<PAGE>

                                                                    EXHIBIT 10.3


                             EMPLOYMENT AGREEMENT
                             --------------------


     This EMPLOYMENT AGREEMENT (this "Agreement"), effective as of the 12th day
of November, 1999 (the "Effective Date"), by and between CellStar Ltd. (the
"Employer"), CellStar Corporation, a Delaware corporation and parent company of
Employer ("Parent"), and Dale H. Allardyce (the "Employee").

                                R E C I T A L S
                                ---------------

     WHEREAS, Employer desires to obtain the benefit of the services of Employee
as an employee of Employer for the period of time provided in this Agreement;
and

     WHEREAS, Employee desires to render services for Employer on the terms and
conditions hereinafter provided; and

     WHEREAS, Employer desires that Employee be able to participate in Parent's
stock option and incentive compensation plans; and

     WHEREAS, the Compensation Committee of the Board of Directors of Parent
deems it advisable and in the best interests of Parent and Employer to enter
into this Employment Agreement with Employee;

                               A G R E E M E N T
                               -----------------

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:

                                   ARTICLE I

                                  Employment

     1.1  Employment.  Effective on the Effective Date the Employer shall employ
          ----------
the Employee and the Employee shall accept employment by the Employer for the
period and upon the terms and conditions contained in this Agreement.

     1.2  Term.  The term of this Agreement shall commence on the Effective Date
          ----
and shall end on the four (4) year anniversary of the Effective Date (the
"Original Term"), unless earlier terminated as provided herein (the period from
the Effective Date to the four (4) year anniversary of the Effective Date, or to
the date of such earlier termination, as applicable, is hereinafter referred to
as the "Term").  At the expiration of the Original Term, this Agreement shall
automatically be renewed on a year to year basis unless notice of any decision
not to renew this Agreement is given by the Employer or the Employee at least
365 days prior to the expiration of the Original Term or any such one year term
or unless earlier terminated as provided herein.
<PAGE>

     1.3  Position and Duties.
          -------------------

          (a) Position.  During the Term, the Employee shall serve as President
              --------
     and Chief Operating Officer of Employer, with authority, duties and
     responsibilities consistent with such position, and shall perform such
     other services for Employer, Parent and their affiliated entities
     consistent with such position as may be reasonably assigned to him from
     time to time by senior management and/or the boards of directors of
     Employer and/or Parent.  During the Term, Employee shall, if so elected or
     appointed, also accept election or appointment, and serve, as an officer
     and/or director of Employer or any of its affiliated entities and perform
     the duties appropriate thereto, without additional compensation other than
     as set forth herein. Employee's actions hereunder shall at all times be
     subject to the direction of the senior management and the boards of
     directors of Employer and Parent.

          (b) Commitment.  During the Term, the Employee shall devote
              ----------
     substantially all of his business time, energy, skill and best efforts to
     the performance of his duties hereunder in a manner that will faithfully
     and diligently further the business and interests of Employer, Parent and
     their affiliated entities.  Subject to the foregoing, the Employee may
     serve in any capacity with any civic, educational or charitable
     organization; provided that such activities and services do not interfere
     or conflict with the performance of his duties hereunder.  Further subject
     to the foregoing, the Employee may serve as a director of other
     corporations;  provided, however, that such service or position is approved
                    --------  -------
     in advance by the Board of Directors of Parent and further that such
     service or position does not at any time during the Term interfere or
     conflict with the performance of his duties hereunder.  Employee shall
     comply with policies, standards and regulations established from time to
     time by senior management and/or the boards of directors of Employer and
     Parent.

     1.4  Compensation.
          ------------

          (a) Base Salary.  Subject to Section 1.4(c) below, beginning on the
              -----------
     Effective Date, Employer shall pay the Employee as compensation an
     aggregate salary ("Base Salary") of $400,000 per year during the Term, or
     such greater amount as shall be approved in accordance with the policies of
     Employer and/or Parent, as applicable.  The Base Salary for each year shall
     be paid by Employer in accordance with the regular payroll practices of
     Employer.

          (b) Annual Incentive Payment.  Each year during the Term, the Employee
              ------------------------
     shall be eligible to participate in an annual incentive plan approved by
     the Compensation Committee of Parent's Board of Directors.  Subject to any
     required approvals of the Compensation Committee of the Board of Directors
     of Parent and subject to achievement of specified goals (the "Goals"), for
     the fiscal year ending in November 1999, Employee will be eligible to earn
     a pro rated annual incentive payment at the 50% target level (i.e., 50% of
     his base salary earned during such fiscal year), which incentive payment
     may be less than such target level or up to two times such target level.

                                       2
<PAGE>

          (c) Withholding.  With respect to any compensation received by
              -----------
     Employee with respect to Employee's services for Employer or any of its
     affiliates, Employer will deduct such withholding and other payroll taxes
     as are required to be withheld by Employer under applicable law.

