EXHIBIT 10.2
SEPARATION AGREEMENT AND RELEASE
--------------------------------
This Separation Agreement and Release (the "Agreement") dated as of July 5,
2001, contains all terms and compromises reached between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
("Executive") and CellStar Corporation (the "Company") and its affiliates
(defined below), in connection with Executive's separation from employment with
the Company. It is the intent of the parties, by entering into this Agreement,
to resolve any and all disputes, claims or causes of action which might now
exist or arise in the future between them under the Employment Agreement
(defined below) and in connection with Executive's employment with the Company.
IT IS THEREFORE AGREED THAT:
1. Termination of Executive's Employment and Service as a Director.
---------------------------------------------------------------
(a) The Company and Executive hereby mutually agree that Executive's
employment with the Company and its affiliates (defined below) will
terminate effective July 5, 2001 (the "Termination Date"). Effective
upon the Termination Date, Executive resigns from all director and
officer positions with the Company and its affiliates and any other
position that he currently holds with the Company and its affiliates.
Executive shall remain on the payroll as an employee of the Company
from the date of this Agreement to the Termination Date and, during
such time, Executive will devote substantially all of his time,
energy, skill and best efforts to the performance of his duties, and
will faithfully and diligently perform such duties in accordance with
the instructions of the Board of Directors of the Company. Executive
shall be entitled to all compensation and reimbursement of expenses
through the Termination Date to the same extent as if this Agreement
had not been entered into between the Company and Executive. Without
limiting the foregoing, Executive shall be paid any amount due under
Section 1.4(b) of the Employment Agreement, on a prorated basis
through the Termination Date, as soon as such payment can be
calculated and is required to be paid under the Company's annual
incentive plan. When used with reference to the Company, "affiliate"
shall mean any person or entity that directly or indirectly through
one or more intermediaries controls or is controlled by or is under
common control with the Company.
(b) Effective upon the Termination Date, the obligations and
responsibilities of the parties set forth in the Employment Agreement
dated December 1, 1994 between the parties (the "Employment
Agreement") shall completely terminate. No further salary, bonus,
compensation, remuneration, benefits, payments, stock or options shall
be due or payable by the Company to Executive, and Executive hereby
waives and relinquishes all claims to further employment,
compensation, benefits, stock, options or other remuneration from the
Company, except as specified in this Agreement and in the Consulting
Agreement between the Company and Executive bearing even date herewith
(the "Consulting Agreement").
Page 1
2. Company Severance Obligations. In consideration for Executive's
-----------------------------
promises and covenants in this Agreement, the Company agrees:
(a) To pay Executive the sum $4,250,000 (less required withholding) within
fifteen (15) days after the Termination Date; provided, however, if
within fifteen (15) days after the Termination Date the Company
obtains the requisite consent of the financial institutions under the
Credit Agreement (defined below) to the deferral of one-half of such
payment, the Company shall pay Executive the sum of $2,125,000 (less
required withholding) within fifteen (15) days after the Termination
Date and the sum of $2,125,000 (less required withholding), plus
accrued interest thereon, on the earlier to occur of (i) January 2,
2002 or (ii) the consummation of the Company's refinancing of its
borrowings under the Credit Agreement. The payment due on January 2,
2002 shall bear interest at the rate that shall from day-to-day be
equal to the rate of interest the Company is charged under its Amended
and Restated Credit Agreement with The Chase Manhattan Bank and other
financial institutions, as it may be amended or replaced (the "Credit
Agreement"). If the Credit Agreement is terminated and the Company
does not enter into a replacement or successor credit facility, then
the payment due on January 2, 2002 shall bear interest at the rate of
ten (10) percent per annum.
