Joint Venture Agreement

EXHIBIT 10.2


JOINT VENTURE AGREEMENT


This Agreement is made and entered into as of the 1st day of April, 1996, between CELLSTAR INTERNATIONAL CORPORATION, a company organized and existing under the laws of the State of Delaware (hereinafter "CellStar"), Simon Rex Earle, an individual ("Earle") and Martin Robert deRooy, an individual ("deRooy") (Earle and deRooy being hereinafter sometimes collectively referred to as the "Individual Shareholders" or singularly as the "Individual Shareholder") (CellStar and the Individual Shareholders being hereinafter sometimes collectively referred to as the "Shareholders" or singularly the "Shareholder"), and CELLSTAR UK LIMITED, a company incorporated under the laws of England (hereinafter the "Company").


Whereas, CellStar owns 100% of the B Ordinary Shares of the Company, the primary purpose of which is to engage in the wholesale distribution throughout the United Kingdom (the "Territory") of cellular telephones, pagers, personal communications services (PCS), mobile radio and other wireless communications equipment and related accessory products (hereinafter the "Products"); and


Whereas, CellStar is currently negotiating to conclude a distribution agreement on behalf of the Company with Motorola, Inc. for the distribution of Motorola cellular telephones and accessories in the Territory; and


Whereas, each of the Individual Shareholders wish to subscribe for 100 A Ordinary Shares of the Company; and


Whereas, the Individual Shareholders shall supply to the Company management services, knowledge of local business environment and marketing services; and


Whereas, CellStar shall supply the Company with Products for distribution throughout the Territory, with Product knowledge, with marketing know-how, and other technical services.


Now, Therefore, the parties agree as follows:


1. SHARE CAPITAL


1.1 Forthwith on the execution of this Agreement, each of the Individual Shareholders shall subscribe for one hundred (100) A Ordinary Shares (Pounds)1 each in the Company. These shares will be issued fully paid in cash.


1.2 Although immediately following the issuance of the shares as contemplated in paragraph 1.1 above, the share capital of the Company shall be held 80% by CellStar and 10% by each of the Individual Shareholders, CellStar recognizes the desire of the Individual Shareholders to increase their aggregate share ownership to up to 49% of the total outstanding


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ordinary shares of the Company. In recognition of this, CellStar agrees, during the term of this Agreement, as follows:


(a) The Individual Shareholders shall have the option, but not the
obligation, to purchase from time to time from CellStar for cash up to an
aggregate total of 299 B Ordinary Shares of the Company (149.5 B Ordinary
Shares each) held by CellStar (the "Option Shares") pro rata in the
proportion that the number of shares owned by the Individual Shareholder
on the date of notice bears to the aggregate number of shares owned by
all of the Individual Shareholders.


(b) An Individual Shareholder who desires to exercise his option shall give
written notice signed by such Individual Shareholder to CellStar and to
the other Individual Shareholder at least thirty (30) days prior to the
end of any fiscal year. Each such notice shall state the number of Option
Shares which the Individual Shareholder giving the notice elects to
purchase. The Individual Shareholder receiving such notice shall, within
ten (10) days following receipt of such notice elect to purchase all or a
portion of his pro rata portion of the Option Shares by giving written
notice to the other Individual Shareholder and CellStar. If any
Individual Shareholder fails to exercise his right to purchase his full
pro rata portion of the Option Shares, the other Individual Shareholder
shall have the option of purchasing all or a portion of the Option Shares
remaining unpurchased.


(c) The purchase price per share for the Option Shares for each Individual
Shareholder shall be determined as follows: (i) the total aggregate
number of shares held by the purchasing Individual Shareholder
immediately following the Closing; divided by (ii) the total number of
shares outstanding immediately following the Closing; multiplied by
(iii) the total Net Worth of the Company on the Closing date; and
divided by (iv) the number of Option Shares purchased by the purchasing
Individual Shareholder. Payment for the Option Shares shall be made in
cash and in full at the closing. The closing of the purchase shall occur
within thirty (30) days following the end of such fiscal year.


(d) It is specifically understood and agreed by the parties hereto that, upon
the purchase by any Individual Shareholder of any of the Option Shares
pursuant to this Section, the A Ordinary Shares held by all Individual
Shareholders will automatically lose their right to dividends under
Section 4.5 of this Agreement, and shall thereupon rank pari passu in all
respects with the B Ordinary Shares in the Company.


(e) "Net Worth" shall mean the net worth of the Company as determined by the
independent accountants, regularly retained by the Company to audit its
annual accounts, in accordance with generally accepted accounting
principles in England applied by the Company on the date as of which the
Net Worth is to be determined plus any and all dividends paid to
Shareholders from the date of this


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Agreement through the closing date. Such determination, in the absence of
bad faith, corruption or gross negligence, shall be binding and
conclusive on each party hereto.


1.3 During the term of this Agreement, the Company shall not issue or sell shares of its stock unless such issuance is approved in advance by the unanimous consent of the Shareholders.


2. AGREEMENT TO PREVAIL


2.1 The parties hereby agree that in the event of any inconsistency or conflict between the provisions of this Agreement and the Articles of Association, the provisions of this Agreement will prevail.


3. BOARD OF DIRECTORS


3.1 The Board of Directors shall consist of six (6) persons: four (4) of whom shall be nominated by CellStar and one (1) of whom shall be nominated by each Individual Shareholder. Each Shareholder hereby agrees to cause the election of the directors nominated by the other Shareholder. In case the office of a director is vacated by death, resignation, removal, or otherwise, each Shareholder shall cause, and hereby agrees to the election of a director nominated by the Shareholder who nominated the predecessor director.


3.2 Meetings of the Board of Directors may be called by each director. Notice of a meeting of the Board of Directors shall be given to each director at least twenty (20) days prior to the date set for such meetings; provided that, in case of urgency, the above period may be shortened with the written consent of all of the directors. Notice to directors in England shall be given by registered mail or telecopy, and notice to directors outside England shall be sent by telecopy with confirmation by registered mail. No notice shall be required for the convocation of a meeting of the Board of Directors where all the directors are present, and where all the directors in writing waive the notice provided for above.


3.3 The Board of Directors shall elect a Chairman who shall be one of the CellStar nominated directors. At any meeting of the Board of Directors, the Chairman shall have the deciding vote in the event of a tie.


3.4 The Company shall be managed by its directors in accordance with its Articles of Association.


3.5 If an Individual Shareholder who is a director of the Company disposes of his shares for any reason and he does not resign as a director at the closing of the disposition of such shares, whether such disposition is to the Company, to another Shareholder or to an outside party, such Individual Shareholder hereby agrees that such disposition shall constitute such a resignation by him.


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4. PROVISION OF RESOURCES


4.1 CellStar shall supply to the Company know-how and assistance including marketing and promotional expertise and shall license to the Company its trademarks as appropriate, all in accordance with the terms of the License Agreement (a copy of which is attached heret ...