Second Modification of Deed of Trust

Exhibit 10.3


RECORDATION REQUESTED BY:


First Interstate Bank of Texas, N.A.


Houston Loan Operations Center
P.O. Box 3326, MS #595
Houston, Texas 77253-3326


WHEN RECORDED MAIL TO:


Leslie V. Lochhead
Jenkens & Gilchrist
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799


SEND TAX NOTICES TO:


CellStar, Ltd.
1730 Briercroft Drive
Carrollton, Texas 75006 SPACE ABOVE THIS LINE IS FOR RECORDER'S USE ONLY


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SECOND MODIFICATION OF DEED OF TRUST


THIS SECOND MODIFICATION OF DEED OF TRUST (the "Modification"), dated as of
------------ April 15, 1996 is by and between CELLSTAR, LTD. ("Grantor") and FIRST INTERSTATE
------- BANK OF TEXAS, N.A. ("Beneficiary").
-----------


RECITALS
--------


Grantor has executed that certain Deed of Trust dated April 28, 1995 which names First Interstate Bank of Texas, N.A. as Beneficiary, P. Michael Wells, Jr. as Trustee (the "Trustee"), encumbers the property described on Exhibit A hereto
------- and was filed on May 9, 1995 in the Deed of Trust Records of Dallas County, Texas in Volume 95090 and Page 01805 (as modified by that certain First Modification of Deed of Trust dated August 31, 1995 and filed on September 1,1995 in the Deed of Trust Records of Dallas County, Texas in Volume 95171 and Page 00243 and as the same may be further modified, the "Deed of Trust"),
------------- Grantor and Beneficiary now desire to modify the Deed of Trust as herein set forth.


AGREEMENTS
----------


NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


DEFINED TERMS. Capitalized terms used in this Modification, to the extent not otherwise defined herein, shall have the same meanings as set forth in the Deed of Trust as modified hereby.


AMENDMENTS. Effective as of the date hereof, the Deed of Trust is hereby amended in the following respects:


AMENDMENT TO THE DEFINITION OF NOTE. The term "Note" in the Deed of Trust
is hereby amended in its entirety to read as follows:


Note. The word "Note" means the promissory note dated April 15, 1996, in
the principal amount of $4,277,500 from Grantor to Beneficiary, together
with all renewals, extensions, modifications, refinanings and
substitutions for such promissory note, which promissory note was
executed to modify in its entirety, but not extinguish the indebtedness
evidenced by, that certain promissory note dated August 31, 1995 in the
principal amount of $4,425,000 from Grantor to the Beneficiary (the
"Previous Note"). The Note evidences the indebtedness previously
evidenced by the Previous Note and originally evidenced by that certain
Promissory Note dated April 28,1995 in the principal amount of
$3,000,000 from Grantor to the Beneficiary. The maturity date of the
Note is September 1, 2005.


CONTINUATION OF LIENS. This Modification is being executed and delivered for purposes of ratifying, confirming, amending and/or otherwise modifying the Deed of Trust and all assignments, pledges, security interests and liens created or intended to be created thereunder (herein collectively referred to as the "Existing Liens"); however, neither this Modification, nor any other agreement, - --------------- instrument or other documentation executed and/or delivered in connection herewith or therewith shall constitute a novation of all or any portion of the obligations and indebtedness secured by the Deed of Trust immediately prior to the effectiveness of this Modification (the "Existing Obligations") or the
-------------------- Existing Liens, and none of the same shall be deemed to have been accepted in extinguishment or satisfaction thereof. As a result, the Existing Obligations shall not be deemed to have been satisfied and shall continue in favor of Beneficiary. All Existing Obligations and Existing Liens shall continue in full force and effect and the Existing Liens shall continue as security for the Note to the same extent that the same secures the Existing Obligations, without change to the priority thereof. Notwithstanding the foregoing, in the event that all or any portion of the Note or the other indebtedness or


04-15-1996 SECOND MODIFICATION Page 2
OF
DEED OF TRUST
(Continued)


================================================================================


obligations to be secured by the Deed of Trust are not or cannot be secured by the Deed of Trust (as modified hereby), it is understood and agreed that in consideration for Beneficiary's agreement to enter into the Note (as defined in the Deed of Trust as modified hereby and such Note herein the "New Note") and to
-------- make the financial accommodations thereunder, and for Ten and No/100 Dollars ($10.00), Grantor does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN, MORTGAGE and SET OVER unto the Trustee, its successors, assigns or substitutes, for the benefit of the Beneficiary, the Real Property to have and to hold together with all rights, hereditaments and appurtenances in any wise appertaining or belonging thereto, forever. This conveyance is given to secure the payment of the Indebtedness and performance of any and all obligations of Grantor under the New Note, the Related Documents, this Modification and the Deed of Trust and all renewals, extensions, increases or modifications thereof, or any part thereof. All of the provisions contained in the Deed of Trust, as modified by this Modification, are incorporated into the terms and provisions of this section.


