-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OLQSYGqxc0KShduvnv3srrjKJL0VB59gw21wgU+b2VjigeXLRux7kSl+rWTYZKL3 BzZqwijEEE3PylE6mrmaDw== 0000906280-97-000004.txt : 19970115 0000906280-97-000004.hdr.sgml : 19970115 ACCESSION NUMBER: 0000906280-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMPO ELECTRONICS APPLIANCES & COMPUTERS INC CENTRAL INDEX KEY: 0000895693 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731] IRS NUMBER: 720721367 STATE OF INCORPORATION: LA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21192 FILM NUMBER: 97505902 BUSINESS ADDRESS: STREET 1: 109 NORTHPARK BLVD SUITE 500 CITY: COVINGTON STATE: LA ZIP: 70433 BUSINESS PHONE: 5048765000 MAIL ADDRESS: STREET 1: 109 NORTH PARK BLVD STE 500 CITY: COVINGTON STATE: LA ZIP: 70433 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 0-21192 CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. (Exact Name of Registrant as Specified in its Charter) LOUISIANA 72-0721367 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 109 NORTH PARK BLVD., COVINGTON, LOUISIANA 70433 (Address of Principal Executive Offices) (Zip Code) (504) 867-5000 Registrant's Telephone Number, Including Area Code Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------- -------- At January 10, 1997, there were 5,566,906 shares of common stock, $.10 par value, outstanding. CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. INDEX Part I. Financial Information Page Item 1. Financial Statements 3 Statements of Operations - Three Months Ended November 30, 1996 and 1995 3 Balance Sheets - November 30, 1996, August 31, 1996 and November 30, 1995 4 Statements of Cash Flows - Three Months Ended November 30, 1996 and 1995 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 1995 Net sales $ 65,762,745 $ 78,955,480 Cost of sales 52,892,913 61,078,404 ------------ ------------ Gross profit 12,869,832 17,877,076 Selling, general and administrative expenses 13,798,856 17,096,894 ------------ ------------ Operating income (loss) (929,024) 780,182 Other income (expense): Interest expense (449,516) (492,849) Interest income 19,703 35,007 Other income, net 58,739 120,999 ------------ ------------ (371,074) (336,843) Income (loss) before income taxes (1,300,098) 443,339 Income tax expense (benefit) (494,000) 168,000 ------------ ------------ Net Income (loss) $ (806,098) $ 275,339 ============ ============ Per share data: Net income (loss) per share $ (0.14) $ .05 ============ ============ Weighted average number of common shares outstanding 5,566,906 5,566,906 ============ ============ The accompanying notes are an integral part of these financial statements. CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. BALANCE SHEETS (UNAUDITED)
November 30, August 31, November 30, 1996 1996 1995 ASSETS ---- ---- ---- ------ Current assets: Cash and cash equivalents 4,286,559 $ 3,303,822 $ 4,576,346 Investments in marketable securities 140,288 129,788 162,864 Receivables (net of an allowance of $2.6 million at November 30, 1996; $2.9 million at August 31, 1996 and $2.7 million at November 30, 1995) 17,492,348 14,561,102 20,508,078 Merchandise inventory 72,624,838 56,387,842 82,206,454 Deferred income taxes 2,411,000 3,033,000 4,496,576 Other 576,100 471,399 1,247,623 ------------ ------------ ------------ Total current assets 97,531,133 77,886,953 113,197,941 Property and equipment, net 35,957,335 36,376,959 38,850,993 Deferred income taxes 811,000 1,234,000 3,145,734 Intangibles and other 3,464,499 3,535,639 3,618,001 ------------ ------------ ------------ $137,763,967 $119,033,551 $158,812,669 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Current portion of long-term debt $ 16,213,515 $ 2,478,179 $ 2,591,189 Short-term borrowings - line of credit 9,250,000 ----- 3,500,000 Accounts payable 57,508,716 47,793,786 72,094,555 Accrued expenses 9,198,338 7,169,218 10,891,778 Deferred revenue 4,142,875 4,621,294 6,118,671 ------------ ------------ ------------ Total current liabilities 96,313,444 62,062,477 95,196,193 ------------ ------------ ------------ Long-term debt, less current portion 4,331,664 18,191,371 19,930,909 Deferred revenue 3,789,041 4,650,296 7,931,916 ------------ ------------ ------------ 8,120,705 22,841,667 27,862,825 ------------ ------------ ------------ Commitments and contingencies Shareholders' equity: Preferred stock, 500,000 shares authorized, no shares issued or outstanding ----- ----- ----- Common stock, $.10 par value; 20,000,000 shares authorized, 5,566,906 issued and outstanding at November 30, 1996 and 1995 and August 31, 1996 556,691 556,691 556,691 Paid-in capital 32,373,306 32,373,306 32,373,306 Retained earnings 582,750 1,388,849 3,052,248 Less: Unearned compensation ----- ----- (59,063) Unrealized loss on marketable securities available for sale (182,929) (189,439) (169,531) ------------ ------------ ------------ Total shareholders' equity 33,329,818 34,129,407 35,753,651 ------------ ------------ ------------ $137,763,967 $119,033,551 $158,812,669 ============ ============ ============
The accompanying notes are an integral part of these financial statements. CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 1995 Cash flow from operating activities: Net income (loss) $ (806,098) $ 275,339 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,079,062 1,720,082 Deferred income taxes 1,041,010 ----- Stock awards ----- 8,437 Provision for uncollectible receivables 298,626 66,350 Loss on disposal of assets 51,051 ----- (Increase) decrease in assets: Receivables (3,229,871) (1,170,753) Merchandise inventory (16,236,996) (21,948,047) Other current assets (130,965) (120,007) Increase (decrease) in liabilities: Accounts payable 9,714,930 17,790,787 Accrued expenses 2,029,119 3,672,273 Deferred revenue (1,339,674) (1,914,677) ------------ ------------ Net cash used in operating activities (7,529,806) (1,620,216) ------------ ------------ Cash flow from investing activities: Purchase of property and equipment (670,463) (237,693) Decrease in other assets 57,377 23,722 ------------ ------------ Net cash used in investing activities (613,086) (213,971) ------------ ------------ Cash flow from financing activities: Decrease in long-term debt (124,371) (194,787) Borrowings under line of credit 17,050,000 21,300,000 Repayments under line of credit (7,800,000) (17,800,000) ------------ ------------ Net cash provided by financing activities 9,125,629 3,305,213 ------------ ------------ Net increase in cash and cash equivalents 982,737 1,471,026 Cash and cash equivalents at beginning of period 3,303,822 3,105,320 ------------ ------------ Cash and cash equivalents at end of period $ 4,286,559 $ 4,576,346 ============ ============ Cash paid during the period for: Interest expense $ 386,955 $ 190,550 ============ ============ Income taxes $ 26,000 $ 69,220 ============ ============ Supplemental schedule of noncash investing and financial activities: Assets acquired under capital lease $ 275,368 ----- ============ ============ The accompanying notes are an integral part of these financial statements. CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (1) Basis of Presentation The information for the three months ended November 30, 1996 and 1995 is unaudited, but in the opinion of management, reflects all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position and results of operations for the interim periods. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996. The results of operations for the three months ended November 30, 1996 are not necessarily indicative of the results to be expected for the full fiscal year ending August 31, 1997. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Overview The Company experienced comparable store sales declines of 15.9% during the quarter ended November 30, 1996 as compared to the same period last year, continuing a trend that began in the third quarter of fiscal 1995. The decline in comparable store sales reflects the combined impact of the general weakness in the retail consumer electronics industry, increased competition in many of the Company's principal markets, a slowdown in the development of new products in consumer electronic categories and reduced spending levels of consumers for non-essential goods due to record high debt levels. The relatively soft level of consumer demand within the consumer electronics and appliance industry has created a highly competitive and promotional climate, which, in turn, has had a negative impact on the Company's gross profit margins. Another factor causing the Company's margins to decline during the quarter ended November 30, 1996 was a change in vendor incentives, with vendors generally offering lower levels of rebates. In addition to the softness of consumer demand and lower levels of vendor rebates, the Company has also experienced a continued shift in product sales to the personal computer and home office categories, which are lower margin items. As previously disclosed, the poor performance of the retail industry and the Company over an extended period led management during fiscal 1996 to review the Company's operations and to explore methods to improve operational efficiency and reduce costs. To that end, the Company implemented several initiatives designed to improve the Company's operations. Although management is satisfied that these measures have begun and