(b) To pay, provide for reimbursement of, or otherwise reimburse Executive
for, the medical and dental expenses incurred (including all medical
and dental insurance premium costs, if the Company requests Executive
to purchase such insurance) by each of Executive and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ("Executive's Spouse") during the remainder of their
respective lives, subject to the following terms and conditions:
(i) The Company shall be obligated under this paragraph 2(b) to
provide for the reimbursement of, or otherwise reimburse or pay
Executive for, a medical or dental expense incurred by
Executive or Executive's Spouse only to the extent that such
medical or dental expense would have been a reimbursable
expense for a Covered Employee (defined below) under the
Company's medical and/or dental plans then in effect or any
other medical or dental reimbursement or payment arrangement,
if any, then in effect for a Covered Employee. "Covered
Employee" shall mean the Company's Chief Executive Officer or
any other Company employee based in the United States with
medical or dental coverage more favorable than such Chief
Executive Officer, in any case who is employed at the time
Executive or Executive's Spouse, as the case may be, incurred
the medical or dental expense in question.
(ii) Executive agrees to elect under COBRA health care continuation
coverage pursuant to Section 4980B of the Internal Revenue Code
of 1986, as amended, and Section 601, et seq. of the Employee
-------
Retirement Income
Page 2
Security Act of 1974, as amended, for the continuation of the
current medical insurance provided by the Company for Executive
and Executive's Spouse for the maximum period allowed
thereunder.
(iii) Executive acknowledges that the Company may enter into
insurance agreements with respect to the payments and
reimbursements described in this subsection. Executive will use
reasonable efforts to assist the Company in recovering payments
and reimbursements from such insurers. Executive and
Executive's spouse shall use all reasonable efforts to avail
themselves of all benefits that may be available to them under
title XVIII of the Social Security Act (Medicare coverage).
(iv) The Company's obligations under this paragraph 2(b) shall cease
with respect to Executive's Spouse if and when a divorce decree
is obtained that dissolves Executive's marriage to Executive's
Spouse.
(c) To allow Executive the exclusive right to use the Texas Stadium Suite
No. 172 currently owned by the Company for so long as the Company is
entitled to use such Suite, provided that Executive shall promptly
reimburse the Company for all future expenses, fees, charges and
ownership and use costs related thereto, and such expenses, fees,
charges and ownership and use costs will be the sole responsibility of
Executive. The Company agrees to transfer to Executive free of charge
any and all tickets for Dallas Cowboys football games to be held at
Texas Stadium that the Company has purchased prior to the date of this
Agreement. The Company also agrees to transfer to Executive any and
all rights now existing or hereafter granted to the Company relating
to the use of such Suite, including any option to purchase or renew
the lease of such Suite or become a suite owner at any new stadium;
provided that Executive shall not be entitled to assign such option to
purchase or renew such lease, and if Executive chooses not to timely
exercise such option to purchase or renew such lease, then all rights
to exercise such option to purchase or renew such lease shall revert
to the Company, and the Company shall have the sole right to exercise
such option to purchase or renew such lease.
(d) That a "Termination of Service", as defined in the Company's 1993
Amended and Restated Long-Term Incentive Plan (the "Plan"), shall not
be deemed to have occurred under all stock options currently held by
Executive under the Plan as a result of Executive's termination of
employment because Executive is serving as an "Advisor" under the Plan
by reason of the consulting relationship delineated in the Consulting
Agreement and that a Termination of Service will not occur for so long
as Executive is serving as a consultant to the Company. The Company
hereby represents that the Compensation Committee of the Company's
Board of Directors has taken any and all actions necessary to approve
the provisions of this paragraph 2(d) and to apply all pertinent
provisions of the Plan, as amended through the date
Page 3
hereof, to all of Executive's stock options currently held by
Executive under the Plan.
(e) The Company shall pay the reasonable fees and expenses of one counsel
in connection with Executive's entry into this Agreement promptly
after it receives a reasonably detailed invoice therefor.
(f) Until the fifth anniversary of the Termination Date and subject to the
Executive's qualification under normal life insurance underwriting
standards as of the date hereof and at any policy renewal date, the
Company shall provide, at the Company's expense, a term life insurance
policy on the life of Executive in a face amount equal to $5,000,000
for the benefit of such beneficiary or beneficiaries as may be
designated from time to time by Executive. On or before the fifth
anniversary of the Termination Date, at Executive's request, the
Company shall transfer such term life insurance policy to Executive if
permitted by the terms of such policy and the insurance company
underwriting such policy. Any such transfer of such policy shall be at
Executive's sole cost, and Executive shall be solely responsible for
all premiums and other costs related to such policy after the fifth
anniversary of the Termination Date.