          (d) Stock Options.  Parent will recommend to the Compensation
              -------------
     Committee of the Board of Directors of Parent that Employee be granted a
     stock option  (the "Option") entitling him to purchase 200,000 shares of
     Parent's common stock at the reported market closing sales price thereof on
     the date of grant.  The Option shall become exercisable by the Employee at
     the rate of 25% of the shares covered thereby per year, beginning on the
     first anniversary of the Effective Date in accordance with the terms of the
     Parent's 1993 Amended and Restated Long Term Incentive Plan; provided,
                                                                  --------
     however, that any unvested portion of the Option shall immediately vest if
     -------
     the Employee's employment is terminated Without Cause (defined below) or
     for Company Breach (defined below) or as a result of a Change in Control
     (defined below).  The Option shall contain such additional terms as are set
     forth in Parent's 1993 Amended and Restated Long Term Incentive Plan and as
     are established by the Compensation Committee of the Board of Directors of
     Parent.  Employee shall be entitled to annual consideration for future
     grants in amounts (if any) and on terms and conditions to be determined by
     the Compensation Committee of the Board of Directors.

          (e) Payment and Reimbursement of Expenses.  During the Term, Employer
              -------------------------------------
     shall pay or reimburse the Employee for all reasonable travel and other
     expenses incurred by the Employee in performing his obligations under this
     Agreement in accordance with the policies and procedures of Employer or
     Parent, provided that the Employee properly accounts therefor in accordance
     with the regular policies of Employer or Parent, as applicable.

          (f) Fringe Benefits and Perquisites.  During the Term, the Employee
              -------------------------------
     shall be entitled to participate in or receive benefits under any stock
     purchase, profit-sharing, pension, retirement, paid time off, life,
     medical, dental, disability or other plan or arrangement made generally
     available by Employer or Parent to employees, subject to and on a basis
     consistent with the terms, conditions and overall administration of such
     plans and arrangements.  Employee shall be credited with 10 years of
     service with the Employer as of the Effective Date for purposes of
     determining eligibility and vesting for paid time off and short-term
     disability benefits.

          (g) Relocation Expenses.  The Employee acknowledges and agrees that he
              -------------------
     will relocate his primary residence to the Dallas/Fort Worth area in order
     to perform his duties and responsibilities under this Agreement.  In
     connection with such relocation:

              (i)  The Employer agrees to reimburse the Employee for the
          reasonable costs of temporary corporate housing in the Dallas/Fort
          Worth area for up to 180 days from the Effective Date.

                                       3
<PAGE>

              (ii)  The Employer agrees to reimburse Employee for the cost of
          Employee's trips home to Connecticut on a bi-weekly basis for up to
          180 days from the Effective Date.  Reimbursable expenses include round
          trip coach air fare and any reasonable out-of-pocket expenses (i.e.,
          airport parking).

              (iii) The Employer shall reimburse Employee for the cost of two
          (2) house hunting trips for members of the Employee's immediate
          family. Reimbursable expenses include round trip coach air fare,
          automobile rental, reasonable costs for meals, lodging (if needed) and
          other reasonable out-of-pocket expenses.

              (iv)  The Employer shall reimburse Employee for all normal and
          customary costs associated with the sale of Employee's current
          residence, including broker's fees not to exceed 6%.

              (v)   The Employer shall reimburse Employee for all normal and
          customary costs associated with the purchase of a residence in the
          Dallas/Fort Worth area, including but not limited to survey fees, loan
          origination fees, title insurance and attorneys fees.

              (vi)  The Employer shall reimburse Employee for all normal and
          customary moving costs for household goods from Connecticut to the
          Dallas/Fort Worth area.

              (vii) The Employer shall reimburse Employee for all reasonable
          and customary out-of-pocket travel expenses incurred by Employee and
          his immediate family during the actual relocation from Connecticut to
          the Dallas/Fort Worth area.

          All amounts reimbursed pursuant to this subsection shall be grossed up
     for all applicable taxes.

     1.5  Termination.
          -----------

          (a) Disability.  Employer may terminate this Agreement for Disability.
              ----------
     "Disability" shall exist if, because of ill health or physical or mental
     disability, the Employee shall have been unable to perform his duties under
     this Agreement, with reasonable accommodation by the Employer, as
     determined in good faith by Parent's Board of Directors or a committee
     thereof, for a period of 180 consecutive days, or if, in any 12-month
     period, the Employee shall have been unable or shall have failed to perform
     his duties for a period of 270 or more business days, irrespective of
     whether or not such days are consecutive.