will continue to have a positive impact on the Company's performance, retail industry conditions have continued to deteriorate, leading management to conclude during the first quarter of fiscal 1997 that a comprehensive review of the Company's operations was appropriate. During the first quarter, management began a comprehensive study of the Company's operations to determine measures that are most likely to achieve an improvement in the performance of the Company. This process is expected to take several months to complete, and no recommendations have been developed thus far. Following development of such recommendations, the Company's board will determine which measures, if any, are appropriate to incorporate into an overall business plan for the Company. Although the overall plan is not yet complete, management has determined to close two of the Company's under performing stores during the second quarter of fiscal 1997, and the possibility exists that other significant changes to the Company's operations could be implemented following this review. As discussed in "Liquidity and Capital Resources," the Company recently secured from its lenders and the providers of its floor plan financing waivers of its non-compliance with certain financial covenants contained in its financing instruments. In addition, the Company was successful in achieving an amendment of the financial covenants to be in line with the Company's fiscal 1997 budget. However, to secure these waivers and amendments, the Company was required by the banks to accelerate the maturity date of its revolving credit and term facility to September 1, 1997. As a practical matter, this will require the Company to secure a replacement line of credit and term loan facility prior to the end of fiscal 1997. The information to be obtained from the Company's comprehensive review of its operations is expected to help ensure that the Company will be in a position to obtain the timely necessary replacement of its debt arrangements. Results of Operations The following table sets forth, for the periods indicated, the relative percentages that certain income and expense items bear to net sales: Three Months Ended ------------------ November 30, November 30, 1996 1995 Net sales 100.0% 100.0% Cost of sales 80.4 77.4 ----- ----- Gross profit 19.6 22.6 Selling, general and administrative expense 21.0 21.7 ----- ----- Operating income (loss) (1.4) 0.9 Interest expense (0.6) (0.6) Interest income 0.0 0.0 Other income, net 0.0 0.2 ---- ---- (0.6) (0.4) ---- ---- Income (loss) before income taxes (2.0) 0.5 Income tax expense (benefit) (0.8) 0.2 ---- ---- Net income (loss) (1.2)% 0.3% ==== ==== Three Months Ended November 30, 1996 as Compared to Three Months Ended November 30, 1995 Net sales for the three months ended November 30, 1996 decreased 16.7% to $65.8 million compared to $79.0 million for the same period in 1995. Comparable retail store sales for the three months ended November 30, 1996 decreased by 15.9%. The decline in sales reflects the combined impact of the general weakness in the retail consumer electronics industry, increased competition in many of the Company's principal markets, a slowdown in the development of new products in consumer electronic categories and reduced spending levels of consumers for non-essential goods due to record high debt levels. Extended warranty revenue recognized under the straight-line method (applicable to those extended warranty contracts sold prior to August 1, 1995) was $1.7 million and $2.4 million for the quarters ended November 30, 1996 and 1995, respectively. Extended warranty expenses for these same periods were $1.1 million and $1.5 million, respectively, before any allocation of other selling, general and administrative expenses. Since August 1, 1995, the Company has sold to an unaffiliated third party all extended warranty service contracts sold by the Company to customers on or after such date. The Company records the sale of these contracts, net of any related sales commissions and the fees paid to the third party, as a component of net sales and immediately recognizes revenue upon the sale of such contracts. Although the Company sells these contracts at a discount, the amount of the discount approximates the cost the Company would incur to service these contracts, while transferring the full obligation for future services to a third party. Net revenue from extended warranty contracts sold to the third party for the quarters ended November 30, 1996 and 1995 was $1.9 million and $2.6 million, respectively, representing a decrease of 28% in total warranty revenue recognized (both under the straight-line method and from sales to the third party) from the same period in 1995. Gross profit for the three months ended November 30, 1996 was $12.9 million or 19.6% of net sales as compared to $17.9 million, or 22.6% of net sales for the comparable period in the prior year. The gross profit percentage decrease was primarily driven by a combination of soft demand affecting the retail industry generally, increased competition (both in number of competitors and corresponding increased price competition) and a change by vendors in the type of incentive programs offered, with vendors generally offering lower levels of rebates. In addition, the Company also experienced a continued shift in product sales to the personal computer and home office categories, which are lower margin items. Selling, general and administrative expenses were $13.8 million or 21.0% of net sales for the three months ended November 30, 1996 as compared to $17.1 million, or 21.7% of net sales for the comparable period in the prior year. This percentage decrease was primarily due to increased vendor funding to offset advertising expenses, as well as an increase as a percentage of sales in promotional and other fees derived from the Company's private label credit card program as such fees remained constant in an environment of declining net sales. The Company also experienced a decrease in the amortization of pre- opening expenses, due to the fact that no new stores have been opened since August 1995. The Company's effective income tax rate was 38.0% and 37.9% for the three months ended November 30, 1996 and 1995, respectively. Net loss for the three months ended November 30, 1996 was $806,000 (or $.14 per share) compared to net income of $275,000 (or $.05 per share) for the same period in the prior fiscal year. The first quarter loss reflects the impact of intense competition in a weak retail industry and the other factors that had a negative impact on gross profits as discussed above. Poor results from two stores that management has decided to close contributed 38% of the Company's net loss for the 1996 period. Liquidity and Capital Resources Net cash used in operating activities was $7.5 million for the three months ended November 30, 1996, as compared to cash used in operating activities of $1.6 million for the three months ended November 30, 1995. The use of cash in both periods was primarily due to increases in merchandise inventory and receivables which were not completely offset by the related increase in accounts payable as the Company prepared for the Christmas selling season. The increase in cash used for the 1996 period over the 1995 period was due to the Company's prepayment of borrowings under its floor plan financing arrangements to take advantage of the more favorable interest rate under its bank line of credit facility. As of November 30, 1996, the Company used several "floor plan" finance companies to finance the majority of its merchandise purchases. The Company has an aggregate borrowing limit with these finance companies of approximately $105 million and it collateralizes the outstanding borrowings with merchandise inventory and certain receivables. Payment terms under these agreements range from 50 to 120 days. In addition, the Company finances inventory purchases through open-account arrangements with various vendors. As of November 30, 1996, the Company was not in compliance with certain of the financial covenants contained in one of its floor plan financing arrangements, but the Company has secured a waiver of these covenants from the finance company. The Company's long-term debt as of November 30, 1996 consisted of two term loans, one with a financial institution and the other with three banks. The principal balance of the term loan with the financial institution, which was $4.1 million at November 30, 1996, accrues interest, payable monthly, at the average weekly yield of 30 Day Commercial paper plus 1.80% (7.19% at November 30, 1996) with the balance of all outstanding principal due and payable at maturity on August 30, 2002. Outstanding amounts pursuant to this agreement are collateralized by the furniture, fixtures and equipment of the Company. Under its terms as of November 30, 1996, the term loan with the banks accrues interest, payable quarterly, at the Prime Rate, with the balance of all outstanding principal due and payable at maturity on August 31, 1998. Outstanding amounts pursuant to this agreement are collateralized by the Company's real estate. The outstanding principal balance and applicable interest rate on this term loan as of November 30, 1996 were $15.3 million and 8.25% (the Prime Rate), respectively. As part of the agreement with the