SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(mark one)
* Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended August 31, 1997
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
____________________
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 (I.R.S. Employer Identification No.)
of incorporation or organization)
109 Northpark Blvd., Covington, Louisiana 70433
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (504) 867-5000
____________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.10 par value
(Title of class)
____________________
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 ______
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. _____
____________________
The aggregate market value of the voting stock held by nonaffiliates
(affiliates being considered, for purposes of this calculation only,
directors, executive officers and 5% shareholders) of the Registrant
as of November 25, 1997 was approximately $4,098,985.
____________________
The number of shares of the Registrant's Common Stock, $.10 par
value per share outstanding, as of November 28, 1997 was 5,766,906.
--------------------
ITEMS SUBJECT TO FORM 12B-25
The following items of this Form 10-K are the subject of a Form 12b-25
report filed with the Commission of December 1, 1997, and are not
included herein: Items 6, 7, 8 and 14(a)(1).
PART I
ITEM 1. BUSINESS
Overview
General. The Company is a leading specialty retailer of name
brand consumer electronics, major appliances, computers and home
office products with 20 stores in Louisiana, Mississippi, Alabama and
Florida. Campo's merchandising strategy is to emphasize top name
brand products with the highest name recognition among consumers, and
to carry a relatively broad range of product offerings within those
brands. The Company uses high profile, aggressive advertising to
communicate its guaranteed low prices and frequent price promotions,
and also executes a number of store-level operating strategies
designed to promote quality service and customer satisfaction,
including guaranteed next-day delivery, home installation and
extended warranty plans for most products sold. Customer awareness
and loyalty are enhanced by the Company's issuance of private label
credit cards, of which there are over 300,000 holders. In recent
years, the Company developed and implemented a Campo Concept store
format to meet higher consumer expectations. Campo Concept stores
feature well-lit, open selling areas, informative signage, an
attractive interior and exterior design, hands-on merchandise
displays and an interactive environment for the consumer.
Chapter 11 Bankruptcy Proceedings. On June 4, 1997, the Company
filed a voluntary petition in the U. S. Bankruptcy Court for the
Eastern District of Louisiana for reorganization under Chapter 11 of
the U. S. Bankruptcy Code (the "Bankruptcy Code"), and is currently
operating its business as debtor-in-possession under the supervision
of the Bankruptcy Court (the "Court").
As of the petition date, actions to collect pre-petition
indebtedness are stayed and other contractual obligations may not be
enforced against the Company. In addition, under the Bankruptcy
Code, the Company may reject executory contracts, including lease
obligations. Parties affected by these rejections may file claims
with the Court in accordance with the reorganization process.
Substantially all liabilities as of the petition date are subject to
settlement under a plan of reorganization to be voted upon by
creditors and equity security holders and approved by the Court. The
Company has not yet prepared or submitted a plan of reorganization.
As provided by the Bankruptcy Code, the Company has the exclusive
right for a period of time to submit a plan of reorganization. This
period has been extended by the Court to January 15, 1998, and
further extensions may be sought and may be granted or rejected by
the Court.
The Company has obtained the approval of the Court to continue to
pay for utility services, certain consumer practices (including the
continuation of service on existing extended warranty contracts),
payroll and employee benefits, and property and liability insurance
coverage. These items are recorded as accrued expenses not subject
to compromise. The Company is also allowed to continue normal
business practices, including purchasing inventory and payment of
normal operating expenses incurred after the filing of the bankruptcy
petition.
As part of the reorganization process, the Company closed nine
stores and one distribution center in July 1997. It also had
previously closed two stores in January 1997, located in Huntsville,
Alabama and in Jackson, Mississippi. The facilities that were closed
in July 1997 were: (i) one store each in Tuscaloosa, Alabama;
Longview, Texas; Texarkana, Texas; Jackson, Mississippi; Chattanooga,
Tennessee; Alexandria, Louisiana; and Lafayette, Louisiana, (ii) two
stores in Memphis, Tennessee and (iii) the Bessemer, Alabama
warehouse. The Shreveport, Louisiana warehouse was closed subsequent
to fiscal year-end in October 1997. Inventory at the Shreveport
warehouse was moved to a smaller warehouse leased beginning in
October 1997 that is adjacent to the Company's remaining warehouse
located in Harahan, Louisiana.
In connection with these closures, the Company recorded non-
recurring charges in the aggregate of $5,338,000 to write off
leasehold improvements and furniture, fixtures and equipment. A
lease rejection liability of $3,100,000 related to the closed stores
and warehouses was established using the Bankruptcy Code rules for
the calculation. A non-recurring charge of $792,000 was also
recorded with respect to the liquidation of inventory below cost at
the closed locations. In addition, the goodwill associated with the
Company's July 1993 acquisition of Shreveport Refrigeration, Inc. was
reduced by $640,000 due to the closure of two locations that were
part of that acquisition.
Recent Industry Conditions. During fiscal 1997, Campo experienced
steady declines in comparable store sales, continuing a trend that
began in the third quarter of fiscal 1995. This negative sales trend
was consistent with the weak overall performance of all sectors of
the retail industry, as consumers burdened with high consumer debt
levels generally reduced their overall levels of non-essential
consumer spending. This downturn has had a particularly severe
impact on the consumer electronics retail segment due to a reduced
demand for the core electronics products sold by the Company, which
was compounded by a slow down in the bringing to market of new
consumer electronics products.
As a result of the weak market for consumer electronics and
appliances, the Company participates in a highly competitive and
promotional climate, with retailers focusing primarily on protecting
market share. This highly competitive environment has exerted
considerable pressure on the Company's gross profit margins, which
have been adversely affected not only by constant, intense price
competition, but also by a decrease in vendor rebates and other
programs that have contributed to the Company's profitability in
prior years. In addition, those product lines for which there has
been an increasing demand, such as computers and home office
equipment, are generally lower margin items, thus further increasing
the pressure on the Company's gross profit margins. Finally,
industry research indicates that today's consumers are spending less
time shopping in stores and instead are learning about product
pricing and features and alternatives prior to entering a store. This
usually means that a consumer purchases a product from the first
store he or she visits. In the present competitive environment, it
is increasingly important that a retailer have "top of mind"
awareness among consumers, so that it is the first place shopped, and
then to have the skills, training and operational efficiencies in
place to enable the sales associates to close sales as quickly as
possible.
Campo was vulnerable to the weakened performance of the consumer
electronics industry because the current downturn began at a time
when Campo had embarked on an expansion program. Campo opened 14 new
stores in fiscal 1995, taking the Company from a small, family-run
business with 12 stores in two markets at the end of fiscal 1992 to a
regional chain with 31 stores in 21 markets by the end of fiscal
1995. During its expansion, the effects of the industry downturn
were obscured by sales boosts attributable to new store grand
openings as well as to a severe flood in the Company's New Orleans
market in May 1995 (which stimulated a short-term inflated demand for
the Company's products); however, as the negative industry conditions
continued, the Company slowed the pace of its new store openings and
the severity of the industry downturn became more fully apparent. In
addition, the Company's rapid expansion outpaced certain of the
Company's management and operational systems which, in turn,
significantly impaired the Company's ability to maintain adequate
training and supervision of its expanding sales force and managers,
to track and effectively manage its inventory and to respond quickly
to changing industry conditions. The Company's ability to respond
effectively to its management and infrastructure problems was
hampered by its declining financial performance. When Campo opened
its most recent new Campo Concept store in August 1995, it announced
at that time that it would curtail further expansion and focus on
improving its infrastructure until such time as the industry
conditions improved.
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 believed that these
measures, if given enough time, would have had a positive impact,
the Company's comparable store sales continued to decline as 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 for
the purpose of developing a long-term strategic plan. As part of
this self-evaluative process, the Company hired a consulting firm in
the third quarter that specializes in turning around financially
troubled companies in consumer retail industries. After evaluating
and discussing with the Board of Directors several different
strategic options, the consulting firm ultimately recommended to the
Board a significant downsizing of the Company's operations;
specifically, the closing of nine stores, in addition to two
unprofitable stores that had been closed in the second quarter, and
the closure of one distribution center. In addition, in order to
allow the Company to fully realize the operational benefits from the
closing of these facilities, the consulting firm recommended that the
Company seek the protection of the federal bankruptcy laws, which the
Company did by filing a voluntary petition under Chapter 11 on June
4, 1997. The Company's use of this strategic tool was primarily to
allow the Company to terminate on a more favorable basis the long-
term leases of the facilities identified for closure. The Chapter 11
filing was undertaken with the cooperation and support of the
Company's bank group and floor plan lenders.
As discussed in "Liquidity and Capital Resources," the Company has
amended its bank credit facility to defer principal payments for one
year until June 1998, to defer maturity of the facility for three
years until August 31, 2000, and to remove the Company's merchandise
inventory as collateral for the facility. The Company has also
obtained a $3 million line of credit from certain of its floor plan
lenders, which is collateralized by certain merchandise inventory.
Immediately following its filing for protection under Chapter 11,
the Company experienced temporary inventory shortages largely
attributable to the disruptive effect that the bankruptcy filing had
on its relationships with its vendors. These inventory shortages had
an adverse effect on sales and customer confidence during the fourth
quarter. The Company believes it has successfully restored its
relationships with its vendors and inventory levels have been rebuilt
in sufficient quantities to meet customer demand.
Recent Management Changes. In June 1997, the Company hired a new
Chief Executive Officer, William Wulfers, whose extensive retail
background included seven years as the Regional Vice President of
Wal-Mart Inc. for Louisiana, Arkansas, Mississippi, Virginia, North
Carolina, South Carolina, Georgia and Florida. In August 1997, the
Company hired three new Senior Vice Presidents, all with extensive
retail backgrounds. John Watson was hired as Sr. Vice President of
Operations, and his experience included twelve years with Woolco,
eleven years with Rose's stores, and three years with Wal-Mart.
Malcolm Ballinger joined the Company as Sr. Vice President of
Merchandising and Advertising and has 20 years of merchandising
experience in the consumer electronics and appliances industry.
Michael Ware was hired as Sr. Vice President, Chief Financial Officer
and Secretary and has sixteen years of experience in financial
management positions with both public and private retail companies,
including experience with two retailers that successfully emerged
from Chapter 11 reorganizations.
Business Strategy
The Company's business strategy is to establish market leadership
in each of its markets and to build and maintain a loyal customer
base by offering guaranteed low prices, superior customer service
through a professional sales force, a pleasing shopping environment
and the merchandising of top name brand products. The Company
believes this strategy, supported by an aggressive advertising
program and an experienced senior management team, will help it
regain a dominant share of all of the markets it serves for the
product categories offered. The key elements of its business
strategy include:
Experienced Management Team. Since filing for Chapter 11
reorganization, the Company has assembled an exceptional senior
management team. The top four executives have an average of over
twenty-five years of retail experience. Their business backgrounds
include high level positions with major retailers such as Wal-Mart
and Woolco. The Chief Financial Officer is uniquely qualified for
his position having been part of senior management teams which
successfully led two retails chains out of Chapter 11 reorganizations
to profitability. Similarly, the Senior Vice President of
Merchandising and Advertising has over twenty years of merchandising
management experience in the consumer electronics and appliance
industry.
Brand Merchandising. The Company offers a comprehensive selection
of top name brand consumer electronics, major appliances, computers
and home office products, with an emphasis on those name brands with
the highest name recognition among consumers, and carries a wide
range of prices and models within those brands. The Company's brand
merchandising strategy is designed to provide a high quality image in
the marketplace and to encourage increased vendor support.
Customer Service. Customer service is the key to the Company's
business strategy. To promote customer loyalty and to provide a
competitive advantage, the Company seeks to assure that its customers
consistently receive knowledgeable and courteous assistance by
maintaining the technical and interpersonal skills of its sales
associates. These skills are developed through extensive initial and
ongoing training sessions. Sales associates and store management are
supported by the Company's customer service department, which is
staffed by representatives with over 15 years of customer service
experience. The Company also offers guaranteed next-day, and same
day and timed delivery services on major purchases, home installation
of major appliances, computer training classes, product performance
guarantees ("PPG") and a thirty-day, no questions asked return policy
on most products.
Aggressive Advertising; Targeted Marketing. The Company engages
in extensive advertising to promote its competitive prices on top
name brands and customer service. The Company's in-house advertising
department produces all of the Company's newspaper advertisements and
television and radio commercials, which provides the Company with
cost savings and gives the Company greater control and flexibility
over its creative product. In an effort to improve sales, the
Company has analyzed each individual market and is now tailoring its
advertising so that it appeals to the majority of potential customers
in each market. The Company will continue to adjust its advertising
programs to take into account changing lifestyles and trends. In
line with the Company's desire to increase computer sales and attract
more customer traffic, a larger percentage of the advertising
expenditures will be focused on this category in the future. To
encourage repeat business and a longer term relationship with its
customers, the Company offers a private label credit card through an
independent credit card bank that bears substantially all credit
risk without recourse to the Company.
Competitive Pricing. The Company's policy is to offer superior
value to its customers by maintaining competitive prices in each of
its markets. To support this policy, the Company actively monitors
prices at competing stores and maintains a low price program that
guarantees that if an item can be purchased at a lower price from
another retailer, or even from the Company, within 30 days after
the customer has purchased the item, the Company will refund the
difference to the customer.
Operational Controls. Inventory control is one of the keys to
the Company's return to profitability. If the Company is to succeed
in its goal of increasing computer sales, it must carefully manage
its inventory turns in order to reduce the risk of aging or obsolete
products. To accomplish this goal, the Company has a dynamic program
for frequent inventory cycle counts and once a year full
inventory counts of all products. This allows for the timely
evaluation of the age and condition of all products and minimizes the
opportunities for internal and external theft. In addition, the
Company's automated Point-of-Sale reporting system gives management
real time information on product availability, pricing deviations and
instant sales information by location and sales associate.
Marketing
Campo Concept Stores. In 1991, management designed a prototype
Campo Concept store that has been the model for all new stores. The
Campo Concept store format has allowed the Company to offer consumers
a broad selection of consumer electronics, appliances and home office
products. These stores feature a contemporary design aimed at
educating the customer and enhancing the shopping experience, and
contain hands-on displays that enable the customer to explore the
features of the products sold. The store design and layout is bright
and open and is intended to demonstrate the Company's broad selection
of merchandise and to expose the consumer to each of the store's
product categories immediately upon entering the store. Computer and
home office products, which have been the Company's fastest growing
product category since their introduction in fiscal 1991, are located
near the front of each store and major appliances, television/video
equipment and home audio equipment are positioned around the
perimeter of the stores. To capitalize on the growing convergence of
audio and video technology, Campo showcases televisions and VCRs with
audio products in home theater settings throughout the stores. The
stores display a wide assortment of personal electronics products in
the center to encourage impulse shopping.
Existing Campo Concept stores generally contain approximately
18,000 to 30,000 square feet, including approximately 11,000 to
20,000 square feet of selling space. The Company locates its stores
in high visibility, high traffic commercial areas including strip
shopping centers and free-standing formats with large readily
identifiable signage, easy access from major roads and adequate
customer parking. The stores are open seven days per week, including
most holidays. The Company's store hours are intended to make its
stores more accessible to customers than certain other stores selling
similar goods, particularly for those customers who are unable to
shop during ordinary business hours.
The Company's general policy is to lease its stores in order to
limit its investment in fixed assets and increase the availability of
capital for other purposes. The Company's investment in leasehold
improvements, fixtures and equipment generally ranges from $475,000
to $1,000,000 per store. The Company has been successful in
negotiating lessor contributions for tenant improvements, rent
abatements and other concessions to reduce these costs.
Advertising. The Company promotes its prices, selection and
service through aggressive mass media advertising campaigns designed
to create an awareness of the Company's comprehensive selection of
quality name brand merchandise, its competitive pricing policy and
its strong customer service orientation. The Company's strategy is
to maintain a balanced advertising program utilizing local newspaper
advertising and radio and television commercials.
In each of its markets, the Company generally runs four-color
multi-page newspaper inserts weekly. Television and radio
advertising is run on a regular basis in all markets to reinforce
messages such as the Company's guaranteed next-day delivery and name
brand selection. The Company also runs highly concentrated
television and radio advertising to support specific sales events.
The Company's advertising typically stresses promotional pricing,
a broad assortment of top name brand merchandise and the services
provided by its knowledgeable personnel. Content, production and
media placement (as well as layout and artwork in the case of
newspaper advertising) are handled by the Company's in-house
advertising department. The Company's approach is to be flexible in
decisions regarding advertising and to make changes to advertising
copy on short notice where necessary in order to take advantage of
new products or unexpected market developments. The Company's use of
an in-house department, instead of an independent advertising agency,
has resulted in cost savings to the Company and has given the Company
the flexibility it requires as well as greater control over the
creative product. The Company has computerized publishing and media-
buying systems that allow it to produce large numbers of
advertisements quickly and professionally without the use of a large
advertising staff.
Pricing. The Company's policy is to offer superior value to its
customers by maintaining competitive prices in each of its markets.
To support this policy, the Company actively monitors prices at
competing stores and maintains a low price program that guarantees
that if a customer can buy merchandise purchased from a competitor at
a lower price, including the Company's own sale price, within 30 days
of purchase, the Company will refund the difference to the customer.
All initial pricing decisions are made centrally by the Company's
merchandising department. At the store level, store managers retain
flexibility to match competitor's prices in order to comply with the
Company's guaranteed low price program.
Private Label Credit Card Program. The Company accepts most major
credit cards and has its own private label credit card with the
"Campo" name which allows qualifying customers to pay for purchases
in installments through an arrangement between the Company and an
independent credit card bank. Under the agreement, customers' credit
card applications are filed and evaluated electronically from the
Company's stores. Typically, this procedure enables qualifying
customers to receive credit card authorizations within a few minutes.
Independent market research indicates that a well-established base of
credit card consumers provides a competitive advantage to retailers.
The Company believes it has experienced longer-term relationships,
more repeat business and higher average purchases through the use of
its private label credit card. There are more than 300,000 holders
of the Company's private label credit card. The Company has
experienced a decline in its approval rate of new card holders,
primarily due to increased competition in the consumer credit
industry.
Under the Company's private label credit card agreement, the
independent credit card bank has agreed to provide a $125 million
revolving line of credit for the purchase of merchandise and services
from the Company's stores by approved private label credit card
holders and to bear substantially all credit risk without recourse to
the Company under the program. The Company also receives fees from
the credit card bank, which are used in part to market the credit
card program and to fund the cost of special promotions (such as 90
days interest free for purchases made with the card) that complement
the Company's other advertising and marketing activities. Payments
received under the agreement are recorded as reductions in selling,
general and administrative expenses. If the growth rate of the
credit card portfolio continues to decline, the Company would not
expect future payments received from the bank under the agreement to
continue at current levels.
The Company also provides credit to its customers for individual
transactions through independent finance companies. Similar to the
private label credit card program, the independent finance company
bears substantially all credit risk without recourse to the Company.
