<PAGE>
As filed with the Securities and Exchange Commission on July 24, 1996
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CompUSA Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2261497
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14951 North Dallas Parkway
Dallas, Texas 75240
(214) 982-4000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
James F. Halpin
President and Chief Executive Officer
CompUSA Inc.
14951 North Dallas Parkway
Dallas, Texas 75240
(214) 982-4000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
Thomas M. Cerabino, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4669
(212) 821-8000
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|________________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------- ----------------- ------------------------ ------------------------ -------------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Per Aggregate Offering Registration Fee
Share (1) Price (1)
- -------------------------------- ----------------- ------------------------ ------------------------ -------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,632,717 $34.00 $89,512,378 $30,867
(2)
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</TABLE>
(1) Calculated pursuant to Rule 457(c) on the basis of the average of the high
and low sales price of the Company's Common Stock on July 23, 1996, on the
New York Stock Exchange.
(2) Includes rights to purchase Series A Junior Participating Preferred Stock,
par value $.01 per share, of the Company. Prior to the occurrence of
certain events, the purchase rights will not be exercisable or evidenced
separately from shares of the Common Stock. No separate consideration is
payable for the purchase rights and, as a result, no additional filing fee
is required.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>1
Subject to Completion, dated July 24, 1996
PROSPECTUS
2,632,717 Shares
CompUSA Inc.
Common Stock
($0.01 par value)
This Prospectus relates to the proposed sale from time to time by
certain holders (the "Selling Stockholders") of up to 2,632,717 shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
CompUSA Inc. ("CompUSA" or the "Company"). None of the proceeds from the sale of
the Shares by the Selling Stockholders will be received by the Company.
The Shares may be offered from time to time for the account of the
Selling Stockholders in the amount and in the manner and on the terms and
conditions described herein. The sale of the Shares by the Selling
Stockholders may be effected in one or more transactions (which may include
block transactions) in the over-the-counter market, on the New York Stock
Exchange (the "NYSE") or other exchanges on which the Shares may be traded, in
privately negotiated transactions, through the writing of options on the
Shares (whether such options are listed on an options exchange or otherwise)
or by a combination of such methods of sale, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Certain of the Selling
Stockholders may distribute their shares from time to time to their limited
and/or general partners, who may sell such shares pursuant to this Prospectus.
Each Selling Stockholder may pledge all or a portion of the Shares owned by
him or her as collateral in loan transactions. Upon default by such a Selling
Stockholder, the pledgee in such loan transaction would have the same rights
of sale as the Selling Stockholder under this Prospectus. Each Selling
Stockholder may also transfer shares owned by him by gift, and upon such
transfer the donee would have the same rights of sale as such Selling
Stockholder under this Prospectus. See "Selling Stockholders" and "Plan of
Distribution."
The Common Stock of the Company is traded on the NYSE under the
symbol "CPU." On July 23, 1996, the last sale price for the Common Stock as
reported by the NYSE was $32.625 per share.
For a discussion of certain factors that should be considered by
prospective purchasers of the Common Stock offered hereby, see "Risk Factors"
commencing on page 6 of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Company has agreed to bear certain expenses (excluding any
underwriting fees, expenses, discounts or other costs payable to any
underwriter, broker or dealer) in connection with the registration and sale of
the Shares being offered by the Selling Stockholders, estimated to be
$104,117. The Company has agreed to indemnify the Selling Stockholders
against certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act,
and any commissions received by them and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
The date of this Prospectus is __________, 1996
<PAGE>2
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and at Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such materials can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, the Commission maintains a site on the
Internet World Wide Web, which can be accessed at http://www.sec.gov, and
which contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission. The Common Stock is
listed on the NYSE. Reports, proxy statements and other information
concerning the Company can also be inspected and copied at the offices of the
NYSE at 20 Broad Street, New York, New York 10005.
ADDITIONAL INFORMATION
The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-3 with respect to the shares of Common Stock
offered hereby, of which this Prospectus forms a part. This Prospectus omits
certain information contained in the Registration Statement, and reference is
made to the Registration Statement, including the exhibits thereto, for
further information with respect to the Company and the securities offered
hereby. Statements contained in this Prospectus concerning the provisions of
such documents are necessarily summaries of such documents and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. Copies of the Registration
Statement and the exhibits and schedules thereto may be inspected, without
charge, at the offices of the Commission, or obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
June 24, 1995, the Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended September 23, 1995, December 23, 1995, and March 23, 1996, the
Company's Current Report on Form 8-K, dated May 16, 1996, the Company's
Current Report on Form 8-K, dated May 30, 1996 (including any amendments
thereto), and the description of the Company's Common Stock which is contained
in a Registration Statement on Form 8-A filed with the Commission on May 5,
1994, as amended by the Company's Registration Statement on Form 8-A/A, filed
with the Commission on November 14, 1995, and any amendment or reports filed
for the purpose of updating such description, are hereby incorporated by
reference in this Prospectus except as superseded or modified herein or
therein.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of this offering (the
<PAGE>3
"Offering") shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of the filing of such documents. Any
statement contained in a document incorporated by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein or in any
accompanying prospectus supplement modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request, a copy of any or
all of the documents incorporated herein by reference (without exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed in writing to CompUSA Inc., 14951
North Dallas Parkway, Dallas, Texas 75240, Attention: Assistant Secretary, or by
telephone at (214) 982-4000.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements under the captions "The Company" and "Risk
Factors" and elsewhere in this Prospectus and in the documents incorporated by
reference herein constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, the
following: general economic and business conditions; variability of
operations; changes in product demand; the availability of products; changes
in competition; the ability of the Company to open and operate new stores and
enter new businesses on a profitable basis in accordance with its plans; real
estate market fluctuations; interest rate fluctuations; dependence on
manufacturers' product development; various inventory risks due to changes in
market conditions; business abilities and judgment of personnel; availability
of qualified personnel; changes in, or failure to comply with, governmental
regulations; ability to obtain adequate financing in the future; and other
factors indicated in this Prospectus and in the Company's filings with the
Commission incorporated by reference herein. See "Risk Factors." See the
Company's filings with the Commission for discussions identifying some
important factors that could cause actual results to vary materially from
those anticipated in the forward-looking statements made by the Company,
including but not limited to the respective "Management's Discussion and
Analysis of Financial Condition and Results of Operations" discussions in the
Company's Annual Report on Form 10-K for the fiscal year ended June 24, 1995,
and in the Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended September 23, 1995, December 23, 1995, and March 23, 1996, as well as
the respective "Commitments and Contingencies" notes of the "Notes to
Consolidated Financial Statements" included in such periodic reports.
