As filed with the Securities and Exchange Commission on October 20, 1997
Registration No. 333-3079
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------
CABLE & CO. WORLDWIDE, INC.
(Name of small business issuer in its charter)
Delaware 5139 22-3341195
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
CABLE & CO. WORLDWIDE, INC.
724 Fifth Avenue
New York, New York 10019
(212) 489-9686
(Name, address and telephone number of principal executive offices
and principal place of business)
ALAN KANDALL
Cable & Co. Worldwide, Inc.
724 Fifth Avenue
New York, New York 10019
(212) 489-9686
(Name, address and telephone number of agent for service)
-------------------
Copies to:
MARTIN C. LICHT, ESQ.
LANE & MITTENDORF LLP
320 Park Avenue
New York, New York 10022
(212) 508-3200
Approximate Date of Commencement of Proposed
Sale to the Public: From time to time after this
Registration Statement becomes effective.
--------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.|X|
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 462 (b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
ii
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
=================================================================================================================================
Amount of
Title of Each Class of Amount to be Offering Price Per Aggregate offering Registration
Securities to be Registered Registered Security Price Fee
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value (1) $.01 per share 13,690,000 $.40625 $5,561,562.50 $1,685.32
Total Registration Fee(2)........................ $1,685.32
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the registration for resale of 13,690,000 shares of Common Stock
issued in a private placement in July 1997.
(2) The offering price per share is estimated pursuant to Rule 457(c) solely for
the purpose of calculating the registration fee and is based upon the average of
the bid and asked prices of the Common Stock of the Company reported on the
NASDAQ SmallCap Market on August 5, 1997 (which date is within five business
days prior to the date of the filing of this Registration Statement).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
iii
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation, or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
(Subject to Completion)
Dated ________, 1997
CABLE & CO. WORLDWIDE, INC.
13,690,000 Shares of Common Stock
All of the shares (the "Shares") of Common Stock, $ .01 par value (the
"Common Stock"), of Cable & Co. Worldwide, Inc., a Delaware corporation (the
"Company"), offered hereby (the "Shares") are being offered by certain selling
stockholders (the "Selling Stockholders") as more fully described herein.
Pursuant to a registration rights agreement, the Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions of any
underwriters, brokers, dealers or agents retained by the Selling Stockholders)
in connection with the
<PAGE>
registration and sale of the Shares being offered by the Selling Stockholders.
In addition, the Company has agreed to indemnify the Selling Stockholders
against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Company will receive none of the
proceeds from any sale of the Shares by or for the account of the Selling
Stockholders. See "SELLING STOCKHOLDERS" and "PLAN OF DISTRIBUTION."
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made on The NASDAQ SmallCap Market ("NASDAQ"), in negotiated
transactions or otherwise at prices and at terms then prevailing; at prices
related to the then current market price; or at negotiated prices. The Shares
may be sold by any one or more of the following methods: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its own account; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. In addition, any Shares that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any commissions received by such broker-dealers, agents or underwriters and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Common Stock is traded on NASDAQ under the symbol "CCWW." On
October __, 1997, the closing bid price per share, as reported by NASDAQ was
_____ .
The shares of Common Stock offered for resale hereby were issued in a
private placement in July 1997.
THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISKS, AND SECURITIES
SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" ON PAGE 7 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- 2 -
<PAGE>
<TABLE>
===================================================================================================
Underwriting
Number of Price to Discounts and Proceeds to Selling
Shares Public Commissions Stockholders
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL 13,690,000 Prevailing Market Price None Prevailing Market Price
- ---------------------------------------------------------------------------------------------------
===================================================================================================
</TABLE>
The date of this Prospectus is _________________, 1997.
- 3 -
<PAGE>
AVAILABLE INFORMATION
A Registration Statement on Form S-3 (the "Registration Statement"),
under the Securities Act, relating to the securities offered hereby has been
filed by the Company with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Certain financial and other information relating to the
Company is contained in the documents indicated below under "Incorporation of
Certain Documents by Reference" which are not presented herein or delivered
herewith. For further information with respect to the Company and the securities
offered hereby, reference is made to such Registration Statement, exhibits and
schedules. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as exhibits to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected without charge or may be obtained from the Commission upon the payment
of certain fees prescribed by the Commission at the public reference facilities
maintained by the Commission in Washington, D.C. at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices in
New York at 7 World Trade Center, 13th Floor, New York, New York 10048 and in
Chicago at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
- 4 -
<PAGE>
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information concerning
the Company may be inspected or copied at the public reference facilities at the
Commission located at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Commission's Regional Offices in New York, 7 World Trade Center, 13th
Floor, New York, New York 10048, and in Chicago, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
documents can be obtained at the public reference section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates or by
reference to the Company on the Commission's Worldwide Web page
(http:www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1997.
3. The Company's Quarterly Report on Form 10-QSB for the six months
ended June 30, 1997.
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on May 24, 1996, pursuant to
Section 12(g) of the Exchange Act.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in and to be a part of
this Prospectus from the date of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in the
Registration Statement containing this Prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
- 5 -
<PAGE>
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents referred to above which have been or may be
incorporated herein by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests for such documents should be
directed to: Cable & Co. Worldwide, Inc., 724 Fifth Avenue, New York, New York
10019.
THE COMPANY
Cable & Co. Worldwide, Inc. (the "Company") designs, manufactures,
imports and markets on a wholesale basis a broad range of men's footwear bearing
the Cable & Co.(R) trademark and Bacco Bucci(R) trademark. The Company markets
its products to approximately 1,500 department and specialty store locations in
the United States. The Company's products are designed to appeal to fashion
conscious consumers. The Company's footwear consists of men's casual and dress
shoes. In August 1997 the Company acquired the rights to the Bacco Bucci
trademark from D&D Design and Details Limited ("D&D Design"), an entity
controlled by Alberto Salvucci, the Chairman of the Board, a director and a
principal stockholder of the Company. Prior to August 1997, the Company licensed
the right to use the Bacco Bucci trademark from D&D Design. The retail price of
the men's shoes sold under the Cable & Co. trademark ranges from $150 to $175
for casual shoes and from $190 to $230 for dress shoes. The retail price of the
men's casual shoes sold under the Bacco Bucci trademark ranges from $120 to
$140.