banks, as of November 30, 1996 the Company also has available to it a $10 million line of credit. This line of credit accrues interest at the same rate as the bank term loan; however, interest is payable monthly. As of November 30, 1996, the Company had borrowings of $9.3 million outstanding on the line of credit. During periods of peak purchasing, the Company uses this line of credit to finance purchases. Both of these loan facilities contain certain restrictive covenants which require the Company to maintain minimum tangible net worth, as well as maximum debt to tangible net worth and minimum fixed charge coverage ratios. The term loan with the banks also contains a provision which prohibits the Company from paying dividends on its common stock. As of November 30, 1996, the Company was not in compliance with certain of the covenants contained in the bank term loan and the line of credit facility, but the Company has secured waivers of these covenants from the banks. On December 1, 1996, the term loan and line of credit facility with the banks was amended to (i) accelerate the maturity date on both facilities from August 31, 1998 to September 1, 1997, (ii) decrease the amount available under the line of credit to $5 million from January 1, 1997 through maturity, (iii) provide waivers of the Company's noncompliance with certain financial covenants for August 31, 1996 and the first quarter of fiscal 1997, suspend certain financial covenants through maturity and amend other financial covenants in line with the Company's fiscal 1997 budget and (iv) add certain inventory collateral to secure both facilities. The Company paid a small fee to secure the waivers and also agreed to an increase in the quarterly commitment fee payable on unfunded amounts under the line of credit facility. As a result of this amendment, it will be necessary for the Company to secure a replacement line of credit and term loan facility prior to the end of fiscal 1997. Management believes that it will be able to timely replace this facility on terms that, in the aggregate, would not be materially more onerous than those contained in the current facility and that the initiatives it implemented in fiscal 1996, the recently begun comprehensive study of its operations and the amendment to the credit facility should, given enough time to be fully implemented, enable the Company to reduce its operating costs and become more efficient and eventually improve its financial performance if the overall conditions of the industry stabilize. However, the performance of the Company's retail industry sector has been weak for a considerable period of time and any continued deterioration in retail industry conditions could materially impair the Company's ability to replace its bank credit facility at levels necessary to sustain the Company's current level of operations or at the current interest rate of such facility. In addition, the possibility exists that significant changes to the Company's operations could be implemented following the receipt of the results of the current comprehensive study, and no assurance can be given that measures that have already been implemented or any measures that may be implemented following the current study will be effective in improving the Company's performance. During the three months ended November 30, 1996 and 1995 the Company's net cash provided by financing activities was $9.1 million and $3.3 million, respectively. The primary source of cash during these periods was borrowings under short-term borrowing arrangements. The Company incurred capital expenditures of $670,000 and $238,000 during the three months ended November 30, 1996 and 1995, respectively, primarily in connection with equipment purchases and leasehold improvements funded with short-term borrowings. In addition to its available line of credit discussed above, the Company believes that its existing funds and its vendor and inventory financing arrangements are sufficient to satisfy its expected cash requirements in fiscal 1997 and, assuming a replacement for the bank term loan and line of credit facility is secured by the end of fiscal 1997, for the foreseeable future. Impact of Inflation In management's opinion, inflation has not had a material impact on the Company's financial results for the three months ended November 30, 1996 and 1995. Technological advances coupled with increased competition have caused prices on many of the Company's products to decline. Those products that have increased in price have in most cases done so in proportion to current inflation rates. Management does not anticipate that inflation will have a material impact on the Company's financial results in the future. PART II. OTHER INFORMATION Item 1. Legal Proceedings There have been no material developments during the three months ended November 30, 1996. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1 Amended and Restated Articles of Incorporation of the Company (1), as amended by Articles of Amendment dated January 3, 1995 (2). 3.2 Composite By-laws of the Company, as of October 4, 1996. 10.1 Second Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated January 12, 1996(3), as amended by Amendment No. 1 dated October 4, 1996. 27.1 Financial Data Schedule __________ (1) Incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 33-56796) filed with the Commisssion on January 6, 1993. (2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 1995. (3) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996. __________ (b) Reports on Form 8-K. No reports on Form 8-K have been filed during the three months ended November 30, 1996. CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. January 14, 1997 /s/ Anthony P. Campo ----------------------------------- Anthony P. Campo Chairman of the Board, Chief Executive Officer, and Director /s/ Wayne J. Usie ----------------------------------- Wayne J. Usie Chief Financial Officer and Secretary EXHIBIT INDEX SEQUENTIALLY EXHIBIT NO. DESCRIPTION NUMBERED PAGE - ----------- ----------- ------------- 3.1 Amended and Restated Articles of Incorporation of the Company (1), as amended by Articles of Amendment dated January 3, 1995(2). 3.2 Composite By-laws of the Company, as of October 4, 1996. 10.1 Second Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated January 12, 1996(1), as amended by Amendment No. 1 dated October 4, 1996. 27.1 Financial Data Schedule ___________ (1) Incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 33-56796) filed with the Commisssion on January 6, 1993. (2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 1995. (3) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996. EX-3 2 COMPOSITE BY-LAWS OF CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. (as of October 4, 1996) SECTION 1 OFFICES 1.1 Principal Office. The principal office of the Corporation shall be located at 109 Northpark Blvd., 5th Floor, Covington, Louisiana 70433. 1.2 Additional offices. The Corporation may have such offices at such other places as the Board of Directors may from time to time determine or the business of the Corporation may require. SECTION 2 SHAREHOLDERS MEETINGS 2.1 Place of Meetings. Unless otherwise required by law or these By-laws, all meetings of the shareholders shall be held at the principal office of the Corporation or at such other place, within or without the State of Louisiana, as may be designated by the Board of Directors. 2.2 Annual Meetings; Notice Thereof. An annual meeting of the shareholders shall be held each year on the date and at the time as the Board of Directors shall designate, for the purpose of electing directors and for the transaction of such other business as may be properly brought before the meeting. If no annual shareholders' meeting is held for a period of eighteen months, any shareholder may call such meeting to be held at the registered office of the Corporation as shown on the records of the Secretary of State of the State of Louisiana. 2.3 Special Meetings. Special meetings of the shareholders, for any purpose or purposes, may be called by the Board of Directors, the Chairman of the Board, or the President. At any time, upon the written request of any shareholder or group of shareholders holding in the aggregate at least a majority of the total voting power, the Secretary shall call a special meeting of shareholders to be held at the registered office of the Corporation at such time as the Secretary may fix, not less than 15 nor more than 60 days after the receipt of such request, and if the Secretary shall neglect or refuse to fix such time or to give notice of the meeting, the shareholder or shareholders making the request may do so. Such request must state the specific purpose or purposes of the proposed special meeting and the business to be conducted thereat shall be limited to such purpose or purposes. 2.4 Notice of Meetings. Except as otherwise provided by law, the authorized person or persons calling a shareholders' meeting shall cause written notice of the time, place and purpose of the meeting to be given to all shareholders entitled to vote at such meeting, at least 10 days and not more than 60 days prior to the day fixed for the meeting. Notice of the annual meeting need not state the purpose or purposes thereof, unless action is to be taken at the meeting as to which notice is required by law or the By-laws. Notice of a special meeting shall state the purpose or purposes thereof, and the business conducted at any special meeting shall be limited to the purpose or purposes stated in the notice. 