<PAGE>4
THE COMPANY
The Company's fiscal year is a 52/53 week year ending on the last
Saturday of each June. As used herein, the terms "fiscal 1994," "fiscal 1995,"
"fiscal 1996" and "fiscal 1997" refer to the Company's fiscal years ended or
ending on June 25, 1994, June 24, 1995, June 29, 1996 and June 28, 1997,
respectively.
CompUSA is a leading retailer and reseller of microcomputers and
related products and services, principally through its Computer Superstores(TM)
located throughout the United States. Although retail sales through its Computer
Superstores are the largest component of the Company's business, the Company
also engages in direct marketing to corporate, government and education
customers, mail order sales, training in software applications and technical
services.
CompUSA opened its first retail store in April 1985 and its first
Computer Superstore in April 1988. The Company currently operates 106 Computer
Superstores in 50 major metropolitan markets in 33 states. The stores average
approximately 27,000 square feet and achieved average sales per square foot in
fiscal 1995 of $1,336. CompUSA's Computer Superstores offer several thousand
hardware, software, accessory and related products at competitive prices. The
Company's training and technical service businesses are operated primarily
through the stores. In addition, CompUSA has outbound sales and telemarketing
operations in each of its stores that make direct sales to corporate, government
and education customers. Certain of the Company's direct sales are fulfilled
through a central warehouse facility located in the Dallas/Fort Worth area. The
Company believes that its large format Computer Superstore concept, combined
with a high level of customer service and technical support and an innovative
merchandising strategy, provides the Company with advantages over its
competitors, enabling the Company to leverage its fixed investments more
effectively and to improve its profitability. In addition, the Company believes
that its Computer Superstores, coupled with its strategy to operate other
businesses through these stores, should position CompUSA to take advantage of
the growth opportunities and rapidly changing dynamics within the microcomputer
products and services industry.
In May 1996, the Company acquired PCs Compleat, Inc. ("PCs Compleat"),
a leading direct reseller of brand-name microcomputers and peripherals. PCs
Compleat operates through a centralized facility with integrated telephone,
computer and distribution systems. The Company believes that the acquisition of
PCs Compleat provides a vehicle to more rapidly expand the Company's position in
the computer mail order business.
The Company believes that its strong relationships with its vendors and
its high purchasing volume provide it with access to substantially all
microcomputer hardware, software, accessory and related products and allow it to
purchase nearly all of these products at or near the lowest price available.
Hardware products, which constitute over one-half of CompUSA's net sales,
include products from, among others, Apple, Canon, Compaq, Digital, Epson,
Hewlett-Packard, IBM, Maxtor, NEC, Packard Bell, Sony, Texas Instruments and
Toshiba. The Company also markets private label microcomputers and related
products under the Compudyne(R) brand. Software packages include products from
Broderbund, Claris, IBM, Intuit, Lotus, Microsoft, Novell and Symantec.
Accessories sold in the Company's stores include products from 3M, Avery,
Curtis, Daiseytek, Fellowes, Gemini, Hewlett-Packard, Iomega, Kensington,
Microsoft, O'Sullivan, Sony, U.S. Robotics and Western Digital.
The Company's marketing strategy is designed to convey a user friendly,
service-oriented image while communicating CompUSA's customer service, breadth
and depth of selection and competitive pricing. For its retail customers, the
Company has established an advertising program based on chain-wide color
preprint newspaper inserts that emphasize particular products and highlight the
Company's mail order telephone number, 1-800-COMPUSA. For direct sales to
corporate, government and education customers, the Company primarily uses
television, radio and print advertising to increase awareness of its direct
sales capabilities and to support the outbound marketing operations in each of
its stores.
CompUSA's store expansion strategy is to continue its geographic
diversification throughout the United States in markets that fit the Company's
expansion criteria. The Company opened 20 new stores in fiscal 1996 and plans to
open approximately 25 to 30 new stores in fiscal 1997. The Company expects that
approximately one-half
<PAGE>5
of its new stores in fiscal 1997 will open in existing markets and approximately
one-half will open in new markets. A majority of the new stores will be based on
the current store prototype of approximately 27,000 square feet, although the
Company plans to open some smaller stores designed for markets less populated
than CompUSA's traditional markets.
The Company's principal executive offices are located at 14951 North
Dallas Parkway, Dallas, Texas 75240, and its telephone number is (214) 982-4000.
<PAGE>6
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the factors listed below in
evaluating an investment in the Shares.
Reliance on Successful Expansion
CompUSA's success is dependent to a significant degree upon its ability
to open and operate new stores profitably, particularly in new markets, to
increase sales at existing stores and in existing businesses and to enter new
businesses on a profitable basis. The Company's performance is also dependent to
a significant degree upon its ability to hire, train and integrate qualified
employees into its operations and, particularly because the Company operates on
a high-volume, low-margin basis, upon its ability to manage and control both the
anticipated growth and the expanded operations of a larger business. The Company
opened 20 new stores in fiscal 1996 and plans to open approximately 25 to 30 new
stores in fiscal 1997. There can be no assurances that the Company will be able
to locate and obtain favorable store sites to meet its expansion goals, resolve
zoning and other regulatory issues relating to those sites, attract and retain
competent personnel, open new stores on a timely and cost-efficient basis or
operate the new and existing stores on a profitable basis. CompUSA plans to open
new stores in existing markets, which may result in the diversion of sales from
existing stores and thus some reduction in comparable store sales.
Quarterly Fluctuations; Variability of Operations
The Company's quarterly results of operations may fluctuate
significantly as the result of the timing of the opening of, and the amount of
net sales contributed by, new stores and the timing of costs associated with the
selection, leasing, construction and opening of new stores, as well as seasonal
factors, product introductions and changes in product mix. CompUSA believes that
its business is seasonal, with sales and earnings being relatively lower during
the first and fourth fiscal quarters than in the second and third fiscal
quarters. In addition, excluding the effects of new store openings, the
Company's inventories and related short-term financing needs have been seasonal,
with the greatest requirements occurring during its second fiscal quarter. The
Company's operating results may also be affected by changes in economic
conditions in the markets where its stores are located, as well as by weather
and other natural conditions.
The Company's operating results in recent years have been highly
variable. In this regard, the Company had a net loss of $16.8 million in fiscal
1994, net income of $23.0 million in fiscal 1995 and net income of $45.5 million
for the first three quarters of fiscal 1996. The Company's business remains
volatile, and there can be no assurances that the Company's recent operating
results are indicative of future performance.