(g) Until the fifth anniversary of the Termination Date and subject to
Executive's qualification under normal disability insurance
underwriting standards as of the date hereof and at any policy renewal
date, the Company shall provide, at the Company's expense, a
disability insurance policy that will pay the Executive, pursuant to
the terms of such policy, an annual disability benefit of $300,000
until the Executive reaches the age of 65. On or before the fifth
anniversary of the Termination Date, at Executive's request, the
Company shall transfer such disability insurance policy to Executive
if permitted by the terms of such policy and the insurance company
underwriting such policy. Any such transfer of such policy shall be at
Executive's sole cost, and Executive shall be solely responsible for
all premiums and other costs related to such policy after the fifth
anniversary of the Termination Date.
3. Executive's Release of the Company. In consideration for the
----------------------------------
promises, payments and benefits provided herein by the Company, and in order to
fully compromise and settle any and all claims and causes of action of any kind
whatsoever relating to or arising out of Executive's employment with the Company
(except as expressly provided in this Agreement and the Consulting Agreement),
including any claim arising under common law, contractual claim, or any other
federal, state or local statute or ordinance, Executive agrees:
(a) That Executive will and hereby does unconditionally release, acquit
and forever discharge the Company, all of its parents, subsidiaries
and its affiliates, and all of their officers, directors,
representatives, employees and agents from any and all charges,
complaints, claims, causes of action, suits and expenses (including
attorney fees and costs actually incurred) of any nature whatsoever,
known or unknown,
Page 4
regarding any matter existing on or prior to the date hereof relating
to or arising out of the Employment Agreement which is hereby
terminated, and Executive's employment or separation thereof from the
Company (except as expressly provided in this Agreement and the
Consulting Agreement). THIS RELEASE INCLUDES, BUT IS NOT LIMITED TO,
ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF THE EMPLOYMENT AGREEMENT,
EXECUTIVE'S EMPLOYMENT WITH THE COMPANY AND THE SEPARATION THEREOF
(EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE CONSULTING
AGREEMENT), OR ANY BENEFITS ASSOCIATED WITH SUCH EMPLOYMENT, INCLUDING
ANY CLAIM UNDER TITLE VII OF THE CIVIL RIGHTS ACTS OF 1964, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT, OR ANY OTHER COMMON LAW, CONTRACTUAL
OR STATUTORY CLAIM.
(b) That Executive will not file any charges or complaints against the
Company or any of its affiliates with the Equal Employment Opportunity
Commission, the Texas Commission on Human Rights, or any other local,
state or federal agency or court, and that if Executive filed or has
filed any such complaint or charge, and/or if any such agency or court
assumes jurisdiction of any complaint or charge against the Company or
any of its affiliates on behalf of Executive, Executive will request
such agency or court to withdraw from the matter and dismiss said
action.
4. Company's Release of Executive. The Company releases Executive from
------------------------------
any and all claims related to, or arising of, Executive's performance of his job
duties, so long as he acted in good faith, in a manner he reasonably thought to
be in, or not opposed to, the best interests of the company and had no
reasonable cause to believe his conduct was unlawful or illegal.
5. Indemnification.
---------------
(a) If Executive was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or
other participant in, a Claim (defined below) by reason of (or arising
in part out of) an Indemnifiable Event (defined below), the Company
shall indemnify Executive to the fullest extent permitted by law, as
soon as practicable but in any event no later than thirty days after
written demand is presented to the Company, against any and all
Expenses (defined below), judgments, fines, penalties and amounts paid
in settlement (including all interest, assessments and other charges
actually incurred and paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Executive, the Company
shall advance (within two business days of such request) any and all
Expenses to Executive (an "Expense Advance"); provided, however, that
-------- -------
the Company may require Executive first to deliver to the Company an
undertaking by or on behalf of Executive to repay such Expense Advance
if it shall ultimately be determined that he is not entitled to
Page 5
be indemnified by the Company.