          (b) Cause.  Employer may terminate the Employee's employment for
              -----
     Cause. Termination for "Cause" shall mean termination because of the
     Employee's (i) the willful failure by Employee to perform his duties,
     provided that no act, or failure to act, on the Employee's part shall be
     considered "willful" unless the Board of Directors, in the

                                       4
<PAGE>

     reasonable exercise of its business judgment, determines that such act or
     failure to act was committed without good faith and without a reasonable
     belief that such act or failure to act was in the best interests of the
     Employer, Parent or their affiliated entities, (ii) misconduct that causes
     or is likely to cause material economic harm to Employer, Parent or their
     affiliated entities or that brings or is likely to bring material discredit
     to the reputation of Employer, Parent or any of their affiliated entities,
     as determined by the Board of Directors of Parent in good faith, (iii)
     failure to substantially follow directions of senior management or the
     boards of directors of Employer or Parent that are consistent with his
     duties under this Agreement, provided that no act, or failure to act, on
     the Employee's part shall be deemed to constitute Cause unless done, or
     omitted to be done, by the Employee not in good faith and without
     reasonable belief that the Employee's act, or failure to act, was in or not
     opposed to the best interest of Employer, (iv) conviction of, or entry of a
     pleading of guilty or nolo contendre to, any felony involving moral
     turpitude or entry of an order duly issued by any federal or state
     regulatory agency having jurisdiction in the matter permanently prohibiting
     Employee from participating in the conduct of the affairs of Employer,
     Parent or their affiliated entities, or (v) any other material breach of
     any provision of this Agreement. Items (i), (ii), (iii) and (v) of this
     subsection shall not constitute Cause unless Employer or Parent notified
     the Employee thereof in writing, specifying in reasonable detail the basis
     therefor and stating that it is grounds for Cause. Furthermore, if the
     Employee's actions are curable, items (i), (ii), (iii) and (v) of this
     subsection shall not constitute Cause unless the Employee fails to cure
     such matter within 30 days after such notice is sent or given under this
     Agreement. It is understood that "Cause" shall not include a failure to
     perform due to a Disability.

          (c) Without Cause.  During the Term, Employer may terminate the
              -------------
     Employee's employment Without Cause, subject to the provisions of
     subsection 1.6(c) (Termination Without Cause or for Company Breach).
                        -----------------------------------------------
     Termination "Without Cause" shall mean termination of the Employee's
     employment by Employer other than termination for Cause or for Disability.

          (d) Company Breach.  The Employee may terminate his employment
              --------------
     hereunder for Company Breach.  For purposes of this Agreement a "Company
     Breach" shall be deemed to occur in the event of a material breach of this
     Agreement by Employer or Parent; provided, however, that the Employee shall
                                      --------  -------
     not be entitled to terminate for Company Breach unless the Employee
     notifies Employer thereof in writing, specifying in reasonable detail the
     basis therefor and stating that it is grounds for Company Breach, and
     unless Employer fails to cure such Company Breach within 30 days after such
     notice is sent or given under this Agreement.  For purposes of this
     Agreement, a material breach by Employer or Parent shall include, without
     limitation, (i) the material reduction without his consent of the title,
     authority, duties or responsibilities that the Employee has on the
     Effective Date, (ii) the reduction in the Employee's annual base salary as
     in effect on the Effective Date, (iii) if the Employee's eligibility for a
     bonus in any fiscal year (provided that all performance standards
     established for him have been achieved) shall be, in terms of a percentage
     of base salary, any

                                       5
<PAGE>

     amount less than the percentage of base salary established for the Chief
     Executive Officer of Parent for such fiscal year, (iv) if the Employee's
     eligibility for bonus in any fiscal year shall be based on performance
     standards that are materially greater or different than those established
     for the Chief Executive Officer of Parent, or (v) the relocation of the
     Employer's principal office, or the Employee's own office location as
     assigned to him by Employer, to a location more than 50 miles from the
     present location of Employer's principal office.

          (e) Change in Control.  The Employee may terminate his employment
              -----------------
     hereunder within 12 months of a Change in Control (defined below):

               (i)  "Change in Control" shall mean any of the following:

                    (1) any consolidation or merger of Parent in which Parent is
               not the continuing or surviving corporation or pursuant to which
               shares of Parent's common stock would be converted into cash,
               securities or other property, other than a merger of Parent in
               which the holders of Parent 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 Parent;

                    (3) any approval by the stockholders of Parent of any plan
               or proposal for the liquidation or dissolution of Parent;

                    (4) the cessation of control (by virtue of their not
               constituting a majority of directors) of Parent's Board of
               Directors by the individuals (the "Continuing Directors") who (x)
               at the date of this Agreement were directors or (y) become
               directors after the date of this Agreement and whose election or
               nomination for election by Parent's stockholders, was approved by
               a vote of at least two-thirds of the directors then in office who
               were directors at the date of this Agreement or whose election or
               nomination for election was previously so approved); or

                    (5) (A) the acquisition of beneficial ownership ("Beneficial
               Ownership"), within the meaning of Rule 13d-3 under the
               Securities Exchange Act of 1934, as amended (the "Exchange Act"),
               of an aggregate of 15% or more of the voting power of Parent's
               outstanding voting securities by any person or group (as such
               term is used in Rule 13d-5 under the Exchange Act) who
               Beneficially Owned less than 10% of the voting power of Parent's
               outstanding voting securities on the Effective Date of this
               Agreement, (B) the