Management believes that the Company's private label credit card
and related programs will provide for adequate availability of
consumer credit for fiscal 1998 and that it has the ability to obtain
additional consumer credit facilities in the future under these
existing or other similar programs on substantially similar terms.
There can be no assurance that future changes in the availability of
consumer credit will not have an adverse impact upon the Company's
sales and results of operations.
Merchandising
Products. The Company offers a comprehensive selection of top
name brand electronics, major appliances and computer and home office
products, with an emphasis on those name brands with the highest
awareness among consumers, and carries a wide range of prices and
models within those brands. The Company's merchandising strategy is
designed to provide a higher quality image in the marketplace and to
encourage increased vendor support. The Company currently offers
more than 3,000 products in its major categories:
Category Products Principal Brand Names
Television/Video Televisions GE, JVC, Magnavox, Mitsubishi, Panasonic,
VCRs RCA, Samsung, Sony, Zenith
Camcorders
Digital
Satellites
Major Appliances Refrigerators Admiral, Friedrich, Frigidaire, GE,
Dishwashers Hotpoint, Jenn Air, Kelvinator, KitchenAid
Washer/Dryers Maytag, Panasonic, Sharp, Tappan,
Ranges Whirlpool, White-Westinghouse
Cooktops
Range Hoods
Microwaves
Room Air
Conditioners
Home Audio Stereo Bose, Infinity, JBL, JVC, Kenwood,
Components Magnavox, Mitsubishi, Panasonic, Pioneer,
Speakers Sharp, Sony, Yamaha, Zenith
Stereo Systems
Computers/Home Computers Brother, Canon, Compaq, Epson, IBM,
Office Printers Packard Bell,
Fax Machines Panasonic, Sony
Electronics/ Personal Audio Aiwa, GE, Infinity, JBL, JVC, Kenwood,
Accessories Radar Lucent Technologies, Magnavox, Motorola,
Detectors Panasonic, Pioneer, RCA, Sharp, Sony,
Portable Southwestern Bell, Sprint PCS
Radios
Car Audio
Car Alarms
Telephones
Cellular
Phones
Pagers
Consumer electronics, including television/video and home audio
equipment, are currently the Company's leading product categories.
Campo stores display a wide assortment of name brand merchandise in
this category, and for fiscal 1997, the Company's three leading
selling name brands were Mitsubishi, RCA and Sony. By advertising
both inexpensive promotional goods and sale prices on the leading
television/video brands in the industry, Campo believes it is able to
attract a wide range of consumers. Campo's sales counselors are
trained to demonstrate the best values and latest features in each
customer's brand preference. Campo's audio marketing strategy
focuses on mid- to high-end products from leading audio manufacturers
in the industry. A wide selection of products is displayed in both
open display areas and smaller acoustically controlled sound rooms.
To capitalize on the growing convergence of audio and video
technology, Campo showcases televisions and VCR's with audio products
in multiple home theater settings throughout the store. Campo also
offers custom system design and installation for high-end surround-
sound and multi-room speaker systems.
The Company believes that one of its competitive strengths is its
focus on major appliances. The Company devotes a significant portion
of its store floor space to this category and offers a large
selection of high-end, built-in appliances. The Company believes
that its ability to successfully merchandise major appliances helps
to differentiate it from its competition, strengthens its image of
high quality and wide selection, provides it with a stable base of
business and promotes customer loyalty and repeat business. Campo
Concept stores display a large assortment of the leading brands in
the industry, and for fiscal 1997, the Company's three leading
selling name brands were GE, Maytag and Whirlpool. Campo Concept
stores showcase the latest built-in appliances in a custom kitchen
display complete with connections for in-store cooking
demonstrations. Campo's inventory management system allows
the Company to offer its next-day delivery guarantee and its same day
and timed delivery services to make appliance replacement as
convenient as possible for the customer.
Computers and home office products have been the Company's fastest
growing product category since their introduction in fiscal 1991.
The Company offers an assortment of computers, printers and
telecommunication machines from industry leaders. For fiscal 1997,
the Company's three leading selling brands were Canon, Compaq and
Packard Bell. For fiscal 1998, management's goal is to increase
sales of computers and home office products as a percentage of the
Company's overall merchandise mix because the Company believes that
future annual sales growth will depend on a strong base of computer
sales. In a retail environment with few new exciting products to
offer, management believes that computers provide an opportunity to
build store traffic and create awareness of other Campo products.
Success in this fast moving and volatile catagory will require
management to monitor this catagory closely in order to maintain
adequate inventory turns and manage aged goods.
The Company's promotional pricing on portable audio products such
as personal electronics and hand held televisions is designed to
build store traffic. Campo Concept stores display a wide assortment
of personal electronics in the store's center to encourage impulse
shopping. The Company's hands-on displays also help customers try
out the models, compare features and make an informed purchasing
decision. Campo Concept stores also offer sales and installation of
car audio, alarms, radar detectors and cellular phones, with on-site
demonstration rooms and auto installation bays. For fiscal 1997, the
Company's three leading selling name brands for
electronics/accessories were Aiwa, Panasonic and Sony.
The following table indicates the percentage of gross sales in each
product category for each of the Company's last three fiscal years.
The percentage of gross sales contributed by each product category is
affected by season, store type, promotional activities, consumer
trends and the development of new products. Because these
percentages change continually, historical percentages may not be
indicative of future results.
Percentage of Gross Sales
Fiscal Years Ended August
31,
1997 1996 1995
Product category:
Television/video 31.2% 32.9% 32.8%
Major appliances 23.6 22.5 23.1
Computers/home office 19.5 18.6 17.6
Home audio 8.4 8.4 10.4
Extended warranty plans 5.4 5.5 5.9
Portable/personal audio 3.9 4.7 5.4
Mobile electronics 4.4 4.0 3.7
Accessories and other 3.6 3.4 3.1
100.0% 100.0% 100.0%
Purchasing. The Company purchases its merchandise directly from
manufacturers. The Company has a staff of three buyers under the
direction of the Senior Vice President of Merchandising each of whom
has responsibility for specific product categories. The buyers are
assisted by the Company's management information system which
provides them with current inventory price and volume information,
allowing them to respond quickly to market demands.
The Company has been able to negotiate favorable price and payment
terms on very large volume purchases, which in part allows the
Company to maintain its low price strategy. The Company has
benefited from its membership in Nationwide Television and Appliance
Association, Inc. ("Nationwide"), a national buying group that
currently consists of approximately 300 retailers of home appliance
and consumer electronic products located throughout the country,
representing more than $4 billion in retail sales. Although it is a
member of Nationwide, the Company makes its own purchasing decisions
and is not required to purchase any particular products or quantity
of products. In fiscal 1997, a majority of the Company's purchases
were effected through Nationwide-sanctioned programs. Nationwide is
also a forum for the exchange of ideas on new products, product lines
and services as well as on management and administrative techniques
and procedures, which has also directly benefited the Company.
Although Nationwide is an important source of information and
industry communication, management believes that the Company's
independent buying power, which has strengthened in recent years
through its regional expansion activities, is not dependent on its
membership in this association.
The Company purchases inventory with financing provided either
through third party finance companies or through open lines of credit
from vendors, the former of which is collateralized by the inventory
purchased. During fiscal 1997, sales of goods purchased from the
Company's largest supplier accounted for approximately 12.7% of
merchandise sales. The Company typically does not maintain long-term
purchase contracts with suppliers and operates principally on a
purchase order basis.
The Company's current sales, inventory, purchasing and other key
information is tracked at the Company's corporate headquarters on its
computerized point-of-sale system. This system provides management
with information that facilitates merchandising, pricing, sales
management and the management of warehouse and store inventories, and
enables management to review and analyze the performance of each of
the Company's stores and sales personnel on a daily basis. The
Company's central purchasing department monitors current sales and
inventory at the stores each day. The purchasing department also
establishes the level of inventory required at each store and handles
the replenishment of store inventory on a daily or weekly basis. The
Company also conducts periodic cycle counts of selected inventory
categories. Inventory turned over 3.6 times for fiscal 1997.
Distribution. The Company owns one distribution facility in New
Orleans, containing approximately 100,000 square feet of warehouse
space, and leases another adjacent warehouse containing approximately
48,000 square feet of space. Substantially all inventory purchased
by the Company is shipped directly to its distribution facilities in
New Orleans. The Company closed its Bessemer, Alabama distribution
center during fiscal 1997 and closed its Shreveport, Louisiana
distribution center in October 1997.
Each store receives shipments of inventory from the distribution
facilities at least three times a week and based on demand, daily,
thereby increasing availability to customers by enabling each store
to maintain sufficient inventories of all products and to promptly
replenish inventories of fast moving products. The Company believes
its computerized distribution system allows it to support a broad
selection of merchandise within the stores while minimizing store
level inventory requirements. The Company also believes its
distribution system provides for savings by consolidating receiving
and handling functions and by enabling the Company to purchase in
full truck loads from suppliers.
Store Operations
Sales Associates. The Company views itself as being in a service
business and emphasizes to its sales personnel the need to provide
personal attention to each customer. Although most of the
merchandise carried by the Company is displayed in specialized
fixtures or self-demonstrating audio and visual displays, the Company
does not operate its stores in a self-service fashion and encourages
its trained personnel to assist customers in selecting merchandise by
demonstrating products and providing information desired by the
customer with respect to price, features and other matters. Highly
visible displays of many products at each Campo store promote sales
by enabling sales personnel to demonstrate for customers the use of
these products.
The Company believes that one of its distinguishing characteristics
is the quality of the people serving its customers and has made a
serious commitment to the training and development of its sales
associates to insure that customers consistently receive
knowledgeable and courteous assistance. This training and development
also serves to provide the Company with a pool of talented associates
for promotion into management. The Company produces all of its sales
training and product training manuals and courses using an in-house
professional training staff. The Company is assisted in its training
programs by its extended warranty administrator, which has assigned a
full-time trainer to work with the Company's store manager on the
effective techniques of selling Product Protection Guarantees
(extended warranties).
At the commencement of employment, each sales associate must
complete an intensive two-week training program that utilizes
classroom instruction for the first week and a standardized video
tape and workbook system for the second week. In addition, each
sales associate must study the appropriate product training manuals
and pass a test to certify his or her knowledge in each product
category. The sale associate's progress is monitored by the store
manager and each sales associate is further assisted by a "mentor,"
who is a more experienced sales associate, during the training
period.
Management and Organizational Structure. The Company now operates
20 stores in 4 states and a two-unit distribution center in the
greater New Orleans area. Because of the downsizing of the Company,
as previously disclosed, the Company has been able to reduce the
number of layers of management and effect significant cost savings.
Formerly, the Company was divided into five districts, each with its
own District Manager reporting to a Director of Stores. Beginning in
August 1997, the Company eliminated the District Manager level of
management, and store managers now report directly to the Director of
Stores. The Director of Stores is assisted by an Operations and Loss
Prevention Director. The Director of Stores has over 25 years of
retail sales management experience with major, multi-unit retailers,
and the Director of Operations and Loss Prevention has over 12 years
of retail experience in the consumer electronics and appliances
industry.
The management structure of each store consists of a full-time
store manager, an assistant store operations manager and a sales
manager. The assistant store operations managers have
responsibility for most non-selling tasks such as inventory control,
receiving, delivery and other operations. The Company's store
management structure is designed to maximize each store manager's
presence on the sales floor and thus his or her personal involvement
in sales and customer service. Each store manager's compensation
consists of a salary based on the store's size, and an annual bonus
based on certain key financial performance criteria. Assistant
store operations managers are compensated in a similar fashion. The
sales managers' compensation is based almost completely on commission
sales. All of the Company's sales counselors are paid on a
commission basis. Additionally, the Company motivates its sales
counselors with recognition awards and sales contests and by
providing opportunities for advancement within the Company.
The Company has developed its own materials and courses for
management training and development. Campo has a system to identify
sales counselors with management potential, assess the strengths and
developmental needs of each individual and tailor a development plan
to expedite his or her growth within the organization. All new
managers are required to complete a one month initial training
program. The Company also conducts periodic store management
workshops and monthly sales managers meetings to continue the growth
and development of its sales management teams.
Customer Services. The Company supports its merchandise sales by
providing a number of important customer services including
guaranteed next-day, same day and timed delivery in most metropolitan
areas, home and car installation, an improved type of extended
warranty contract, and a thirty-day, no questions asked, return
policy on most products. The Company also offers in select markets
free or reduced rate computer training classes to purchasers of its
computer products.
The Company's "Next-Day Express Metro Delivery" service guarantees
that a major purchase will be delivered to the customer by the day
after purchase or the Company will refund the purchase price to the
customer. In rare instances, the Company has been required to refund
to customers the purchase price of an item because of the Company's
inability to deliver the item by the day after purchase. The Company
also offers same day and timed delivery of appliances in certain
markets at a premium price. The same day service is available on
purchases made before 3 p.m. and the timed delivery service offers
customers a narrower delivery time window that includes evening
delivery hours. The Company believes its delivery service has
contributed to the Company's significant sales growth in the
appliance category, indicating that this service provides a
competitive advantage and is highly desired by customers. Many of
the Company's competitors do not offer even next-day delivery of
major appliances. The delivery service is currently provided by both
in-house delivery services and independent contractors approved by
the Company, however, the Company plans to shift to using solely
independent contractors for its delivery services which provides a
cost-savings to the Company.
Product Service and Product Performance Guarantee (PPG). At the
time of purchase of most products, each customer may elect to
purchase an improved version of an extended warranty contract called
a "Product Performance Guarantee" ("PPG"). While most extended
warranties simply extend the manufacturer's limited warranty for a
number of extra years the PPG program guarantees to keep the product
in the same operating condition as when new. Product performance
deterioration resulting from normal use will be brought back to
original "like new" quality by an authorized service center under the
provisions of this program. Products damaged from power surges
caused by lightening, or other conditions will also be automatically
replaced in most instances.
Generally, these PPG contracts provide one to five years of
extended warranty coverage and are renewable, which promotes post-
sale customer satisfaction and a longer-term relationship with the
Company. The contracts are administered for the Company by Federal
Warranty Service Corporation ("Federal"), an unaffiliated third party
warranty company, although the Company's customer service department
handles all questions and problems regarding service and the PPG
contracts. Federal is owned by American Bankers Insurance Group.
Federal performs the repair services required by the contracts
through factory authorized service centers and is required by its
agreement with the Company to maintain insurance to fully protect the
Company in the event that Federal fails to fulfill its obligations
under the PPG contracts. The Company sells the PPG contracts to
Federal on a non-recourse basis.
Controls. The Company closely monitors the performance of its
sales personnel as well as the sales results and operations at each
of its stores through its management information system. The Company
takes cyclical physical inventory counts of selected categories on a
regular basis throughout the year, and a complete physical inventory
of each store at least once per year. Each store is also visited at
least twice monthly by members of corporate management ranging from
the President of the Company to the Vendor Products Return Specialist.
Supplementing these visits are "surprise" safety and loss prevention
audits twice annually at each location by the Company's insurance
underwriter.
Each store is connected with the Company's wide area computer
network which allows for the instant exchange of e-mail messages from
or to any point in the organization. This allows for rapid
dissemination of directed changes in store procedures, pricing
changes and other corporate directives.
Information Systems
The Company utilizes computer technology to support its point-of-
sale, retail management, and financial software applications. These
software applications are maintained primarily by the Company's in-
house information systems department. The hardware platform, an IBM
AS/400 model F90, has been upgraded as needed to accommodate the
Company's recent aggressive growth. All stores and distribution
centers are equipped with computer terminals and printers which
communicate interactively to the host AS/400 system at the Company's
corporate headquarters. The hardware, telecommunications network,
and interactive software allow the Company to have "real-time" sales
and inventory information.
The activity of all stores and distribution centers may be viewed
by management via on-line inquiry at any time. This allows for
decisions to be based on current, real-time information and provides
immediate feedback on sales activity associated with special
promotions and events. Trend, gross margin, and sales analysis
reports are produced each morning from the previous day's business.
The Company's need for real-time inventory and distribution
information is driven by a variety of reasons, the most significant
being efficient management of inventory. The auto-replenishment
feature of the system is utilized to replenish store stock rapidly
from the Company's distribution centers. Additionally, this real-
time inventory information enables the Company to meet its guaranteed
next-day delivery policy and to facilitate its same day and timed
delivery services.
During the first quarter of fiscal 1997, the Company leased
portions of a new Hewlett-Packard hardware system utilizing Oracle
and GERS retail software that was intended to integrate all store
processes into one system, allow for user-driven reporting based on
individual needs for information, and improve inventory management
and the financial reporting function. Because of the Chapter 11
Bankruptcy filing and the cash position of the Company at that time,
this project was interrupted prior to implementation. However, an e-
mail system was implemented which has improved communications with
the stores and includes on-line help with regard to Company policies
and procedures, delivery and inventory information and other
reporting functions.
The Company estimates that it would require additional cash
expenditures of approximately $900,000 to complete implementation of
the planned system, and has decided to delay implementation of this
system for at least two years due to the reorganization process and
cash restraints. During fiscal 1998, the Company will re-evaluate
its information systems strategy and alternatives. Because of this
delay, during fiscal 1998 the Company's existing software systems
will have to be evaluated and programs upgraded or changed to be year
2000 compliant. The current cost of this effort is still being
evaluated.
Competition
The Company's business is highly competitive in all product
categories. In general, the Company's competitors include other
specialty stores, independent consumer electronics and appliance
stores, department stores, warehouse clubs, mass merchandisers,
discount stores and catalogue showrooms, many of which are national
in scope and have significantly greater resources than the Company.
The Company believes that it competes in its current markets most
directly with Sears, Wal-Mart and Sams (in all markets), Montgomery
Wards (all markets except New Orleans) and Circuit City in certain of
its markets. The Company competes with these companies by
aggressively advertising and emphasizing its product selection,
guaranteed low prices and superior customer service.
The Company believes it is positioned in its current market areas
to compete effectively with national and other regional companies.
However, there can be no assurance that the Company will not face
additional competition in its current or future markets from new or
existing competitors.
Employees
As of November 23, 1997, the Company employed approximately 778
persons, 625 of whom were full-time employees and 153 of whom were
part-time. The Company is not a party to any collective bargaining
agreement and is not aware of any efforts to unionize its employees.
The Company considers its relations with its employees to be good.
Trade Names and Service Marks
The Company holds various federal trade names and service mark
registrations including rights to the name "Campo." The Company
believes that this trade name has acquired substantial goodwill and
reputation and broad consumer recognition as a trade name of the
Company within its market areas and that its continued use is
important to the development of its business. The Company is not
aware of any adverse claims or infringements concerning any of its
trade names or service marks.
ITEM 2. PROPERTIES
The Company's general policy is to lease its stores in order to
limit its investments in fixed assets and increase the availability
of capital for other purposes; however, as of August 31, 1997, the
Company does own the land and buildings for six of its Campo Concept
stores. All of its other stores are leased from unrelated parties
except two stores which are leased from the estate of Mr. Tony Campo,
the founder and former majority shareholder of the Company, or a
family LLC owned by his descendants.