2.5 List of Shareholders. At every meeting of shareholders, a list of shareholders entitled to vote, arranged alphabetically and certified by the Secretary or by the agent of the Corporation having charge of transfers of shares, showing the number and class of shares held by each such shareholder on the record date for the meeting and confirming the number of votes per share as to which each such shareholder is entitled, shall be produced on the request of any shareholder. 2.6 Quorum. At all meetings of shareholders, the holders of a majority of the total voting power shall constitute a quorum, provided, however, that this subsection shall not have the effect of reducing the vote required to approve any matter that may be established by law, the Articles of Incorporation or these By-laws. 2.7 Voting. When a quorum is present at any shareholders' meeting, the vote of the holders of a majority of that portion of the total voting power that is present in person or represented by proxy, voting together as a single class, shall decide each question brought before such meeting, unless the resolution of the question requires, by express provision of law, the Articles of Incorporation or these By-laws, a different vote or one or more separate votes by the holders of a class or series of capital stock, in which case such express provision shall apply and control the decision of such question. Directors shall be elected by plurality vote. 2.8 Proxies. At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing executed by such shareholder and bearing a date not more than eleven months prior to the meeting, unless the instrument provides for a longer period, but in no case will an outstanding proxy be valid for longer than three years from the date of its execution, provided, however, that in no event may a proxy be voted at a meeting called pursuant to La. R.S. 12:138 unless it is executed and dated by the shareholder within 30 days of the date of such meeting. The person appointed as proxy need not be a shareholder of the Corporation. 2.9 Adjournments. Adjournments of any annual or special meeting of shareholders may be taken without new notice being given unless a new record date is fixed for the adjourned meeting, but any meeting at which directors are to be elected shall be adjourned only from day to day until such directors shall have been elected. 2.10 Withdrawal. If a quorum is present or represented at a duly organized shareholders' meeting, such meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum as fixed in Section 2.6 of these By-laws, or the refusal of any shareholders to vote. 2.11 Lack of Quorum. If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 2.9 hereof. In the case of any meeting called for the election of directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 2.6 hereof, shall nevertheless be deemed to constitute a quorum for the purpose of electing directors. 2.12 Presiding Officer. The Chairman of the Board or the Chief Executive Officer, or in their absence a chairman designated by the Board of Directors, shall preside at all shareholders' meetings. 2.13 Definition of Shareholder. As used in these By-laws, and unless the context otherwise requires, the term shareholder shall mean a person who is (i) the record holder of shares of the Corporation's common stock or any other capital stock of the Corporation granted voting rights, or (ii) a registered holder of any bonds, debentures or similar obligations granted voting rights by the Corporation pursuant to La. R.S. 12:75H. SECTION 3 DIRECTORS 3.1 Number. All of the corporate powers shall be vested in, and the business and affairs of the Corporation shall be managed by, a Board of Directors. Except as otherwise fixed by or pursuant to Article III of the Articles of Incorporation (as it may duly amended from time to time) relating to the rights of the holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation to elect additional directors by class vote, the Board of Directors shall consist of not less than three and not more than ten natural persons, as established from time to time by a resolution of the Board of Directors; provided that, if after proxy materials for any meeting of shareholders at which directors are to be elected are mailed to shareholders, any person or persons named therein to be nominated at the direction of the Board of Directors becomes unable or unwilling to serve, the foregoing number of authorized directors as provided by the board resolution then in effect shall be automatically reduced by a number equal to the number of such persons unless the Board of Directors, by a majority vote of the entire Board, selects an additional nominee or nominees to replace such persons. No director need be a shareholder. The Secretary shall have the power to certify at any time as to the number of directors authorized and as to the class to which each director has been elected or assigned. 3.2 Powers. The Board may exercise all such powers of the Corporation and do all such lawful acts and things which are not by law, the Articles of Incorporation or these By-laws directed or required to be done by the shareholders. 3.3 Classes. The Board of Directors, other than those directors who may be elected by the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, shall be divided, with respect to the time during which they shall hold office, into three classes as nearly equal in number as possible, with the initial term of office of Class I directors expiring at the annual meeting of shareholders to be held in 1993, of Class II directors expiring at the next succeeding annual meeting of shareholders and of Class III directors expiring at the second succeeding annual meeting of shareholders, with all such directors to hold office until their successors are elected and qualified. Any increase or decrease in the number of directors shall be apportioned by the Board of Directors so that all classes of directors shall be as nearly equal in number as possible. At each annual meeting of shareholders, directors chosen to succeed those whose terms then expire shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election and until their successors are duly elected and qualified. 3.4 General Election. At each annual meeting of shareholders, directors shall be elected to succeed those directors whose terms then expire. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. 3.5 Vacancies. Except as otherwise provided in the Articles of Incorporation or these By-laws, (a) the office of a director shall become vacant if he dies, resigns or is duly removed from office and (b) the Board of Directors may declare vacant the office of a director if he (i) is interdicted or adjudicated an incompetent, (ii) is adjudicated a bankrupt, (iii) in the sole opinion of the Board of Directors becomes incapacitated by illness or other infirmity so that he is unable to perform his duties for a period of six months or longer, or (iv) ceases at any time to have the qualifications required by law, the Articles of Incorporation or these By-laws. 3.6 Filling Vacancies. Except as otherwise provided in the Articles of Incorporation or Section 3.8 of these By-laws, any vacancy on the Board (including any vacancy resulting from an increase in the authorized number of directors or from failure of the shareholders to elect the full number of authorized directors) may, notwithstanding any resulting absence of a quorum of directors, be filled by a majority vote of the Board of Directors remaining in office, provided that the shareholders shall have the right, at any special meeting called for such purpose prior to any such action by the Board, to fill the vacancy. A director elected pursuant to this section shall serve until the next shareholders' meeting held for the election of directors of the class to which he shall have been appointed and until his successor is elected and qualified. 3.7 Notice of Shareholder Nominees. Except as otherwise provided in Section 3.8 of these By-laws, only persons who are nominated in accordance with the procedures set forth in this section shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders by or at the direction of the Board of Directors or by any shareholder of record of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this section. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered or mailed and received at the principal office of the Corporation not less than 45 days nor more than 90 days prior to the meeting, provided, however, that in the event that less than 55 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received no later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such shareholder's notice shall set forth or include the following: a. as to each person whom the shareholder proposes to nominate for election or re-election as a director (i) the name, age, business address and residential address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of capital stock of the Corporation of which such person is the beneficial owner (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934), (iv) such person's written consent to being named in the proxy statement as a nominee and to serve as a director if elected and (v) any other information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors, or would be otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934; and b. as to the shareholder of record giving the notice, (i) the name and address of such shareholder and (b) the class and number of shares of capital stock of the Corporation of which such shareholder is the beneficial owner (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934). If requested in writing by the Secretary of the Corporation at least 15 days in advance of the meeting, such shareholder shall disclose to the Secretary, within ten days of such request, whether such person is the sole beneficial owner of the shares held of record by him, and, if not, the name and address of each other person known by the shareholder of record to claim or have a beneficial interest in such shares. At the request of the Board of Directors, any person nominated by or at the direction of the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. If a shareholder seeks to nominate one or more persons as directors, the Secretary shall appoint two inspectors, who shall not be affiliated with the Corporation, to determine whether the shareholder has complied with this section. If the inspectors shall determine that the shareholder has not complied with this section, the defective nomination shall be disregarded and the inspectors shall direct the Chairman of the meeting to declare at the meeting that such nomination was not made in accordance with the procedures prescribed by the Articles of Incorporation and these By-laws. 3.8 Directors Elected by Preferred Shareholders. Notwithstanding anything in these By-laws to the contrary, whenever the holders of any one or more classes or series of stock having a preference over the Common Stock as to dividends or upon liquidation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the provisions of the Articles of Incorporation (as they may be duly amended from time to time) fixing the rights and preferences of such preferred stock shall govern with respect to the nomination, election, term, removal, vacancies or other related matters with respect to such directors. 3.9 Compensation of Directors. Directors shall receive such compensation for their services, in their capacity as directors, as may be fixed by resolution of the Board of Directors, provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 4 MEETINGS OF THE BOARD 4.1 Place of Meetings. The meetings of the Board of Directors may be held at such place within or without the State of Louisiana as a majority of the directors may from time to time appoint. 4.2 Initial Meetings. The first meeting of each newly-elected Board shall be held immediately following the shareholders' meeting at which the Board, or any class thereof, is elected and at the same place as such meeting, and no notice of such first meeting shall be necessary for the newly-elected directors in order legally to constitute the meeting. 4.3 Regular Meetings; Notice. Regular meetings of the Board may be held at such times as the Board may from time to time determine. Notice of regular meetings of the Board of Directors shall be required, but no special form of notice or time of notice shall be necessary. 4.4 Special Meetings; Notice. Special meetings of the Board may be called by the Chairman of the Board or the President on reasonable notice given to each director, either personally or by telephone, mail, telex, telecopy or any other comparable form of facsimile communication. Special meetings shall be called by the Secretary in like manner and on like notice on the written request of a majority of the directors and if such officer fails or refuses, or is unable within 24 hours to call a meeting when requested, then the directors making the request may call the meeting on two days' written notice given to each director. The notice of a special meeting of directors need not state its purpose or purposes, but if the notice states a purpose or purposes and does not state a further purpose to consider such other business as may properly come before the meeting, the business to be conducted at the special meeting shall be limited to the purpose or purposes stated in the notice. 4.5 Waiver of Notice. Directors present at any regular or special meeting shall be deemed to have received, or to have waived, due notice thereof, provided that a director who participates in a meeting by telephone (as permitted by Section 4.9 hereof) shall not be deemed to have received or waived due notice if, at the beginning of the meeting, he objects to the transaction of any business because the meeting is not lawfully called. 4.6 Quorum. A majority of the Board shall be necessary to constitute a quorum for the transaction of business, and except as otherwise provided by law, the Articles of Incorporation or these By-laws, the acts of a majority of the directors present at a duly-called meeting at which a quorum is present shall be the acts of the Board. If a quorum is not present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum is present. 4.7 Withdrawal. If a quorum was present when the meeting convened, the directors present may continue to do business, taking action by vote of a majority of a quorum as fixed in Section 4.6 hereof, until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum as fixed in Section 4.6 hereof or the refusal of any director present to vote. 4.8 Action by Consent. Any action that may be taken at a meeting of the Board, or any committee thereof, may be taken by a consent in writing signed by all of the directors or by all members of the committee, as the case may be, and filed with the records of proceedings of the Board or committee. 4.9 Meetings by Telephone or Similar Communication. Members of the Board may participate at and be present at any meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment if all persons participating in such meeting can hear and communicate with each other. SECTION 5 COMMITTEES OF THE BOARD 5.1 General. The Board may designate one or more committees, each committee to consist of two or more of the directors of the Corporation (and one or more directors may be named as alternate members to replace any absent or disqualified regular members), which, to the extent provided by resolution of the Board or these By-laws, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to documents, but no such committee shall have power or authority to amend the Articles of Incorporation, adopt an agreement of merger, consolidation or share exchange, recommend to the shareholders the sale, lease or exchange of all or substantially all of the Corporation's assets, recommend to the shareholders a dissolution of the Corporation or a revocation of dissolution, remove or indemnify directors, or amend these By-laws; and unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or authorize the issuance of stock. Such committee or committees shall have such name or names as may be stated in these By-laws, or as may be determined, from time to time, by the Board. Any vacancy occurring in any such committee shall be filled by the Board, but the President may designate another director to serve on the committee pending action by the Board. Each such member of a committee shall hold office during the term designated by the Board. 5.2 Compensation Committee. The Board shall establish and maintain a Compensation Committee consisting of two or more directors, each of whom (i) shall be a "disinterested person" under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and shall not have been, during the one-year period prior to serving as a member of such committee, granted or awarded equity securities of the Corporation pursuant to any benefit plan of the Corporation or any of its affiliates and (ii) shall meet any further qualifications designated by the Board. The Compensation Committee shall perform such services as may be designated by the Board. 5.3 Audit Committee. The Board shall establish an Audit Committee consisting of at least two directors, a majority of whom are not officers or employees of the Corporation or any of its affiliates. The Audit Committee shall (i) serve as a focal point for communication between the Corporation's directors, management, independent accountants and internal auditing personnel, as their duties relate to financial accounting, reporting and controls, (ii) assist the Board of Directors in fulfilling its fiduciary responsibilities as to accounting policies and reporting practices of the Corporation and all subsidiaries and the sufficiency of auditing practices with respect thereto, in part, by reviewing the scope of audit coverage, including consideration of the Corporation's accounting practices and procedures and system of internal accounting controls and reporting to the Board with respect thereto, (iii) operate as the Board's principal agent in ensuring the independence of the Corporation's independent accountants, the integrity of management and the adequacy of disclosure to shareholders, and (iv) perform such other services as may be designated by the Board. SECTION 6 REMOVAL OF BOARD MEMBERS The shareholders, by vote of a majority of the total voting power at any special meeting called for the purpose, may remove from office any one or more of the directors, notwithstanding that his or their terms of office may not have expired, and may at such meeting elect one or more successors, as the case may be, for the unexpired term. SECTION 7 NOTICES 7.1 Form of Delivery. Whenever under the provisions of law, the Articles of Incorporation or these By-laws notice is required to be given to any shareholder or director, it shall not be construed to mean personal notice unless otherwise specifically provided in the Articles of Incorporation or these By-laws, but such notice may be given by mail, addressed to such shareholder or director at his address as it appears on the records of the Corporation, with postage thereon prepaid, or in such other manner as may be specified in these By-laws. Notices given by mail shall be deemed to have been given at the time they are deposited in the United States mail, and all other notices shall be deemed to have been given upon receipt. 