plan shall be kept on file in the principal office of the
Company in Carrollton, Texas.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed as
of January 21, 2000, by its President and Secretary pursuant to prior action
taken by the Board.
CellStar Corporation
/s/ Dale H. Allardyce
By: ---------------------------------
Dale H. Allardyce
President and COO
Attest:
/s/ Elaine Flud Rodriguez
- -------------------------------------
Elaine Flud Rodriguez, Secretary
B-19
<PAGE>
<TABLE>
<S> <C>
The Board of Directors recommends that the stockholders vote FOR the proposal. Please mark
Please review carefully the Proxy Statement delivered with this Proxy. your vote as [X]
indicated in
this example
</TABLE>
1. Proposal to elect James L. Johnson, and J.L. Jackson and Jere W. Thompson
as directors for a term of three years or until their successors are
elected and qualified.
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD Instruction: To withhold authority to vote for any individual
listed above (except as AUTHORITY nominee, write that nominee's name in the space provided below.
marked to the contrary to vote for all nominees
to the right) listed above _____________________________________________________________
[_] [_]
</TABLE>
2. Proposal to approve and adopt the Amended and Restated CellStar Corporation
Annual Incentive Compensation Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to approve the increase in the number of shares of CellStar
Corporation common stock available for issuance under the CellStar
Corporation 1993 Amended and Restated Long-Term Incentive Plan from
8,000,000 to 11,000,000.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Proxies are authorized to vote, in their discretion, upon such other
business as may properly come before the meeting.
Dated: ________________________________, 2000
_____________________________________________
Signature
_____________________________________________
Signature if held jointly
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
<PAGE>
PROXY
CELLSTAR CORPORATION
1730 Briercroft Court
Carrollton, Texas 75006
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Alan H. Goldfield and Elaine Flud Rodriguez as
Proxies, each with the power to act without the other and to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as designated
on the other side, all the shares of common stock of CellStar Corporation held
at record by the undersigned on March 15, 2000 at the Annual Meeting of
Stockholders of the Company to be held on May 8, 2000 or any adjournment
thereof.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR Proposal Number 1. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