(b) Notwithstanding the foregoing, (i) the obligations of the Company
under paragraph 5(a) shall be subject to the condition that the
Reviewing Party (defined below) shall not have determined (in a
written opinion, in any case in which the Independent Counsel is
involved) that Executive would not be permitted to be indemnified
under applicable law, and (ii) the obligation of the Company to make
an Expense Advance pursuant to paragraph 5(a) shall be subject to the
condition that, if, when and to the extent that the Reviewing Party
determines that Executive would not be permitted to be so indemnified
under applicable law, the Company shall be entitled to be reimbursed
by Executive (who hereby agrees to reimburse the Company) for all such
amounts theretofore paid; provided, however, that if Executive
-------- -------
commences legal proceedings in a court of competent jurisdiction to
secure a determination that Executive should be indemnified under
applicable law, any determination made by the Reviewing Party that
Executive would not be permitted to be indemnified under applicable
law shall not be binding and Executive shall not be required to
reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). If there has been no
determination by the Reviewing Party or if the Reviewing Party
determines that Executive substantively would not be permitted to be
indemnified in whole or in part under applicable law, Executive shall
have the right to commence litigation in any court in the State of
Texas having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or challenging
any such determination by the Reviewing Party or any aspect thereof,
and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Executive.
(c) If the determination of entitlement to indemnification is to be made
by Independent Counsel (defined below), the Independent Counsel shall
be selected as provided in this paragraph 5(c). The Independent
Counsel shall be selected by majority vote of a quorum of
Disinterested Directors (defined below), and the Company shall give
written notice to Executive advising him of the identity of the
Independent Counsel so selected. Executive may, within seven days
after receipt of the written notice, deliver to the Company a written
objection to the selection. His objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the
requirements of Independent Counsel as defined in paragraph 5(d)
below, and the objection shall set forth with particularity the
factual basis of the assertion. If written objection is made, the
Independent Counsel so selected shall be disqualified. If, within 20
days after submission by Executive of a demand for indemnification
pursuant to paragraph 5(e) of this Agreement, no Independent Counsel
shall have been selected, or if selected shall have been objected to,
in accordance with this paragraph 5(c), either the Company or
Executive may petition a court of competent
Page 6
jurisdiction in the State of Texas for the appointment as Independent
Counsel of a person selected by that court or by any other person that
court shall designate, and the person so appointed shall act as
Independent Counsel. The Company shall pay all reasonable fees and
expenses incident to the procedures of this paragraph 5(c), regardless
of the manner in which the Independent Counsel was selected or
appointed. The Company shall pay the reasonable fees and expenses of
the Independent Counsel and shall indemnify fully the Independent
Counsel against any and all expenses (including attorneys' fees)
claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(d) Definitions. The following terms shall have the definitions noted:
-----------
(i) "Claim" shall mean any threatened, pending or completed action,
suit or proceeding, any inquiry or investigation, or any appeal
therefrom whether conducted by the Company or any other party,
that Executive in good faith believes might lead to the
institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or other.
(ii) "Indemnifiable Event" shall mean any event or occurrence
related to the fact that Executive is or was serving the
Company in some capacity, including without limitation, as a
director, officer, employee, agent (including trustee and
consultant) or fiduciary of the Company or of another
corporation, partnership, joint venture, trust or other
enterprise, or by reason of anything done or not done by
Executive in any such capacity.
(iii) "Expenses" shall include attorneys' fees and all other costs,
expenses and obligations actually incurred and paid in
connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(iv) "Reviewing Party" shall mean a quorum of the Board of Directors
consisting of Disinterested Directors or, if such a quorum is
not obtainable or if such a quorum so directs, Independent
Counsel. Any decision by such a quorum must be by a majority
vote of the quorum.
(v) "Independent Counsel" shall mean a law firm, or a member of a
law firm, that is experienced in matters of Delaware corporate
law and neither is, nor in the past five years has been,
retained to represent the Company or Executive in any matter
material to either such party or any other party to the Claim
relating to an Indemnifiable Event. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional
conduct then prevailing, would have a
Page 7
conflict of interest in representing either the Company or
Executive in an action to determine Executive's rights under
this Agreement.
(vi) "Disinterested Director" shall mean a director of the Company
who is not and was not at any time a party to a Claim relating
to an Indemnifiable Event.