                                       6
<PAGE>

               acquisition of Beneficial Ownership of an additional 5% of the
               voting power of Parent's outstanding voting securities by any
               person or group who Beneficially Owned at least 10% of the voting
               power of Parent's outstanding voting securities on the Effective
               Date of this agreement, or (C) the execution by Parent and a
               stockholder of a contract that by its terms grants such
               stockholder (in its, hers or his capacity as a stockholder) or
               such stockholder's Affiliate (as defined in Rule 405 promulgated
               under the Securities Act of 1933 (an "Affiliate")) including,
               without limitation, such stockholder's nominee to Parent's Board
               of Directors (in its, hers or his capacity as an Affiliate of
               such stockholder), the right to veto or block decisions or
               actions of Parent's Board of Directors; provided, however, that
                                                       --------  -------
               notwithstanding the foregoing, the events described in items (A),
               (B) or (C) above shall not constitute a Change in Control
               hereunder if the acquiror is (aa) Alan H. Goldfield or his
               Affiliates, (bb) a trustee or other fiduciary holding securities
               under an employee benefit plan of Employer, Parent or one of
               their affiliated entities and acting in such capacity, (cc) a
               corporation owned, directly or indirectly, by the stockholders of
               Parent in substantially the same proportions as their ownership
               of voting securities of Parent or (dd) a person or group meeting
               the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1)
               under the Exchange Act or (ee) in the case of an acquisition
               described in items (A) or (B) above (but not in the case of an
               acquisition described in item (C) above), any other person whose
               acquisition of shares of voting securities is approved in advance
               by a majority of the Continuing Directors;  provided further,
                                                           -------- -------
               however that none of the following shall constitute a Change in
               -------
               Control: (aa) the right of the holders of any voting securities
               of Parent to vote as a class on any matter or (bb) any vote
               required of disinterested or unaffiliated directors or
               stockholders including, without limitation, pursuant to Section
               144 of the Delaware General Corporation Law or Rule 16b-3
               promulgated pursuant to the Exchange Act.

                    (6) subject to applicable law, in a Chapter 11 bankruptcy
               proceeding, the appointment of a trustee or the conversion of a
               case involving Parent to a case under Chapter 7.

          (f)  Without Good Reason.  During the Term, the Employee may terminate
               -------------------
     his employment Without Good Reason upon 30 days prior written notice to
     Employer of such termination, which notice may be waived by Employer in
     Employer's discretion. Termination "Without Good Reason" shall mean
     termination of the Employee's employment by the Employee other than
     termination for Company Breach.

          (g)  Explanation of Termination of Employment. Any party terminating
               ----------------------------------------
     this Agreement shall give prompt written notice ("Notice of Termination")
     to the other party hereto advising such other party of the termination of
     this Agreement stating in reasonable

                                       7
<PAGE>

     detail the basis for such termination. The Notice of Termination shall
     indicate whether termination is being made for Cause, Without Cause or for
     Disability (if Employer has terminated the Agreement) or for Company
     Breach, upon a Change in Control or Without Good Reason (if the Employee
     has terminated the Agreement).

          (h) Date of Termination.  "Date of Termination" shall mean the last
              -------------------
     day of Employee's employment, as determined in accordance with this Section
     1.5.

     1.6  Compensation Upon Termination.
          -----------------------------

          (a) During Disability.  During any period that the Employee fails to
              -----------------
     perform his duties hereunder because of ill health or physical or mental
     disability, he shall continue to receive his full salary and benefits
     pursuant to Section 1.4 (Compensation) through the Date of Termination,
                              ------------
     after giving effect to all disability benefits received by Employee under
     the terms of any applicable disability policy.

          (b) Termination for Cause or Without Good Reason.  If Employer shall
              --------------------------------------------
     terminate the Employee's employment for Cause or if the Employee shall
     terminate his employment Without Good Reason, then Employer's obligation to
     pay salary and benefits pursuant to Section 1.4 (Compensation) shall
                                                      ------------
     terminate, except that Employer shall pay the Employee his accrued but
     unpaid salary and benefits pursuant to Section 1.4 (Compensation) through
                                                         ------------
     the Date of Termination.

          (c) Termination Without Cause or for Company Breach.   If Employer
              -----------------------------------------------
     shall terminate the Employee's employment Without Cause or if the Employee
     shall terminate his employment for Company Breach, then Employer shall pay
     to the Employee, as severance pay in a lump sum on the 15th day following
     the Date of Termination, the following amounts:

              (i)  his accrued but unpaid Base Salary through the Date of
          Termination at the rate in effect as of the Date of Termination; and

              (ii) in lieu of any further Base Salary and Annual Incentive
          Payments for periods subsequent to the Date of Termination, an amount
          equal to the product of (A) the sum of Employee's Base Salary at the
          rate in effect as of the Date of Termination plus the amount of the
          Annual Incentive Payment paid to the Employee for the preceding year
          (or an annualized equivalent of the Annual Incentive Payment paid for
          any shorter period) divided by 365 and (B) multiplied by the lesser of
          (y) 720, or (z) the number of days from the Date of Termination to the
          last day of the Original Term or the applicable renewal term, but in
          no event less than 365 days.