Dependence on Product Development
CompUSA's operating results are, and will continue to be, subject in
part to the introduction and acceptance of new products in the microcomputer
hardware and software industry. For example, consumer demand may be affected by
the successful introduction, or lack thereof, of new hardware, peripherals and
software packages. Any decline in demand, which could be caused by lack of
successful product development, delays in product introductions, product related
difficulties or lack of consumer acceptance, could adversely affect the growth
rate of sales of microcomputer products and services and could adversely affect
the Company's operating results.
Industry and Competition
The microcomputer industry is undergoing significant change. Rapid
technological advances, in combination with an increasingly computer literate
population, have increased the use and popularity of microcomputers, resulting
in the emergence and growth of a variety of distribution channels. The Company
believes that customers, having gained familiarity with microcomputers, require
less assistance in making their purchasing decisions and have become
increasingly price sensitive. At the same time, intense competition for market
share has forced hardware and accessory manufacturers, along with software
vendors, to reduce prices and
<PAGE>7
seek new channels through which to sell their products. These factors have
resulted in widespread and intense competition among microcomputer product
resellers. In each of its businesses, CompUSA competes with a large number and
variety of competitors, some of whom are larger and have substantially greater
resources than the Company. There can be no assurances that changes in the
competitive environment or strategic direction of the microcomputer industry
would not have a material adverse effect on the Company.
CompUSA believes that the major competitive factors in its businesses
include customer service, product availability and selection, price, technical
support, and marketing and sales capabilities. The Company's utilization of
trained personnel and the ability to use national and local advertising media
are important to the Company's ability to compete in its businesses. CompUSA
would be adversely affected if its competitors were to offer their products or
services at significantly lower prices or if the Company were unable to obtain
products in a timely manner for an extended period of time. Given the highly
competitive nature of each of its businesses, no assurances can be given that
the Company will continue to compete successfully with respect to the factors
referenced above.
Management Information Systems
Because CompUSA operates on a high-volume, low-margin basis, the
Company's success is dependent to a significant degree upon the accuracy and
proper utilization of its management information systems. For example, the
Company's ability to manage its inventories, accounts receivable and accounts
payable, and to price its products appropriately, depends upon the quality and
utilization of the information generated by its management information systems.
In addition, the success of the Company's expansion plans is dependent to a
significant degree upon its management information systems. The failure of the
Company's management information systems to adapt to business needs resulting
from, among other things, expansion of its store base and the further
development of its various businesses, could have a material adverse effect on
the Company.
Reliance on Vendors
The Company has maintained long-term relationships with vendors but
does not have material long-term contracts or commitments with any of them.
Brand names and individual products are important to the Company's business.
Purchases of products from Hewlett-Packard Company constituted in excess of 10%
of the Company's aggregate purchases for fiscal 1995. Although CompUSA believes
that competitive sources of supply are currently available in substantially all
of the merchandise categories the Company carries, the loss of a key vendor
could have a material adverse effect on the Company if, as a result, certain
merchandise were not available in adequate supply or at competitive prices.
Vendors provide the Company with substantial incentives in the form of
discounts, rebates, credits, inventory financing programs, return privileges and
cooperative advertising and market development funds. A reduction in or
discontinuance of trade credit or any of the foregoing incentives, or
significant delays in receiving them, could have a material adverse effect on
the Company.
Dependence on Senior Management
CompUSA's future performance will depend to a significant degree upon
the efforts and abilities of certain members of senior management, in particular
those of James F. Halpin, President and Chief Executive Officer. The loss of the
services of any member of senior management could have a material adverse effect
on the Company.
Litigation
The Company is a defendant from time to time in lawsuits incidental to
its business. Based on currently available information, the Company believes
that resolution of all known contingencies would not have a material adverse
impact on the Company's financial statements. However, there can be no
assurances that future costs would not be material to results of operations of
the Company for a particular future period. In addition, the Company's estimates
of future costs are subject to change as events evolve and additional
information becomes available during the course of litigation.
<PAGE>8
Asserted Royalty Obligations
The Company has been approached by certain patent owners, including
computer manufacturers, that contend the Company should pay royalties in
connection with the alleged use of certain patented technology in the assembly
and sale of Compudyne microcomputers. Based on the information provided by these
patent owners to date, the Company has not concluded that it has any such
royalty obligations. However, as additional information becomes available, the
Company's assessment of these issues may change. If the Company's assessment of
these issues were to change, or if the Company were to be compelled to pay
royalties with respect to the Compudyne microcomputer line, the Company could be
materially adversely affected.
Volatility of Stock Price
The price of the Common Stock may be subject to significant
fluctuations in response to the Company's operating results, developments in the
microcomputer industry, general market movements and other factors. For example,
announcements of fluctuations in the Company's, its vendors' or its competitors'
operating results, and market conditions for growth stocks or retail industry
stocks in general, could have a significant impact on the price of the Common
Stock. In addition, the stock market in recent years has experienced price and
volume fluctuations in general that may have been unrelated or disproportionate
to the operating performance of individual companies. These fluctuations, as
well as general economic and market conditions, may adversely affect the market
price of the Common Stock and the ability of CompUSA to access the capital
markets.
Acquisitions
In May 1996, CompUSA acquired PCs Compleat, a leading direct reseller
of brand-name microcomputers and peripherals. The Company's plans may include a
strategy of identifying and acquiring additional businesses in an effort to
enhance the Company's operations and profitability. There can be no assurance
that the Company will be able to continue to identify attractive target
businesses or to acquire such businesses on satisfactory terms, that any
business acquired by the Company will prove profitable and will be integrated
successfully into the Company's operations or that such integration will not
divert management resources, cause temporary disruptions in the management of
the business or financial results of the Company or otherwise have an adverse
effect on the Company.
Certain Antitakeover Provisions Affecting Stockholders
Certain provisions of the Certificate of Incorporation and the Bylaws
of the Company, the Company's 9 1/2% Senior Subordinated Notes due 2000 (the
"Senior Subordinated Notes") and the Company's bank credit agreement could make
it more difficult for a third party to acquire, or discourage a third party from
attempting to acquire, control of CompUSA. Such provisions could limit the price
that certain investors might be willing to pay in the future for the Common
Stock. The Company's Board of Directors is divided into three classes, with
directors in each class elected for three-year terms. The Certificate of
Incorporation and the Bylaws impose various procedural and other requirements
that could make it more difficult for stockholders to effect certain corporate
actions. Shares of preferred stock may be issued by the Board of Directors
without stockholder approval on such terms and conditions, and having such
rights, privileges and preferences, as the Board of Directors may determine. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. The Senior Subordinated Notes and the Company's bank credit
agreement trigger a redemption obligation and an event of default, respectively,
if a change in control occurs with respect to the Company. In addition, on April
29, 1994, the Company declared a dividend of one right (a "Right") to purchase
Series A Junior Participating Preferred Stock, par value $.01 per share, for
each outstanding share of Common Stock. Each share of Common Stock subsequently
issued, including each Share, will also incorporate one Right. The Rights are
exercisable only if a person or group acquires 20% or more of the Common Stock
or commences a tender or exchange offer upon consummation of which such person
or group would beneficially own 20% or more of the Common Stock and, if
exercised, would result in significant dilution of an acquiring person's
interest in the Company. The existence of the Rights may, under certain
circumstances, render more difficult or discourage attempts to acquire the
Company.