(e) Promptly after receipt by Executive of notice of the commencement of
any Claim, Executive will, if a claim for indemnification in respect
thereof is to be made against the Company under this Agreement, notify
the Company of the commencement thereof; but the omission to notify
the Company will not relieve it from any liability which it may have
to Executive otherwise than under this Agreement.
(f) With respect to any Claim as to which Executive notifies the Company
of the commencement thereof, the Company will be entitled to
participate therein at its own expense. Except as otherwise provided
below, to the extent that it may wish, the Company jointly with any
other indemnifying party similarly notified will be entitled to assume
the defense thereof, with counsel satisfactory to Executive. After
notice from the Company to Executive of its election to assume the
defense thereof, the Company will not be liable to Executive under
this Agreement for any legal or other expenses subsequently incurred
by Executive in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below.
Executive shall have the right to employ counsel in such Claim, but
the fees and expenses of such counsel incurred after notice from the
Company of its assumption of the defense thereof shall be at the
expense of Executive unless (i) the employment of counsel by Executive
has been authorized by the Company, (ii) Executive shall have
reasonably concluded that there may be a conflict of interest between
the Company and Executive in the conduct of the defense of such Claim
or (iii) the Company shall not in fact have employed counsel to assume
the defense of such Claim, in each of which cases the fees and
expenses of counsel shall be borne by the Company. The Company shall
not be entitled to assume the defense of any Claim brought by or on
behalf of the Company or as to which Executive shall have reasonably
made the conclusion provided for in (ii) above.
(g) The Company shall not be liable to indemnify Executive under this
Agreement for any amounts paid in settlement of any Claim made without
its written consent. The Company shall not settle any Claim in any
manner that would impose any penalty or limitation on Executive
without Executive's written consent. Neither the Company nor
Executive will unreasonably withhold their consent to any proposed
settlement.
(h) The Company shall indemnify Executive against any and all expenses
(including attorneys' fees) and, if requested by Executive, shall
(within two business days of such request) advance such expenses to
Executive, which are incurred by Executive in connection with any
claim asserted against or action brought by Executive for (i)
Page 8
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or Company bylaw now or
hereafter in effect relating to claims for Indemnifiable Events or
(ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company, regardless of whether Executive
ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
(i) If Executive is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the Expenses,
judgments, fines, penalties and amounts paid in settlement of a Claim
but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Executive for the portion thereof to
which Executive is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Executive has been
successful on the merits or otherwise in defense of any or all Claims
relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice,
Executive shall be indemnified against all Expenses incurred in
connection therewith. In connection with any determination by the
Reviewing Party or otherwise as to whether Executive is entitled to be
indemnified hereunder the burden of proof shall be on the Company to
establish that Executive is not so entitled.
(j) For purposes of this Agreement, the termination of any Claim, action,
suit or proceeding, by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that
Executive did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification
is not permitted by applicable law.
(k) The rights of Executive hereunder shall be in addition to any other
rights Executive may have under the Company's bylaws, pursuant to
resolutions or determinations of the Company's Board of Directors or
stockholders, under the Delaware General Corporation Law or otherwise.
To the extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the Company's bylaws and this Agreement, it is the intent of the
parties hereto that Executive shall enjoy by this Agreement the
greater benefits so afforded by such change.
(l) To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Executive
shall be covered by such policy or policies, in accordance with its or
their terms, to the maximum extent of the coverage available for any
former Company employee.
Page 9
6. Confidentiality. Except as required by law, the parties agree that
---------------
they will keep the terms, amount and existence of this Agreement completely
confidential and that neither party hereto will make any disparaging statements
or allegations about the other to any person or governmental agency, including
comments about the Company's employees, officers, directors or agents or about
the reputations of the Company or any such person. It is recognized that the
Company may be required to file a copy of this Agreement with the Securities and
Exchange Commission, issue a press release relating to Executive's separation,
and make other disclosures required of a public company pursuant to applicable
law, and any such filing, press release or disclosure shall not be deemed to
violate the provisions of this Agreement, provided that prior to issuing any
such press release or making any other disclosure related thereto, the Company
shall provide Executive with a copy of such release or disclosure as far in
advance of the issuance or making thereof as is reasonably possible, consult
with Executive with respect thereto and cooperate with all reasonable requests
made by Executive with respect to the content thereof.