                                       8
<PAGE>

     In addition, the Employee will be entitled to a prorated portion of any
     annual incentive payment earned for the fiscal year in which his employment
     is terminated, if earned in accordance with the terms of its grant.

          Employee hereby acknowledges and agrees that the payments by the
     Employer under this Section 1.6(c) shall be the sole and exclusive remedy
     of the Employee for termination of Employee's employment Without Cause or
     by reason of a Company Breach, and Employee hereby waives any and all other
     remedies under law or in equity.

          If the Employee terminates his employment for Company Breach based
     upon a material reduction by Employer of the Employee's Base Salary, then
     for purposes of this subsection 1.6(c) (Termination Without Cause or for
                                             --------------------------------
     Company Breach), the Employee's Base Salary as of the Date of Termination
     --------------
     shall be deemed to be the Employee's Base Salary immediately prior to the
     reduction that the Employee claims as grounds for Company Breach.

          (d) Termination Upon a Change in Control.  If the Employee terminates
              ------------------------------------
     his employment after a Change in Control pursuant to subsection 1.5(e)
     (Change in Control), then Employer shall pay to the Employee as severance
     ------------------
     pay and as liquidated damages (because actual damages are difficult to
     ascertain), in a lump sum, in cash, within 15 days after termination, an
     amount which, when combined with all payments under Section 1.6(c), equals
     $100 less than three (3) times the Employee's "annualized includable
     compensation for the base period" (as defined in Section 280G of the
     Internal Revenue Code of 1986); provided, however, that if such lump sum
                                     --------  -------
     severance payment, either alone or together with other payments or
     benefits, either cash or non-cash, that the Employee has the right to
     receive from Employer, including, but not limited to, accelerated vesting
     or payment of any deferred compensation, options, stock appreciation rights
     or any benefits payable to the Employee under any plan for the benefit of
     employees, would constitute an "excess parachute payment" (as defined in
     Section 280G of the Internal Revenue Code of 1986), then such lump sum
     severance payment or other benefit shall be reduced to the largest amount
     that will not result in receipt by the Employee of a parachute payment.
     The determination of the amount of the payment described in this subsection
     shall be made by Parent's independent auditors.

          (e) Termination for Disability.  If Employer shall terminate the
              --------------------------
     Employee's employment for Disability, Employer's obligation to pay salary
     and benefits pursuant to Section 1.4 (Compensation) shall terminate, except
                                           ------------
     that Employer shall pay the Employee accrued but unpaid salary and benefits
     pursuant to Section 1.4 (Compensation) through the Date of Termination,
                              ------------
     after giving effect to all disability benefits received by Employee under
     the terms of any applicable disability policy.

          (f) Employee Benefits.   Employer shall maintain in full force and
              -----------------
     effect (to the extent consistent with past practice), for the continued
     benefit of Employee and, if

                                       9
<PAGE>

     applicable, his wife and children, the employee benefits set forth in
     subsections 1.4(f) (Fringe Benefits and Perquisites) through the Date of
                         -------------------------------
     Termination (subject to the provisions of Section 1.6(e)); provided that
     his continued participation or, if applicable, the participation of his
     wife and children, is possible under the general terms and conditions of
     such plans and programs. Following the Date of Termination, Employee and
     his eligible dependents shall be eligible for continued health coverage in
     accordance with the terms of applicable law.

     1.7  Death of Employee.  If Employee dies prior to the expiration of this
          -----------------
Agreement, Employee's employment and other obligations under this Agreement
shall automatically terminate and all compensation to which Employee is or would
have been entitled hereunder (including without limitation under subsections
1.4(a) (Base Salary) and 1.4(b) (Annual Incentive Payment)) shall terminate as
        -----------              ------------------------
of the end of the month in which Employee's death occurs; provided, however,
                                                          --------  -------
that (i) Employer shall pay to Employee's estate, as soon as practicable, a
prorated Annual Incentive Payment, if earned in accordance with Parent's annual
incentive plan; and (ii) for the balance of the month in which Employee's death
occurs, Employee's wife and children shall be entitled to receive their benefits
under Employer's group hospitalization, medical and dental plans (if any), to
the extent permitted under the terms of such plans, and thereafter Employee's
dependents shall have a right to continued health coverage in accordance with
the terms of applicable law.