<PAGE>9
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to
the Selling Stockholders, including (i) the names of the Selling Stockholders,
(ii) the number of shares of Common Stock owned by the Selling Stockholders
prior to the offering and (iii) the maximum number of shares of such Common
Stock to be offered hereby. Because the Selling Stockholders or their
transferees or distributees may offer all, a portion or none of the Common
Stock offered pursuant to this Prospectus, no estimate can be given as to the
amount of Common Stock that will be held by the Selling Stockholders upon
termination of the offering. See "Plan of Distribution."
The Selling Stockholders acquired the Shares pursuant to an Agreement
and Plan of Merger dated as of May 15, 1996 (the "Merger Agreement"), by and
among the Company, Snowstorm Merger Corp., a Delaware corporation and
wholly-owned subsidiary of the Company ("Sub") and PCs Compleat, Inc. ("PCs
Compleat"), a Delaware corporation. Pursuant to the Merger Agreement, Sub was
merged with and into PCs Compleat on May 30, 1996, all of the issued and
outstanding capital stock of PCs Compleat was canceled, and the Company issued
to the Selling Stockholders an aggregate of 2,632,717 shares of Common Stock.
<TABLE>
<CAPTION>
Number of
Shares Beneficially Maximum
Name of Selling Owned Prior to the Number of Shares
Stockholder Offering Being Offered
--------------- ------------------- ----------------
<S> <C> <C>
Allstate Insurance Company............................ 448,079 448,079
Allstate Life Insurance Company....................... 298,719 298,719
Matrix Partners III(1)................................ 296,020 296,020
Global Private Equity II Limited Partnership(1)....... 256,586 256,586
Atlas Venture Fund, L.P(1)............................ 217,092 217,092
Kinship Partners II(1)................................ 217,092 217,092
William Brown......................................... 156,116 (2) 156,116
Gordon Hoffstein(3)................................... 156,116 (4) 156,116
Jack Littman-Quinn(3)................................. 156,116 (4) 156,116
Aegis II Limited Partnership(1)....................... 144,696 144,696
Aegis Select Limited Partnership(1)................... 144,696 144,696
International Network Fund Limited Partnership(1)..... 79,541 79,541
Advent Crown Fund C.V.(1) ............................ 48,109 48,109
John P. Poldoian...................................... 7,569 7,569
Patrick J. Sansonetti Family Trust.................... 1,603 1,603
Advent International Investors Limited Partnership II(1) 641 641
Thomas R. Armstrong................................... 641 641
Thomas H. Lauer....................................... 641 641
Clinton Harris........................................ 481 481
Melody Morgan-Edson................................... 354 354
Brinton O.C. Young.................................... 320 320
George Sutherland..................................... 260 260
Abigail H. Harris Trusts 1988......................... 160 160
Jessica C. Harris Trusts 1988......................... 160 160
William P. Harris Trusts 1988......................... 160 160
Paul Lemire........................................... 118 118
Thomas P. Harrington.................................. 70 70
Jamie Barry........................................... 47 47
Joel H. Bertger....................................... 47 47
</TABLE>
<PAGE>10
<TABLE>
<CAPTION>
Number of
Shares Beneficially Maximum
Name of Selling Owned Prior to the Number of Shares
Stockholder Offering Being Offered
--------------- ------------------- ----------------
<S> <C> <C>
Gini Cornilla......................................... 47 47
Antonio Cunha......................................... 47 47
David Foulsham........................................ 47 47
Suzanne L. Guay....................................... 47 47
Michelle Murdock...................................... 47 47
Michael Randall....................................... 47 47
Kristin Walker........................................ 47 47
Paul Botolino......................................... 23 23
Miki D. Bryan......................................... 23 23
Peter Herz............................................ 23 23
Martin E. Lane........................................ 23 23
Lori Randall.......................................... 23 23
Rian Sousa............................................ 23 23
Totals...................................... 2,632,717 2,632,717
<FN>
- --------------------------
(1) The Selling Stockholder may distribute such shares to its limited and/or
general partners, who may sell such shares pursuant to this Prospectus.
(2) Does not include 40,811 shares of Common Stock issuable upon the exercise
of options held by the Selling Stockholder.
(3) The Selling Stockholder is an officer of the Company.
(4) Does not include 46,487 shares of Common Stock issuable upon
the exercise of options held by the Selling Stockholder.
</TABLE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold by the Selling Stockholders, or
by pledgees, donees, transferees or other successors in interest, from time to
time in one or more transactions (which may include block transactions) in the
over-the-counter market, on the NYSE or other exchanges on which the Shares may
be traded, in privately negotiated transactions, through the writing of options
on the Shares (whether such options are listed on an options exchange or
otherwise) or by a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Stockholders may deliver the Shares to close out previously established short
positions and may also pledge the Shares as collateral for margin accounts and
such Shares could be resold pursuant to the terms of such accounts.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, and
<PAGE>11
any commissions received by them and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
To the extent required, the type and number of Shares to be sold, the
purchase price and public offering price, the name or names of any agent, dealer
or underwriter, and any applicable commissions or discounts with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement
to this Prospectus.
Pursuant to the Merger Agreement, the Company agreed to register the
Shares under the Securities Act and to indemnify and hold the Selling
Stockholders harmless against certain liabilities, including certain liabilities
under the Securities Act, that could arise in connection with the sale by the
Selling Stockholders of the Shares. The Company has agreed to bear certain
expenses (excluding any underwriting fees, expenses, discounts or other costs
payable to any underwriter, broker or dealer) in connection with the
registration and sale of the Shares being offered by the Selling Stockholders,
estimated to be $104,117.
LEGAL MATTERS
Certain legal matters with respect to the shares of Common Stock
offered hereby will be passed upon for the Company by Willkie Farr & Gallagher,
New York, New York.