7.2 Waiver. Whenever any notice is required to be given by law, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent thereto. In addition, notice shall be deemed to have been given to, or waived by, any shareholder or director who attends a meeting of shareholders or directors in person, or is represented at such meeting by proxy, without protesting at the commencement of the meeting the transaction of any business because the meeting is not lawfully called or convened. SECTION 8 OFFICERS 8.1 Designations. The officers of the corporation shall be elected by the directors and shall be the Chairman of the Board, President, Secretary and Treasurer. The Board of Directors may appoint a Chief Executive Officer, one or more Vice Presidents and such other officers as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. More than one office may be held by one person, provided that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required by law to be signed by two officers. 8.2 Term of Office. The officers of the Corporation shall hold office at the pleasure of the Board of Directors. Except as otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until the first meeting of the Board of Directors after the annual meeting of shareholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Board, Chairman of the Board, President or Secretary of the Corporation. Such resignation shall take effect at the time specified therein and acceptance of such resignation shall not be necessary to make it effective. The Board may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officers, if any, with the Corporation, but the election of an officer shall not in and of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board at any regular or special meeting. 8.3 The Chairman of the Board. The Chairman of the Board shall preside at meetings of the Board of Directors and the shareholders and perform such other duties as may be designated by the Board of Directors or these By-laws. He shall be an ex-officio member of all committees of the Board of Directors, except that he shall be a full member entitled to all the rights and privileges appertaining thereto with respect to committees on which he is named a full member. 8.4 The President. The President shall, subject to the powers of the Chairman of the Board, have general and active responsibility for the management of the business of the Corporation, shall, unless otherwise provided by the Board, be the chief executive and chief operating officer of the Corporation, shall supervise the daily operations of the business of the Corporation and shall ensure that all orders, policies and resolutions of the Board are carried out. 8.5 The Vice Presidents. The Vice Presidents (if any) shall perform such duties as the President or the Board of Directors shall prescribe. 8.6 The Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the shareholders and regular and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or President. He shall keep in safe custody the seal of the Corporation, if any, and affix such seal to any instrument requiring it. 8.7 The Treasurer. The Treasurer shall have the custody of the corporate funds and shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall keep a proper accounting of all receipts and disbursements and shall disburse the funds of the Corporation only for proper corporate purposes or as may be ordered by the Board and shall render to the President and the Board at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition and results of operations of the Corporation. SECTION 9 STOCK 9.1 Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by the President or a Vice President and the Secretary or an Assistant Secretary evidencing the number and class (and series, if any) of shares owned by him, containing such information as required by law and bearing the seal of the Corporation. If any stock certificate is manually signed by a transfer agent or registrar other than the Corporation itself or an employee of the Corporation, the signature of any such officer may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be an officer, transfer agent or registrar of the Corporation before such certificate is issued, it may be issued by the Corporation with the same effect as if such person or entity were an officer, transfer agent or registrar of the Corporation on the date of issue. 9.2 Missing Certificates. The President or any Vice President may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the Corporation's receipt of an affidavit of that fact from the person claiming the certificate of stock to be lost, stolen or destroyed. As a condition precedent to the issuance of a new certificate or certificates, the officers of the Corporation shall, unless dispensed with by the President, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to (i) give the Corporation a bond or (ii) enter into a written indemnity agreement, in each case in an amount appropriate to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 9.3 Transfers. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. SECTION 10 DETERMINATION OF SHAREHOLDERS 10.1 Record Date. For the purpose of determining shareholders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a record date for determination of shareholders for such purpose, such date to be not more than 60 days and, if fixed for the purpose of determining shareholders entitled to notice of and to vote at a meeting, not less than 10 days, prior to the date on which the action requiring the determination of shareholders is to be taken. 10.2 Registered Shareholders. Except as otherwise provided by law, the Corporation and its directors, officers and agents may recognize and treat a person registered on its records as the owner of shares as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and the Corporation's rights under this section shall not be affected by any actual or constructive notice that the Corporation, or any of its directors, officers or agents, may have to the contrary. SECTION 11 INDEMNIFICATION 11.1 Definitions. As used in this section the following terms shall have the meanings set forth below: (a) "Board" - the Board of Directors of the Corporation. (b) "Claim" - any threatened, pending or completed claim, action, suit, or proceeding, whether civil, criminal, administrative or investigative and whether made judicially or extra-judicially, or any separate issue or matter therein, as the context requires. (c) "Determining Body" - (i) those members of the Board who are not named as parties to the Claim for which indemnification is being sought ("Impartial Directors"), if there are at least three Impartial Directors, (ii) a committee of at least three Impartial Directors appointed by the Board (regardless whether the members of the Board of Directors voting on such appointment are Impartial Directors) or (iii) if there are fewer than three Impartial Directors or if the Board of Directors or the committee appointed pursuant to clause (ii) of this paragraph so directs (regardless whether the members thereof are Impartial Directors), independent legal counsel, which may be the regular outside counsel of the Corporation. (d) "Disbursing Officer" - the President of the Corporation or, if the President is a party to the Claim for which indemnification is being sought, any officer not a party to such Claim who is designated by the President to be the Disbursing Officer with respect to indemnification requests related to the Claim, which designation shall be made promptly after receipt of the initial request for indemnification with respect to such Claim. (e) "Expenses" - any expenses or costs (including, without limitation, attorney's fees, judgments, punitive or exemplary damages, fines and amounts paid in settlement). (f) "Indemnitee" - each person who is or was a director or officer of the Corporation. 