                                   ARTICLE 2

                      Non-Competition and Confidentiality

     2.1  Training/Confidential Information.  For purposes of this Article 2
          ---------------------------------
(Non-Competition and Confidentiality), the term "the Company" shall be construed
------------------------------------
also to include Employer, Parent and any and all Affiliates of Employer and
Parent.  The Company agrees that it will provide Employee with specialized
knowledge and training regarding the business in which the Company is involved,
and will provide Employee with initial and ongoing confidential information and
trade secrets of the Company (hereinafter referred to as "Confidential
Information").  For purposes of this Agreement, Confidential Information
includes, but is not limited to:

          (a) Customer lists and prospect lists developed by the Company;

          (b) Information regarding the Company's customers which Employee
     acquired as a result of his employment with the Employer, including but not
     limited to, customer contracts, work performed for customers, customer
     contacts, customer requirements and needs, data used by the Company to
     formulate customer bids, customer financial information and other
     information regarding the customer's business;

          (c) Information regarding the Company's vendors which Employee
     acquired as a result of his employment with the Employer, including but not
     limited to, product and service information and other information regarding
     the business activities of such vendors;

                                       10
<PAGE>

          (d) Information related to the Company's business, including but not
     limited to marketing strategies and plans, sales procedures, operating
     policies and procedures, pricing and pricing strategies, business plans,
     sales, profits, and other business and financial information of the
     Company;

          (e) Training materials developed by and utilized by the Company;

          (f) Any other information which Employee acquired as a result of his
     employment with the Employer and which Employee has a reasonable basis to
     believe the Company would not want disclosed to a business competitor or to
     the general public.

          (g)  Information which:

               (i)   is proprietary to, about or created by the Company;

               (ii)  gives the Company some competitive advantage, the
          opportunity of obtaining such advantage or the disclosure of which
          could be detrimental to the interests of the Company;

               (iii) is not typically disclosed to non-employees by the
          Company, or otherwise is treated as confidential by the Company; or

               (iv)  is designated as Confidential Information by the Company or
          from all the relevant circumstances should reasonably be assumed by
          the Employee to be confidential to the Company.

Notwithstanding the foregoing, Confidential Information shall not include any
information that is or has become public knowledge, other than by acts by the
Employee or representatives of the Employee in violation of this Agreement.

     2.2  Non-Disclosure.  The Employee acknowledges, understands and agrees
          --------------
that all Confidential Information, whether developed by the Company or others or
whether developed by the Employee while carrying out the terms and provisions of
this Agreement (or previously while serving as an officer of the Company), shall
be the exclusive and confidential property of the Company and (i) shall not be
disclosed to any person (except as otherwise required by law or legal process)
other than employees of the Company and professionals engaged on behalf of the
Company, and other than disclosure in the scope of the Company's business in
accordance with the Company's policies for disclosing information, (ii) shall be
safeguarded and kept from unintentional disclosure and (iii) shall not be used
for the Employee's personal benefit.  Subject to the terms of the preceding
sentence, the Employee shall not use, copy or transfer Confidential Information
other than as is necessary in carrying out his duties under this Agreement.

                                       11
<PAGE>

     2.3  Return of Company Property and Information.  Upon termination of
          ------------------------------------------
employment, or at any earlier time as directed by Company, Employee shall
immediately deliver to Company any and all Confidential Information in
Employee's possession, any other documents or information which Employee
acquired as a result of his employment with Employer, and any copies of such
documents/information.  Employee shall not retain any originals or copies of
such documents or materials related to Company's business which Employee came
into possession of or created as a result of his employment at Company.
Employee acknowledges that such information, documents and materials are the
exclusive property of Company.  Upon termination of employment, or at any
earlier time as directed by Company, Employee shall immediately deliver to
Company any property of Company in Employee's possession.  Employee agrees that
should he fail to return any Company property, Company shall be entitled to
deduct from any sums otherwise due Employee (including, but not necessarily
limited to wages and expense reimbursements) the cost and/or value of any
property which Employee fails to return, up to the maximum amount allowed by
law.  Employee hereby authorizes Company to deduct and/or withhold any such sums
from Employee's wages and/or other sums due Employee.

     2.4  Non-Competition.
          ---------------

          (a)  Description of Proscribed Actions.  During the Term and for a
               ---------------------------------
     period of 18 months thereafter (or 12 months thereafter in the event of
     Termination Without Cause or for Company Breach), in consideration for the
     obligations of Employer and Parent hereunder, including without limitation
     their disclosure (pursuant to subsection 2.1 (Training/Confidential
                                                   ---------------------
     Information) above) of Confidential Information, the Employee shall not:
     -----------

               (i)  directly or indirectly, engage or invest in, own, manage,
          operate, control or participate in the ownership, management,
          operation or control of, be employed by, associated or in any manner
          connected with, or render services or advice to, any Competing
          Business (defined below); provided, however, that the Employee may
                                    --------  -------
          invest in the securities of any enterprise (but without otherwise
          participating in the activities of such enterprise) if (x) such
          securities are listed on any national or regional securities exchange
          or have been registered under Section 12(g) of the Exchange Act and
          (y) the Employee does not beneficially own (as defined Rule 13d-3
          promulgated under the Exchange Act) in excess of 5% of the outstanding
          capital stock of such enterprise;