The Company believes that its footwear is comfortable, fashionable and
practical. The Company incorporates technically sophisticated designs into the
construction of its footwear, which is intended to be worn with casual or
business attire. The Company sells approximately 35 styles of men's shoes each
season bearing the Cable & Co. trademark and approximately 20 styles under the
Bacco Bucci trademark.
The Company plans to increase revenues by increasing sales to existing
accounts, establishing new accounts, developing high quality shoes with styling
and design detail to sell at competitive prices, expanding the Company's
marketing programs and globalizing the Cable & Co. and Bacco Bucci brands. In
August 1997 the Company acquired the Cable & Co. trademark from Cable & Co.
S.R.L. in many major countries throughout the world. The Company also began
manufacturing its footwear with its own machinery, equipment and staff in a
leased facility in Montegranaro Italy, in the second quarter of 1997, which the
Company believes will increase margins.
The Company also intends to explore opportunities to license rights to
related products such as belts, wallets, accessories and other small leather
goods. There can be no assurance that the Company will be able to achieve such
objectives.
- 6 -
<PAGE>
On July 1, 1997, the Company entered into a license agreement (the
"License Agreement") with Roffe Accessories, Inc. ("Roffe"), whereby the Company
granted a license to Roffe to use the Cable & Co. trademark in North America for
silk neckwear for a period of three years. Pursuant to the License Agreement,
Roffe shall pay to the Company a royalty equal to 5% of the first $500,000 of
gross sales and 6% thereafter, together with a fee equal to 2% of gross sales to
be utilized for advertising expenses. The License Agreement provides for minimum
sales of $400,000 in the first year, $600,000 in the second year and $1,100,000
in the third year.
The Company was formed on November 10, 1994 to acquire certain net
assets of Hongson, Inc. used in the sale and marketing of footwear bearing the
Cable & Co. trademark (the "Acquired Net Assets"). The Acquired Net Assets
consisted primarily of intangible assets, namely the goodwill associated with
the Cable & Co. trademark. The Company purchased the Acquired Net Assets
effective as of the close of business on January 1, 1995 for a total purchase
price of $1,401,787 (the "Acquisition"). The Company acquired all of the rights
of Hongson, Inc. to use the Cable & Co. trademark in the Western Hemisphere.
Prior to the Acquisition, Alberto Salvucci, Chairman of the Board, a
director and a principal stockholder of the Company, through Cable & Co. S.R.L.,
identified raw materials and provided design and production services for the
Cable & Co. product line of Hongson, Inc. Mr. Salvucci, through Cable & Co.
S.R.L. and D&D Design, continues to provide substantially the same services to
the Company. In addition, Alan Kandall, Chief Executive Officer, President, and
a Director of the Company, was the chief financial officer of Hongson, Inc. and
David Albahari, formerly the President, Chief Executive Officer and a director,
was the president of the Cable & Co. product line of Hongson, Inc. See - "Recent
Developments."
The Company's principal executive office is located at 724 Fifth
Avenue, New York, New York 10019, and its telephone number is (212) 489-9686.
Recent Developments
In August 1997 the Company purchased all of the rights to the Bacco
Bucci trademark, an intangible asset, from D&D Design, an entity controlled by
Alberto Salvucci, the Chairman of the Board, a director and a principal
stockholder of the Company. The rights sold to the Company include trademarks
registered in the United States, Canada, Italy, Austria, China, France, Germany,
Portugal, Russia, Spain, Switzerland, Hong Kong, India, Korea, Sri Lanka, Taiwan
and the United Kingdom together with any other rights owned by D&D Design
whether or not registered throughout the world. Prior to
- 7 -
<PAGE>
the acquisition, the Company held a license for the rights to the Bacco Bucci
trademark in North, Central and South America.
For the year ended December 31, 1996, and the six months ended June 30,
1997, the sales of Bacco Bucci footwear in North, Central and South America were
$3,645,176 and $2,244,306, respectively. There were no sales of Bacco Bucci
footwear for the year ended December 31, 1996 and for the six months ended June
30, 1997 in any other countries. For fiscal 1996, the Company paid an aggregate
of $226,931 to D&D Design and Cable & Co. S.R.L. with respect to sales and
purchases of Bacco Bucci footwear which is comprised of $115,220 of commissions
and $111,711 of royalties. In addition, the Company paid to D&D Design $86,000
for fashion and design advisory fees for Bacco Bucci and Cable & Co. footwear.
For the six months ended June 30, 1997, the Company paid an aggregate of
$123,702 to D&D Design and Cable & Co. S.R.L. with respect to purchases of Bacco
Bucci footwear which is solely for commissions. In addition, for the six months
ended June 30, 1997, the Company paid to D&D Design $28,852 for fashion and
design advisory fees for Bacco Bucci and Cable & Co. footwear. No royalties for
sales of Bacco Bucci footwear were paid for the six months ended June 30, 1997.
As a result of the acquisition of the Bacco Bucci trademark, the
Company will no longer be obligated to pay royalties of 3% per year with respect
to net sales of Bacco Bucci footwear in North, Central and South America.
However, it is anticipated that the Company will continue to pay commissions to
D&D Design and Cable & Co. S.R.L. as directed by Alberto Salvucci, at the rate
of 7%, in the aggregate, of the cost of goods shipped to the Company. The
Company will also be obligated to pay royalties to D&D Design equal to 7% of net
sales of products bearing the Bacco Bucci trademark outside of North, Central
and South America for a period of five years commencing on the date the Company
commences exploiting the Bacco Bucci trademark in each country, but expiring no
later than December 31, 2007.