7. Reimbursement in Event of Breach. Subject to paragraph 18(b)(v), as a
--------------------------------
further material inducement to enter into this Agreement, any party who breaches
this Agreement must reimburse the non-breaching party for any and all loss,
cost, damage or expense, including, without limitation, reasonable attorneys
fees incurred as a result of any effort, action or lawsuit to enforce this
Agreement. In addition, any breach of this Agreement will entitle the non-
breaching party to seek injunctive relief to enforce this Agreement and to
recover any actual damages incurred as a result of said breach. In the event of
litigation, the losing party must pay the attorneys fees of the prevailing
party.
8. Executive's Reliance. The parties represent and acknowledge to each
--------------------
other that in executing this Agreement they do not rely and have not relied upon
any representation made by the other or its agents, representatives or attorneys
with regard to the subject matter, basis or fact of this Agreement, except on
those contained in this Agreement. The parties agree that this Agreement
represents a resolution of various matters and shall not be construed to be an
admission of any liability or obligation by either party to the other party.
9. Representations. The parties, by their signatures below, represent
---------------
and agree that (a) each has read this Agreement carefully and completely, and
understands all provisions contained therein; (b) Executive has been given a
period of at least twenty-one (21) days to consider and review this Agreement;
(c) Executive has seven (7) days after he signs this Agreement to revoke it, in
which case this Agreement and all obligations contained herein are null and
void; and (d) Executive is aware of his right to consult with legal counsel and
has ample opportunity to do so if he so desires.
10. Multiple Counterparts. This Agreement may be executed in two or more
---------------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. Indulgences, Etc. Neither the failure nor any delay on the part of
----------------
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver
Page 10
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power, or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence.
12. Executive's Sole Remedy. Executive's sole remedy shall be against the
-----------------------
Company for any claim, liability or obligation of any nature whatsoever arising
out of or relating to this Agreement or an alleged breach of this Agreement or
for any other claim arising out of Executive's employment by the Company, his
service to the Company on or prior to the date hereof, any indemnification
obligation of the Company related to the subject matter of this Agreement or
Executive's employment with the Company and its affiliates (collectively,
"Executive Claims"). Executive shall have no claim or right of any nature
whatsoever against any of the Company's directors, former directors, officers,
former officers, employees, former employees, stockholders, former stockholders,
agents, former agents or the Independent Counsel in their individual capacities
arising out of or relating to any Executive Claim. Executive hereby releases
and covenants not to ▇▇▇ any person other than the Company over any Executive
Claim. The persons described in this paragraph 12 (other than the Company and
Executive) shall be third-party beneficiaries of this Agreement for purposes of
enforcing the terms of this paragraph 12 against Executive. IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT THE LIMITATIONS ON EXECUTIVE'S REMEDIES EXPRESSED IN
THIS SECTION 12 APPLY WITHOUT LIMITATION TO EXECUTIVE CLAIMS RELATING TO
NEGLIGENCE.
13. Notices. All notices, requests, demands and other communications
-------
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received when sent by telecopy (with a copy sent by mail) or when personally
delivered or one business day after it is sent by overnight service, addressed
as set forth below:
If to Executive:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Page 11
If to the Company:
CellStar Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, III
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this subsection for the giving of notice, which shall be effective only upon
receipt.
14. Provisions Separable. The provisions of this Agreement are
--------------------
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
15. Entire Agreement. This Agreement contains the entire understanding
----------------
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained, which shall be deemed terminated effective immediately. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
16. Headings. The headings of paragraphs herein are included solely for
--------
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas, without giving effect to
principles of conflict of laws; provided, however, that questions regarding the
-------- -------
Company's ability to indemnify and advance expenses pursuant to paragraph 5 of
this Agreement shall be governed by the Delaware General Corporation Law.