The Company's store leases have generally provided for a base
rental and have not provided for a percentage of sales in addition to
the fixed rent; however, two leases for Campo Concept stores require
percentage rents. In addition, the leases generally require the
Company to pay all or a portion of the real estate taxes and
assessments, utilities, insurance and common area and interior
maintenance and repairs. Rental payments (including amounts paid in
respect to expenses, taxes and other charges) by the Company
aggregated approximately $5.3 million in fiscal 1997.
The table below sets forth certain information concerning the
Company's stores.
Calendar Approximate
Year Gross Selling Lease
Opened Square Square Expir-
or Footage Footage ation
Acquired Date(1)
Campo Stores
Claiborne Ave., New Orleans, LA 1967 22,000 5,000 2011
Bloomfield Road, New Orleans, LA 1977 24,000 18,000 2017
Campo Concept Stores
Northlake Shopping Ctr.,
Mandeville, LA 1991 18,410 11,844 2006
Edgewood Village Shopping Ctr.,
Biloxi, MS 1992 19,751 11,482 2012
2801 Veterans Blvd., Kenner, LA 1992 20,153 12,555 2012
Oak Ridge Plaza, Marrero, LA 1992 24,287 11,960 2002
The Crossings Shopping Ctr.,
Slidell, LA 1993 19,840 12,206 2018
8888 Airline Hwy., Baton Rouge,
LA 1993(2) 49,043 17,976 N/A
East Lake Plaza, New Orleans
East, LA 1993 19,000 14,209 2013
Bossier Corners Shopping Center,
Bossier City, LA 1994 21,276 14,404 2024
Oak Park Shopping Center, Lake
Charles, LA 1994 26,024 15,329 2024
4600 Hardy Street, Hattiesburg,
MS 1994 29,264 16,866 2032
6235 N. Davis Highway,
Pensacola, FL 1994 51,900 18,871 2024
4641 Pecanland Mall Dr., Monroe,
LA 1994(2) 27,500 17,553 N/A
8815 Jewella Rd., Shreveport, LA 1994(2) 30,000 17,553 N/A
146 Wildwood Parkway,
Birmingham, AL 1994 30,000 17,338 2024
6981 Crestwood Blvd.,
Birmingham, AL 1994(2) 30,500 19,400 N/A
Wiregrass Mall, Dothan, AL 1995(2) 30,000 18,894 N/A
525 West 23rd St., Panama City,
FL 1995 47,057 17,770 2017
3943 Airport Road, Mobile, AL 1995(2) 30,000 20,000 N/A
__________
(1) Includes all renewal options unless otherwise indicated.
(2) These facilities are owned by the Company.
________________
Until August 1996, the Company's corporate headquarters were
located in an approximately 46,000 square foot leased facility in an
office building in Covington, Louisiana. In September 1996 the
Company consolidated its corporate headquarters into approximately
20,000 square feet of space located in the same office building.
This facility contains the Company's executive offices, and
accounting, data processing, merchandising and marketing operations.
The Company owns a 100,000 square foot warehouse and distribution
facility in Harahan, Louisiana and leases another facility with
approximately 48,000 square feet of warehouse space adjacent to the
Harahan facility. The Company closed its Shreveport distribution
center, which contained approximately 50,000 square feet of warehouse
space and the administrative offices for its North Louisiana district
in October 1997, and in July 1997 closed its Alabama distribution
facility, which contained approximately 110,000 square feet of
warehouse space, in Bessemer, Alabama.
The Claiborne Avenue store is owned by the Campo Family LLC and
leased to the Company. The Company subleases the Bloomfield Road
store from Campo Appliance Co. of Clearview, Inc., a corporation
wholly-owned by the estate of Mr. Tony Campo.
ITEM 3. LEGAL PROCEEDINGS
On June 4, 1997, the Company filed a voluntary petition in the U.S.
Bankruptcy Court for the Eastern District of Louisiana for
reorganization under Chapter 11 of the Bankruptcy Code, and is
currently operating its business as debtor-in-possession under
the supervision of the Court.
The Company is not a party to any other material legal proceedings.
The Company is, however, involved in various routine claims and
legal actions which arise in the ordinary course of business.
Management of the Company intends to vigorously defend these claims
and believes that the ultimate disposition of these matters will not
have a material adverse effect on the Company's financial condition,
results of operations or cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the shareholders of Campo Electronics,
Appliances and Computers, Inc. (the "Meeting") was held on September
25, 1997 and 5,127,368 shares were represented. The voting
tabulation for the election of directors, which is the only matter to
come before the Meeting, follows:
William E. Wulfers, 3,671,625 votes for, 1,455,743 votes
withheld; and Anthony J. Correro, III, 3,671,075 votes for,
1,456,293 votes withheld.
The following directors' terms of office continued after the
Meeting:
Donald T. Bollinger, Anthony P. Campo, Joseph E. Campo,
Barbara Treuting Casteix, David L. Ducote and L. Ronald Forman.
PART II
ITEM 5. MARKET PRICE FOR REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol CMPOQ. The following table sets forth, for each
quarterly period in the two most recent years, the range of high and
low sales prices, as reported by the Nasdaq National Market:
High Low
Fiscal Year 1996:
First Quarter (November 30, 1995) 6-1/2 3-5/8
Second Quarter (February 29, 1996) 4-1/8 2-3/4
Third Quarter (May 31, 1996) 3-3/4 2-1/4
Fourth Quarter (August 31, 1996) 2-5/8 1-5/8
Fiscal Year 1997:
First Quarter (November 30, 1996) 2-3/16 1-7/16
Second Quarter (February 28, 1997) 1-13/16 15/16
Third Quarter (May 31, 1997) 2-1/8 7/8
Fourth Quarter (August 31, 1997) 1-13/16 9/16
The Company is prohibited from paying dividends on its Common Stock
by the terms of its existing debt instruments. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
As of November 28, 1997, there were approximately 361 record
holders of the Company's Common Stock.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information With Respect to Directors
Set forth below is information regarding the age and
principal occupation or employment of each director. Unless
otherwise indicated, each director has been engaged in the
principal occupation shown for more than the past five years.
Name, Age, and Principal Occupation First Serving
Elected Term
Director Expiring
William E. Wulfers, 51, (1) 1997 2000
President and Chief Executive Officer
Donald T. Bollinger, 48,(2) 1997 1999
Chairman and Chief Executive Officer Bollinger
Shipyards, Inc.
Anthony P. Campo, 42, (3)(4) 1991 1999
Private Investments
Joseph E. Campo, 43, (3)(5) 1991 1998
President, Golf Zone, Inc., a retail golf supply
store
Anthony J. Correro, III, 55, (7) 1997 2000
Partner, Correro Fishman Haygood Phelps Weiss
Walmsley & Casteix, LLP, a law firm
Barbara Treuting Casteix, 44, (6) 1992 1998
Managing Partner, Barrios, Kingsdorf & Casteix,
L.L.P., a law firm
David L. Ducote, 29 1997 1998
Chief Executive Officer, Tchoupitoulas Partners,
Inc., a private investment and merchant bank;
Vice Chairman, Park One, Inc., a developer, owner
and operator of commercial parking facilities
L. Ronald Forman, 50 1994 1999
President and Chief Executive Officer of the
Audubon Institute, Inc., operator of a zoo,
aquarium and several parks
_______________
(1) William E. Wulfers has served as President and Chief Executive
Officer of the Company since June 1997. For more than five
years before then he worked for Wal-Mart Stores, Inc. in a
variety of positions beginning in 1983 as store manager, then
as District Manager and most recently as Regional Vice
President-Store Operations for Louisiana, Arkansas,
Mississippi, Virginia, North Carolina, South Carolina, Georgia
and Florida. William Wulfers also worked in a variety of
capacities for Woolco Company, a division of F. W. Woolworth
from 1967 to 1979, most recently as District Manager for South
Florida.
(2) Donald T. Bollinger has served as Chairman of Bollinger
Shipyards, Inc. since 1989 and as its Chief Executive Officer
since 1985. He also serves on the Board of Directors of
Tidewater Inc. and Bank One of Louisiana.
(3) Anthony P. Campo and Joseph E. Campo are brothers.
(4) Since March 1997, Anthony Campo has managed certain family
investments and properties. He served as Chairman of the
Board and Chief Executive Officer from May 1992 until March
1997. He also served as President of the Company from
September 1991 until August 1996, and as Senior Vice President
of the Company from 1984 to 1991.
(5) Since July 1997, Joseph Campo has served as President of Golf
Zone, Inc. and manages certain family investments and
properties. From February 1997 to July 1997, Joseph Campo
served as Director-Loss Prevention for the Company. From
December 1995 until February 1997, Joseph Campo managed
certain family investments and properties. For more than five
years prior to December 1995, Joseph Campo served as Director-
New Market Development for the Company.
(6) Barbara Treuting Casteix has served in this position since
October 1, 1995. For more than five years prior to October 1,
1995, Barbara Casteix served as managing partner of Cleveland,
Barrios, Kingsdorf & Casteix, L.L.P.
(7) Anthony J. Correro, III has served in this position since July
1996. From June 1994 until July 1996 he was a partner of
Correro, Fishman & Casteix, LLP. For more than five years
before June 1994, Anthony Correro was a partner in the law
firm of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. He is also a director of Avondale Industries, Inc.
________________
Information with respect to Executive Officers
The following table sets forth certain information with
respect to the executive officers who are not also directors of the
Company as of the date of this report. The Company is not aware of
any family relationships between any executive officers of the
Company. Executive officers are appointed by and serve at the
discretion of the Board of Directors.
Name Age Position
Michael G. Ware 48 Senior Vice President, Chief
Financial Officer and Secretary
John Watson 49 Senior Vice President-Operations
Malcolm Ballinger 50 Senior Vice President-
Merchandising and Advertising
Michael G. Ware joined the Company as Senior Vice President,
Chief Financial Officer and Secretary in August 1997. From July
1996 to August 1997, he served as a private consultant to the
retail industry. From July 1993 to July 1996 he served as Senior
Vice President and Chief Financial Officer of Sunshine-Jr. Stores,
Inc., which filed for Chapter 11 Bankruptcy in December 1992 and
successfully emerged from Chapter 11 in June 1994. From December
1987 to October 1992 he served as Vice President and Chief
Financial Officer of Farm Stores, Inc., which filed for Chapter 11
in 1991 and successfully emerged in September 1992. Michael Ware
also served as Vice President-Controller of Kash n' Karry, Inc.
from July 1987 to December 1987, as Vice President and Chief
Financial Officer of Bin & Barrel, Inc. from December 1985 to
December 1986, as Vice President of Finance of Little General
Stores and Circle K General, Inc. from May 1977 to August 1985, and
as a Staff Accountant and later a Senior Accountant for Price
Waterhouse from September 1972 to May 1977. He is a certified
public accountant.
John Watson joined the Company as Senior Vice President-
Operations in July 1997. From 1994 to July 1997, he served as
Regional Manager for Wal-Mart Stores, Inc. for North Carolina and
Virginia, and from 1983 to 1994 worked in various capacities for
Rose's Stores, including District Manager, Regional Human Resources
Manager and Regional Manager. From 1971 to 1983 he served in a
variety of capacities for Woolco Company, a division of F. W.
Woolworth, most recently as District Manager.
Malcolm Ballinger joined the Company as Senior Vice President-
Merchandising and Advertising in July 1997. From November 1995 to
July 1997, Malcolm Ballinger served as General Merchandise Manager
for Apex, Inc., an appliance and electronics retailer in Rhode
Island, and from July 1994 to November 1995, served as General
Merchandise Manager for the Company. From December 1992 to July
1994, he served as Merchandise Manager for Fretter Inc., an
appliance and electronics retailer in the mid-west. He was the
owner/operator of Mrs. B's Appliance & T.V. from August 1989 to
December 1992, and served as Vice President, Merchandising and
Sales for World Radio Inc. from January 1984 to August 1989. He
served in a variety of capacities with Silo Inc. from September
1977 to January 1984, most recently as Vice President,
Merchandising and Sales.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, executive officers and 10% shareholders to
file with the Securities and Exchange Commission reports of
beneficial ownership, and changes in beneficial ownership of the
Common Stock of the Company. Barbara Casteix failed to timely file
a Statement of Changes in Beneficial Ownership (Form 4) to report a
transaction by her husband in November 1995, and reported this
transaction on a Form 4 in January 1997. William Wulfers failed
to timely file an Initial Statement of Beneficial Ownership (Form
3) to report his holdings as of the date of his employment with the
Company, and filed the Form 3 in July 1997. Dean Hanby and James
Rogan, two former executive officers of the Company, failed to
timely file their Initial Statements of Beneficial Ownership (Form
3) to report their holdings as of the date of their employment with
the Company, and filed the Form 3s in September 1997.
ITEM 11. EXECUTIVE COMPENSATION
Summary of Executive Compensation
The following table sets forth information with respect to
compensation paid by the Company for services rendered in all
capacities during the fiscal years ended August 31, 1997, 1996 and
1995 to the Chief Executive Officer and to each of the four most
highly compensated executive officers of the Company whose annual
compensation exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term All Other
Compensation Compensation
Awards
<S> <C> <C> <C> <C> <C> <C> <C>
Names and Year Salary Bonus Other Restricted Number
Principal Position Annual Stock of
Compen- Awards Options
sation
William E. Wulfers 1997 $ 57,692 $20,833 $ ---- $125,000(2) 100,000 $ -------
President and
Chief Executive
Officer(1)
Anthony P. Campo, 1997 197,423 50,000 31,057(4) -------- ------- 379,000(5)
Former Chairman of 1996 351,581 53,311 -------- -------- ------- --------
the Board and Chief 1995 318,467 53,300 -------- -------- 50,000(6) --------
Executive Officer(3)
Rex O. Corley, Jr. 1997 178,942 25,000 -------- -------- 75,000(6) 76,103(8)
Former President and 1996 163,737 10,000 -------- -------- ------- --------
Chief Operating 1995 155,082 25,000 -------- -------- ------- --------
Officer, Former
Acting Chairman
of the Board
and Chief
Executive Officer(7)
James B. Warren 1997 152,885 25,000 -------- -------- 50,000(6) 37,500(8)
Former Vice 1996 14,423 ------- -------- -------- ------- 3,000(10)
President-
Merchandising(9)
Charles S. Gibson 1997 135,577 25,000 -------- -------- 50,000(6) --------
Former Vice 1996 129,816 30,000 -------- -------- ------- --------
President- 1995 96,154 15,000 -------- -------- 10,000 --------
Logistics and
Operations(11)
John K. Ross 1997 97,115 50,000 -------- -------- 50,000(6) --------
Former Vice 1996 102,497 30,000 -------- -------- ------- 19,100(13)
President- 1995 72,308 ------- -------- -------- 5,000(6) --------
Marketing(12)
</TABLE>
__________
(1) William Wulfers joined the Company on June 15, 1997.
(2) Calculated based on the grant of 100,000 shares of restricted
stock valued at the per share closing price of the Common Stock
on the date of grant (June 15, 1997). The restrictions on these
shares lapsed on July 15, 1997.
(3) Anthony Campo served as Chief Executive Officer of the Company
until March 1997.
(4) Includes $17,307 for unused vacation time and $13,750 for a
Company car.
(5) Includes $363,000 paid or accrued as severance upon resignation
of the officer, and $16,000 paid as directors' fees after March
1997.
(6) These options automatically terminated upon resignation of the
officer.
(7) Rex Corley served as Acting Chief Executive Officer of the
Company from March 1997 to June 1997.
(8) Amount paid or accrued as severance upon resignation of the
officer.
(9) James Warren joined the Company in fiscal 1996 and resigned at
the end of fiscal 1997.
(10) Moving allowance.
(11) Charles Gibson joined the Company in fiscal 1995 and resigned
before the end of fiscal 1997.
(12) John Ross became an executive officer of the Company in December
1994 (fiscal 1995) and resigned from the Company before the end
of fiscal 1997.
(13) Tuition reimbursement for Tulane MBA program.
____________________
Option Grants
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR 1997
Name Number Percent Exercise Expiration Potential Value
of of Total Price Date at Assumed
Options Options Annual Rates
Granted Granted(1) of Stock Price
Appreciation
for
Option Term
5% 10%
<S> <C> <C> <C> <C> <C> <C>
William E. Wulfers 100,000 19.08% 1.187 06/18/07 $ 74,650 $189,177
Anthony P. Campo 0 0 --- --- --- ---
Rex O. Corley, Jr. 75,000(2) 14.31% 2.0625 10/04/06 97,280 246,534
James B. Warren 50,000(2) 9.54% 2.0625 10/04/06 64,855 164,355
Charles S. Gibson 50,000(2) 9.54% 2.0625 10/04/06 64,855 164,355
John K. Ross 50,000(2) 9.54% 2.0625 10/04/06 64,855 164,355
</TABLE>
________________
(1) Based on grants of options exercisable for a total of 524,000
shares during fiscal 1997.
(2) These options automatically terminated upon resignation of the
officer.
Option Holdings
The following table provides information concerning unexercised
options held by the named executive officers at August 31, 1997.
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Name Stock Options at August at August 31, 1997
31, 1997
Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------
William E. Wulfers 0 100,000 0 $ 12,550
Anthony P. Campo 0 0 0 0
Rex O. Corley, Jr. 0 0 0 0
James B. Warren 0 0 0 0
Charles S. Gibson, Jr. 0 0 0 0
John K. Ross 0 0 0 0
- -----------------------------------------------------------------------------
____________________
Employment and Severance Agreements and Arrangements
General
Until March 1997, the Company had employment agreements only
with its two most senior executives, Anthony Campo and Donald
Galloway. Donald Galloway resigned in July 1996 and Anthony Campo
resigned in March 1997, and both received severance benefits in
accordance with their employment agreements.
At the time of Anthony Campo's resignation, the Board was also
in the process of reorganizing the Company's operations and it engaged
Hewitt Associates LLC to make recommendations regarding appropriate
executive retention and severance arrangements and director
compensation packages that could be implemented by the Company in
order to attract new board members and retain members of its executive
management team during the reorganization period. After reviewing
Hewitt's recommendations, the Board determined to increase the amount
of its director compensation as noted under "Compensation of
Directors." The Board also decided to enter into employment
agreements with its five most senior executives, as described below.
All five of these executives have now resigned from the Company and
two were paid the severance benefits described below.
The Company currently has only a personal service and non-
competition agreement with Anthony Campo, as described below, and an
employment agreement with William Wulfers, the Company's new President
and Chief Executive Officer, as described below.
Employment Agreements
Anthony P. Campo. The Company had an employment agreement with
Anthony Campo pursuant to which the Company agreed, among other
things, to pay an annual base salary of $300,000, $330,000 and
$363,000 for the 1994, 1995 and 1996 calendar years, respectively. On
May 16, 1996 the employment agreement was amended to extend the
initial term of the agreement through December 31, 1997 and to provide
that Mr. Campo's compensation for calendar year 1997 would remain the
same as that provided in the agreement for calendar year 1996.