The purchase price for the Bacco Bucci trademark consists of $3,150,000
of which $400,000 will be paid periodically by December 1, 1997, and the balance
of which shall be payable in installments. Payments of $350,000 and $400,000 are
due in January 1998 and January 1999, respectively. The remaining balance is
payable in four installments of $500,000 in January 2000 through January 2003.
In addition, the Company has agreed to pay to D&D Design annual royalties of 7%
of net sales for a period of five years for all goods bearing the Bacco Bucci
trademark sold outside North, Central and South America, commencing on the date
the Company commences exploiting the Bacco Bucci trademark in each country, but
expiring no later than December 31, 2007. The Company also issued to D&D Design
an aggregate of 11,973,411 shares of Common Stock. For financial statement
purposes, the Company has valued the shares of Common Stock at $2,694,017,
- 8 -
<PAGE>
which represents a discount to the market price, to reflect the restrictions on
transfer under the Securities Act.
The Company also acquired in many major countries throughout the world
outside of the Western Hemisphere, all of the rights to the Cable & Co.
trademark from Cable & Co. S.R.L., an entity controlled by Mr. Salvucci. Prior
to the acquisition, the Company owned the rights to the Cable & Co. trademark in
the Western Hemisphere. The rights sold to the Company include trademark
registrations in the following countries among others, Austria, Belgium, France,
Germany, India, Russia, Italy, Netherlands, Spain, Sweden and Switzerland. The
rights also include all of the rights owned by Cable & Co. S.R.L. in Africa,
Asia Minor, Australia, all of Europe and other parts of the world, except United
Kingdom and Asia.
The purchase price for the rights to the Cable & Co. trademark include
the shares of Common Stock discussed above, the 7% royalties payable with
respect to the Bacco Bucci trademark, together with a payment of $100,000, which
amount has been paid to Cable & Co. S.R.L. For fiscal 1996, the Company paid an
aggregate of $434,887 to Cable & Co. S.R.L. and D&D Design with respect to
purchases of Cable & Co. footwear which is comprised solely of commissions. For
the six months ended June 30, 1997, the Company paid an aggregate of $258,225 to
Cable & Co. S.R.L. and D&D Design with respect to purchases of Cable & Co.
footwear which is comprised solely of commissions. It is anticipated that the
Company will continue to pay commissions on the purchase of Cable & Co. footwear
to entities controlled by Mr. Salvucci at a rate of 8% of the cost of goods
shipped to the Company.
In fiscal 1996, the Company paid a fashion and design advisory fee of
$86,000 to D&D Design for Cable & Co. and Bacco Bucci footwear. The fee was paid
for fashion and design advisory services which were provided to the Company.
During the six months ended June 30, 1997, the Company paid fashion and design
advisory fees to D&D Design of $28,852 and anticipates paying an additional
$28,852 to D&D Design during the second half of fiscal 1997. The Company
anticipates entering into a consulting agreement with Mr. Salvucci for years
subsequent to December 31, 1997.
The purchase price, including costs and expenses, for the Bacco Bucci
and Cable & Co. trademarks is approximately $5,420,000, resulting in an annual
charge to earnings of approximately $271,000. The purchase price is being
amortized over a period of 20 years. The Company believes that the impact on
gross profit will not be significant.
Management believes that the purchase of the Bacco Bucci and Cable &
Co. trademarks is an integral part of the Company's plans for expansion. The
purchase of the Bacco Bucci trademark will result in savings on the annual
royalties payable to D&D Design with respect to net sales of Bacco Bucci
footwear in North, Central and South America. For fiscal 1996, the royalties
paid to D&D
- 9 -
<PAGE>
Design with respect to sales of Bacco Bucci footwear were $111,711. The Company
intends to focus on expanding sales of the Bacco Bucci footwear. In the event
that sales of the Bacco Bucci footwear increase significantly, of which there
can be no assurance, the Company believes that the amount saved by the Company
in royalty payments would be substantial. The Company also plans to sell
footwear bearing the Cable & Co. and Bacco Bucci trademarks outside of the
Western Hemisphere, which rights the Company did not possess prior to the recent
acquisitions. The Company anticipates utilizing a network of distributors and
licensees to sell its footwear outside the United States. However, the network
is not established and there can be no assurance that the Company will do so.
The Company has had discussions to sell Bacco Bucci and Cable & Co. footwear in
the Middle East, Turkey, and India. However, no definitive agreements have been
reached. In addition, the Company intends to sell Bacco Bucci footwear in the
United Kingdom. However, no definitive agreements have been reached.
In October 1997, the Company entered into an agreement as of July 21,
1997, to pay David Albahari, the former President, Chief Executive Officer and a
director of the Company, $200,000 per year commencing July 1997 through
September 30, 1998, and to reimburse Mr. Albahari for certain expenses. The
employment agreement between the Company and Mr. Albahari was terminated
pursuant to such agreement. The Company also issued Mr. Albahari options to
purchase 901,756 shares of Common Stock at a purchase price of $0.01 per share.
- 10 -
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
THE SECURITIES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN THE
LOSS OF THEIR ENTIRE INVESTMENT. IN EVALUATING AN INVESTMENT IN THE COMPANY AND
ITS BUSINESS, PRIOR TO PURCHASE PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISK FACTORS AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN
THIS PROSPECTUS.
Limited Operating History
The Company, which was organized in November 1994, was formed for the
purpose of acquiring the Acquired Net Assets from Hongson, Inc. For the years
ended December 31, 1995 and 1996, the Company had net losses of $103,109 and
$7,458,305 respectively, and for the six months ended June 30, 1996 and 1997 the
Company had net losses of $4,611,533 and $1,094,079, respectively. The Company
has a limited operating history and there can be no assurance of future
profitable operations. Moreover, there can be no assurance that the Company will
be able to attain improved operating results and, as a result, no assurance can
be given that the Company's financial condition will improve.