EXPERTS
The consolidated financial statements of the Company at June 24, 1995
and June 25, 1994, and for each of the three fiscal years in the period ended
June 24, 1995, incorporated by reference in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon incorporated by reference herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
<PAGE>
===============================================================================
No dealer, salesperson or other
individual has been authorized to give
any information or to make any
representations other than those 2,632,717 Shares
contained in this Prospectus in
connection with the offer made by this CompUSA Inc.
Prospectus and, if given or made, such
information or representations must
not be relied upon as having been
authorized by the Company. This Common Stock
Prospectus does not constitute an
offer to sell or a solicitation of an
offer to buy any securities in any
jurisdiction in which such offer or
solicitation is not authorized or in
which the person making such offer or ---------------
solicitation is not qualified to do
so, or to any person to whom it is PROSPECTUS
unlawful to make such offer or --------------
solicitation. Neither the delivery of
this Prospectus nor any sale made
hereunder shall, under any
circumstances, create any implication
that there has been no change in the
affairs of the Company or that
information contained herein is
correct as of any time subsequent to
the date hereof.
---------------
TABLE OF CONTENTS
Page
Available Information.............................2
Additional Information............................2 _________, 1996
Incorporation of Certain Documents by
Reference......................................2
Special Note Regarding Forward-Looking
Statements.....................................3
The Company.......................................4
Risk Factors......................................6
Use of Proceeds...................................9
Selling Stockholders..............................9
Plan of Distribution............................10
Legal Matters....................................11
Experts..........................................11
===============================================================================
<PAGE>II-1
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the
Company in connection with the sale of Common Stock being registered (all
amounts are estimated except the registration fee):
Amount
------
Securities and Exchange Commission Registration fee.............. $30,867
NYSE listing fee................................................. 9,250
Printing, shipping and engraving expenses........................ 500
Legal fees and expenses.......................................... 50,000
Accounting fees and expenses..................................... 5,000
Blue Sky fees and expenses....................................... 2,500
Transfer Agent and Registrar fees and expenses................... 1,000
Miscellaneous fees and expenses.................................. 5,000
--------
Total....................................................... $104,117
=======
Item 15. Indemnification of Officers and Directors.
Section 145 of the Delaware General Corporation Law (the "DGCL")
empowers a Delaware corporation to indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer or director of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner reasonably believed to be in or not
opposed to the corporation's best interests, and, for criminal proceedings, had
no reasonable cause to believe his conduct was illegal. A Delaware corporation
may indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred in connection
therewith. The indemnification provided is not deemed to be exclusive of any
other rights to which an officer or director may be entitled under any
corporation's by-law, agreement, vote or otherwise.
In accordance with Section 145 of the DGCL, Article VI ("Article VI")
of the Restated and Amended Certificate of Incorporation of CompUSA provides
that no director of CompUSA shall be personally liable to CompUSA or to any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability;
provided, however, that to the extent required from time to time by applicable
law, Article VI shall not eliminate or limit the liability of a director, to the
extent such liability is provided by applicable law, (i) for any breach of the
director's duty of loyalty to CompUSA or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article VII of the Restated and Amended Bylaws of CompUSA provides for
indemnification of directors and officers except as to certain circumstances and
except as provided by applicable law.
<PAGE>II-2
Item 16. Exhibits.
4.1 -- Restated and Amended Certificate of Incorporation.(1)
4.2 -- Restated and Amended Bylaws. (2)
4.3 -- Specimen Common Stock Certificate (as amended). (1)
4.4 -- Rights Agreement dated April 29, 1994, between the Company
and Bank One, Texas, N.A. as Rights Agent. (2)
4.5 -- Letter of the Company dated November 1, 1995, appointing
First Interstate Bank of Texas, N.A. as substitute Rights
Agent under the Rights Agreement. (1)
4.6 -- Rights and Obligations with respect to Registrable
Securities, Annex I to Agreement and Plan of Merger, dated as
of May 15, 1996, by and among CompUSA Inc., Snowstorm Merger
Corp., and PCs Compleat, Inc. (3) (4)
5.1 -- Opinion of Willkie Farr & Gallagher. (4)
23.1 -- Consent of Ernst & Young LLP, independent auditors. (4)
23.2 -- Consent of Willkie Farr & Gallagher (contained in its opinion
filed as Exhibit 5 to this Registration Statement).
24 -- Powers of Attorney (included on the signature page).
- ---------------
(1) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended December 23, 1995 and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended March 26, 1994 and
incorporated herein by reference.
(3) Agreement and Plan of Merger previously filed as an exhibit to the
Company's Current Report on Form 8-K, filed with the Commission
on June 14, 1996.
(4) Filed herewith.
<PAGE>II-3
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) above
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by such registrant
pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act") that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the provisions described in Item 15 or
otherwise, the Registrant has been advised that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on July 24,
1996.
COMPUSA INC.
By:/s/ James E. Skinner
James E. Skinner
Executive Vice President
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints James F. Halpin and James E.
Skinner, and each of them singly, with full power to act without the other,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary fully to all
intents and purposes as he might or could do in person thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ James F. Halpin President, Chief Executive Officer and Director July 24, 1996
James F. Halpin (Principal Executive Officer)
/s/ James E. Skinner July 24, 1996
James E. Skinner Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Giles H. Bateman Chairman of the July 24, 1996
Giles H. Bateman Board of Directors
/s/ Kevin J. Roche Director July 24, 1996
Kevin J. Roche
/s/ Warren D. Feldberg Director July 24, 1996
Warren D. Feldberg
</TABLE>
<PAGE>II-5
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Leonard L. Berry Director July 24, 1996
Leonard L. Berry, Ph.D.
/s/ Lawrence Mittman Director July 24, 1996
Lawrence Mittman
/s/ Edith Weiner Director July 24, 1996
Edith Weiner
</TABLE>
<PAGE>
EXHIBIT INDEX
4.1 -- Restated and Amended Certificate of Incorporation. (1)
4.2 -- Restated and Amended Bylaws. (2)
4.3 -- Specimen Common Stock Certificate (as amended). (1)
4.4 -- Rights Agreement dated April 29, 1994, between the Company
and Bank One, Texas, N.A. as Rights Agent. (2)
4.5 -- Letter of the Company dated November 1, 1995, appointing
First Interstate Bank of Texas, N.A. as substitute Rights
Agent under the Rights Agreement. (1)
4.6 -- Rights and Obligations with respect to Registrable
Securities, Annex I to Agreement and Plan of Merger, dated as
of May 15, 1996, by and among CompUSA Inc., Snowstorm Merger
Corp., and PCs Compleat, Inc. (3) (4)
5.1 -- Opinion of Willkie Farr & Gallagher. (4)
23.1 -- Consent of Ernst & Young LLP, independent auditors. (4)
23.2 -- Consent of Willkie Farr & Gallagher (contained in its opinion
filed as Exhibit 5 to this Registration Statement).
