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