- 11 -
<PAGE>
Dependence on Proposed Expansion Program
The Company's continued growth depends to a significant degree on its
ability to increase sales to existing customers, to obtain new customers and to
expand its product lines, while insuring adequate quality controls. The Company
plans to increase revenues by increasing sales to existing accounts,
establishing new accounts, including overseas sales developing high quality
shoes with styling and design detail to sell at competitive prices and expanding
the Company's marketing programs. The Company plans to increase margins through
the manufacture of its products. In addition, the Company intends to seek to
grant license rights to the Cable & Co. trademark.
The Company anticipates hiring an additional individual at the
executive level to coordinate overseas sales. In addition, the Company plans to
retain the services of an advertising and marketing firm in Italy. Initially,
the Company plans to establish a network of licensees, distributorships and
enter into similar arrangements overseas to sell Bacco Bucci and Cable & Co.
footwear. The Company intends to attempt to control its marketing costs through
entering into agreements for the distribution of its products. However, the
Company believes that additional financing of approximately $3,000,000 may be
required over the next 16 months to effectuate the Company's plans for expansion
outside of the United States and to make the additional payments that are
required in connection with the acquisition of the Bacco Bucci trademark. The
Company has had discussions to sell Bacco Bucci and Cable & Co. footwear in the
Middle East, Turkey, and India. However, no definitive agreements have been
reached. In addition, the Company intends to sell Bacco Bucci footwear in the
United Kingdom. However, no definitive agreements have been reached. The Company
has not yet incurred any significant increase in costs with respect to the sale
of its footwear overseas.
There can be no assurance that the Company will be able to hire, train
and integrate employees and adapt its management information and other
operational systems, to the extent necessary to grow in a profitable manner. In
addition, the costs associated with the planned expansion of the Company may
have a material adverse impact upon the Company's results and prospects. In the
event that the Company's plans for expansion are not successful, there would be
a material adverse affect on the Company's business.
Need for Additional Financing
If revenues are not sufficient for the operation of the Company, or
to enable the Company to complete its present plans for expansion, then the
Company will have to seek additional financing. Such additional financing may be
in the form of indebtedness from institutional lenders or other third parties or
as equity financing. Moreover, the Company's credit facilities with Heller
Financial, Inc. ("Heller"), the Company's factor, may
- 12 -
<PAGE>
limit the Company's ability to obtain additional financing. The Company believes
that additional financing of approximately $3,000,000 will be required over the
next 16 months to finance the Company's plans for expansion overseas and to pay
the additional amounts due in connection with the acquisition of the Bacco Bucci
trademark. In addition, the fourth quarter of the year is generally the most
unpredictable. In the event that the results in the fourth quarter of 1997 were
substantially below expectations, additional financing may be required. There
can be no assurance that such financing will be available and, if so, on
acceptable terms. Any such financing may result in significant dilution to
investors or cause the Company to become overly leveraged. In such event, the
stockholders, including purchasers in this Offering, may lose or experience a
substantial reduction in the value of their investment in the Company.
Secured Liens -- Liens on the Company's Assets
The Company's accounts receivable, inventory, machinery, equipment,
fixtures, instruments, documents, chattel paper, general intangibles and
contract rights (the "Secured Assets") have been pledged as collateral to secure
obligations owed to Heller. If the Company fails to comply with such
obligations, including making required payments of principal and interest,
Heller could declare the indebtedness immediately due and payable and, in
certain events, foreclose upon the Secured Assets. Moreover, to the extent that
the Company's assets continue to be pledged to secure outstanding indebtedness,
such assets will be unavailable to secure additional debt financing, which may
adversely affect the Company's ability to borrow in the future.
Dependence on Credit Facilities
The Company's operations are dependent upon the availability of credit.
As of June 30, 1997, the total amount outstanding under the Company's credit
facilities with Heller was $3,085,613, all of which is classified as a current
liability. The Company's existing credit facility with Heller expires in
February 1998. If Heller fails to renew or declares a default under or imposes a
material change in the terms of the Company's credit facilities, there could be
a material adverse affect on the Company.
The Company has not had any formal discussions with Heller with respect
to the renewal of the Company's existing credit facility. However, the Company
is exploring alternatives. The Company anticipates, although there can be no
assurance, that the Company will be able to obtain a credit facility from Heller
or another lender on substantially the same terms. The failure of the Company to
obtain a credit facility on substantially the same terms would have a material
adverse effect on the Company.
- 13 -
<PAGE>
Competition
Competition in the footwear industry is intense. The Company's products
compete with other branded products within their product category. In varying
degrees, depending on the product category involved, the Company competes on the
basis of style, price, quality, comfort and brand prestige and recognition,
among other considerations. The Company competes with numerous manufacturers,
importers and distributors of men's footwear for the limited shelf-space
available for displaying products to the consumer. Moreover, the general
availability of contract manufacturing capacity allows access by new market
entrants. Some of the Company's competitors are larger, have achieved greater
recognition for their brand names, have captured greater market share and/or
have substantially greater financial, distribution, marketing and other
resources than the Company.
Continued Relationship with Alberto Salvucci; Lack of
Non-Competition Agreement; Dependence on Key Persons
Due to the Company's performance in fiscal 1996, the Board of Directors
believed that it was necessary to change the management structure of the
Company. As a result, in the first quarter of 1997, Alberto Salvucci was
appointed the Chairman of the Company and in July 1997, Alan Kandall, the former
Chief Financial Officer and Executive Vice President was named President and
Chief Executive Officer, replacing David Albahari. Mr. Albahari has also
resigned as a director of the Company.
The Company is dependent on the design, production and production
control services provided by Alberto Salvucci, Chairman of the Board and a
principal stockholder of the Company, individually and through Cable & Co.
S.R.L. and D&D Design. However, although the Company is in the process of
finalizing a consulting agreement with Mr. Salvucci, the Company does not have
any written agreements with, Mr. Salvucci, Cable & Co. S.R.L. or D&D Design,
both of which are controlled by Mr. Salvucci. There can be no assurance that the
Company will enter into such agreements on acceptable terms. The loss or
curtailment on acceptable terms of Mr. Salvucci's services, or direct or
indirect competition with Mr. Salvucci, Cable & Co. S.R.L. or D&D Design could
have a material adverse affect on the Company's business.