18. Dispute Resolution. Subject to Executive's right to a judicial
------------------
determination that
Page 12
Executive should be indemnified by the Company (as provided in paragraph 5 of
this Agreement), any dispute, controversy or claim arising out of or in relation
to or connection to this Agreement, including without limitation any dispute as
to the construction, validity, interpretation, enforceability or breach of this
Agreement, shall be exclusively and finally settled by arbitration, and either
party may submit such dispute, controversy or claim, including a claim for
indemnification, to arbitration.
(a) The arbitration shall be heard and determined by one arbitrator, who
shall be impartial and who shall be selected by mutual agreement of
the parties; provided, however, that if the dispute involves more
-------- -------
than $2,000,000, then the arbitration shall be heard and determined by
three (3) arbitrators. If three (3) arbitrators are necessary as
provided above, then (i) each side shall appoint an arbitrator of its
choice within thirty (30) days of the submission of a notice of
arbitration and (ii) the party-appointed arbitrators shall in turn
appoint a presiding arbitrator of the tribunal within thirty (30) days
following the appointment of the last party-appointed arbitrator. If
(x) the parties cannot agree on the sole arbitrator, (y) one party
refuses to appoint its party-appointed arbitrator within said thirty
(30) day period or (z) the party-appointed arbitrators cannot reach
agreement on a presiding arbitrator of the tribunal, then the
appointing authority for the implementation of such procedure shall be
the Senior United States District Judge for the Northern District of
Texas, who shall appoint an independent arbitrator who does not have
any financial interest in the dispute, controversy or claim. If the
Senior United States District Judge for the Northern District of Texas
refuses or fails to act as the appointing authority within ninety (90)
days after being requested to do so, then the appointing authority
shall be the Chief Executive Officer of the American Arbitration
Association, who shall appoint an independent arbitrator who does not
have any financial interest in the dispute, controversy or claim. All
decisions and awards by the arbitration tribunal shall be made by
majority vote.
(b) Unless otherwise expressly agreed in writing by the parties to the
arbitration proceedings:
(i) The arbitration proceedings shall be held in Dallas, Texas, at
a site chosen by mutual agreement of the parties, or if the
parties cannot reach agreement on a location within thirty (30)
days of the appointment of the last arbitrator, then at a site
chosen by the arbitrators;
(ii) The arbitrators shall be and remain at all times wholly
independent and impartial;
(iii) The arbitration proceedings shall be conducted in accordance
with the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time;
Page 13
(iv) Any procedural issues not determined under the arbitral rules
selected pursuant to item (iii) above shall be determined by
the law of the place of arbitration, other than those laws
which would refer the matter to another jurisdiction;
(v) The costs of the arbitration proceedings (including attorneys'
fees and costs) shall be borne in the manner determined by the
arbitrators;
(vi) The decision of the arbitrators shall be reduced to writing;
final and binding without the right of appeal; the sole and
exclusive remedy regarding any claims, counterclaims, issues or
accounting presented to the arbitrators; made and promptly paid
in United States dollars free of any deduction or offset; and
any costs or fees incident to enforcing the award shall, to the
maximum extent permitted by law, be charged against the party
resisting such enforcement;
(vii) The award shall include interest from the date of any breach or
violation of this Agreement, as determined by the arbitral
award, and from the date of the award until paid in full, at 6%
per annum; and
(viii) Judgment upon the award may be entered in any court having
jurisdiction over the person or the assets of the party owing
the judgment or application may be made to such court for a
judicial acceptance of the award and an order of enforcement,
as the case may be.
19. Subrogation. In the event the Company makes any payment pursuant to
-----------
paragraph 5 of this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Executive, who shall execute
all papers reasonably required and shall at the Company's sole cost and expense
do everything that may be reasonably necessary to secure such rights, including
all actions that may be necessary to enable the Company effectively to bring
suit to enforce such rights.
20. No Duplication of Payments. The Company shall not be liable under
--------------------------
this Agreement to make any payment in connection with any claim made against
Executive to the extent Executive has otherwise actually received payment (under
any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable
hereunder.
21. Binding Effect, Etc. This Agreement shall be binding upon and inure
-------------------
to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business or assets of
Page 14
the Company, by written agreement in form and substance satisfactory to
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place.