               (ii) directly or indirectly, either as principal, agent,
          independent contractor, consultant, director, officer, employee,
          employer, advisor (whether paid or unpaid), stockholder, partner or in
          any other individual or representative capacity whatsoever, either for
          his own benefit or for the benefit of any other person or entity,
          solicit, divert or take away any suppliers, customers or clients of
          the Company or any of its Affiliates; or

                                       12
<PAGE>

               (iii)  directly or indirectly, either as principal, agent,
          independent contractor, consultant, director, officer, employee,
          employer, advisor (whether paid or unpaid), stockholder, partner or in
          any other individual or representative capacity whatsoever, either for
          his own benefit or for the benefit of any other person or entity,
          either (i) hire, attempt to hire, contact or solicit with respect to
          hiring, any employee of Employer or Parent or any Affiliate thereof,
          (ii) induce or otherwise counsel, advise or encourage any employee of
          Employer, Parent or any Affiliate thereof to leave the employment of
          Employer, Parent or any Affiliate thereof, or (iii) induce any
          representative or agent of Employer, Parent or any Affiliate thereof
          to terminate or modify its relationship with Employer, Parent or such
          Affiliate.

          (b)  Judicial Modification.  The Employee agrees that if a court of
               ---------------------
     competent jurisdiction determines that the length of time or any other
     restriction, or portion thereof, set forth in this Section 2.4 (Non-
                                                                     ---
     Competition) is overly restrictive and unenforceable, the court may reduce
     -----------
     or modify such restrictions to those which it deems reasonable and
     enforceable under the circumstances, and as so reduced or modified, the
     parties hereto agree that the restrictions of this Section 2.4 (Non-
                                                                     ---
     Competition) shall remain in full force and effect. The Employee further
     -----------
     agrees that if a court of competent jurisdiction determines that any
     provision of this Section 2.4 (Non-Competition) is invalid or against
                                    ---------------
     public policy, the remaining provisions of this Section 2.4 (Non-
                                                                  ---
     Competition) and the remainder of this Agreement shall not be affected
     -----------
     thereby, and shall remain in full force and effect.

          (c)  Nature of Restrictions.  The Employee acknowledges that the
               ----------------------
     business of Employer and Parent and their Affiliates is international in
     scope and that the Restrictions imposed by this Agreement are legitimate,
     reasonable and necessary to protect Employer's, Parent's and their
     Affiliates' investment in their businesses and the goodwill thereof.  The
     Employee acknowledges that the scope and duration of the restrictions
     contained herein are reasonable in light of the time that the Employee has
     been or will be engaged in the business of Employer, Parent and/or their
     Affiliates, and the Employee's relationship with the suppliers, customers
     and clients of Employer, Parent and their Affiliates.  The Employee further
     acknowledges that the restrictions contained herein are not burdensome to
     the Employee in light of the consideration paid therefor and the other
     opportunities that remain open to the Employee.  Moreover, the Employee
     acknowledges that he has other means available to him for the pursuit of
     his livelihood.

          (d)  Competing Business.  "Competing Business" shall mean any
               ------------------
     individual, business, firm, company, partnership, joint venture,
     organization, or other entity engaged in the wholesale distribution or
     retail sales of wireless communication equipment in any domestic or
     international market area in which Employer, Parent or any of their
     Affiliates does business at any time during the Employee's employment with
     Employer or any of its Affiliates.

                                       13
<PAGE>

     2.5  Injunctive Relief.  Because of the Employee's experience and
          -----------------
reputation in the industries in which Employer, Parent and their Affiliates
operate, and because of the unique nature of the Confidential Information, the
Employee acknowledges, understands and agrees that Employer and Parent will
suffer immediate and irreparable harm if the Employee fails to comply with any
of his obligations under Article 2 (Non-Competition and Confidentiality) of this
                                    -----------------------------------
Agreement, and that monetary damages will be inadequate to compensate Employer
and Parent for such breach.  Accordingly, the Employee agrees that Employer and
Parent shall, in addition to any other remedies available to them at law or in
equity, be entitled to injunctive relief to enforce the terms of Article 2 (Non-
                                                                            ---
Competition and Confidentiality), without the necessity of proving inadequacy of
-------------------------------
legal remedies or irreparable harm.

                                   ARTICLE 3

                  Representations and Warranties by Employee

     Employee hereby represents and warrants, the same being part of the essence
of this Agreement, that, as of the Effective Date, he is not a party to any
agreement, contract or understanding, and that no facts or circumstances exist,
that would in any way restrict or prohibit him from undertaking or performing
any of his obligations under this Agreement.  The foregoing representation and
warranty shall remain in effect throughout the Term.