Anthony Campo's employment agreement also provided for payment
of an annual cash bonus of $50,000 and an annual incentive bonus of 2%
of the Company's net income before taxes, and provided that if his
employment were terminated during the initial term of the agreement by
the Company for any reason other than cause (as defined in the
agreement) or by him for good reason (as defined in the agreement), he
would be paid an amount equal to his then current base salary
multiplied by the number of years remaining in such initial term, but
in no event less than one full year's base salary.
Effective March 19, 1997, Anthony Campo resigned as an executive
officer of the Company and entered into an agreement with the Company
that provides for the continuation of certain benefits for twelve
months following resignation and provides for a lump sum payment in
the amount of $363,000. The Company also agreed to continue making
the lease payments on his Company car for the duration of the lease
which is approximately 18 months from the date of his resignation. The
Company also entered into a personal services contract and non-
competition agreement with Anthony Campo pursuant to which he has
agreed to render consultant services to the Company and not to compete
with the Company for two years, for which agreements he is to be paid
a fee of $5,000 per month.
Rex O. Corley, Jr. Upon Anthony Campo's resignation, the
Company entered into an employment agreement dated March 21, 1997 with
Rex O. Corley, Jr. pursuant to which he was employed as Acting
Chairman of the Board and Chief Executive Officer of the Company until
a permanent replacement for Anthony Campo was appointed. Pursuant to
this Agreement, which had a two-year term, the Company agreed to pay
Rex Corley an annual base salary of $200,000 for the first year and
$210,000 for the second year. The Agreement also provided for the
payment of a one-time performance bonus upon execution of the
agreement of $25,000 and a stay bonus of $200,000 due 15 days after
the occurrence of certain events provided that he was still a full
time employee of the Company on such date. The agreement also
provided for the payment of severance benefits equal to the amount he
would have received had his employment terminated (a) by reason of
death or Disability (as defined in the agreement and including the
payment of the stay bonus in accordance with the calculation described
therein) and (b) (i) at the first anniversary of the agreement or (ii)
six months from the actual termination date, if his employment was
terminated for any reason other than cause (as defined in the
agreement) or by him for good reason (as defined in the agreement),
but any such severance would be reduced by any amount he had
previously been paid and by any severance benefits payable under the
Company's severance plan (discussed below). Effective June 19, 1997,
Rex Corley resigned as an executive officer and director of the
Company and agreed to accept a lump sum severance payment of $75,000.
Charles S. Gibson, Jr. The Company also entered into a two-year
employment agreement, dated March 21, 1997, with Charles S. Gibson,
Jr., which provided for (i) a base salary of $150,000 for the first
year and $157,500 for the second year, (ii) a one-time performance
bonus payable upon execution of the agreement of $25,000 and (iii) a
stay bonus of $150,000 payable within 15 days after the occurrence of
certain events. This agreement also provided for the payment of
severance benefits on substantially the same terms as provided in Rex
Corley's agreement. This officer resigned before the end of fiscal
1997, and no severance benefits were paid to this officer.
John K. Ross and James B. Warren. The Company also entered into
one-year employment agreements, dated April 14 and April 23, 1997,
with John K. Ross and James B. Warren, respectively. The agreement
with John Ross provided for a base salary of $125,000, a one-time
performance bonus of $25,000 payable upon execution of the agreement
and an incentive bonus of up to $25,000 payable 15 days after the
first anniversary of the agreement provided certain performance
criteria were met. The agreement with James Warren provided for a
base salary of $150,000, a one time performance bonus payable upon
execution of the agreement of $25,000 and an incentive bonus of up to
$100,000 payable within 15 days after the first anniversary of the
agreement provided certain performance criteria were met. Both
agreements provided for a six month severance benefit if the officer's
employment were terminated for any reason other than cause or by the
executive with good reason, such amount to be reduced by any amounts
previously paid and by any severance benefits payable under the
Company's severance plan. John Ross and Jim Warren resigned effective
July 18 and August 29, 1997, respectively. No severance payments were
made to John Ross; however, the Company agreed to pay as severance to
James Warren the amount of $37,500, payable over three months.
William Wulfers. Effective June 15, 1997, William E. Wulfers
became the Company's President and Chief Executive Officer and a
director. The Company entered into an employment agreement with
William Wulfers, dated as of June 15, 1997, which has a term expiring
on August 31, 2000, providing for an annual base salary of $300,000,
bonuses of $20,833 for the fiscal year ended August 31, 1997, and
$100,000 for the fiscal year ended August 31, 1998, and an incentive
bonus equal to $500 per basis point of pre-tax net profit margin
achieved by the Company for each of the fiscal years ended August 31,
1999 and 2000.
The agreement also provides for six months severance benefits if
he is terminated without cause or he terminates his employment for
good reason. Pursuant to the agreement, the Company also awarded
William Wulfers 100,000 shares of restricted stock, the restrictions
on which lapsed on July 15, 1997 and non-qualified stock options for
100,000 shares, which become exercisable on June 15, 2000. The
agreement also provides for additional grants of non-qualified stock
options for 100,000 shares each on June 15, 1998 and 1999, which will
become exercisable on June 15, 2000.
Severance Plan and Agreements.
Effective August 29, 1996, the Company adopted a Severance Plan
for its executive officers which provides for the payment of certain
benefits upon an involuntary or constructive termination of an
officer's employment, except for cause, within one year following a
change of control. Benefits payable under the plan include a cash
payment in an amount equal to six month's salary and continued health
and life insurance benefits for six months after termination.
The Company has also agreed to provide each of Malcolm
Ballinger, Michael Ware and John Watson with a additional severance
payment of $37,500 if such officer's employment is terminated by the
Company without cause.
Compensation of Directors
Each member of the Board of Directors who is not a full-time
employee of the Company is paid $1,000 per month, and is reimbursed
for all ordinary and necessary expenses incurred in attending any
meeting of the Board or any committee. Beginning in March 1997, each
non-employee director also receives $1,000 for each Board and
Committee meeting attended and each Chairman of a Board Committee also
receives $3,000 per year.
Compensation Committee Interlocks and Insider Participation
For fiscal 1997, until March 1997 the members of the Company's
Compensation Committee were L. Ronald Forman and Mervin L. Trail,
M.D., and since March 1997 the members of the Compensation Committee
have been L. Ronald Forman, Donald T. Bollinger and David L. Ducote.
No member of the Compensation Committee has ever been an officer or
employee of the Company, nor has or has had any other significant
relationship with the Company. No executive officer of the Company
served in the last fiscal year as a director or member of the
compensation committee of another entity, one of whose executive
officers served as a director or on the Compensation Committee of the
Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Holdings of Directors and Executive Officers
The following table sets forth certain information concerning
the beneficial ownership of the Common Stock of the Company by (i)
each director, (ii) each executive officer named in the Summary
Compensation Table and (iii) all directors and executive officers of
the Company as a group, as of November 28, 1997, determined in
accordance with Rule 13d-3 of the Securities and Exchange Commission.
Unless otherwise indicated, all shares shown as beneficially owned are
held with sole voting and investment power.
Number of Percent
Name of Beneficial Owner Shares of Class
William E. Wulfers 100,000 1.73%
Anthony P. Campo(1) 306,853.75(1) 5.32%
Joseph E. Campo 313,508.75(2) 5.44%
Barbara Treuting Casteix 3,850(3) *
L. Ronald Forman 0 0
Donald T. Bollinger 114,600 1.99%
David L. Ducote 97,300(4) 1.69%
Anthony J. Correro, III 0 0
Rex O. Corley, Jr.(5) 2,000 *
Charles S. Gibson(5) 0 0
John K. Ross(5) 800 *
James B. Warren(5) 0 0
All directors and executive
officers as a group (11 persons) 1,056,112.5(6) 18.17%(7)
__________
* Less than 1%
(1) Includes 66,042.9 shares held by trusts for the benefit of
Anthony Campo's children of which he serves as trustee, and
25,998 shares held by a partnership of which he is a partner.
Also includes 6,572.82 shares, representing his interest in
shares held by an LLC, of which he serves as a manager (the
"Campo Family LLC"), and 2,577.93 shares, representing the
interest held by a trust for the benefit of his children, of
which he serves as trustee, in shares held by the Campo Family
LLC.
(2) Includes 107,142.9 shares held by trusts for the benefit of
Joseph Campo's children of which he serves as trustee. Also
includes 6,572.82 shares, representing his interest in shares
held by the Campo Family LLC, of which he serves as a manager,
and 2,577.93 shares, representing the interest held by a trust
for the benefit of his children, of which he serves as trustee,
in shares held by the Campo Family LLC.
(3) Includes 2,500 shares owned by Barbara Casteix's husband, of
which she disclaims beneficial ownership.
(4) Includes 26,800 shares held by a family corporation of which
David Ducote serves as President.
(5) This person resigned as an executive officer and/or director of
the Company at or prior to the end of the 1997 fiscal year.
(6) Includes 45,000 shares that such persons have the right to
acquire through the exercise of stock options that are
exercisable within 60 days.
(7) Calculated on the basis of 5,766,906 shares outstanding at
November 28, 1997 and 45,000 shares that all directors and
executive officers as a group have the right to acquire through
the exercise of stock options that are exercisable within 60
days.
Security Holdings of Certain Beneficial Owners
The following table lists those persons other than executive
officers or directors of the Company who are known by the Company to
own beneficially more than 5% of its outstanding Common Stock as of
November 28, 1997. The information set forth below is based upon
information furnished by the persons listed. Unless otherwise
indicated, all shares shown as beneficially owned are held with sole
voting and investment power.
Name and Address of Beneficial Owner Number of Percent
Shares of Class
Gina Campo Morgan 342,008.76(1) 5.93%
214 Monsanto
Luling, LA 70070
Dimensional Fund Advisors, Inc.. 314,800(2) 5.46%
1299 Ocean Avenue, 11th Fl.
Santa Monica, CA 90401
__________
(1) Includes 71,428.6 shares held by trusts for the benefit of Ms.
Morgan's children of which Ms. Morgan serves as trustee. Also
includes 7,432.32 shares, representing Ms. Morgan's interest in
shares held by the Campo Family LLC, of which Ms. Morgan serves
as a manager, and 1,718.44 shares, representing the interest
held by a trust for the benefit of Ms. Morgan's children, of
which Ms. Morgan serves as trustee, in shares held by the Campo
Family LLC.
(2) Held as of December 31, 1996in portfolios of DFA Investment
Dimensions Group Inc. (the "Fund"), a registered open-end
investment company, in series of The DFA Investment Trust
Company (the "Trust"), a Delaware business trust, or the DFA
Group Trust and the DFA Participating Group Trust, investment
vehicles for qualified employee benefit plans, for all of which
Dimensional Fund Advisors Inc. ("Dimensional") serves as
investment manager. Dimensional disclaims beneficial ownership
of all such shares. Includes 94,800 shares as to which
Dimensional shares voting power with certain officers of
Dimensional who also serve as officers of the Fund and the
Trust.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to September 1991, the Company was controlled by Tony
Campo, late father of Anthony P. Campo and Joseph E. Campo, and his
seven children (the "Campo Family"). From September 1991 until the
Company's initial public offering on February 23, 1993, the Company
was controlled by the Campo Family.
On September 1, 1991, the Company and Tony Campo entered into
certain agreements pursuant to which (i) Tony Campo cancelled
$4,676,520 of Company indebtedness to him, (ii) the Company redeemed
all of Tony Campo's stock in the Company for its $5,611,144 promissory
note (the "Note") and (iii) Tony Campo entered into a non-competition
and personal services agreement with the Company providing for
aggregate monthly payments of approximately $11,690 to him over ten
years. On April 29, 1994, the Company paid $2,769,678 to Tony Campo
with proceeds from the Company's secondary offering to pay off the
remaining balance of the Note, and upon Tony Campo's death in December
1996, all further obligations of the Company under the agreement were
extinquished.
The Company leases one store from the Campo Family LLC and it
subleases one store from Campo Appliance Co. of Clearview, Inc.
("Clearview"), a corporation wholly-owned by Tony Campo's estate. The
Company believes that its lease payments under the lease and sublease
are at fair market rental rates. The sublease requires lease payments
identical to the payments required by the underlying lease which is
with an unrelated third party lessor. For fiscal 1997, the Company
paid aggregate rental payments under this lease and sublease of
approximately $173,000.
Barbara Casteix is the managing partner of Barrios, Kingsdorf &
Casteix, which serves as general counsel to the Company. The Company
paid $142,000 during fiscal 1997 to this firm for legal services
rendered.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
2. Financial Statement Schedules
All schedules have been omitted because they are not
applicable or not required, or the information
appears in the financial statements or notes
thereto.
3. 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.(3)
10.1 Master Lease of 2201 S. Claiborne Avenue, 110 Terry
Parkway and 800 Distributors Row dated as of August
1, 1991 by and between Anthony J. Campo and Giant
TC, Inc., as terminated with respect to Terry
Parkway by Partial Termination of Master Lease dated
as of December 30, 1992 by and between Anthony J.
Campo and Giant TC, Inc.(1)
10.2 Lease of 5015 Bloomfield dated March 15, 1977, by
and between Elmwood Development Co. and Campo
Appliance Co. of Clearview, Inc., as amended by
Supplemental and Amended Lease Agreement dated 1977,
together with Sublease of 5015 Bloomfield dated as
of August 1, 1991 by and between Campo Appliance Co.
of Clearview, Inc. and Giant TC, Inc.(1)
10.3 Non-Competition Agreement dated September 1, 1991 by
and between Giant TC, Inc. and Anthony J. Campo.(1)
10.4 Personal Services Contract dated September 1, 1991
by and between Giant TC, Inc. and Anthony J.
Campo.(1)
10.5 Amendment and Restatement of Non-Competition
Agreement and Personal Services Contract dated June
29, 1992 by and between Anthony J. Campo and Giant
TC, Inc.(1)
10.6 Credit Card Program Agreement dated as of May 29,
1992 by and between Giant TC, Inc. and Monogram
Credit Card Bank of Georgia(1), as amended by
Amendment to Credit Card Program Agreement dated as
of May 29, 1992 by and between Monogram Credit Card
Bank of Georgia and Campo Electronics, Appliances
and Computers, Inc. (formerly Giant TC, Inc.), dated
October 29, 1993.(4)
10.7 Giant TC, Inc. 1992 Stock Incentive Plan(1), as
amended by Amendment No. 1 to Campo Electronics,
Appliances and Computers, Inc. 1992 Stock Incentive
Plan dated October 13, 1993(5), as amended by
Amendment No. 2 to Campo Electronics, Appliances and
Computers, Inc. 1992 Stock Incentive Plan dated May
20, 1994(6), as amended by Amendment No. 3 and the
Amended and Restated Campo Electronics, Appliances
and Computers, Inc. 1992 Stock Incentive Plan dated
December 7, 1994(2), as amended by the Second
Amended and Restated Campo Electronics, Appliances
and Computers, Inc. 1992 Stock Incentive Plan dated
January 12, 1996,(7) as amended by Amendment No. 1
thereto dated October 4, 1996,(3) as further amended
and restated by the Third Amended and Restated 1992
Stock Incentive Plan dated August 8, 1997.
10.8 Form of Indemnity Agreement by and between Giant TC,
Inc. and each of Anthony P. Campo, Joseph E. Campo,
Barbara Treuting Casteix, L. Ronald Forman, Donald
T. Bollinger, Anthony J. Correro, III, David L.
Ducote, William E. Wulfers, Michael G. Ware, John
Watson and Malcolm Ballinger.(1)
10.9 Employment Agreement dated June 29, 1992 by and
between Giant TC, Inc. and Anthony P. Campo , as
amended December 30, 1992(1) as terminated and
replaced by Employment Agreement dated December 16,
1993 by and between Campo Electronics, Appliances
and Computers, Inc. and Anthony P. Campo(5), as
amended by the Amendment to Employment Agreement
dated May 16, 1996,(7) as terminated by the
Severance Agreement and Personal Services Contract
and Non-Competition Agreement dated March 19,
1997.(8)
10.10 Employment Agreement dated June 29, 1992 by and
between Giant TC, Inc. and Donald E. Galloway(1) as
terminated and replaced by Employment Agreement
dated December 16, 1993 by and between Campo
Electronics, Appliances and Computers, Inc. and
Donald E. Galloway(5), as amended by the Amendment
to Employment Agreement dated May 16, 1996, as
terminated by letter agreement dated July 12,
1996.(7)
10.11 Acquisition and Interim Servicing Agreement dated
November 22, 1993 by and between Monogram Credit
Card Bank of Georgia Item 14 and Campo Electronics,
Appliances and Computers, Inc.(4)
10.12 Loan Agreement dated August 30, 1995 by and between
Hibernia National Bank and Campo Electronics,
Appliances and Computers, Inc.(9), as amended by the
First Amendment to Loan Agreement as of August 30,
1995 by and between Hibernia National Bank and Campo
Electronics, Appliances and Computers, Inc.(3), as
amended by the Second Amendment to Loan Agreement
dated May 31, 1996 by and between Hibernia National
Bank and Campo Electronics, Appliances and
Computers, Inc.(10), as amended by the Third
Amendment to Loan Agreement dated December 1, 1996
by and between Hibernia National Bank and Campo
Electronics, Appliances and Computers, Inc., as
amended by Amendment to Loan Agreement dated June 25,
1997.
10.13 Loan Agreement dated August 30, 1995 by and between
Met Life Capital Corporation and Campo Electronics,
Appliances and Computers, Inc.(9)
10.14 Sale Agreement dated August 30, 1995 by and between
Federal Warranty Service Corporation and Campo
Electronics, Appliances and Computers, Inc.(9)
10.15 Change of Control Agreement dated as of August 29,
1996 by and between Campo Electronics, Appliances
and Computers, Inc. and Anthony P. Campo.(7)
10.16 Campo Electronics, Appliances and Computers, Inc.
Severance Pay Plan dated as of August 29, 1996.(7)
10.17 Employment Agreement, dated March 21, 1997, by and
between the Company and Rex O. Corley, Jr., as
terminated by Severance Agreement dated June 19,
1997.(8)
10.18 Employment Agreement, dated March 21, 1997, by and
between the Company and Charles S. Gibson, Jr., as
amended on June 24, 1997,(8) as terminated upon
resignation of the officer.
10.19 Employment Agreement, dated March 21, 1997, by and
between the Company and Wayne J. Usie, as amended on
June 24, 1997,(8) as terminated upon resignation of
the officer.
10.20 Employment Agreement, dated April 14, 1997, by and
between the Company and John K. Ross,(8) as
terminated upon resignation of the officer.
10.21 Employment Agreement, dated April 23, 1997, by and
between the Company and James B. Warren,(8) as
terminated upon resignation of the officer.
10.22 Employment Agreement, dated June 15, 1997, by and
between the Company and William E. Wulfers.(8)
10.23 Consultation Agreement, dated April 17, 1997, by and
between the Company and York Management Services,
Inc.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule
__________
(1) Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-56796) filed with the
Commission 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 Quarterly Report on
Form 10-Q for the fiscal quarter ended November 30, 1996.