RATIFICATIONS. The terms and provisions set forth in this Modification shall modify and supersede all inconsistent terms and provisions set forth in the Deed of Trust. Grantor hereby ratifies and confirms all of the terms and provisions of the Deed of Trust as amended hereby and of the Related Documents. Grantor and Beneficiary agree that the Deed of Trust, as amended hereby, and the other Related Documents shall continue to be legal, valid, binding and enforceable in accordance with their respective terms. In furtherance and not in limitation of the foregoing, Grantor hereby ratifies and confirms the terms and provisions of that certain Indemnity Agreement dated April 28, 1995 executed by Grantor, CellStar Corporation and National Auto Center, Inc. for the benefit of Beneficiary (as the same may be modified, herein the "Indemnity Agreement") and
------------------- agrees and acknowledges that: (1) The term "Loan" as used in the Indemnity Agreement shall mean the loan evidenced by the New Note; (2) The term "Note" as used in the Indemnity Agreement shall mean the New Note and all amendments or other modifications thereto; and (3) The term "Mortgage" as used in the Indemnity Agreement means and includes the Deed of Trust as modified by this Modification. As used in the Deed of Trust, the term "Related Documents" includes without limitation the Waiver Letter dated April 15, 1996 among Grantor, Beneficiary, CellStar Corporation and National Auto Center, Inc. (the "Waiver Letter") - --------------


REPRESENTATIONS AND WARRANTIES; WAIVER. Grantor (and by their execution below CellStar Corporation and National Auto Center, Inc. ) each hereby represent and warrant to Beneficiary that (1) the execution, delivery and performance of this Modification, the New Note and any and all other Related Documents executed and/or delivered in connection herewith have been authorized by all requisite action on their part and, with respect to Grantor, its general partner and will not violate the partnership agreement of Grantor nor its Articles of Incorporation or by laws, (2) the representations and warranties contained in the Deed of Trust, as amended hereby, the Indemnity Agreement and all other Related Documents are true and correct on and as of the date hereof as though made on and as of the date hereof, (3) after giving effect to the Waiver Letter, no Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default and (4) there are no claims or offsets against, or defenses or counterclaims to, the terms and provisions of and the other obligations created or evidenced by the Note or the other Related Documents. GRANTOR (AND BY THEIR EXECUTION BELOW CELLSTAR CORPORATION AND NATIONAL AUTO CENTER, INC.) EACH HEREBY RELEASE, ACQUIT AND FOREVER DISCHARGE BENEFICIARY AND ITS SUCCESSORS, ASSIGNS AND PREDECESSORS IN INTEREST AND THE OFFICERS, EMPLOYEES, ATTORNEYS AND AGENTS OF EACH OF THE FOREGOING (ALL OF WHOM ARE HERE AND JOINTLY SEVERALLY REFERRED TO AS "RELEASED PARTIES") FROM ANY AND ALL LIABILITIES, DAMAGES, LOSSES,
---------------- OBLIGATIONS, COSTS, EXPENSES, SUIT, CLAIMS, DEMANDS, CAUSES OF ACTIONS OR DAMAGES OR ANY OTHER RELIEF, WHETHER OR NOT KNOW OR SUSPECTED OF ANY KIND, NATURE OR CHARACTER, AT LAW OR EQUITY, WHICH ANY OF THEM MAY NOW HAVE OR EVER HAVE HAD AGAINST ANY OF THE RELEASED PARTIES ARISING PRIOR TO THE DATE HEREOF IN CONNECTION WITH THE DEED OF TRUST, THE DOCUMENTS EXECUTED AND DELIVERED IN CONNECTION THEREWITH OR OTHERWISE IN CONNECTION WITH THE EXISTING OBLIGATIONS.


REFERENCE TO DEED OF TRUST. Each of the Related Documents, including the Deed of Trust and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Deed of Trust as amended hereby, are hereby amended so that any reference in such Related Documents to the Deed of Trust shall mean a reference to the Deed of Trust as amended hereby.


SEVERABILITY. Any provision of this Modification held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Modification and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.


APPLICABLE LAW. This Modification shall be governed by and construed in accordance with the laws of the ...