24 -- Powers of Attorney (included on the signature page).
- ---------------
(1) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended December 23, 1995 and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended March 26, 1994 and incorporated
herein by reference.
(3) Agreement and Plan of Merger previously filed as an exhibit to the
Company's Current Report on Form 8-K, filed with the Commission on June
14, 1996.
(4) Filed herewith.
<PAGE>1
Rights and Obligations with respect to
Registrable Securities
The holders of CompUSA Common Stock issued pursuant to
Sections 3.1 and 3.14 of the Merger Agreement shall have the following rights
and obligations with respect to such shares:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings set forth in the Merger
Agreement. As used in this Annex I, unless the context otherwise requires,
the following terms have the following respective meanings:
"Broker" has the meaning set forth in Section 2.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"CSFB" has the meaning set forth in Section 2.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such successor federal
statute.
"Majority Holders" means stockholders owning a majority of
the Registrable Securities outstanding at the time of determination.
"NYSE" means the New York Stock Exchange, Inc.
"Person" means any individual, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency, department or political subdivision
thereof) or other entity of any kind.
"Registrable Securities" means (i) the shares of CompUSA
Common Stock received by the Company Stockholders at the Effective Time by
virtue of the Merger and (ii) any Related Registrable Securities. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (b) they shall have been otherwise transferred, and
new certificates for them not
<PAGE>2
bearing a legend restricting further transfer shall have been delivered by
CompUSA and subsequent public distribution of them shall not, in the opinion
of counsel to the holders (or in the opinion of counsel to CompUSA, which
opinion is reasonably satisfactory to the holders), require registration of
them under the Securities Act, or (c) they shall have ceased to be
outstanding.
"Registration Expenses" means all costs, fees and expenses
incident to CompUSA's performance of or compliance with Section 3, including,
without limitation, all registration, filing and NASD fees, all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses and the fees
and disbursements of counsel for CompUSA and of its independent public
accountants and of one counsel for the Company Stockholders, selected by the
Majority Holders, but excluding any underwriting fees, expenses, discounts or
other costs payable to any underwriter, broker or dealer.
"Related Registrable Securities" means any securities of
CompUSA issued or issuable with respect to the shares of CompUSA Common Stock
received by the Company Stockholders at the Effective Time by virtue of the
Merger by way of a dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
"Representative" has the meaning set forth in Section 3.3.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such successor federal
statute.
"Seller Indemnified Parties" has the meaning set forth in
Section 3.4(a).
"Shares" means the shares of CompUSA Common Stock to be
received by the Company Stockholders pursuant to Sections 3.1 and 3.14 of the
Merger Agreement.
"Shelf Registration" has the meaning set forth in Section
3.1.
"Target Date" means the date on which CompUSA makes publicly
available financial information reflecting at least 30 days of combined
operations of CompUSA and the Company.
<PAGE>3
"Termination Date" mean the first date on which any of the
Registrable Securities may be distributed to the public pursuant to Rule 144
(or any successor provision) under the Securities Act.
2. Engagement of CS First Boston Corporation. Except as
otherwise provided in this Section 2, as a condition to including Registrable
Securities in any registration statement filed pursuant to this Annex I,
CompUSA may require each Company Stockholder who received more than 20,000
Shares at the Effective Time by virtue of the Merger and who desires to
include such Shares in such registered offering, to agree in writing to engage
CS First Boston Corporation ("CSFB") to act as such stockholder's broker,
dealer or other intermediary in connection with sales to be made pursuant to
the registration statement (other than any privately negotiated sales). Such
stockholder (i) shall first seek to engage CSFB as broker, dealer or other
intermediary ("Broker") in connection with any such proposed sale and, in
connection therewith, shall furnish to CSFB such stockholder's written
instructions with respect thereto, and (ii) prior to such time, shall not
approach or solicit another Broker with respect to such transaction.
Notwithstanding the foregoing, no such stockholder shall be required to engage
CSFB as such stockholder's Broker if (i) the fees and terms on which CSFB
proposes to so act are other than CSFB's customary fees and terms for
transactions of the type proposed, or (ii) the fees and terms on which CSFB
proposes to so act are materially less favorable to the stockholder than may
be obtained generally from other full service brokerages (i.e., firms other
than discount brokerage firms) for transactions of the type proposed or (iii)
CSFB fails to execute any trade in accordance with industry standards
applicable to transactions of the type covered by the stockholder's written
instructions. Upon the occurrence of any event described in clause (i), (ii)
or (iii) of the prior sentence, the Company Stockholder shall thereafter be
entitled to sell Shares included in the registration statement through any
Broker of its choice. In addition, notwithstanding the foregoing, each Company
Stockholder shall be entitled to sell up to 20,000 Shares per calendar month
through any Broker of its choice.
3. Registration Under Securities Act, etc.
3.1 Filing of Shelf Registration Statement. (a) As soon as
is reasonably practicable after the Effective Time, CompUSA shall file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act
(the "Shelf Registration") with respect to the Registrable Securities to be
issued to the Company Stockholders pursuant to the Merger Agreement. CompUSA
shall use its best efforts to (i) have the Shelf Registration declared
<PAGE>4
effective on or before the Target Date, and (ii) keep the Shelf Registration
continuously effective from the date such Shelf Registration is declared
effective until the Termination Date.
(b) Subject to Section 9 hereof, CompUSA shall promptly
supplement or amend, if necessary, the Shelf Registration, as required by the
registration form utilized by CompUSA or by the instructions applicable to such
registration form or by the Securities Act, and CompUSA shall furnish to the
holders of the Registrable Securities to which the Shelf Registration relates
copies of any such supplement or amendment prior to its being used and/or filed
with the Commission. CompUSA shall pay all Registration Expenses incurred in
connection with the Shelf Registration and any supplements or amendments
thereto, whether or not it becomes effective, and whether all, none or some of
the Registrable Securities are sold pursuant to the Shelf Registration.