(4) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1993.
(5) Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-76184) filed with the
Commission on March 8, 1994.
(6) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1994.
(7) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1996.
(8) Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended May 31, 1997.
(9) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1995.
(10) Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended May 31, 1996.
____________________
b) Reports on Form 8-K
A Current Report on Form 8-K was filed on June 4, 1997 to
report the Company's filing of a voluntary petition to
reorganize under Chapter 11 of the Federal Bankruptcy
Code.
(c) Exhibits
All exhibits required by Item 601 of Regulation S-K have
been filed.
(d) Financial Statement Schedules
All schedules have been omitted because they are not
applicable or not required, or the information appears in
the financial statements or notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ WILLIAM E. WULFERS
William E. Wulfers
President and Chief
Executive Officer
Dated:November 19, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on November
19, 1997.
/s/ WILLIAM E. WULFERS President and Chief Executive
William E. Wulfers Officer
/s/ MICHAEL G. WARE Sr. Vice President, Chief
Michael G. Ware Financial Officer and Secretary
(Principal Financial and Accounting Officer)
/s/ ANTHONY P. CAMPO Director
Anthony P. Campo
Director
Joseph E. Campo
/s/ BARBARA TREUTING CASTEIX Director
Barbara Treuting Casteix
/s/ L. RONALD FORMAN Director
L. Ronald Forman
/s/ DAVID L. DUCOTE Director
David L. Ducote
/s/ DONALD T. BOLLINGER Director
Donald T. Bollinger
/s/ ANTHONY J. CORRERO, III Director
Anthony J. Correro, III
EXHIBIT INDEX
Exhibits Page No.
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.(3)
10.1 Master Lease of 2201 S. Claiborne Avenue, 110 Terry Parkway
and 800 Distributors Row dated as of August 1, 1991 by and
between Anthony J. Campo and Giant TC, Inc., as terminated
with respect to Terry Parkway by Partial Termination of
Master Lease dated as of December 30, 1992 by and between
Anthony J. Campo and Giant TC, Inc.(1)
10.2 Lease of 5015 Bloomfield dated March 15, 1977, by and
between Elmwood Development Co. and Campo Appliance Co. of
Clearview, Inc., as amended by Supplemental and Amended
Lease Agreement dated 1977, together with Sublease of 5015
Bloomfield dated as of August 1, 1991 by and between Campo
Appliance Co. of Clearview, Inc. and Giant TC, Inc.(1)
10.3 Non-Competition Agreement dated September 1, 1991 by and
between Giant TC, Inc. and Anthony J. Campo.(1)
10.4 Personal Services Contract dated September 1, 1991 by and
between Giant TC, Inc. and Anthony J. Campo.(1)
10.5 Amendment and Restatement of Non-Competition Agreement and
Personal Services Contract dated June 29, 1992 by and
between Anthony J. Campo and Giant TC, Inc.(1)
10.6 Credit Card Program Agreement dated as of May 29, 1992 by
and between Giant TC, Inc. and Monogram Credit Card Bank of
Georgia(1), as amended by Amendment to Credit Card Program
Agreement dated as of May 29, 1992 by and between Monogram
Credit Card Bank of Georgia and Campo Electronics,
Appliances and Computers, Inc. (formerly Giant TC, Inc.),
dated October 29, 1993.(4)
10.7 Giant TC, Inc. 1992 Stock Incentive Plan(1), as amended by
Amendment No. 1 to Campo Electronics, Appliances and
Computers, Inc. 1992 Stock Incentive Plan dated October 13,
1993(5), as amended by Amendment No. 2 to Campo Electronics,
Appliances and Computers, Inc. 1992 Stock Incentive Plan
dated May 20, 1994(6), as amended by Amendment No. 3 and the
Amended and Restated Campo Electronics, Appliances and
Computers, Inc. 1992 Stock Incentive Plan dated December 7,
1994(2), as amended by the Second Amended and Restated Campo
Electronics, Appliances and Computers, Inc. 1992 Stock
Incentive Plan dated January 12, 1996,(7) as amended by
Amendment No. 1 thereto dated October 4, 1996,(3) as further
amended and restated by the Third Amended and Restated 1992
Stock Incentive Plan dated August 8, 1997.
10.8 Form of Indemnity Agreement by and between Giant TC, Inc.
and each of Anthony P. Campo, Joseph E. Campo, Barbara
Treuting Casteix, L. Ronald Forman, Donald T. Bollinger,
Anthony J. Correro, III, David L. Ducote, William E.
Wulfers, Michael G. Ware, John Watson and Malcolm
Ballinger.(1)
10.9 Employment Agreement dated June 29, 1992 by and between
Giant TC, Inc. and Anthony P. Campo , as amended December
30, 1992(1) as terminated and replaced by Employment
Agreement dated December 16, 1993 by and between Campo
Electronics, Appliances and Computers, Inc. and Anthony P.
Campo(5), as amended by the Amendment to Employment
Agreement dated May 16, 1996,(7) as terminated by the
Severance Agreement and Personal Services Contract and Non-
Competition Agreement dated March 19, 1997.(8)
10.10 Employment Agreement dated June 29, 1992 by and between
Giant TC, Inc. and Donald E. Galloway(1) as terminated and
replaced by Employment Agreement dated December 16, 1993 by
and between Campo Electronics, Appliances and Computers,
Inc. and Donald E. Galloway(5), as amended by the Amendment
to Employment Agreement dated May 16, 1996, as terminated by
letter agreement dated July 12, 1996.(7)
10.11 Acquisition and Interim Servicing Agreement dated November
22, 1993 by and between Monogram Credit Card Bank of Georgia
Item 14 and Campo Electronics, Appliances and Computers,
Inc.(4)
10.12 Loan Agreement dated August 30, 1995 by and between Hibernia
National Bank and Campo Electronics, Appliances and
Computers, Inc.(9), as amended by the First Amendment to
Loan Agreement as of August 30, 1995 by and between Hibernia
National Bank and Campo Electronics, Appliances and
Computers, Inc.(3), as amended by the Second Amendment to
Loan Agreement dated May 31, 1996 by and between Hibernia
National Bank and Campo Electronics, Appliances and
Computers, Inc.(10), as amended by the Third Amendment to
Loan Agreement dated December 1, 1996 by and between
Hibernia National Bank and Campo Electronics, Appliances and
Computers, Inc., as amended by Amendment to Loan Agreement
dated June 25, 1997.
10.13 Loan Agreement dated August 30, 1995 by and between Met Life
Capital Corporation and Campo Electronics, Appliances and
Computers, Inc.(9)
10.14 Sale Agreement dated August 30, 1995 by and between Federal
Warranty Service Corporation and Campo Electronics,
Appliances and Computers, Inc.(9)
10.15 Change of Control Agreement dated as of August 29, 1996 by
and between Campo Electronics, Appliances and Computers,
Inc. and Anthony P. Campo.(7)
10.16 Campo Electronics, Appliances and Computers, Inc. Severance
Pay Plan dated as of August 29, 1996.(7)
10.17 Employment Agreement, dated March 21, 1997, by and between
the Company and Rex O. Corley, Jr., as terminated by
Severance Agreement dated June 19, 1997.(8)
10.18 Employment Agreement, dated March 21, 1997, by and between
the Company and Charles S. Gibson, Jr., as amended on June
24, 1997,(8) as terminated upon resignation of the officer.
10.19 Employment Agreement, dated March 21, 1997, by and between
the Company and Wayne J. Usie, as amended on June 24,
1997,(8) as terminated upon resignation of the officer.
10.20 Employment Agreement, dated April 14, 1997, by and between
the Company and John K. Ross,(8) as terminated upon
resignation of the officer.
10.21 Employment Agreement, dated April 23, 1997, by and between
the Company and James B. Warren,(8) as terminated upon
resignation of the officer.
10.22 Employment Agreement, dated June 15, 1997, by and between
the Company and William E. Wulfers.(8)
10.23 Consultation Agreement, dated April 17, 1997, by and between
the Company and York Management Services, Inc.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule
__________
(1) Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-56796) filed with the
Commission 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 Quarterly Report on
Form 10-Q for the fiscal quarter ended November 30, 1996.
(4) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1993.
(5) Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-76184) filed with the
Commission on March 8, 1994.
(6) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1994.
(7) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1996.
(8) Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended May 31, 1997.
(9) Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1995.
(10) Incorporated by reference from the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended May 31, 1996.
THIRD AMENDED AND RESTATED
CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC.
1992 STOCK INCENTIVE PLAN
Section 1. Purpose. The purpose of the Campo Electronics,
Appliances and Computers, Inc. 1992 Stock Incentive Plan (the
"Plan") is to increase shareholder value and to advance the
interests of Campo Electronics, Appliances and Computers, Inc.
("Campo") and its subsidiaries (collectively, the "Company") by
granting stock options and restricted stock (the "Incentives") to
key employees of the Company in order to attract, retain and
motivate these employees. The Board of Directors of Campo hereby
approves and adopts the Plan, subject to approval of the
shareholders of Campo.
Section 2. Administration.
Section 2.1 Composition. The Plan shall be
administered by the Compensation Committee (the "Committee")
of the Board of Directors of Campo. The Committee shall
consist of not fewer than two members of the Board of
Directors, all of whom shall, to the extent required,
qualify to administer the Plan under Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") as
currently in effect or any successor rule.
Section 2.2 Authority. The Committee shall have
plenary authority to award Incentives under the Plan, to set
the terms of such Incentives, to interpret the Plan, to
establish any rules or regulations relating to the Plan that
it determines to be appropriate, and to make any other
determination that it believes necessary or advisable for
the proper administration of the Plan. Its decisions in
matters relating to the Plan shall be final and conclusive
on the Company and participants.
Section 3. Eligible Participants. Key employees of the
Company (including officers and directors, but excluding
directors who are not also full-time employees of the Company)
who, in the opinion of the Committee have significant
responsibility for the continued growth, development and
financial success of the Company shall become eligible to receive
Incentives under the Plan when designated by the Committee.
Participants may be designated individually or by groups or
categories as the Committee deems appropriate.
Section 4. Types of Incentives. Incentives under the Plan
may be granted in any one or a combination of the following
forms: (a) incentive stock options or non-qualified stock
options, (b) shares of restricted stock and (c) stock awards.
Section 5. Shares Subject to the Plan.
Section 5.1 Number of Shares. Subject to adjustment
as provided in Section 9.5, a total of 850,000 shares of
Campo common stock, $.10 par value per share (the "Common
Stock"), may be issued under the Plan. Incentives with
respect to no more than 200,000 shares of Common Stock may
be granted under the Plan to a single participant in any
calendar year.
Section 5.2 Calculation of Shares Available for
Issuance and Cancellation of Options. If a stock option
granted hereunder expires or is terminated or cancelled as
to any shares of Common Stock, such shares may again be
issued under the Plan either pursuant to stock options or as
restricted stock. If shares of Common Stock are issued as
restricted stock and thereafter are forfeited or reacquired
by the Company pursuant to rights reserved upon issuance
thereof, such forfeited and reacquired shares may again be
issued under the Plan, either as restricted stock or
pursuant to a stock option, if such issuance does not result
in a violation of Rule 16b-3 under the Exchange Act or any
successor rule. Shares of Common Stock otherwise issuable
under the Plan and used for the payment of withholding taxes
shall again be available for issuance under the Plan.
Shares of Common Stock delivered to pay the exercise price
of stock options shall be added to the number of shares
available for issuance through the Plan. The Committee may
also determine to cancel, and agree to the cancellation of,
stock options in order to grant new stock options to the
same participant at a lower price than the options to be
cancelled.
Section 5.3 Type of Common Stock. Common Stock
issued under the Plan in connection with Incentives may be
authorized and unissued shares or issued shares held as
treasury shares.
Section 5.4 Reinvestment of Dividends. Shares of
Common Stock that are delivered to a participant in the Plan
as a result of the reinvestment of dividends in conjunction
with restricted stock shall be applied against the maximum
number of shares provided in Section 5.1.
Section 6. Stock Options. A stock option is a right to
purchase shares of Common Stock from the Company. Stock options
granted under this Plan may be incentive stock options or non-
qualified stock options. Any option that is designated as a non-
qualified stock option shall not be treated as an incentive stock
option. Each stock option granted by the Committee under the
Plan shall be subject to the following terms and conditions:
Section 6.1 Price. The option price per share shall
be determined by the Committee, subject to adjustment under
Section 9.5; provided that in no event shall the option
price be less than the Fair Market Value (as defined in
Section 9.11) of a share of Common Stock on the date of
grant.
Section 6.2 Number. The number of shares of Common
Stock subject to the option shall be determined by the
Committee, subject to adjustment as provided in Section 9.5.
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 9.10; 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.
Section 6.4 Repurchase. Upon approval of the
Committee, the Company may repurchase a previously granted
stock option from a participant by mutual agreement before
such option has been exercised by payment to the participant
of the amount per share by which: (a) the Fair Market Value
of the Common Stock subject to the option on the date of
purchase exceeds (b) the option price.
Section 6.5 Manner of Exercise. A stock option may
be exercised, in whole or in part, by giving written notice
to the Company, specifying the number of shares of Common
Stock to be purchased. The exercise notice shall be
accompanied by the full purchase price for such shares. The
option price shall be payable in United States dollars and
may be paid (a) by cash, uncertified or certified check or
bank draft, (b) if the Committee permits, by delivery of
shares of Common Stock held by the optionee for at least six
months in payment of all or any part of the option price,
which shares shall be valued for this purpose at the Fair
Market Value on the date such option is exercised, (c) by
delivering a properly executed exercise notice together with
irrevocable instructions to a broker approved by the Company
(with a copy to the Company) to promptly deliver to the
Company the amount of sale or loan proceeds to pay the
exercise price or (d) in such other manner as may be
authorized from time to time by the Committee. Shares of
Common Stock delivered in payment of the exercise price that
were acquired upon the exercise of a stock option are deemed
to have been held from the date of grant of the stock
option. In the case of delivery of an uncertified check or
bank draft upon exercise of a stock option, no shares shall
be issued until the check or draft has been paid in full.
Prior to the issuance of shares of Common Stock upon the
exercise of a stock option, a participant shall have no
rights as a stockholder.
Section 6.6 Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, the following
additional provisions shall apply to the grant of stock
options that are intended to qualify as incentive stock
options (as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"):
(a) Any incentive stock option authorized under
the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events
be consistent with and contain or be deemed to contain
all provisions required in order to qualify the options
as incentive stock options;
(b) All incentive stock options must be granted
within ten years from the date on which this Plan was
adopted by the Board of Directors;
(c) Unless sooner exercised, all incentive stock
options shall expire no later than ten years after the
date of grant;
(d) No incentive stock option shall be granted to
any participant who, at the time such option is
granted, would own (within the meaning of Section 422
of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of
the employer corporation or of its parent or subsidiary
corporation; and
(e) The aggregate Fair Market Value (determined
with respect to each incentive stock option as of the
time such incentive stock option is granted) of the
Common Stock with respect to which incentive stock
options are exercisable for the first time by a
participant during any calendar year (under the Plan or
any other plan of the Company) shall not exceed
$100,000. To the extent that such limitation is
exceeded, such options shall not be treated, for
federal income tax purposes, as incentive stock
options.
Section 6.7 Non-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.
Section 7. Restricted Stock
Section 7.1 Grant of Restricted Stock. The Committee
may award shares of restricted stock to such key employees
as the Committee determines to be eligible pursuant to the
terms of Section 3. An award of restricted stock may be
subject to the attainment of specified performance goals or
targets, restrictions on transfer, forfeitability provisions
and on such other terms and conditions as the Committee may
determine, subject to the provisions of the Plan.
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 9.10 hereof.
Section 7.3 Escrow. In order to enforce the
restrictions imposed by the Committee pursuant to this
Section 7, the participant receiving restricted stock shall
enter into an agreement with the Company setting forth the
conditions of the grant. Certificates representing shares
of restricted stock shall be registered in the name of the
participant and deposited with the Company, together with a
stock power endorsed in blank by the participant. Each such
certificate shall bear a legend in substantially the
following form:
The transferability of this certificate and the
shares of Common Stock represented by it are
subject to the terms and conditions (including
conditions of forfeiture) contained in the Campo
Electronics, Appliances and Computers, Inc.
Amended and Restated 1992 Stock Incentive Plan
(the "Plan"), and an agreement entered into
between the registered owner and Campo
Electronics, Appliances and Computers, Inc.
Copies of the Plan and the agreement are on file
at the principal office of the Company.
Section 7.4 Dividends on Restricted Stock. Any and
all cash and stock dividends paid with respect to the shares
of restricted stock shall be subject to any restrictions on
transfer, forfeitability provisions or reinvestment
requirements as the Committee may, in its discretion,
determine.
Section 7.5 Forfeiture. Upon the forfeiture of any
restricted stock (including any additional shares of
restricted stock that may result from the reinvestment of
cash and stock dividends in accordance with such rules as
the Committee may establish pursuant to Section 7.4), such
forfeited shares shall be surrendered. The participants
shall have the same rights and privileges, and be subject to
the same forfeiture provisions with respect to any
additional shares received pursuant to Section 9.5 due to a
recapitalization, merger or other change in capitalization.
Section 7.6 Expiration of Restricted Period. Upon the
expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided for in Section
7.2 and in the restricted stock agreement, the restrictions
applicable to the restricted stock shall lapse and a stock
certificate for the number of shares of restricted stock
with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, except any that
may be imposed by law, to the participant or the
participant's estate, as the case may be.
Section 7.7 Rights as a Stockholder. Subject to the
terms and conditions of the Plan and subject to any
restrictions on the receipt of dividends that may be imposed
by the Committee, each participant receiving restricted
stock shall have all the rights of a stockholder with
respect to shares of stock during any period in which such
shares are subject to forfeiture and restrictions on
transfer, including without limitation, the right to vote
such shares. Unless otherwise restricted by the Committee,
dividends paid in cash or property, other than Common Stock
with respect to shares of restricted stock, shall be paid to
the participant currently.
Section 8. Stock Awards. A stock award consists of the
transfer by the Company to a participant of shares of Common
Stock, without other payment therefor, in lieu of salary or
bonus, including a bonus to be paid in connection with a person
accepting employment with the Company. The number of shares to
be transferred by the Company to a participant pursuant to a
stock award shall be determined by the Committee. To the extent
a stock award is intended to qualify as performance based
compensation under Section 162(m) it must meet the additional
requirements imposed thereby.
Section 9. General.
Section 9.1 Duration. The Plan shall remain in
effect until all stock options granted under the Plan have
either been satisfied by the issuance of shares of Common
Stock or been terminated under the terms of the Plan and all
restrictions imposed on shares of restricted stock in
connection with their issuance under the Plan have lapsed.
Section 9.2 Effect of Termination of Employment or
Death. If a participant ceases to be an employee of the
Company for any reason, including death, any stock options
may be exercised or shall expire as provided in Section 6.3
hereof and shares of restricted stock shall be forfeited or
restrictions thereon shall lapse at such times as may be
determined by the Committee.