22. Contribution. If the indemnity contained in this Agreement is
------------
unavailable or insufficient to hold Executive harmless in a Claim for an
Indemnifiable Event, then separate from and in addition to the indemnity
provided elsewhere herein, the Company shall contribute to Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of Executive in connection with such Claim in such proportion as
appropriately reflects the relative benefits received by, and fault of, the
Company on the one hand and Executive on the other in the acts, transactions or
matters to which the Claim relates and other equitable considerations.
23. Cooperation; Reimbursement of Expenses.
--------------------------------------
(a) Subject to paragraph 23(b), at the Company's sole cost and expense,
Executive will cooperate with the Company in response to reasonable
requests for information or assistance by the Company in connection
with all matters relating to or arising out of his employment with the
Company or pertaining to the general business operations of the
Company. At the Company's sole cost and expense, Executive will
reasonably cooperate with the Company regarding any pending or
subsequently filed litigation, claims or other disputes involving the
Company or any affiliate. Subject to the following provisions of this
paragraph 23, for each day on which Executive renders services after
November 30, 2001, other than any services that Executive provides (i)
under Section 6(b) of the Consulting Agreement to develop New Business
Lines (as defined in the Consulting Agreement) in Selected Asian
Countries (as defined in the Consulting Agreement) or (ii) in
connection with any legal or administrative proceedings or other
litigation in which Executive is a named party, the Company shall pay
Executive the greater of (A) $1,000 per day or (B) the highest per day
amount then being paid to members of the Board of Directors of the
Company for services other than services provided as a member of the
Company's Board of Directors. It shall be a condition to the Company's
payment of any amounts to Executive under this paragraph 23 that the
Company and Executive agree in writing prior to Executive's
performance of services under this paragraph 23 on the general scope
of such services and the maximum number of days of service for which
the Company will be paying Executive under this paragraphs 23. Payment
of such fees will be made by the Company as soon as practicable after
Executive properly accounts therefor in accordance with the regular
policies and practices of the Company.
(b) The Company will reimburse Executive for his reasonable, actual out-
of-pocket expenses as incurred in performing services pursuant to this
Agreement, in accordance with the policies and procedures of the
Company, only if such expenses
Page 15
are approved by the Company's Chief Executive Officer in writing prior
to the date such expenses are incurred, and the Company will have no
obligation to reimburse Executive if Executive fails to obtain such
prior approval. If the Company's Chief Executive Officer approves
Executive's request to be reimbursed for a business trip and expenses
incurred while on such trip pursuant to this paragraph 23, then the
Company will reimburse Executive for all reasonable expenses Executive
incurs while on such trip that are related to the business of the
Company. Reimbursement will be made as soon as practicable after
Executive complies with the provisions above of this paragraph 23 and
properly accounts therefor in accordance with the regular policies and
practices of the Company relating to reimbursement of expenses of non-
employees.
24. Non-Disclosure. Executive agrees that he will not disclose material
--------------
non-public information about the Company or any of its parent, subsidiary or
affiliate companies to anyone other than the Company's officers, directors,
attorneys and accountants.
25. ACKNOWLEDGMENTS. EXECUTIVE'S SIGNATURE BELOW INDICATES THAT EXECUTIVE
---------------
HAS READ THE ABOVE AGREEMENT AND VOLUNTARILY AGREES AND CONSENTS TO THE TERMS
AND CONDITIONS HEREIN.
* * * * *
Page 16
Signed in Dallas, Texas on July 5, 2001.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Before me, a Notary Public, on this day personally appeared ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of said
person and that he has executed the same for the purposes and consideration
therein expressed.
Given under my hand and seal of office this 5/th/ day of July, 2001.
[NOTARY STAMP] /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Notary Public Signature
CELLSTAR CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. Vice
President and General Counsel
Before me, a Notary Public, on this day personally appeared ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, known to me to be the person and officer whose name is subscribed to
the foregoing instrument and acknowledged to me that the same was the act of
CellStar Corporation, and that she has executed the same on behalf of said
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
Given under my hand and seal of office this 5/th/ day of July, 2001.
[NOTARY STAMP] /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Notary Public Signature
Page 17