11.2 Indemnity. (a) To the extent such Expenses exceed the amounts reimbursed or paid pursuant to policies of liability insurance maintained by the Corporation, the Corporation shall indemnify each Indemnitee against any Expenses actually and reasonably incurred by him (as they are incurred) in connection with any Claim either against him or as to which he is involved solely as a witness or person required to give evidence, by reason of his position (i) as a director or officer of the Corporation, (ii) as a director or officer of any subsidiary of the Corporation or as a fiduciary with respect to any employee benefit plan of the Corporation, or (iii) as a director, officer, partner, employee or agent of another Corporation, partnership, joint venture, trust or other for-profit or not-for-profit entity or enterprise, if such position is or was held at the request of the Corporation, whether relating to service in such position before or after the effective date of this Section, if he (i) is successful in his defense of the Claim on the merits or otherwise or (ii) has been found by the Determining Body (acting in good faith) to have met the Standard of Conduct (defined below); provided that (A) the amount otherwise payable by the Corporation may be reduced by the Determining Body to such amount as it deems proper if it determines that the Claim involved the receipt of a per- sonal benefit by Indemnitee, and (B) no indemnification shall be made in respect of any Claim as to which Indemnitee shall have been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for willful or intentional misconduct in the performance of his duty to the Corporation or to have obtained an improper personal benefit, unless, and only to the extent that, a court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the court deems proper. (b) The Standard of Conduct is met when the conduct by an Indemnitee with respect to which a Claim is asserted was conduct that was in good faith and that he reasonably believed to be in, or not opposed to, the best interest of the Corporation, and, in the case of a criminal action or proceeding, that he had no reasonable cause to believe was unlawful. The termination of any Claim by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet the Standard of Conduct. (c) Promptly upon becoming aware of the existence of any Claim as to which he may be indemnified hereunder, Indemnitee shall notify the President of the Corporation of the Claim and whether he intends to seek indemnification hereunder. If such notice indicates that Indemnitee does so intend, the President shall promptly advise the Board thereof and notify the Board that the establishment of the Determining Body with respect to the Claim will be a matter presented at the next regularly scheduled meet- ing of the Board. After the Determining Body has been established the President shall inform the Indemnitee thereof and Indemnitee shall im- mediately provide the Determining Body with all facts relevant to the Claim known to him. Within 60 days of the receipt of such information, together with such additional information as the Determining Body may request of In- demnitee, the Determining Body shall determine, and shall advise Indemnitee of its determination, whether Indemnitee has met the Standard of Conduct. (d) During such 60-day period, Indemnitee shall promptly inform the Determining Body upon his becoming aware of any relevant facts not theretofore provided by him to the Determining Body, unless the Determining Body has obtained such facts by other means. (e) In the case of any Claim not involving a proposed, threatened or pending criminal proceeding, (i) if Indemnitee has, in the good faith judgment of the Determining Body, met the Standard of Conduct, the Corporation may, in its sole discretion after notice to Indemnitee, assume all responsibility for the defense of the Claim, and, in any event, the Corporation and the Indemnitee each shall keep the other informed as to the progress of the de- fense, including prompt disclosure of any proposals for settlement; pro- vided that if the Corporation is a party to the Claim and Indemnitee reasonably determines that there is a conflict between the positions of the Corporation and Indemnitee with respect to the Claim, then Indemnitee shall be entitled to conduct his defense, with counsel of his choice; and pro- vided further that Indemnitee shall in any event be entitled at his expense to employ counsel chosen by him to participate in the defense of the Claim; and (ii) the Corporation shall fairly consider any proposals by Indemnitee for settlement of the Claim. If the Corporation (A) proposes a settlement acceptable to the person asserting the Claim, or (B) believes a settlement proposed by the person asserting the Claim should be accepted, it shall inform Indemnitee of the terms thereof and shall fix a reasonable date by which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall execute such documents as shall be necessary to effect the settlement. If he does not agree he may proceed with the defense of the Claim in any manner he chooses, but if he is not successful on the merits or otherwise, the Corporation's obligation to indemnify him for any Expenses incurred following his disagreement shall be limited to the lesser of (A) the total Expenses incurred by him following his decision not to agree to such proposed settlement or (B) the amount the Corporation would have paid pursuant to the terms of the proposed settlement. If, however, the proposed settlement would impose upon Indemnitee any requirement to act or refrain from acting that would materially interfere with the conduct of his affairs, Indemnitee may refuse such settlement and proceed with the defense of the Claim, if he so desires, at the Corporation's expense without regard to the limitations imposed by the preceding sentence. In no event, however, shall the Corporation be obligated to indemnify Indemnitee for any amount paid in a settlement that the Corporation has not approved. (f) In the case of a Claim involving a proposed, threatened or pending criminal proceeding, Indemnitee shall be entitled to conduct the defense of the Claim, and to make all decisions with respect thereto, with counsel of his choice, provided, however, that the Corporation shall not be obligated to indemnify Indemnitee for an amount paid in settlement that the Corporation has not approved. (g) After notifying the Corporation of the existence of a Claim, Indemnitee may from time to time request the Corporation to pay the Expenses (other than judgments, fines, penalties or amounts paid in settlement) that he incurs in pursuing a defense of the Claim prior to the time that the Determining Body determines whether the Standard of Conduct has been met. If the Disbursing Officer believes the amount requested to be reasonable, he shall pay to Indemnitee the amount requested (regardless of Indemnitee's apparent ability to repay such amount) upon receipt of an undertaking by or on behalf of Indemnitee to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation under the circumstances. If the Disbursing Officer does not believe such amount to be reasonable, the Corporation shall pay the amount deemed by him to be reasonable and Indemnitee may apply directly to the De- termining Body for the remainder of the amount requested. (h) After the Determining Body has determined that the Standard of Conduct was met, for so long as and to the extent that the Corporation is required to indemnify Indemnitee under this Agreement, the provisions of Paragraph (g) shall continue to apply with respect to Expenses incurred after such time except that (i) no undertaking shall be required of Indemnitee and (ii) the Disbursing Officer shall pay to Indemnitee such amount of any fines, penalties or judgments against him which have become final as the Corporation is obligated to indemnify him. (i) Any determination by the Corporation with respect to settlements of a Claim shall be made by the Determining Body. (j) The Corporation and Indemnitee shall keep confidential, to the extent permitted by law and their fiduciary obligations, all facts and determinations provided or made pursuant to or arising out of the operation of this Section, and the Corporation and Indemnitee shall instruct its or his agents and employees to do likewise. 11.3 Enforcement. (a) The rights provided by this Section shall be enforceable by Indemnitee in any court of competent jurisdiction. (b) If Indemnitee seeks a judicial adjudication of his rights under this Section, Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all Expenses actually and reasonably incurred by him in connection with such proceeding but only if he prevails therein. If it shall be determined that Indemnitee is entitled to receive part but not all of the relief sought, then the Indemnitee shall be entitled to be reimbursed for all Expenses incurred by him in connection with such judicial adjudication if the amount to which he is determined to be entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses incurred by Indemnitee in connection with such judicial adjudication shall be appropriately prorated. (c) In any judicial proceeding described in this subsection, the Corporation shall bear the burden of proving that Indemnitee is not entitled to any Expenses sought with respect to any Claim. 