Section 9.3 Legal and Other Requirements. The
obligation of the Company to sell and deliver Common Stock
under the Plan shall be subject to all applicable laws,
regulations, rules and approvals, including, but not by way
of limitation, the effectiveness of a registration statement
under the Securities Act of 1933 if deemed necessary or
appropriate by the Company.
Section 9.4 Effective Date. The Plan shall become
effective upon the later of (a) the date of approval of the
Plan by Campo's shareholders or (b) the closing of the sale
of Common Stock to the underwriters of a public offering of
the Common Stock registered under the Securities Act of
1933.
Section 9.5 Adjustment. In the event of any
reorganization, recapitalization, stock dividend, stock
split, reverse stock split, combination of shares or other
change in the Common Stock, the number of shares of Common
Stock then subject to the Plan, including outstanding shares
of restricted stock and options shall be adjusted in
proportion to the change in outstanding shares of Common
Stock. In the event of any such adjustments, the exercise
price of any option, the performance objectives of any
Incentive, and the number of shares of Common Stock issuable
pursuant to any stock option shall be adjusted as and to the
extent appropriate, in the reasonable discretion of the
Committee, to provide participants with the same relative
rights before and after such adjustment.
Section 9.6 Incentive Agreements. The terms of each
Incentive shall be stated in an agreement approved by the
Committee. The Committee may also determine to enter into
agreements with holders of options to reclassify or convert
certain outstanding options, within the terms of the Plan,
as incentive stock options or as non-qualified stock options
with respect to all or part of such options and any other
previously issued options. Notwithstanding anything to the
contrary contained in the Plan, the Company is under no
obligation to grant an Incentive to a participant or
continue an Incentive in force unless the participant
executes all appropriate agreements with respect to such
Incentives in such form as the Committee may determine from
time to time.
Section 9.7 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.
Section 9.8 No Continued Employment. No participant
in the Plan shall have any right, because of his or her
participation, to continue in the employ of the Company for
any period of time or to any right to continue his or her
present or any other rate of compensation.
Section 9.9 Amendment of the Plan. The Board may
amend or discontinue the Plan at any time; provided,
however, that no such amendment or discontinuance shall
change or impair, without the consent of the recipient, an
Incentive previously granted and; further provided that if
any such amendment requires shareholder approval to meet the
requirements of Rule 16b-3 under the Exchange Act or any
successor rule such amendment shall be subject to the
approval of the shareholders of Campo.
Section 9.10 Immediate Acceleration of Incentives.
Notwithstanding any provision in this Plan or in any
Incentive Agreement to the contrary, the Committee, in its
sole discretion shall have the power to cause at any time
(a) the restrictions on all shares of restricted stock
awarded to lapse immediately and (b) all outstanding options
to become exercisable immediately.
Section 9.11 Definition of Fair Market Value. "Fair
Market Value" of the Common Stock on any date shall be
deemed to be the final closing sale price per share of
Common Stock on the trading day immediately prior to such
date. If the Common Stock is listed upon an established
stock exchange or exchanges or any automated quotation
system that provides sale quotations, such Fair Market Value
shall be deemed to be the closing price of the Common Stock
on such exchange or quotation system, or if no sale of the
Common Stock shall have been made on that day, on the next
preceding day on which there was a sale of such stock. If
the Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published,
such Fair Market Value shall be the mean between the quoted
bid and asked price on the day the option is granted, and if
bid and asked quotations are not available on such day, on
the latest preceding day on which such prices were
available. If the Common Stock is not actively traded, or
quoted, such Fair Market Value shall be established by the
Committee based upon a good faith effort to value the Common
Stock.
Section 9.12 Compliance with Section 16. With
respect to persons subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors
under the Exchange Act. To the extent any provision of the
Plan or action by the Committee is deemed not to comply with
any applicable condition of Rule 16b-3, it shall be deemed
null and void to the extent permitted by law and deemed
advisable by the Committee.
Section 9.13 Tax Benefits Rights. The Committee may
grant a tax benefit right ("TBR") to a participant in the
Plan on such terms as the Committee in its discretion shall
determine. A TBR may be granted only with respect to an
Incentive granted under the Plan and may be granted
concurrently with or after the grant of the Incentive. A
TBR shall entitle a participant to receive from the Company
an amount in cash not to exceed the product of the ordinary
income, if any, which the participant may realize as the
result of the exercise of an option or the grant or vesting
of restricted stock (including any income realized as a
result of the related TBR) multiplied by the then applicable
highest stated federal and state income tax rate for
individuals. The Committee shall determine all terms and
provisions of the TBR granted hereunder.
Section 9.14 Change of Control. (a) Notwithstanding
anything to the contrary in the Plan or any related
Incentive Agreement, if
(1) Campo shall not be the surviving entity in any
merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of Campo),
(2) Campo sells, leases or exchanges all or
substantially all of its assets to any other person or
entity (other than a wholly-owned subsidiary of Campo),
(3) Campo is to be dissolved or liquidated,
(4) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the Exchange Act,
other than an employee benefit plan of the Company or a
related trust, acquires or gains ownership or control
(including, without limitation, power to vote) of more
than 30% of the outstanding shares of the Common Stock,
or
(5) as a result of or in connection with a
contested election of directors, the persons who were
directors of Campo before such election shall cease to
constitute a majority of the Board of Directors of
Campo (each such event is referred to herein as a
"Corporate Change"),
then upon the approval by the Board of Directors of Campo of
any Corporate Change of the type described in clause (1),
(2) or (3), or upon a Corporate Change described in clause
(4) or (5), all outstanding options shall automatically
become fully exercisable, all restrictions or limitations on
any Incentives shall lapse and all performance criteria and
other conditions relating to the payment of Incentives shall
be deemed to be achieved or waived by the Company, without
the necessity of any action by any person.
(b) In addition, no later than
(i) 30 days after the approval by the Board of
Directors of Campo of any Corporate Change of the type
described in clauses (1), (2) or (3) of Section 9.14(a)
or
(ii) 30 days after a Corporate Change of the type
described in clause (4) or (5) of Section 9.14(a),
the Committee, acting in its sole discretion without the
consent or approval of any participant (and notwithstanding
any removal or attempted removal of some or all of the
members thereof as directors or committee members), may act
to effect one or more of the following alternatives, which
may vary among individual participants and which may vary
among Incentives held by any individual participant:
(1) require that all outstanding options be
exercised on or before a specified date (before or
after such Corporate Change) fixed by the Committee,
after which specified date all unexercised options and
all rights of participants thereunder shall terminate,
(2) provide for mandatory conversion of some or
all of the outstanding options held by some or all
participants as of a date, before or after such
Corporate Change, specified by the Committee, in which
event such options shall be deemed automatically
cancelled and the Company shall pay, or cause to be
paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option, as
defined and calculated below, over the exercise
price(s) of such options, or, in lieu of such cash
payment, the issuance of Common Stock having a Fair
Market Value equal to such excess,
(3) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary to Incentives then
outstanding), or
(4) provide that thereafter upon any exercise of
an option theretofore granted the participant shall be
entitled to purchase under such option, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Corporate Change of the type
described in clause (1), (2) or (3) above, if,
immediately prior to such Corporate Change, the
participant had been the holder of record of the number
of shares of Common Stock then covered by such options.
(c) For the purposes of clause (2) of Section 9.14(b)
the "Change of Control Value" shall equal the amount
determined by whichever of the following items is
applicable:
(1) the per share price offered to shareholders of
the Company in any such merger, consolidation or other
reorganization, determined as of the date of the
definitive agreement providing for such transaction,
(2) the price per share offered to shareholders of
the Company in any tender offer or exchange offer
whereby a Corporate Change takes place, or
(3) in all other events, the Fair Market Value per
share of Common Stock into which such options being
converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options.
(d) In the event that the consideration offered to
shareholders of the Company in any transaction described
herein consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of
the consideration offered that is other than cash.
Adopted by the Board of
Directors on August 8,
1997
Amendments effected
hereby - not approved by
the shareholders.
AMENDMENT TO LOAN AGREEMENT
This Amendment to Loan Agreement (this "Agreement") is
executed as of June 25, 1997, by and among CAMPO ELECTRONICS,
APPLIANCES AND COMPUTERS, INC. (the "Borrower"), Debtor and
Debtor-in-Possession in that certain bankruptcy case (the
"Bankruptcy Case") under Chapter 11 of the United States
Bankruptcy Code entitled "In Re: Campo Electronics, Appliances
and Computers, Inc., Debtor", Case No. 97-13057 on the docket of
the United States Bankruptcy Court for the Eastern District of
Louisiana (the "Court"), and HIBERNIA NATIONAL BANK, as agent for
the Banks (in such capacity, the "Agent"), and CENTRAL BANK,
HIBERNIA NATIONAL BANK, and LIBERTY BANK & TRUST COMPANY OF
TULSA, N.A. (the "Banks").
RECITALS
A. The Borrower, the Agent, and the Banks entered into
that certain Loan Agreement dated as of August 30, 1995 (as the
same may have been or may hereafter be amended from time to time,
the "Loan Agreement"), pursuant to which the Banks extended to
Borrower (i) a term loan (the "Term Loan") in the original
principal amount of $17,000,000.00, and (ii) a line of credit
(the "Line of Credit") in the original maximum aggregate
principal amount of $10,000,000.00, which maximum aggregate
principal amount has subsequently been reduced. The Term Loan
and the Line of Credit are sometimes collectively referred to
herein as the "Loan".
B. Borrower has commenced the Bankruptcy Case and, in
connection therewith, the Court has issued and entered that
certain Final Agreed Order Authorizing the Use of Cash Collateral
and Collateral, Approving Adequate Protection, and Granting
Additional Replacement Liens, signed on June 13, 1997, a copy of
which is annexed hereto (the "Order").
C. The Order provides, inter alia, that the Term Loan and
the Line of Credit and all other loans and extensions of credit
and any other indebtedness which may now or hereafter be owing by
Borrower, as either debtor or debtor-in-possession, to the Banks,
both prepetition and postpetition, other than the "Notes" (as
defined in the Order), shall be merged into and form a single
term indebtedness, which shall be subject to the terms and
conditions and secured in the manner set forth in the Order.
D. The Order also provides, inter alia, for the execution
by Borrower of certain "Notes" (as defined in the Order), which
shall be subject to the terms and conditions and secured in the
manner set forth in the Order.
E. The Order also contains numerous other terms and
provisions relating to the Loan.
F. The parties desire to amend the Loan Agreement so that
it will incorporate and reflect the relevant terms and provisions
of the Order.
G. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and in the Order, the parties
hereto amend the Loan Agreement as follows, effective as of the
Effective Date as defined in the Order:
AGREEMENT
1. Section 1.02 (Certain Definitions) of the Loan
Agreement is hereby amended as follows:
(a) The definition of "Indebtedness" is restated to read in
its entirety as follows:
""Indebtedness" shall mean any and all amounts,
indebtedness, obligations, loans, advances, and
liabilities of every kind and nature from time to time
owing by the Borrower to any or all of the Banks in
their capacities as the "Banks" under this Agreement
(but excluding any amounts owed to any of the Banks in
any separate or unrelated capacity other than as one of
the "Banks" under this Agreement) or any of their
predecessors, successors, transferees, and/or assigns
in such capacity, whether liquidated or unliquidated
and whether now existing or hereafter arising,
including without limitation the "Term Loan", the "Line
of Credit", the "Term Notes", the "Loan", and the
"Indebtedness", all as defined in this Agreement, the
"Indebtedness" and the "Notes" as defined in the Order,
and any and all other amounts now or hereafter owed by
Borrower to the Banks in their capacity aforesaid,
however evidenced, incurred, or arising, including
principal, interest, attorneys' fees, court costs,
appraisal fees, expenses, charges, and other amounts
connected with the foregoing, whether the same were
incurred before or after the commencement of the
Bankruptcy Case, together with any and all amendments,
substitutions, supplements, renewals, extensions,
refinancings, and other modifications thereto or
thereof. The Borrower acknowledges that the
Indebtedness and all of its obligations, covenants,
duties, undertakings, assignments, grants, and
conveyances under the Loan Documents are absolute,
unconditional, due, owing, unpaid, and not subject to
any offset, cross-claim, demand, claim, suit, action,
proceeding, counterclaim, or other dispute or defense
of any kind or nature, all of which are hereby
expressly and irrevocably waived, relinquished and
released by the Borrower."
(b) The following new definitions are hereby added to
Section 1.02 of the Loan Agreement in alphabetical order:
""Bankruptcy Case" shall mean that certain
bankruptcy case under Chapter 11 of the United States
Bankruptcy Code entitled "In Re: Campo Electronics,
Appliances and Computers, Inc., Debtor", Case No. 97-
13057 on the docket of the Court."
""Court" shall mean the United States Bankruptcy
Court for the Eastern District of Louisiana."
""Loan Documents" shall mean and include this
Agreement (as the same may have been or may hereafter
be amended from time to time), any and all promissory
notes, mortgages, deeds of trust, assignments,
collateral assignments of leases and rents, pledges,
security agreements, and any and all other documents,
agreements, and instruments executed in connection
therewith or as security therefor and any and all
amendments, substitutions, supplements, renewals,
extensions, refinancings, and other modifications
thereto or thereof."
""Order" shall mean that certain Final Agreed
Order Authorizing the Use of Cash Collateral and
Collateral, Approving Adequate Protection, and Granting
Additional Replacement Liens, signed on June 13, 1997
by the Court in the Bankruptcy Case."
2. Section 2.01 (Term Loan) of the Loan Agreement is
hereby amended to provide that, from and after the Effective Date
as defined in the Order, the principal amount of the Term Loan
shall be $17,861,653.54, representing the total of (i) the
principal amount owed under the Term Loan immediately prior to
the execution of this Agreement, plus (ii) the principal amount
owed under the Line of Credit immediately prior to the execution
of this Agreement. The accrued but unpaid interest due and owing
on the above principal amount was $68,067.64 as of June 17, 1997,
representing the total of (i) all accrued but unpaid interest due
and owing on the Term Loan as of June 17, 1997, and (ii) all
accrued but unpaid interest due and owing on the Line of Credit
as of June 17, 1997. Interest has continued to accrue on the
above principal amount in the sum of $4,217.33 per diem from June
17, 1997 through the Effective Date of the Order, such per diem
interest figure representing the total of the per diem interest
figure for the Term Loan plus the per diem interest figure for
the Line of Credit. From and after the Effective Date of the
Order, the Term Loan shall bear interest at the rate of 9.0% per
annum as set forth below. Interest on the Term Loan shall be
payable quarterly in arrears on the first day of each December,
March, June, and September beginning on September 1, 1997.
Interest for the quarterly payment due on September 1, 1997 shall
be calculated based on interest having accrued at the rate of
8.5% per annum through the Effective Date of the Order and at the
rate of 9.0% per annum from and after the Effective Date of the
Order. Principal on the Term Loan shall be payable in nine equal
quarterly installments of $223,270.67 on the first day of each
December, March, June, and September beginning on June 1, 1998
and continuing through June 1, 2000, with the balance of all
outstanding principal and all accrued and unpaid interest being
due and payable at maturity on June 27, 2000 (the "Maturity
Date"). Contemporaneously with this Agreement, Borrower and each
Bank have executed a separate Second Note Modification Agreement
(collectively, the "Note Modification Agreements") pursuant to
which the term note held by each Bank, evidencing each Bank's
respective portion of the Term Loan, has been modified and
amended to reflect the new principal balance of such term note as
contemplated by the Order, as well as the other provisions of the
Order relating to the term notes. Except as otherwise set forth
in the Order, all payments made by the Borrower or received by
the Banks with respect to the Indebtedness may be applied in such
manner or order as the Banks may determine in their sole
discretion.
3. Section 2.02 (Line of Credit) of the Loan Agreement is
hereby deleted in its entirety. Pursuant to the Order, the
entire outstanding principal balance of the Line of Credit is
hereby merged into and shall hereafter form part of the Term Loan
and shall be payable in the manner set forth in paragraph 1 above
and in the Note Modification Agreements. The Banks shall have no
obligation to extend Line of Credit Advances or any other
advances to Borrower.
4. In place of former Section 2.02 (Line of Credit) of the
Loan Agreement, the following provision is hereby added as new
Section 2.02:
"Section 2.02 Additional Notes. As
additional adequate protection for the Banks'
allowing Borrower to use the Banks' cash
collateral and the Banks' release of their
Liens on the Inventory as set forth in
paragraph 20 of the Order, and pursuant to
paragraph 3 of the Order, Borrower shall
execute one certain promissory note payable
to the order of Central Bank in the original
principal amount of $159,999.84, bearing no
interest except default interest at the rate
of nine (9.0%) percent per annum during the
existence of an Event of Default, payable in
full at maturity 36 months following the
Effective Date of the Order in a single
payment of the entire outstanding balance of
principal, together with all accrued but
unpaid default interest, if any, and all
costs, fees, and other charges that may then
be outstanding; one certain promissory note
payable to the order of Hibernia National
Bank in the original principal amount of
$199,999.80, bearing no interest except
default interest at the rate of nine (9.0%)
percent per annum during the existence of an
Event of Default, payable in full at maturity
36 months following the Effective Date of the
Order in a single payment of the entire
outstanding balance of principal, together
with all accrued but unpaid default interest,
if any, and all costs, fees, and other
charges that may then be outstanding; and one
certain promissory note payable to the order
of Liberty Bank & Trust Company of Tulsa,
N.A. in the original principal amount of
$179,999.82, bearing no interest except
default interest at the rate of nine (9.0%)
percent per annum during the existence of an
Event of Default, payable in full at maturity
36 months following the Effective Date of the
Order in a single payment of the entire
outstanding balance of principal, together
with all accrued but unpaid default interest,
if any, and all costs, fees, and other
charges that may then be outstanding
(collectively, the "Notes"). The Notes shall
be secured by the same first priority and
paramount mortgages and deeds of trust
described in Subsection 2.09(a) hereof
encumbering the Real Properties, and by the
same first priority and paramount security
interest in all of the inventory of Borrower
described in Subsection 2.09(b) hereof. The
Notes shall be deemed to be part of the
"Loan" and the "Indebtedness" for all
purposes and such terms, whenever used
herein, shall include the Notes.".
5. Section 2.03 (Interest Rate; Fees) of the Loan
Agreement is hereby amended to provide that the Term Loan shall
bear interest from the Effective Date of the Order until paid at
the rate of nine (9.0%) percent per annum. All references in the
Loan Agreement to the Prime Rate, the LIBO Rate, and the
Commercial Paper Rate are hereby deleted. Interest on the Term
Loan shall be computed on a 365/360 simple interest basis; that
is, by applying the ratio of the annual interest rate over a year
of 360 days times the outstanding principal balance, times the
actual number of days the principal balance is outstanding.