The Company is also dependent upon the services of Alan Kandall the
Company's Chief Executive Officer, President, and a member of the Company's
Board of Directors. Mr. Kandall has an employment agreement with the Company
that expires on June 30, 2002. The loss or curtailment of the services of Mr.
Kandall would have a material adverse affect on the Company's operations and
prospects.
In addition, the Company has an ongoing need to expand its
management, marketing and support staff. Competition for
- 14 -
<PAGE>
personnel having the qualifications required by the Company is intense and no
assurance can be given that the Company will be successful in recruiting or
retaining such personnel as the need arises.
Dependence on Major Customers
Approximately 18% of the Company's sales were made to one customer during
the year ended December 31, 1996. The loss of, or reduced purchases by, the
Company's major customer could have a material adverse affect on the Company.
Generally, the Company has not made special arrangements with its major
customers. However, from time to time, based on the type of products and the
customers' location, incentive prices are offered in management's discretion.
Changing Consumer Demands; Uncertainty of Market Acceptance
The footwear industry is subject to changing consumer demands and
fashion trends. The Company believes that its success will depend in large part
upon its ability to identify and interpret fashion trends and to anticipate and
respond to such trends in a timely manner. There can be no assurance that the
Company will be able to meet changing consumer demands or to develop successful
styles in the future. If the Company misjudges the market for a particular
product or product line, it may result in an increased inventory of unsold and
outdated finished goods and have an adverse affect on the Company's financial
condition and results of operations. In addition, any failure by the Company to
identify and respond to changing demands and trends could adversely affect
consumer acceptance of the Company's products and diminish the Company's
business and prospects.
The Company intends to market additional lines of footwear in the
future. Achieving market acceptance for each of these products will be difficult
and may require substantial marketing efforts and the expenditure of significant
funds. There can be no assurance that the Company will have sufficient funds to
do so or that its marketing effort will be successful.
Risks of Manufacturing
The Company recently began manufacturing the Company's footwear in
Montegranaro, Italy. Previously, the Company's footwear was produced to its
specifications by manufacturers located primarily in Montegranaro Italy. There
can be no assurance that the Company will be able to manufacture its footwear to
satisfy its customers requirements or, if required, alternative suppliers will
be available in a timely manner.
- 15 -
<PAGE>
Impact of Doing Business in Foreign Countries
The Company's business is subject to risks of doing business abroad,
including, but not limited to, fluctuations in exchange rates and changes in
regulations relating to imports, including quotas, duties, taxes and other
charges. Political and economic instability in countries where the Company's
products are manufactured or sold may have a material adverse affect on the
Company's operations.
In order to reduce the risk of exchange rate fluctuations, the Company
enters into forward exchange contracts to protect gross profit margins on most,
but not all of its foreign currency transactions. The Company has an aggregate
of $6,000,000 of foreign exchange lines of credit available. The Company
generally attempts to cover the currency risk in each season's outstanding
purchase orders. At any one point during the year, the Company generally has
$5,500,000 to $6,000,000 of forward foreign exchange contracts outstanding. The
Company cannot anticipate all of its currency needs and, therefore, cannot fully
hedge against such fluctuations. Thus, changes in exchange rates could adversely
affect the costs of goods purchased by the Company.
Although the goods sold by the Company are not currently subject to
quotas, countries in which the Company's products are manufactured may, from
time to time, impose new quotas or adjust prevailing quotas or other
restrictions on exported products and the United States may impose new duties,
tariffs and other restrictions on imported products, any of which could
adversely affect the Company's operations. In accordance with the 1993
Harmonized Tariff Schedule, a fixed duty structure is in effect for the United
States. The Company pays import duties on its products of approximately 8.5%,
depending on the principal component of the product. Other import restrictions
on footwear and related products are periodically considered by the United
States Congress and no assurances can be given that new regulations will not
result in higher costs to the Company, or that import quotas will not be imposed
or made more restrictive.
The Company imports a large portion of its products from Italy. Italy
is on the "watch list" maintained by the United States Trade Representative (the
"USTR") under "Special 301" provisions of the Trade Act of 1974 for purposes of
monitoring protection of intellectual property rights. If the USTR were to
determine that Italy's actions, policies, or practices with respect to
intellectual property rights are actionable, sanctions against imports from
Italy, including higher duties, could be imposed.
Advance Marketing of Products
To minimize purchasing costs and the time necessary to fill customers'
orders and the risk of non-delivery, the Company arranges for manufacturing
before receiving customers' orders, and maintains an inventory of certain key
products which it
- 16 -
<PAGE>
anticipates will be in demand. However, there can be no assurance that the
Company will be able to sell the products that it has manufactured or has in its
inventory. As of June 30, 1997, the Company had approximately $4,623,000 of
finished goods inventory, including landing costs, and approximately $370,000 of
unfinished goods inventory. The Company must make decisions regarding how much
inventory to manufacture well in advance of anticipated sale. Deviations in
actual from projected demand for products could have an adverse affect on the
Company's sales and profitability. In addition, if the Company fails to meet its
delivery requirements to its customers, such delayed delivery could result in
cancellation of purchase orders and reduced sales.
Product Diversion
The Company believes that International Hongson, Inc., an affiliate of
Hongson, Inc. as a result of common ownership, owns the rights to use the Cable
& Co. trademark in parts of Asia. The Company does not control the distribution
of the footwear produced by International Hongson, Inc. or others that may have,
or acquire rights to the Cable & Co. trademark for parts of Asia or elsewhere,
and no assurances can be given that products manufactured or sold in parts of
Asia or elsewhere will not be sold in the Company's markets. Management believes
that International Hongson, Inc. retains the rights to the Cable & Co. trademark
for parts of Asia.