                                   ARTICLE 4

                                Indemnification

     Parent agrees to indemnify, and advance expenses to, the Employee to the
extent provided in the Certificate of Incorporation and Bylaws of Parent as of
the date of this Agreement.  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 Parent's
Certificate of Incorporation and Bylaws and this Agreement, it is the intent of
the parties hereto that the Employee shall enjoy by this Agreement the greater
benefits so afforded by such change.

                                   ARTICLE 5

                                 Miscellaneous

     5.1  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.

     5.2  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

                                       14
<PAGE>

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.

     5.3  Employee's Sole Remedy.  The Employee's sole remedy shall be against
          ----------------------
Employer or Parent 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 the termination of the
Employee's employment hereunder (collectively, "Employee Claims").  The Employee
shall have no claim or right of any nature whatsoever against any of Employer's
or its Affiliates' 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 Employee Claim.  The Employee hereby releases and covenants
not to sue any person other than Employer or Parent over any Employee Claim.
The persons described in this Section 5.3 (other than Employer, Parent and the
Employee) shall be third-party beneficiaries of this Agreement for purposes of
enforcing the terms of this Section 5.3 (Employee's Sole Remedy) against the
                                        -----------------------
Employee.

     5.4  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 the Employee:

               Dale H. Allardyce
               10 Keeler's Ridge
               Wilton, Connecticut 06897

          If to Employer or Parent:

               CellStar Corporation
               1730 Briercroft Court
               Carrollton, Texas  75006
               Attn:  General Counsel

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.

     5.5  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

                                       15
<PAGE>

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.

     5.6  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.

     5.7  Headings; Index.   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.

     5.8  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.

     5.9  Dispute Resolution.  Subject to Employer's and Parent's right to seek
          ------------------
injunctive relief in court as provided in Section 2.5 (Injunctive Relief) 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 any
party may submit such dispute, controversy or claim, including a claim for
indemnification under this Section 5.9 (Dispute Resolution), to arbitration.
                                        ------------------

          (a) Arbitrators.  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

                                       16
<PAGE>

     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)  Proceedings.  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;

               (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.

     5.10 Survival.  The covenants and agreements of the parties set forth in
          --------
Article 2 (Non-Competition and Confidentiality), and Article 5 (Miscellaneous)
           -----------------------------------                  -------------
are of a continuing nature and

                                       17
<PAGE>

shall survive the expiration, termination or cancellation of this Agreement,
regardless of the reason therefor.

     5.11 Subrogation.  In the event of payment under this Agreement, Employer
          -----------
and Parent shall be subrogated to the extent of such payment to all of the
rights of recovery of the Employee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable Employer or Parent effectively
to bring suit to enforce such rights.

     5.12 No Duplication of Payments.  Employer and Parent shall not be liable
          --------------------------
under this Agreement to make any payment in connection with any claim made
against  the Employee to the extent the Employee has otherwise actually received
payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.

     5.13 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 Employer, Parent, spouses, heirs, and personal and legal
representatives.  Employer and Parent 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 their business or assets, by
written agreement in form and substance satisfactory to the Employee, expressly
to assume and agree to perform this Agreement in the same manner and to the same
extent that Employer or Parent would be required to perform if no such
succession had taken place.

     5.14 Contribution.  If the indemnity contained in this Agreement is
          ------------
unavailable or insufficient to hold the Employee harmless in a Claim for an
Indemnifiable Event, then separate from and in addition to the indemnity
provided elsewhere herein, Parent shall contribute to Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of the Employee in connection with such Claim in such proportion
as appropriately reflects the relative benefits received by, and fault of,
Parent on the one hand and the Employee on the other in the acts, transactions
or matters to which the Claim relates and other equitable considerations.

     5.15 Parent Guaranty.  Parent guarantees the payment and performance of all
          ---------------
obligations of Employer under this Agreement and agrees it will pay or perform
those obligations if for any reason Employer fails to do so.  This guarantee is
absolute, continuing, irrevocable and not conditional or contingent.  Any notice
given hereunder to either Employer or Parent will be deemed to be notice to
Parent for purposes of this guaranty.

                                       18
<PAGE>

     IN WITNESS WHEREOF, Employer and Parent have caused this Agreement to be
executed by their officer/general partner thereunto duly authorized, and
Employee has signed this Agreement, as of the date first set forth above.


                              CELLSTAR LTD
                              By:   National Auto Center, Inc.
                                    General Partner


                              By: /s/ Alan H. Goldfield
                                  ----------------------------------
                                  Alan H. Goldfield
                                  Chairman and CEO



                              CELLSTAR CORPORATION


                              By: /s/  Alan H. Goldfield
                                  ----------------------------------
                                  Alan H. Goldfield
                                  Chairman and CEO



                              /s/ Dale H. Allardyce
                              --------------------------------------
                              Dale H. Allardyce

                                       19