6. Section 2.09 (Security) of the Loan Agreement is hereby
amended as follows:
(a) Subsection 2.09(a) of the Loan Agreement is hereby
amended to read in its entirety as follows:
"Section 2.09 Security. (a) The
Indebtedness shall be secured by (i) a first
priority and paramount mortgage or deed of
trust on eight (8) properties owned by the
Borrower and located as set forth below (the
"Real Properties") and (ii) a first priority
and paramount collateral assignment of all
present and future leases and rents arising
from or relating to the Real Properties (the
"Leases and Rents"). The Real Properties are
more fully described in said mortgages or
deeds of trust and are generally located as
follows:
Birmingham, Alabama
Dothan, Alabama
Mobile, Alabama
Baton Rouge, Louisiana
Harahan, Louisiana
Monroe, Louisiana
Shreveport, Louisiana
Chattanooga, Tennessee.
The foregoing are all of the real estate
properties currently owned by the Borrower.
All other of Borrower's remaining stores are
leased from unaffiliated third parties. At
the request of the Lender, the Borrower shall
execute such other instruments, including
amendments or supplements to the existing
mortgages, deeds of trust, and collateral
assignments of leases and rents as the Banks
may request to further evidence the
foregoing. The mortgages, deeds of trust,
and collateral assignments of leases and
rents on the Real Properties listed above
shall at all times be senior to the rights of
any entity or individual, including but not
limited to the "Junior Creditors" (as defined
in the Order), the Borrower, both as debtor
and debtor-in-possession, its estate, and all
trustees in the Bankruptcy Case or in any
subsequent case under the Bankruptcy Code,
including but not limited to any subsequent
Chapter 7 case. The Borrower hereby
acknowledges, reaffirms, and ratifies that
the entire Indebtedness, including the
amended term notes and the Notes, are
intended to be secured by the aforesaid
mortgages, deeds of trust, and collateral
assignments of leases and rents with a first
and paramount rank and priority to the same
extent as the promissory notes originally
secured by said instruments."
(b) Subsection 2.09(b) of the Loan Agreement is hereby
amended to provide that the first priority and paramount security
interest presently held by the Banks as security for the Loan in
all of the inventory of Borrower described in the Loan Agreement
shall be subject to the obligation of the Banks, after the
Effective Date of the Order, to release such security interest in
the inventory pursuant to paragraph 20 of the Order.
7. Section 4.02 (Financial Statements and Reports) of the
Loan Agreement is hereby amended by redesignating such Section as
Section 4.02.1 (Financial Statements and Reports). The entire
text of said Section, except for the numerical designation, shall
remain in full force and effect as presently written.
8. The Loan Agreement is hereby amended by adding a new
Section 4.02.2 immediately after the redesignated Section 4.02.1,
which new Section 4.02.2 shall read in its entirety as follows:
"4.02.2 Additional Financial Statements
and Reporting Requirements. Without limiting
the reporting requirements imposed upon the
Borrower under the Loan Documents (including
but not limited to those under Section 4.02.1
of this Agreement), the Bankruptcy Code and
Rules, and under the Orders and Local Rules
of the Court, the Borrower shall strictly
account for all proceeds of, and income or
cash generated by or from, the prepetition or
postpetition inventory or any accounts
receivable generated therefrom and shall
furnish the Banks with such reports relative
thereto as the Banks, in their discretion,
shall request. Further, without in any way
limiting the foregoing, the Borrower shall
provide the Banks the following:
(a) until the Effective Date
of the Order, weekly prepetition
and postpetition inventory reports
in a form satisfactory to the
Banks; however the Banks may at
their option require daily
submissions of inventory reports;
notwithstanding the foregoing, if
the Order becomes effective, the
Borrower shall not be required to
provide the inventory reports
referred to in this subparagraph
(a) for any period (i) after the
Effective Date of the Order, or
(ii) for periods prior to the
Effective Date of the Order if such
reports were not delivered by the
Effective Date;
(b) monthly balance sheets
and income statements certified by
the Borrower's Chief Financial
Officer by the 15th day of the
following month (which will be
included in the U.S. Trustee
Reports);
(c) monthly source and
application of funds statements in
a form acceptable to the Banks by
the 15th day of the following month
(which will be included in the U.S.
Trustee Reports);
(d) monthly profit and loss
reports by store and consolidated
(which will be included in the U.S.
Trustee Reports);
(e) monthly and yearly cash
flow reports (which will be
included in the U.S. Trustee
Reports);
(f) yearly audited profit and
loss statement and audited balance
sheet; and
(g) any reporting (other than
daily sales reports) required by
any other lender.
The Banks may have a representative present
at any business location of the Borrower or
at any location where any of the Borrower's
assets are located during business hours but
shall not in any respect direct or
participate in the management of the day-to-
day business operations of the Borrower."
9. Section 4.05 (Taxes and Other Liens) of the Loan
Agreement is hereby amended to provide that on December 1, 1997,
Borrower shall establish and shall thereafter at all times
maintain with the Agent for the benefit of the Banks a tax escrow
account for the payment of real property taxes and assessments
with respect to the Real Properties. No later than the fifth
(5th) day of each calendar month commencing with December, 1997,
Borrower shall transmit to the Agent for deposit into the tax
escrow account an amount estimated by the Agent to be equal to
one-twelfth (1/12) of the aggregate amount of all real property
taxes and assessments estimated to be levied during the current
calendar year against the Real Properties, so as to enable the
Agent to pay, at least thirty (30) days before they become due,
all taxes, assessments, and other similar charges against the
Real Properties. Upon demand of the Agent, Borrower shall
deliver to the Agent such additional monies as are necessary to
make up any deficiency in the amount necessary to enable the
Agent to pay the foregoing items. Unless the Order ceases to be
in effect or is modified by the Court to so permit, the Banks
shall have no right to apply the funds in the tax escrow account
for any purpose other than the payment of real property taxes and
charges, provided that if the Order ceases to be in effect or is
modified to so permit, the Agent may, upon the occurrence of an
Event of Default, apply the funds in the tax escrow account
against the Loan in such manner as the Agent may determine. It
shall be the responsibility of Borrower to furnish the Agent with
tax bills in sufficient time to pay the taxes, assessments, and
other charges before the due date thereof. Notwithstanding the
above, Borrower shall remain liable for payment, before the same
becomes delinquent or any penalty attaches thereto for non-
payment, all taxes, assessments, and charges of any type or
nature, local or otherwise, to whomever assessed, which may be
levied on any of the Real Properties; and if the Agent permits
Borrower to pay such taxes, assessments, and charges directly,
Borrower shall furnish or cause to be furnished to the Agent,
evidence satisfactory to the Agent, of such payment before the
due date thereof.
10. Section 5.02 (Liens) of the Loan Agreement is hereby
amended by adding the following as new Subsection 5.02(h)
thereof:
"(h) Junior and subordinate Liens on the
Real Properties after the Effective Date of
the Order in favor of the "Junior Creditors"
as defined in the Order, provided that (i)
all such Liens are permitted and provided for
by the Order and all requirements,
conditions, waivers, and releases set forth
in the Order for such Liens have been
satisfied, (ii) such Liens are junior and
subordinate to the Liens of the Banks on the
Real Properties with respect to all
indebtedness owed to the Banks; (iii) the
instruments creating such Liens have been
approved in writing in advance by the Banks;
(iv) if the Banks so require, each of the
Junior Creditors has executed an
intercreditor agreement with the Banks in
form and substance satisfactory to the Banks
in their sole discretion; and (v) the
instruments creating such Liens have been
authorized in advance by an order of the
Court."
11. Section 5.05(b) of the Loan Agreement is hereby deleted
in its entirety and the following provision is substituted in its
place:
"(b) All sales leases, refinancings,
and other dispositions of any or all of the
Real Properties shall be subject to the
approval of the Banks. All proceeds of all
sales, leases, refinancings, and other
dispositions of any or all of the Real
Properties shall be applied first to the
unpaid principal balance of the Term Loan
until paid in full, second to interest on the
Term Loan until paid in full, third to
attorney's fees, costs, expenses, appraisal
fees, and other amounts due hereunder until
paid in full, and fourth to the amount due on
the Notes, as defined in the Order. All
references herein or in any related documents
to minimum release prices are hereby
deleted."
12. Section 7.01 (Events of Default) of the Loan Agreement
is hereby amended as follows:
(a) The following Subsections 7.01(l) and (m) are
hereby added thereto as additional Events of Default:
"(l) Dismissal or Conversion of
Bankruptcy Case; Breach of Order; Appointment
of Trustee. The Bankruptcy Case is
dismissed, or Borrower breaches the terms of
the Order, or a trustee is appointed in the
Bankruptcy Case or any subsequent case under
the United States Bankruptcy Code in which
Borrower is a debtor, or the Bankruptcy Case
is converted to a Chapter 7 case under the
United States Bankruptcy Code."
"(m) Other Events of Default Under Loan
Documents. Any Event of Default occurs under
any Loan Document."
(b) Subsection 7.01(e) is hereby revised to read in its
entirety as follows:
"(e) Other Debt to Other Lenders. The
Borrower (i) defaults in the payment of any
amounts due to any Person (other than the
Banks or the Junior Creditors as defined in
Order) or in the observance or performance of
any of the covenants or agreements contained
in any credit or loan agreements, notes,
equipment lease, collateral or other
documents (excluding store leases) relating
to any Debt of the Borrower to any Person
(other than the Banks or the Junior Creditors
as defined in the Order) in excess of
$250,000.00 and such Debt has been
accelerated or otherwise becomes due and
payable, or (ii) defaults in any payment,
performance, or covenant owed to any of the
Junior Creditors (as defined in the Order)."
13. Section 7.02 (Remedies) of the Loan Agreement is hereby
amended by adding the following Subsection 7.02(c) thereto:
"(c) Upon the happening of any Event of
Default specified in Subsection (l) of the
preceding Section, the entire principal
amount of all obligations then outstanding
including interest accrued thereon shall,
without further order of the Court or notice
by the Agent or the Banks, be immediately due
and payable without presentment, demand,
protest, notice of protest or dishonor or
other notice of default of any kind, all of
which are hereby expressly waived by the
Borrower."
14. Section 8.01 (Sharing of Set-Offs) of the Loan
Agreement is hereby amended to provide that as of the Effective
Date of the Order and except with respect to the Real Properties
and the cash proceeds from any sale of any of the Real Properties
and leases, rents, and other income generated from the Real
Properties, the Banks waive their rights of setoff. This
provision does not apply to First National Bank of Commerce d/b/a
First Bankcard Center.
15. The Loan Agreement is hereby further amended by adding
the following additional provisions to Article 9 thereof:
"SECTION 9.19 WAIVER OF JURY TRIAL.
WITH RESPECT TO ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT, THE LOAN, ANY OF
THE LOAN DOCUMENTS, ANY GRANTS OF SECURITY
THEREFOR, OR THE RELATIONSHIP ESTABLISHED
THEREBY OR HEREBY, THE BORROWER IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THE FOREGOING
MATTERS INCLUDING WITHOUT LIMITATION IN THE
BANKRUPTCY CASE AND ANY ADVERSARY PROCEEDINGS
OR OTHER PROCEEDINGS RELATED OR ANCILLARY TO
THE BANKRUPTCY CASE.
"Section 9.20 Notice of Offers to
Purchase. Borrower will advise the Banks of
all bona fide offers to purchase any of the
Real Properties or to purchase in bulk any of
the inventory on which the Banks hold a lien
at the time of such offer within two days of
receipt of any such offer and shall transmit
to the Banks copies of any such written
offers within five days of their receipt. In
addition, Borrower shall provide the Banks
within five days following Borrower's signing
of the Order with copies of all written
offers to purchase any of the Real Properties
or to purchase in bulk any of the inventory
received by Borrower since January 1, 1997.
"Section 9.21 No Obligation to Make
Payments. The Banks and the Agent shall have
no obligation to make any payments, and shall
not have any liability for payment or
nonpayment, of any expenses or other
obligations of the Borrower, including
without limitation those relating to the Real
Properties and/or the inventory. Without
limitation of the foregoing, the Banks and
the Agent shall have no obligation or
liability for payment of payroll taxes or
other taxes, including but not limited to
taxes applicable to the Real Properties or
inventory, and Borrower shall pay all such
payroll and other taxes and charges when and
as they become due. Notwithstanding the
foregoing, unless the Agent permits Borrower
to pay property taxes directly, the Agent
shall apply whatever monies it holds in the
property tax escrow account with respect to
the Real Properties, limited strictly to the
extent of said funds, for the payment of
property taxes, assessments, and similar
charges. The Banks and the Agent shall have
no liability to Borrower for any act or
omission with regard to the subject matter
hereof, nor shall any act or omission of the
Banks or the Agent in good faith under this
Agreement or the Order give rise to any
defense, counterclaim, or right of setoff
under this Agreement or any other agreement.
Borrower expressly waives any such defense,
counterclaim, or right of setoff."
16. Borrower hereby agrees to observe, comply with, and
perform all of the obligations, terms, and conditions under or in
connection with the Loan Agreement as amended hereby, the term
notes, the Notes, any and all other documents and instruments
securing or pertaining or relating to the Loan, and the Order.
17. Borrower hereby ratifies, reaffirms, confirms, and
acknowledges the Indebtedness and all terms and provisions of,
and all obligations, covenants, duties, and undertakings under,
this Agreements, and the Loan Documents. Borrower acknowledges
that the Indebtedness and all of its obligations, covenants,
duties, and undertakings under this Agreement and the Loan
Documents are absolute, unconditional, due, owing, unpaid, and
not subject to any offset, cross-claim, demand, claim, suit,
action, proceeding, counterclaim, or other dispute or defense of
any kind or nature, all of which are hereby expressly and
irrevocably waived, relinquished and released by Borrower.
Without limitation of the generality of the foregoing, the
Borrower hereby specifically reaffirms the mortgage, pledge,
assignment, grant of security interest in, and other
hypothecation of all collateral as security for the Indebtedness,
including, without limitation the following:
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in Jefferson County, Alabama.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in Houston County, Alabama.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in Mobile County, Alabama.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in East Baton Rouge Parish,
Louisiana.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in Jefferson Parish, Louisiana.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in Ouachita Parish, Louisiana.
Mortgage by the Borrower in favor of the Agent dated
August 30, 1995, covering certain immovable property of
the Borrower located in Caddo Parish, Louisiana.
Deed of Trust by the Borrower in favor of the Agent
dated August 30, 1995, covering certain immovable
property of the Borrower located in Hamilton County,
Tennessee.
Security Agreement (Inventory and Proceeds) by the
Borrower in favor of the Agent dated December 4, 1996,
covering certain inventory and proceeds; however, the
Banks' liens with respect to said inventory shall be
released as provided by the Order on the Effective Date
of the Order.
The Borrower acknowledges and agrees that the Borrower may, from
time to time, one or more times, enter into additional mortgages,
pledges, assignments, security agreements and other
hypothecations with the Banks under which the Borrower may
mortgage, pledge, assign, grant a security interest in and
hypothecate the same collateral. The Borrower further
acknowledges and agrees that the execution of such additional
agreements will not have the effect of cancelling, releasing,
novating said obligations, indebtedness, and other agreements, it
being the Borrower's intent that all such obligations
indebtedness and other agreements shall be cumulative in nature
and shall each and all remain in full force and effect until
expressly cancelled by the Banks under a written cancellation
instrument delivered to the Borrower.
18. Nothing in this Agreement shall constitute the
satisfaction or extinguishment of the amounts owed under the Term
Loan, the Line of Credit, the Loan Agreement, or otherwise owed
to the Banks, nor shall it be a novation of all or any portion of
the Loan or any other amounts owed to the Banks.
19. Borrower, both as debtor and debtor-in-possession, and
its estate fully, finally, and forever release, acquit, waive,
settle, discharge, surrender, and cancel the Banks and the Agent
from any and all claims, rights, demands, actions, disputes,
controversies and/or causes of action of every kind and nature
(together with the expenses, interest, costs, attorneys' fees,
and/or other amounts of any nature whatsoever claimed or
otherwise arising therefrom or related thereto) howsoever
arising, including, but not limited to, in tort, negligence,
intentional tort, strict liability, law, contract, admiralty,
equity, bankruptcy, fraudulent conveyance, preference, avoidance,
warranty, worker's compensation, loss, damages, punitive damages,
injury to a person, damage to property or property interests,
indemnity, contribution, reimbursement, defense, offense, quasi-
offense, sanctions, fines, penalties, unjust enrichment,
subrogation, assignment, and/or arising in any other way
whatsoever, whether based on direct or indirect (vicarious)
liability, whether existing and/or arising from events, actions,
and/or omissions in the past or present (including but not
limited to claims for indemnity, contribution, reimbursement,
and/or based on a similar theory which have not yet arisen
because a claimant has not been cast in judgment or made payment
on the underlying liability), whether known or unknown,
liquidated or unliquidated, choate or inchoate, matured or
unmatured, asserted or unasserted, contingent or exigible,
anticipated or unanticipated; claims also means and includes but
is not limited to the term claim as defined in 11 U.S.C. Section
101(5).
20. Borrower acknowledges that there exist Events of
Default under the Loan, the Loan Agreement, and the other Loan
Documents. Nothing contained herein shall be construed as curing
or waiving any or all of the existing defaults or Events of
Default or as a relinquishment by the Banks of their rights and
remedies with respect thereto, and the Banks hereby reserve and
retain all of their rights and remedies with respect to any and
all present and future defaults and Events of Default under the
Loan and the Loan Agreement. Notwithstanding the foregoing, the
Banks shall not exercise any of their rights or remedies under
any of the Loan Documents unless, after the date hereof, an Event
of Default occurs under the Loan Agreement or the other Loan
Documents or any breach or default occurs under the Order.
21. Except as modified and amended hereby, the Loan
Agreement shall remain in full force and effect.
22. This Agreement shall be governed by and shall be
construed in accordance with the laws of the State of Louisiana
and the United States of America.
23. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures
of all parties hereto be contained on any one counterpart hereof;
each counterpart shall be deemed an original, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument be duly executed as of the date first above written.
WITNESSES: BORROWER:
CAMPO ELECTRONICS, APPLIANCES AND
COMPUTERS, INC., Debtor and Debtor-
in-Possession
/s/ Pearl G. James By: /s/ Wayne J. Usie
Name: Wayne J. Usie
/s/ Brenda G. Lahteine Title:Chief Financial Officer,
Vice President and
Secretary
AGENT:
HIBERNIA NATIONAL BANK
/s/ Pearl G. James By: /s/ Frank J. Crifasi
Name: Frank J. Crifasi
/s/ Brenda G. Lahteine Title: Vice President
BANKS:
CENTRAL BANK
/s/ David M. Hampton By: /s/ Michael A. Naquin
Name: Michael A. Naquin
/s/ Lynn B. Barbara Title: Executive Vice President
HIBERNIA NATIONAL BANK
/s/ Pearl G. James By: /s/ Frank J. Crifasi
Name: Frank J. Crifasi
/s/ Brenda G. Lahteine Title: Vice President
LIBERTY BANK & TRUST COMPANY OF
TULSA, N.A.