11.4 Saving Clause. If any provision of this Section is determined by a court having jurisdiction over the matter to require the Corporation to do or refrain from doing any act that is in violation of applicable law, the court shall be empowered to modify or reform such provision so that, as modified or reformed, such provision provides the maximum indemnification permitted by law, and such provision, as so modified or reformed, and the balance of this Section, shall be applied in accordance with their terms. Without limiting the generality of the foregoing, if any portion of this Section shall be invalidated on any ground, the Corporation shall nevertheless indemnify an Indemnitee to the full extent permitted by any applicable portion of this Section that shall not have been invalidated and to the full extent permitted by law with respect to that portion that has been invalidated. 11.5 Non-Exclusivity. (a) The indemnification and advancement of Expenses provided by or granted pursuant to this Section shall not be deemed exclusive of any other rights to which Indemnitee is or may become entitled under any statute, article of incorporation, by-law, authorization of shareholders or directors, agreement, or otherwise. (b) It is the intent of the Corporation by this Section to indemnify and hold harmless Indemnitee to the fullest extent permitted by law, so that if applicable law would permit the Corporation to provide broader indemnification rights than are currently permitted, the Corporation shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law notwithstanding that the other terms of this Section would provide for lesser indemnification. 11.6 Successors and Assigns. This Section shall be binding upon the Corporation, its successors and assigns, and shall inure to the benefit of the Indemnitee's heirs, personal representatives, and assigns and to the benefit of the Corporation, its successors and assigns. 11.7 Indemnification of Other Persons. The Corporation may indemnify any person not covered by Sections 11.1 through 11.6 to the extent provided in a resolution of the Board or a separate section of these By-laws. SECTION 12 AMENDMENTS 12.1 Adoption of By-laws; Amendments Thereof. By-laws of the Corporation may be adopted only by a majority vote of the Board of Directors. By-laws may be amended or repealed only by (i) a two-thirds vote of the Board of Directors, or (ii) the affirmative vote of the holders of at least two-thirds of the total voting power, voting together as a single class, that is present or represented at any regular or special meeting of shareholders, the notice of which expressly states that the proposed amendment or repeal is to be considered at the meeting. 12.2 New By-laws; Amendments. Any purported amendment to these By-laws which would add hereto a matter not expressly covered herein prior to such purported amendment shall be deemed to constitute the adoption of a By-law provision and not an amendment to the By-laws. SECTION 13 MISCELLANEOUS 13.1 Dividends. Except as otherwise provided by law or the Articles of Incorporation, dividends upon the stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, property, or shares of stock, subject to the limitations specified in the Articles of Incorporation. 13.2 Voting of Shares Owned by Corporation. Unless otherwise directed by the Board, any shares of capital stock issued by a wholly-owned subsidiary of the Corporation may be voted by the President of the Corporation at any shareholders' meeting of the subsidiary (or in connection with any written consent in lieu thereof). 13.3 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Signatures of the authorized signatories may be by facsimile. 13.4 Fiscal Year. The Board of Directors may adopt for and on behalf of the Corporation a fiscal or a calendar year. 13.5 Seal. The Board of Directors may adopt a corporate seal, which shall have inscribed thereon the name of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Failure to affix the seal shall not, however, affect the validity of any instrument. 13.6 Gender. All pronouns and variations thereof used in these By-laws shall be deemed to refer to the masculine, feminine or neuter gender, singular or plural, as the identity of the person, persons, entity or entities referred to may require. EX-10 3 AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. 1992 STOCK INCENTIVE PLAN WHEREAS, the Board of Directors of Campo Electronics, Appliances and Computers, Inc. (the "Company") desires to amend the Second Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan (the "Plan") to remove restrictions no longer applicable under recent amendments to Rule 16b-3 under the Securities Exchange Act of 1934 that (a) relate to the elimination of a six-month holding period applicable to stock options and restricted stock; (b) permit transfer of stock options for estate planning purposes and (c) eliminate restrictions no longer applicable to the payment of withholding taxes in stock. NOW THEREFORE, the Plan is hereby amended as follows: I. Section 6.3 is hereby amended to read in its entirety as follows: Section 6.3 Duration and Time for Exercise. The term of each option shall be determined by the Committee. Each option shall become exercisable at such time or times during its term as shall be determined by the Committee and as provided in Section 8.10; provided, however, that unless otherwise provided in the stock option agreement and unless the options are incentive stock options, with respect to which other restrictions apply, all stock options shall expire (a) 12 months from the date of termination of employment as the result of death or disability, (b) six months and one day after termination of employment as a result of retirement and (c) immediately if employment terminates for any other reason, including resignation and termination by the Company. The Committee may in its discretion extend the term of options which would otherwise expire as a result of resignation or termination by the Company. The Committee may also impose such terms and conditions to the exercise of each option as it deems advisable and may accelerate the exercisability of any outstanding option at any time in its sole discretion. II. Section 6.7 is hereby amended to read in its entirety as follows: 6.7 Transferability of Options. No stock option granted hereunder may be transferred, pledged, assigned or otherwise encumbered by the holder thereof except: (a) by will; (b) by the laws of descent and distribution; or (c) in the case of non-qualified stock options only, pursuant to a domestic relations order, as defined in the Code, to family members, to a family partnership, to a family limited liability company, to a trust for the benefit of family members or to charitable institutions, if permitted by the Committee and so provided in the option agreement or an amendment thereto. Any attempted assignment, transfer, pledge, hypothecation or other disposition of a stock option or levy of attachment or similar process upon a stock option not specifically permitted herein, shall be null and void and without effect. III. Section 7.2 is hereby amended to read in its entirety as follows: Section 7.2 Award and Delivery of Restricted Stock. At the time an award of restricted stock is made, the Committee shall establish a period of time (the "Restricted Period") applicable to such an award. Each award of restricted stock may have a different Restricted Period. The Committee may, in its sole discretion, prescribe conditions for the lapse of restrictions upon death, disability, retirement or other termination of employment or for the lapse or termination of restrictions upon the satisfaction of other conditions in addition to or other than the expiration of the Restricted Period with respect to all or any portion of the shares of restricted stock. The Committee shall have the power to accelerate the expiration of the Restricted Period with respect to all or any part of the shares awarded to a participant and the expiration of the Restricted Period shall automatically occur under the conditions described in Section 8.10 hereof. IV. Section 8.7 shall be amended to read in its entirety as follows: Section 8.7 Withholding. The Company shall have the right to withhold from any payments made under the Plan or to collect as a condition of payment, any taxes required by law to be withheld. At any time that a participant is required to pay to the Company an amount required to be withheld under the applicable income tax laws in connection with the issuance of shares of Common Stock upon exercise of an option or upon the lapse of restrictions on shares of restricted stock, the participant may, subject to the Committee's right of disapproval, satisfy this obligation in whole or in part by electing (the "Election") to have the Company withhold from the distribution shares of Common Stock having a value equal to the amount required to be withheld. The value of the shares to be withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined (the "Tax Date"). Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election or may suspend or terminate the right to make Elections. If a participant makes an election under Section 83(b) of the Internal Revenue Code with respect to shares of restricted stock, an Election is not permitted to be made. Adopted by the Board of Directors: October 4, 1996 EX-27 4
5 3-MOS AUG-31-1997 NOV-30-1996 4,286,559 140,288 17,492,347 2,676,214 72,624,838 97,531,133 35,957,335 14,620,339 137,763,967 96,313,444 0 0 0 556,691 32,773,127 167,763,967 65,762,745 65,762,745 52,892,913 52,892,913 13,644,722 75,692 449,516 (1,300,098) (494,000) 0 0 0 0 (806,098) (0.14) (0.14)
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