3.2 Registration Procedures. (a) In connection with the
registration statement filed pursuant to Section 3.1, CompUSA will, as
expeditiously as possible:
(i) subject to Section 9 hereof, prepare and file
with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement or as may be reasonably requested by the Majority Holders,
until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement
(without limiting the generality of the foregoing, CompUSA will prepare
and file such amendments and supplements as may be required to permit
the distributees of any Registerable Securities held by a partnership
or other entity or the donees of any Registerable Securities held by
any stockholder to sell such shares pursuant to the registration
statement);
(ii) furnish to each seller of Registrable
Securities covered by such registration statement, one original and
such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits) and such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in
<PAGE>5
conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request;
(iii) use its best efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such States of the United States of America where an exemption is not
available and as the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect, and (z) to take any other
action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers, except that CompUSA shall not
for any such purpose be required to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not, but for
the requirements of this subdivision (iii), be obligated to be so
qualified, subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction;
(iv) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with
or approved by such other federal or state governmental agencies or
authorities or self regulatory organizations as may be necessary or
desirable, in the opinion of counsel to CompUSA or counsel to the
seller or sellers of Registrable Securities, to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Securities;
(v) promptly notify each seller of Registrable
Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event
as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made, and, subject
to Section 9 hereof, at the request of any such seller, promptly
prepare and furnish to each prospective seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
<PAGE>6
(vi) use its best efforts to list all
Registrable Securities covered by such registration statement on the
NYSE; and
(vii) to maintain on file with the NYSE a copy of
the most recent prospectus and otherwise use its best efforts to allow
the sellers to satisfy the prospectus delivery requirements of the
Securities Act in a manner not requiring physical delivery of a
prospectus.
(b) CompUSA may require each holder of Registrable Securities
as to which any registration is being effected to (i) furnish CompUSA such
information regarding such holder and the distribution of such securities as
CompUSA may from time to time reasonably request in writing and (ii) otherwise
agree to comply with the Securities Act and the Exchange Act in connection with
the registration and distribution of the Registrable Securities.
(c) As a condition to including shares in any registration
statement, CompUSA may require any holder of Registrable Securities to agree
that, upon receipt of any notice from CompUSA of the happening of any event of
the kind described in (i) subdivision (v) of Section 3.2(a) or (ii) Section 9,
such holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until (x) in the case of a notice under clause (i) above, such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (v) of Section 3.2(a), or until it is advised in
writing by CompUSA that the use of the applicable prospectus may be resumed,
and, if so directed by CompUSA, such holder will promptly deliver to CompUSA (at
CompUSA's expense) all copies, other than permanent file copies, then in such
holder's possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice or (y) in the case of a notice
under clause (ii) above, until expiration of the 30th day following the date of
such notice or of any subsequent notice given in accordance with Section 9
hereof.
(d) If CompUSA suspends a registration statement or requires
stockholders to cease sales of Registrable Securities pursuant to this section,
CompUSA shall, as promptly as practicable following the termination of the
circumstances which entitled CompUSA to do so, take such actions as may be
necessary to reinstate the effectiveness of such registration statement and/or
give written notice to all stockholders authorizing them to resume sales
pursuant to such registration statement.
3.3 Preparation; Reasonable Investigation. In connection
with the preparation and filing of the registration statement under the
Securities Act pursuant to this Annex I, CompUSA (i) shall give a
representative holder designated in
<PAGE>7
writing to CompUSA by the Majority Holders (the "Representative") and counsel
and accountants designated by the Representative the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, (ii) shall give each of them such reasonable access to its
books and records and such opportunities to discuss the business of CompUSA
with its officers and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the
Representative and such counsel or accountants, to conduct a reasonable
investigation within the meaning of the Securities Act, subject to each such
person agreeing to treat confidentially any non-public information disclosed
to them as a result of such investigation and (iii) shall promptly notify the
Representative and its counsel of any stop order issued or threatened by the
Commission and promptly take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
3.4 Indemnification.
(a) Indemnification by CompUSA. CompUSA will, and hereby does,
indemnify and hold harmless, in the case of any registration statement filed
pursuant to Section 3.1, each seller of any Registrable Securities covered by
such registration statement, each other Person, if any, who controls such seller
within the meaning of the Securities Act, each broker, dealer or underwriter
acting on behalf of such seller and their respective directors, officers,
partners, shareholders, employees and affiliates ("Seller Indemnified Parties")
against any losses, claims, damages or liabilities, joint or several, to which
such Seller Indemnified Parties may become subject under the Securities Act or
otherwise, including, without limitation, the reasonable fees and expenses of
legal counsel, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by CompUSA of the Securities Act, and CompUSA will reimburse
each such Seller Indemnified Parties for any reasonable legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding; provided, that CompUSA shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
<PAGE>8
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to CompUSA through an instrument duly executed by or on
behalf of such seller specifically stating that it is for use in the
preparation thereof or (ii) the sale of Registrable Securities pursuant to the
registration statement to any person, if such seller (x) failed to send or
give a copy of the prospectus, as the same may be then supplemented or
amended, to such person within the time required by the Securities Act and the
untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such prospectus was corrected in the
prospectus, as amended or (y) engaged in such sale in breach of its agreements
pursuant to Section 3.2(c). Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such Seller
Indemnified Parties and shall survive the transfer of such securities by such
seller.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement, CompUSA may
require such prospective seller to agree to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 3.4(a)) CompUSA, and
each director, officer, employee and shareholder of CompUSA and each other
Person, if any, who participates or may be considered as an underwriter in the
offering or sale of such securities and each other Person who controls CompUSA
within the meaning of the Securities Act ("CompUSA Indemnified Parties") with
respect to (i) any untrue statement or alleged untrue statement of a material
fact contained in or any omission or alleged omission to state therein a
material fact in any such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to CompUSA through an instrument duly executed by
or on behalf of such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement (provided that the
liability of such indemnifying party under this clause (i) shall be limited to
the amount of proceeds received by such indemnifying party in the offering
giving rise to such liability), or (ii) is any sale of any Registrable
Securities by such seller under the circumstances described in clause (ii) of
the proviso to Section 3.4(a). Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of CompUSA
Indemnified Parties and shall survive the transfer of such securities by such
seller.
<PAGE>9
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 3.4,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 3.4, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if the indemnified party reasonably believes it is advisable for it to be
represented by separate counsel because there exists a conflict of interest
between its interests and those of the indemnifying party with respect to such
claim, or there exist defenses available to such indemnified party which may not
be available to the indemnifying party, or if the indemnifying party shall fail
to assume responsibility for such defense, the indemnified party may retain
counsel satisfactory to it and the indemnifying party shall pay all fees and
expenses of one such counsel. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or which requires action other than the payment of money by the
indemnifying party. Each indemnified party shall furnish such information
regarding itself or the claim in question as an indemnifying party may
reasonably request in writing and as shall be reasonably requested in connection
with the defense of such claim and litigation resulting therefrom.