/s/ Rene Belford By: /s/ Tipton J. Burch
Name: Tipton J. Burch
/s/ Rene Belford Title: Vice President
CONSULTATION AGREEMENT
This Agreement, made as of the 17th day of April, 1997, by
and between
Campo Electronics, Appliances and Computers, Inc., (the
"Company")
109 Northpark Blvd., Suite 500
Covington, LA 70433 ("Facility"), and
York Management Services, Inc. ("Consultant")
37 Northfield Ave.
Edison, NJ 08837
WHEREAS, Company desires to retain the services of
Consultant as set forth herein in accordance with the terms and
conditions of this Agreement; and
WHEREAS, Consultant desires to provide the services to
Company as set forth herein, and intending to be legally bound,
Company and Consultant hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall
have the meanings set forth below:
1.1 "Affiliate" shall mean a corporation which,
directly or indirectly, controls, is controlled by or is under
common control with the Company, and for purposes hereof,
"control" shall mean the ownership of 20% or more of the Voting
Stock of the corporation in question.
1.2 "Board" shall mean the Board of Directors of the
Company as duly constituted from time to time.
1.3 "the Business" shall mean the business to be
conducted by the Company or any Subsidiary, directly or
indirectly, including but not limited to retail sales.
1.4 "Commencement Date" shall be the date first set
forth on page one of this Agreement.
1.5 "Confidential Information" shall include, without
limitation by reason of specification, any information,
including, without limitation, trade secrets, vendor and customer
lists, pricing policies, operational methods, methods of doing
business, technical processes, formulae, designs and design
projects, inventions, research projects, strategic plans, product
information, production know-how and other business affairs of
the Company or its Affiliates, which (i) is or are designed to be
used in or are or may be useful in connection with the business
of the Company, any Subsidiary or any Affiliate of any thereof,
or which, in the case of any of these entities, results from any
of the research or development activities of any such entity,
which (ii) is private or confidential in that it is not generally
known or available to the public, except as the result of
unauthorized disclosure by or information supplied by Consultant,
or (iii) which gives the Company or a Subsidiary or any Affiliate
an opportunity or the possibility of obtaining an advantage over
competitors who may not know or use such information or who are
not lawfully permitted to use the same.
1.6 "Date of Termination" shall have the meaning
assigned to it in Section 3.
1.7 "Notice of Termination" shall have the meaning
assigned to that term in Section 3.
1.8 "Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, public
benefit corporation, entity of government (whether Federal,
state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or
department thereof).
1.9 "Subsidiary" shall mean a corporation of which
more than 50% of the Voting Stock is owned, directly or
indirectly, by the Company.
1.10 "Term" shall mean the term of retention of
Consultant under this Agreement.
1.11 "Voting Stock" shall mean capital stock of a
corporation which gives the holder the right to vote in the
election of directors for such corporation in the ordinary course
of business and not as the result of, or contingent upon, the
happening of any event.
Wherever from the context it appears appropriate, each word
or phrase stated in either the singular or the plural shall
include the singular and the plural, and each pronoun stated in
the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter.
2. CONSULTATION DUTIES OF THE CONSULTANT
2.1 Consultation Duties. The Company hereby retains
Consultant, and Consultant hereby accepts appointment as
Consultant to the Company. The principal duty of Consultant
shall be to perform those services which may be requested by the
Board, including, but not limited to, assistance in the
evaluation of the Company's existing business; and assistance in
the formulation of a strategic plan to restore the Company's
profitability, including restructuring and reorganization
alternatives, and to render services as are necessary and
desirable to protect and advance the best interests of the
Company and its Subsidiaries. Consultant agrees to devote
whatever reasonable time is required to perform such duties.
2.2 Consultant shall report to and be under the
supervision of the Board.
2.3 Consultant does not hold itself out as having the
licenses of, nor does Consultant perform the services of,
attorneys, accountants, brokers, or other service providers
requiring a license.
3. TERM OF RETENTION
3.1 The retention of Consultant pursuant to this
Agreement shall commence as of the Commencement Date, and end
seven (7) days after receipt of written notice by one party from
the other terminating this Agreement (the "Termination Date").
4. PLACE OF WORK
4.1 Consultant's services shall be performed initially
in substantial part at the home office location of the Company,
and the Company agrees to afford to Consultant and its personnel,
office space at the Company headquarters, and other business
premises owned by or available to Company as is reasonably
requested.
5. COMPENSATION AND BENEFITS
5.1 Retainer. Company agrees to pay Consultant a
retainer of $50,000.00 on the Commencement Date, which Consultant
shall hold as security for the timely payment and performance by
the Company of its obligations hereunder. If the Company
breaches this Agreement, Consultant may apply the retainer to
reduce Consultant's damages. Following the Termination Date,
after all fees, bonuses and expenses due to Consultant have been
paid, the balance of the retainer shall be refunded to the
Company.
5.2 Fees and Expenses. Company agrees to pay fees for
services rendered by personnel of Consultant based upon the
hourly rates attached hereto as Exhibit A. Hourly fees for
personnel not listed on Exhibit A shall be billed at the rates
regularly charged by Consultant for services personnel performing
similar functions. Personnel of Consultant shall include
employees of Consultant and independent consultants selected by
Consultant to perform on behalf of the Consultant. All rates
quoted may be reasonably increased from time to time in the event
the assignment extends beyond a six (6) month period. Company
agrees to reimburse Consultant for all reasonable and necessary
expenses incurred by Consultant by reason of this Agreement,
including, but not limited to travel, including air travel and
rental car, mileage reimbursement for use of Consultant's
personal automobiles, and for lodging and meal expenses whenever
Consultant's personnel are away from home. Travel time shall be
reimbursed at one-half (1/2) of the Consultant's hourly rates
listed on Exhibit A.
5.3 Billing and Payment. Consultant agrees to render
weekly invoices to Company for fees and expenses, and any delay
in rendering such invoices shall not constitute a waiver of such
fees and expenses. Company agrees to pay such invoices within
two (2) business days of receipt by wire transfer to Consultant's
bank, or by certified check or cashier's check.
5.4 Taxes. Company agrees that all taxes due by
reason of amounts payable, or paid to Consultant under this
Agreement (for instance, sales taxes), are the responsibility of
and to be paid by Company, other than federal, state, and local
taxes on the Consultant's income.
5.5 Bonus for Exceptional Performance. Company agrees
that Consultant will receive a bonus for exceptional performance
in the event the Company's financial condition is stabilized or
the Company is sold or merged. In the event the Company's
financial condition is stabilized through the end of the
Company's current fiscal year without recourse to reorganization
under Title 11 of the United States Code, Consultant shall be
paid a Success Fee in the amount of $200,000. In the event the
Company becomes a debtor in a case under Title 11 of the United
States Code, Consultant shall be paid a Success Fee in the
amount of $200,000, in the event a Plan of Reorganization is
confirmed on or before twelve (12) months following the initial
filing date.
5.6 Except as hereinafter provided, in the event the
term of this Agreement extends beyond sixty (60) days, and the
Board of the Company, during the term of this Agreement or within
six (6) months following the termination date elects to undertake
the sale of the Company, York shall be retained as the exclusive
representative to market the Company, and shall be paid a fee for
the completion of a transaction in accordance with a written
agreement to be concluded within the next thirty (30) days, which
fee shall be calculated using the "Lehman formula". No fee shall
be due Consultant in connection with the sale of the Company to
Consultant or an entity which, directly or indirectly, is owned
or controlled by Consultant or any person or entity to whom
indemnification is extended pursuant to Section 10.2 of this
Agreement.
5.7 Obligations of the Company. The Company's
obligation to pay Consultant the compensation, fees and expenses
contained herein and to make the arrangements provided herein
shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the
Company may have against Consultant or anyone else. All amounts
payable by the Company hereunder shall be paid without notice or
demand.
6. INDEPENDENT CONTRACTOR STATUS
6.1 Consultant shall for all purposes hereunder be an
independent contractor with respect to the Company. Consultant
shall not be deemed an officer or director or agent of the
Company. This Agreement shall not constitute Consultant as a
joint venturer or partner of the Company. Consultant shall have
no liability for any debts or obligations of the Company.
Consultant shall have no authority to contract on behalf of, or
otherwise bind the Company without the express authorization of
the Board.
6.2 Except as provided in Section 6.3 of this
Agreement, nothing contained in this Agreement shall preclude
Consultant from being a purchaser of the Company or its Assets,
or a proponent of a plan for the Company to reorganize same, or
to participate in any way in any transaction respecting the
Company.
6.3 Consultant agrees that neither it nor any person
or entity to whom indemnification is extended pursuant to Section
10 of this Agreement will (i) make any proposal to buy securities
or other assets of the Company without the prior approval of the
Board unless the Board has decided to offer the Company for sale,
or (ii) solicit proxies to vote shares of the Company; or (iii)
trade in Company stock.
7. INFORMATION AND CONFIDENTIALITY
7.1 The Company agrees to provide access to all
financial and other information and records to Consultant and to
Consultants officers, employees and representatives, as
Consultant shall reasonably request.
7.2 Consultant agrees that it may obtain Confidential
Information during the course of its retention hereunder by the
Company . Accordingly, Consultant agrees that it shall not,
either during the Term of this Agreement or at any time within
one year after the Date of Termination (i) use or disclose any
such Confidential Information outside the Company and Affiliates;
or (ii) except as required in the proper performance of its
services hereunder, remove or aid in the removal from the
premises of the Company or any Affiliate, of any Confidential
Information or any property or material relating thereto.
(a) The foregoing confidentiality provision shall
cease to be applicable to any Confidential Information which
becomes generally available to the public (except by reason of or
as a consequence of a breach by Consultant of his obligations
under this Section).
(b) In the event Consultant is required by law or
a court order to disclose any such Confidential Information, it
shall promptly notify the Company of such requirement and provide
the Company with a copy of any court order or of any law which in
its opinion requires such disclosure, and if the Company so
elects, permit the Company an adequate opportunity, at its own
expense, to contest such law or court order.
8. DISPUTES AND REMEDIES
8.1 WAIVER OF JURY TRIAL. CONSULTANT AND THE COMPANY
HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY
DISPUTE WHICH ARISES UNDER THIS AGREEMENT.
9. REGULATORY COMPLIANCE
9.1 All regulatory compliance decisions are the
responsibility of the Company; and, without limitation,
Consultant shall have no duty, responsibility or authority with
respect to regulatory compliance duties, including, without
limitation: (1) the management, handling, transport, disposal or
remediation of hazardous wastes or hazardous substances; (2)
compliance with applicable federal, state or local statutes,
ordinances, regulations, orders and requirements of common law in
any way affecting or pertaining to health, safety or the
environment; and (3) filings with federal and state securities
authorities and federal, state and local taxing authorities.
10. INDEMNIFICATION AND HOLD HARMLESS
10.1 Company and its subsidiaries, if any, jointly and
severally agree to indemnify and hold harmless Consultant to the
full extent lawful, against any and all losses, actions, claims,
damages, liabilities or costs including reasonable legal fees and
expenses (collectively, "Loss"), whether or not in connection
with a matter in which Consultant is a party, as and when
occurred, directly or indirectly, caused by, relating to, based
upon or arising out of Consultant's activities pursuant to this
Agreement. The Consultant will not be held liable for errors in
judgment. Notwithstanding the foregoing, Company shall have no
duty to indemnify or to hold harmless Consultant for any loss,
action, claim, damage, liability or costs to the extent such Loss
is found, in a final judgment by a court of competent
jurisdiction to have resulted primarily and directly from the
gross negligence, willful misconduct or unlawful activities of
Consultant.
10.2 Limitation of Liability. Company and its
subsidiaries, if any, agree that the Consultant's liability to
Company, to the extent not otherwise limited, indemnified or held
harmless under this Agreement, is further limited to the amount
of fees paid to Consultant under Section 5.2.
10.3 Included Indemnities. Except for liability
arising from Consultant's gross negligence, willful misconduct or
unlawful activities, These indemnification and hold harmless
provisions shall be in addition to any liability which Company
may otherwise have to Consultant and shall include, in addition
to Consultant, Consultant's affiliated entities, directors,
officers, employees, independent contractors employed by
Consultant for this project, agents and controlling persons of
Consultant within the meaning of the federal securities laws.
All references to Consultant in these indemnification and hold
harmless provisions, and other provisions of this Agreement shall
be understood to include any of the foregoing persons.
10.4 Counsel and Notification of Company. If any
claim, action, proceeding, or investigation is commenced as to
which Consultant proposes to demand such indemnification and to
be held harmless, it will notify the Company promptly upon
becoming aware of any such action, proceeding or investigation.
Consultant will have the right to retain counsel of its own
choice to represent it, subject to the Company's approval of such
counsel, which approval shall not be unreasonably withheld, and
the Company will pay the reasonable fees and expenses of such
counsel; and such counsel shall to its fullest extent consistent
with its professional responsibilities cooperate with the Company
and any counsel designated by it. The Company will only be
liable for any settlement of any claim against Consultant made
with the Company's written consent, which consent shall not be
unreasonably withheld.
10.5 Duration. Neither termination nor completion of
the engagement of Consultant pursuant to this Agreement shall
affect the indemnification and hold harmless provisions which
shall remain operative and in full force and effect.
10.6 Health, Safety and Environmental Inclusion. The
Company its subsidiaries agree to indemnify and hold harmless the
Consultant from any breach of the representations and warranties
and covenants set forth in Section 11 below, to the full extent
set forth in Section 10.
10.7 In the event of litigation between Company and
Consultant, the prevailing party shall be entitled to recover its
reasonable fees and expenses.
11. HEALTH, SAFETY AND ENVIRONMENTAL REPRESENTATIONS,
WARRANTIES, AND COVENANTS
11.1 Company and its subsidiaries, if any, jointly and
severally, represent and warrant that:
(a) All activities and operations of Company have
been and are being conducted in compliance with all applicable
federal, state and local environmental, health, and safety
statutes, ordinances, regulations and orders and requirements of
common law ("Environmental Statutes").
(b) No Hazardous Substance (as herein defined) is
present in, on, over or under any facilities owned or leased by
Company or its subsidiaries, if any (collectively, "Company
Facilities") in a manner as may require remediation under any
Environmental Statute or, to Company's knowledge, is present in,
on, over or under any adjacent premises or is migrating to the
Facility or to Company Facilities. The term "Hazardous
Substances" means substances and/or materials that are regulated
pursuant to Environmental Statutes, including, without
limitation, substances and materials that are or contain
hazardous substances, hazardous wastes, hazardous materials,
toxic substances, regulated substances, and petroleum as those
terms are defined pursuant to any Environmental Statute.
(c) Company has obtained and maintained and is in
compliance with all registrations, licenses, permits and
approvals, including amendments thereto, issued by governmental
agencies pursuant to Environment Statutes and all are in full
force and effect.
(d) The generation,, handling, treatment,
storage, transportation and disposal of Hazardous Substances and
waste by, or on behalf of, Company was and is in compliance with
all applicable federal, state and local laws, ordinances and
regulations, including Environmental Statutes.
(e) Company has not received any notice of any
violation of or investigation or claim of liability under any
Environmental Statute regarding or relating to the Facility and
Company Facilities and their operation or notice of any
investigation or potential liability of Company regarding any
other facility including, without limitation, those to which
Company, Company Facilities or the Facility sent Hazardous
Substances or waste for handling, treatment, storage or disposal
("Other Facilities").
(f) Neither the Facility, Company Facilities, nor
any Other Facility is listed or proposed for listing on the
National Priorities List or the Comprehensive Environmental
Response, Compensation and Liability Information System list
promulgated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., as
amended, or any analogous state or local list.
11.2 Company and its subsidiaries, if any, agree to
remain in compliance with all Environmental Statutes.
12. ENTIRE AGREEMENT, WAIVER AND OTHER
12.1 Entire Agreement. This Agreement constitutes the
entire understanding and Agreement between the parties hereto
with respect to the subject matter and supersedes all previous
agreements between the parties hereto, written or oral, express
or implied, covering the subject matter hereof. No
representations, inducements, promises or agreements, oral or
otherwise, not embodied herein, shall be of any force or effect.
This Agreement may not be amended, changed, modified, or
supplemented, except in writing signed by each party.
12.2 Neither party shall sell, assign, convey or
otherwise transfer this Agreement, or any of the rights,
interests or obligations hereunder to any other party without the
prior written consent of the other party. In the event the
Company becomes a debtor in a case under Title 11 of the United
States Code, it shall immediately apply to assume this Agreement.
12.3 Notices. Any written notice required to be given
hereunder shall be valid if sent by registered or certified mail
with return receipt requested, or by Federal Express or other
overnight service with receipt verification, to the address of
the party set forth in the opening paragraph of this Agreement,
or to such other address as one party shall provide in writing to
the other in accordance with this paragraph.
12.4 Governing Law. This Agreement shall be governed
by and construed, and the rights and obligations of the parties
hereto enforced, in accordance with the laws of the State of
Louisiana.
12.5 No Waiver. No waiver or modification of any of the
provisions of this Agreement shall be valid unless in writing and
signed by or on behalf of the party granting such waiver of
modification. No waiver by any party of any breach or default
hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed a waiver of any other breach
or default, nor shall it in any way affect any of the other terms
or conditions of this Agreement or the enforceability thereof.
No failure of the Company to exercise any power given it
hereunder or to insist upon strict compliance by Consultant with
any obligation hereunder, and no custom or practice at variance
with the terms hereof, shall constitute a waiver of the right of
the Company or Consultant to demand strict compliance with the
terms hereof.
(a) Consultant shall not have the right to sign
any waiver or modification of any provisions of this Agreement on
behalf of the Company, nor shall any action taken by Consultant
reduce its obligations under this Agreement.
(b) This Agreement may not be supplemented or
rescinded except by an instrument in writing signed by the
parties hereto. Neither this Agreement nor any of the rights of
any of the parties hereto may be terminated except as provided
herein.
12.6 Separability of Provisions. If any provision of
this Agreement shall be or become illegal or unenforceable in
whole or in part for any reason whatsoever, the remaining
provisions shall nevertheless be deemed valid, binding and
subsisting.
12.7 Headings and Paragraphs. The headings and
paragraphs of this Agreement are for reference purposes only, and
shall not in any way affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
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COMPANY CONSULTANT
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Campo Electronics, Appliances York Management Services, Inc.
and Computers, Inc.
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/s/ Rex Corley, Jr. /s/ William F. Taggart
Rex Corley, Jr. William F. Taggart
President President
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Exhibit A to Agreement dated as of April 17, 1997, by and between
Campo Electronics, Appliances and Computers, Inc., ("Company"),
and York Management Services, Inc., ("Consultant").
Schedule of Hourly Billing Rates
Name Hourly Billing Rate
William F. Taggart 350.00
Tom Hays 245.00
Sanford (Sandy) Nacht 225.00
Sid Layton 195.00
John Hennessey 195.00
Tom Kirkpatrick 195.00
Administrative/Secretarial
Services 80.00