Potential Limitation on Trademark Protection
The Company has been granted trademark registrations for the Cable &
Co. in the United States, Canada and in many major countries throughout the
world, except the United Kingdom and Taiwan. In addition, the Company has been
granted trademark registrations for Bacco Bucci in the United States, Canada and
many major countries throughout the world. Additional trademark registration
applications which may be filed by the Company with the United States Patent and
Trademark Office and in other countries may or may not be granted and the
breadth or degree of protection of the Company's existing or future trademarks
may not be adequate. In addition, pursuant to the asset purchase agreement
between the Company and Hongson, Inc. in connection with the Acquisition,
Hongson, Inc. was obligated to indemnify the Company for any misrepresentations
it made with respect to the Cable & Co. trademark. However, management believes
that Hongson, Inc. is no longer doing business and it is not anticipated that it
will be able to fulfill such obligation, if so requested. Moreover, the Company
may not be able to defend successfully any of its legal rights with respect to
its present or future trademarks. The failure of the Company to protect its
legal rights to its trademarks from improper appropriation or otherwise may have
a material adverse affect on the Company.
- 17 -
<PAGE>
Effect of General Economic Conditions
The fashion-related segments of the Company's business are cyclical,
with consumer purchases generally declining during recessionary periods when
disposable income decreases. There can be no assurance that a poor economic
climate will not have an adverse impact on the Company's ability to compete for
limited consumer resources.
Although the retail footwear industry has experienced significant
changes and difficulties over the past several years, including consolidation of
ownership, centralization of buying decisions, restructuring, bankruptcies and
liquidations, management believes that such changes have not had a material and
adverse affect on the Company's business. However, the Company cannot predict
what effect, if any, continued changes within the retail industry will have on
its business.
Seasonality
The Company's business is subject to seasonal variations. Historically
in the footwear industry, a significant portion of the Company's sales are
realized during the spring and fall fashion seasons, and levels of sales are
generally lower during the winter and summer fashion seasons. If the Company's
sales were to be substantially below seasonal norms during the spring and fall
fashion seasons, the Company's annual results could be materially and adversely
affected.
Authorization and Discretionary Issuance of Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
"blank check" preferred stock with such designations, rights and preferences as
may be determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividends, liquidation, conversion, voting or other rights
which could decrease the amount of earnings and assets available for
distribution to holders of Common Stock and adversely affect the relative voting
power or other rights of the holders of the Company's Common Stock. In the event
of issuance, the preferred stock could be used, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no present intention to issue any additional
shares of its preferred stock, there can be no assurance that the Company will
not do so in the future.
No Dividends
The Company has not paid and does not anticipate declaring or paying
any dividends on its Common Stock in the foreseeable future. Moreover, the
Company's loan agreements with Heller prohibit the payment of dividends if such
payment would cause the Company to violate any of the Company's financial
covenants.
- 18 -
<PAGE>
Benefits to Certain Selling Securityholders
In July 1997, the Company consummated a private placement at a purchase
price of $.10 per share. The prices paid by investors in this Offering may be
substantially higher than the amounts paid by the selling stockholders.
Shares Eligible for Future Sale
Of the 42,146,408 shares of Common Stock currently outstanding
27,198,260, including the Shares offered hereby, are "restricted securities" as
that term is defined in Rule 144 under the Securities Act and may only be sold
pursuant to a registration statement filed under the Securities Act or in
compliance with Rule 144 or another exemption from the registration requirements
of the Securities Act. In general, under Rule 144, subject to the satisfaction
of certain other conditions, a person, including an affiliate of the Company,
who has beneficially owned restricted shares of Common Stock for at least one
year is entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares of
the same class, or if the Common Stock is quoted on NASDAQ or a stock exchange,
the average weekly trading volume during the four calendar weeks immediately
preceding the sale. A person who presently is not and who has not been an
affiliate of the Company for at least three months immediately preceding the
sale and who has beneficially owned the shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the volume limitations described above.
The Company has 2,831,256 shares of Common Stock issuable upon the
exercise of outstanding options, warrants and conversion rights. Moreover,
280,000 shares of Common Stock will be available for issuance upon the exercise
of options which may be granted under the Company's 1996 Stock Option Plan. To
the extent that options or warrants are exercised, dilution to the interests of
the Company's stockholders may occur. Moreover, the terms upon which the Company
will be able to obtain additional equity capital may be adversely affected,
since the holders of the outstanding options or warrants can be expected to
exercise them, to the extent they are able to, at a time when the Company would,
in all likelihood, be able to obtain any needed capital on terms more favorable
to the Company than those provided in the options or warrants.
Possible Delisting of Common Stock for NASDAQ; Possible Adverse
Effect on Trading Market
The Common Stock is quoted on the NASDAQ SmallCap Market. There are a
number of continuing requirements that must be met in order for the Common Stock
to remain eligible for quotation on
- 19 -
<PAGE>
NASDAQ. In order to continue to be quoted on NASDAQ, a company must maintain $2
million in total assets, a $200,000 market value of the public float, $1 million
in total capital and surplus and a minimum of 300 shareholders. In addition,
continued quotation requires two marketmakers and a minimum bid price of $1.00
per share; provided, however, under an alternative test if a company falls below
such a minimum bid, it will remain eligible for continued quotation on NASDAQ if
the market value of the public float is at least $1 million and the company has
$2 million in capital and surplus. The bid price of the Company's Common Stock
is presently less than $1.00, however the Company presently has capital and
surplus in excess of $2 million. The failure to meet these maintenance criteria
in the future could result in the delisting of the Company's Common Stock from
NASDAQ. In such event, trading, if any, in the Common Stock may then continue to
be conducted in the non-NASDAQ over-the-counter market. As a result, an investor
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Common Stock.
In August 1997, NASDAQ approved changes to its quantitative and
qualitative standards for issuers listing on NASDAQ, the changes will apply to
the Company commencing in February 1998. For continued listing, pursuant to the
recent changes the Company, generally, must have (i) net tangible assets of at
least $2,000,000, a market capitalization of at least $35,000,000 or net income
in two of the last three years of at least $500,000, (ii) a minimum of 500,000
shares publicly held, (iii) a minimum of $1,000,000 market value of public
float, (iv) a minimum bid price of $1.00 per share and (v) a minimum of 300
shareholders.