(d) Contribution. If the indemnification provided for in this
Section 3.4 shall for any reason be held by a court of competent jurisdiction to
be unavailable to an indemnified party under subparagraph (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subparagraph (a) or
(b) hereof, the indemnified party and the indemnifying
<PAGE>10
party under subparagraph (a) or (b) hereof shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of CompUSA and the
sellers of Registrable Securities covered by the registration statement in
connection with the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations (the relative fault of CompUSA and such
sellers to be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
CompUSA or such sellers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission)
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law; in such proportion as shall be appropriate to reflect the
relative benefits received by CompUSA and such sellers from the offering of
the securities covered by such registration statement. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Such sellers' obligations to
contribute as provided in this subparagraph (d) are several in proportion to
the relative value of their respective Registrable Securities covered by such
registration statement and not joint and no seller shall be liable under this
subparagraph (d) for any amount in excess of the proceeds received by the
seller in the offering giving rise to the liability hereunder. In addition, no
Person shall be obligated to contribute hereunder any amounts in payment for
any settlement of any action or claim effected without such Person's consent,
which consent shall not be unreasonably withheld or delayed.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 3.4
(with appropriate modifications) shall be given by CompUSA and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law, rule or regulation
of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.4 shall be made by prompt periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred.
4. Rule 144 and Rule 144A. CompUSA shall take all
actions
<PAGE>11
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, (b) Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or (c) any similar rules or
regulations hereafter adopted by the Commission, including, without limiting
the generality of the foregoing, filing on a timely basis all reports required
to be filed by the Exchange Act. Upon the request of any holder of Registrable
Securities, CompUSA will deliver to such holder a written statement as to
whether it has complied with such requirements. If at any time after the
Termination Date but prior to the date when Registrable Securities may be
resold by non-affiliates pursuant to Rule 144(k), or any similar successor
rule, CompUSA ceases to be in compliance with the applicable requirements of
Rule 144, CompUSA shall promptly prepare and file a new Shelf Registration (to
the extent CompUSA is then eligible to use shelf registration) with respect to
the Registrable Securities then outstanding and use its best efforts to (i)
have such Shelf Registration declared effective as promptly as practicable and
(ii) keep such Shelf Registration continuously effective until the date when
any Registrable Securities may be resold by non-affiliates pursuant to Rule
144(k), or any similar successor rule.
5. Amendments . This Annex I may be amended only upon the
prior written consent of CompUSA and the Majority Holders. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to
CompUSA, be treated as the holder of such Registrable Securities for purposes of
any request, consent, waiver or other action by any holder or holders of
Registrable Securities pursuant to this Annex I or any determination of any
number or percentage of shares of Registrable Securities held by any holder or
holders of Registrable Securities contemplated by this Annex I. If the
beneficial owner of any Registrable Securities so elects, CompUSA may require
assurances reasonably satisfactory to it of such owner's beneficial ownership of
such Registrable Securities.
7. Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in the manner
provided in the Merger Agreement, and, in the case of the Company
Stockholders,
<PAGE>12
shall be addressed in the manner set forth in the stock record books of the
Company.
8. Assignment. This Annex I shall be binding upon and inure to
the benefit of and shall be enforceable by the Company Stockholders, by virtue
of the approval of the Merger and such stockholder's receipt of CompUSA Common
Stock pursuant to Section 3.1 or 3.14 of the Merger Agreement, and by the
Company, and their respective successors and assigns and, with respect to any
Company Stockholder, any holder of any Registrable Securities, provided that,
with respect to a transferee or assignee of shares of Registrable Securities,
(i) such transfer is effected in accordance with applicable securities law, (ii)
CompUSA is given written notice of such assignment prior to such assignment or
promptly thereafter, and (iii) the transferee or assignee by written agreement
acknowledges that he is bound by the terms of this Annex I.
9. Holdback Agreements. Notwithstanding anything in this Annex
I to the contrary, if the Board of Directors of CompUSA determines in good faith
(i) that it is in the best interests of CompUSA not to disclose the existence of
facts surrounding any proposed or pending corporate transaction involving
CompUSA or (ii) that it would otherwise be disadvantageous to CompUSA and its
stockholders for any Shelf Registration to be amended or supplemented, then
CompUSA may notify the Company Stockholders, up to four separate times during
the period in which the effectiveness of the Shelf Registration is required to
be maintained hereunder, that it elects to suspend the rights of the Company
Stockholders to make sales pursuant to the Shelf Registration for a period of
time not to exceed 30 days from the date of such notice, provided that, CompUSA
may exercise its rights under this Section 9 no more than two times during any
period of 70 consecutive days. The Company Stockholders hereby agree not to make
any such sales during the period specified in such notice.
10. No Inconsistent Agreements. CompUSA will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Securities
in this Annex I.
11. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
hereunder. CompUSA agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Annex I and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
<PAGE>
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
July 24, 1996
CompUSA Inc.
14951 North Dallas Parkway
Dallas, Texas 75240
Ladies and Gentlemen:
We have assisted in the preparation of the Registration Statement on Form S-3
(the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
registration of 2,632,717 shares of common stock, $0.01 par value per share
(the "Shares"), of CompUSA Inc., a Delaware corporation (the "Company"), held
by certain selling stockholders of the Company.
We have examined the Certificate of Incorporation and By-Laws of the Company
and all amendments thereto and have examined and relied on the originals, or
copies certified to our satisfaction, of such records of meetings, written
actions in lieu of meetings, or resolutions adopted at meetings, of the
directors of the Company and such other documents and instruments as in our
judgment are necessary or appropriate to enable us to render the opinions
expressed below.
In our examination of the foregoing documents, we have assumed (i) the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals, (ii) the conformity to the originals of all documents
submitted to us as certified or photostatic copies, and (iii) the authenticity
of the originals of the latter documents.
Based upon and subject to the foregoing, we are of the opinion that the Shares
have been duly and validly authorized and issued and are fully paid and
non-assessable.
We hereby consent to the use of our name in the Registration Statement and in
the related Prospectus under the caption "Legal Matters" and to the filing of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3) and related Prospectus of CompUSA
Inc. for the registration of 2,632,717 shares of its common stock and to the
incorporation by reference therein, of our report dated August 9, 1995, with
respect to the consolidated financial statements of CompUSA Inc., included in
its Annual Report (Form 10-K) for the year ended June 24, 1995, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Ernst & Young LLP
Dallas, Texas
July 23, 1996