The Company presently has a minimum bid price of less than $1.00 per
share. The Company intends to effect a one-for-five reverse stock split in order
to increase the minimum bid price. However, there can be no assurance that the
Company will do so, or that the reverse stock split will have the desired
effect. As a result of the new rule changes, in the event that the minimum bid
price of the Common Stock is less than $1.00, the Common Stock would be subject
to delisting in February 1998, since the alternative test will no longer be
applicable.
In addition, if the Common Stock were delisted from trading on NASDAQ
and the trading price of the Common Stock were less than $5.00 per share,
trading in the Common Stock would also be subject to the requirements of certain
rules promulgated under the Securities Exchange Act of 1934, which require
additional disclosure by broker dealers in connection with any trades
- 20 -
<PAGE>
involving a stock defined as a penny stock (generally, any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker-dealers
may discourage broker-dealers from effecting transactions in penny stocks, which
could reduce the liquidity of the shares of Common Stock and thereby have a
material adverse effect on the trading market for the securities.
Non-Cash Compensation
The Company anticipates incurring a charge to earnings in fiscal 1997
and fiscal 1998 in the amounts of approximately $1,200,000 and $728,000,
respectively, as a result of shares of Common Stock issued in connection with
various agreements, including expenses relating to the issuance of options to
purchase 901,756 shares of Common Stock to David Albahari, the former President,
Chief Executive Officer and a director of the Company. See -"Significant Related
Party Transactions."
Cash Commitments
As a result of the purchase of the Bacco Bucci trademark from D&D
Design, $400,000 is payable periodically by December 1, 1997, a payment of
$350,000 is due in January, 1998 and a payment of $400,000 is due in January,
1999. The Company believes that additional financing of approximately $3,000,000
will be required over the next 16 months to finance the Company's overseas
operations and to make the additional payments required in connection with the
acquisition of the Bacco Bucci trademark. In addition, the fourth quarter is
generally the most unpredictable quarter of the year. In the event that sales
are significantly below the Company's expectations, additional financing may be
required.
Legal Proceedings
The Company effected an underwritten initial public offering of its
securities on June 5, 1996 (the "IPO"). On July 15, 1997, as part of an inquiry
into the activities of a principal underwriter of the IPO, the Commission issued
an Order of Private Investigation relating to such underwriter and three
companies, including the Company, in which the underwriter had acted as
principal underwriter. Prior to the Commission issuing its Order
- 21 -
<PAGE>
of Private Investigation, and since November 19, 1996, the Company and its
officers and directors have fully cooperated with the Commission in connection
with its present inquiry.
Separate and apart from the Commission's Order of Private
Investigation, the Company received a grand jury subpoena which the Company
believes is in connection with an investigation of the underwriter pending in
the United States District Court for the Southern District of New York. The
Company has been advised by the Assistant United States Attorney conducting the
Grand Jury investigation that the Company is not the subject or target of such
investigation.
Significant Related Party Transactions
Since June 1996, the Company has entered into a series of transactions
with the directors and officers of the Company. In August 1997, the Company
purchased the rights to the Cable & Co. and Bacco Bucci trademarks from Cable &
Co. S.R.L. and D&D Design, respectively. Alberto Salvucci, the Chairman, a
director and a principal stockholder of the Company, controls D&D Design and
Cable & Co. S.R.L. For fiscal 1996, the Company paid an aggregate of $226,931 to
D&D Design and Cable & Co. S.R.L. with respect to sales and purchases of Bacco
Bucci footwear which is comprised of $115,220 of commissions and $111,711 of
royalties. In addition, the Company paid to D&D Design $86,000 for fashion and
design advisory fees for Bacco Bucci and Cable & Co. footwear. For the six
months ended June 30, 1997, the Company paid an aggregate of $123,702 to D&D
Design and Cable & Co. S.R.L. with respect to purchases of Bacco Bucci footwear
which is solely commissions. In addition, for the six months ended June 30,
1997, the Company paid to D&D Design $28,852 of fashion and design advisory fees
for Bacco Bucci and Cable & Co. footwear. No royalties for sales of Bacco Bucci
footwear were paid during the six months ended June 30, 1997. For fiscal 1996,
the Company paid an aggregate of $434,887 to Cable & Co. S.R.L. and D&D Design
with respect to purchases of Cable & Co. footwear which is solely for
commissions. For the six months ended June 30, 1997, the Company paid an
aggregate of $258,225 to Cable & Co. S.R.L. and D&D Design with respect to
purchases of Cable & Co. footwear which is solely for commissions. It is
anticipated that the Company will continue to pay commissions on the purchase of
Cable & Co. and Bacco Bucci footwear to entities controlled by Mr. Salvucci at a
rate of 8% and 7%, respectively of the cost of goods shipped to the Company. In
October 1997, the Company entered into an agreement as of July 21, 1997 to pay
David Albahari, the former President, Chief Executive Officer and a director,
$200,000 per year commencing July 1997 through September 30, 1998, and to
reimburse Mr. Albahari for certain expenses. The Company also issued Mr.
Albahari options to purchase 901,756 shares of Common Stock at a purchase price
of $0.01 per share. In connection with the issuance of the options, the Company
recorded an expense of $309,978.
- 22 -
<PAGE>
Risks Associated with Forward-Looking Statements
This Prospectus contains certain forward-looking statements regarding
the plans and objectives of management for future operations. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based on a successful execution of the Company's expansion
strategy and assumptions that Company's operations will be profitable, that the
footwear industry will not change materially or adversely, and that there will
be no unanticipated material adverse change in the Company's operations or
business. Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements included herein
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, particularly in view of the
Company's early stage operations, the inclusion of such information should not
be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
USE OF PROCEEDS
Since this Prospectus relates to the offering of Shares by the Selling
Stockholders, the Company will not receive any proceeds from the sale of the
Shares offered hereby. See "SELLING STOCKHOLDERS."
SELLING STOCKHOLDERS
The following table sets forth the name and the number of shares of
Common Stock beneficially owned by each Selling Stockholder as of August 1,
1997, the number of the shares to be offered by each Selling Stockholder
pursuant to this Prospectus and the number of shares to be beneficially owned by
each Selling Stockholder after the Offering if all of the shares offered hereby
by such Selling Stockholder are sold as described herein. The shares being
offered for resale hereby were acquired by the selling stockholders in a private
placement in July 1997. Except as noted below, the Selling Stockholders have not
held any position or office with, been employed by, or otherwise had a material
relationship with, the Company, other than as stockholders of the Company
subsequent to their respective acquisition of shares of Common Stock. The Shares
are being registered to permit public secondary trading of the Shares, and
- 23 -
<PAGE>
the Selling Stockholders may offer the Shares for resale from
time to time. See "PLAN OF DISTRIBUTION."
In recognition of the fact that Selling Stockholders may wish to be
legally permitted to sell their Shares when they deem appropriate, the Company
has filed with the Commission, under the Securities Act, a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time on NASDAQ or in privately-negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep the Registration
Statement effective until the Shares are no longer required to be registered for
the sale thereof by the Selling Stockholders.
The Company has agreed to pay for all costs and expenses incident to
the issuance, offer, sale and delivery of the Shares, including, but not limited
to, all expenses and fees of preparing, filing and printing the Registration
Statement and Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. The Company will not pay selling commissions
and expenses associated with any such sales by the Selling Stockholders. The
Company has agreed to indemnify the Selling Stockholders against civil
liabilities including liabilities under the Securities Act.
Except as otherwise indicated, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect to their
securities. The information in the table concerning the Selling Stockholders who
may offer Shares hereunder from time to time is based on information provided to
the Company by such stockholders. Information concerning such Selling
Stockholders may change from time to time and any changes of which the Company
is advised will be set forth in a Prospectus Supplement to the extent required.
See "PLAN OF DISTRIBUTION."
<TABLE>
Number of Shares of Number of Shares Number of Shares
Name of Selling Common Stock of Common Stock Beneficially Owned
Stockholder Beneficially Owned(1) Offered Hereby After Offering
<S> <C> <C> <C>
JP Partners II LLP 1,725,000 1,725,000 0
- 24 -
<PAGE>
Banco Cooperativo
Costarricense R.L.
2,000,000 2,000,000 0
First National Funding Corp. 1,000,000 1,000,000 0
RBB Bank AG 5,500,000(2) 5,500,000 0
Robert B. Prag 350,000 350,000 0
Heracles Holdings 350,000 350,000 0
Mathers Associates 2,500,000 2,500,000 0
Howard Boilen 171,245 150,000 21,245
Neal Heller 100,000 100,000 0
Paul Gordon 48,139 5,000 43,139
Charles Lowlicht 105,145 10,000 95,145
Total 13,849,529 13,690,000 159,529
</TABLE>
(1) Such beneficial ownership represents the number of shares of Common Stock
beneficially owned by each such person.
(2) R&B Bank AG holds such shares of Common Stock as agent for 29 independent
investors.
The Selling Stockholders are offering the Shares for their own account,
and not for the account of the Company. The Company will not receive any
proceeds from the sale of the Shares by the Selling Stockholders.
- 25 -
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made through ordinary brokerage transactions, the
over-the-counter market, or otherwise at prices and at terms then prevailing, at
prices related to the then current market price or at negotiated prices. The
Shares may be sold by any one or more of the following methods: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker as principal
and resale by such broker or dealer for its account, (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. In addition, any Shares that qualify for sale
pursuant to Rule 144 may be sole under Rule 144 rather than pursuant to this
Prospectus.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholder in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any commissions received by such broker-dealer, agent or underwriter and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Shares offered by this Prospectus may
simultaneously engage in market making activities with respect to the Common
Stock during any applicable "Cooling off" periods prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder including, without limitation, Rules 10b-6
and 10b-7, which provisions may limit the timing of purchases and sales of
Common Stock by the Selling Stockholders.
The Company has agreed to indemnify the Selling Stockholders against
liabilities incurred by the Selling Stockholders by reason of misstatements or
omissions to state material facts in connection with the statements made in this
Prospectus and the Registration Statement of which it forms a part. The Selling
Stockholders, in turn, have agreed to indemnify the Company against liabilities
incurred by the Company by reason of misstatements or omissions to state
material facts in connection with statements made in the Registration Statement
and prospectus based on information furnished in writing by the Selling
Stockholders.
Insofar as indemnification for liabilities arising under the
- 26 -
<PAGE>
Securities Act may be permitted to directors, officers or persons controlling
the registrant pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
The Company undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the prospectus to provide such
interim financial information.
DESCRIPTION OF SECURITIES
General
The total authorized capital stock of the Company is 50,000,000 shares
of Common Stock, $.01 par value per share, and 1,453,020 shares of Preferred
Stock, $.01 par value per share. As of October 1, 1997, the Company had
42,146,408 shares of Common Stock issued and outstanding, which were held by
approximately 2,200 shareholders as of September 1997, and an aggregate of
2,831,256 shares of Common Stock issuable upon exercise of outstanding options,
warrants and conversion rights.
Common Stock
Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to a vote of the stockholders.
Since the holders of Common Stock do not have cumulative voting rights, holders
of more than 50% of the outstanding shares can elect all of the directors of the
Company then being elected and holders of the remaining shares by themselves
cannot elect any directors. The holders of Common Stock do not have preemptive
rights or rights to convert their Common Stock into other securities. Holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. In the event
of a liquidation, dissolution or winding up of the Company, holders of the
Common Stock have the right to a ratable portion of the assets remaining after
payment of liabilities subject to any superior claims of any shares of Preferred
Stock hereafter
- 27 -
<PAGE>
issued. See "- Preferred Stock." All shares of Common Stock outstanding and to
be outstanding upon completion of the Offering are and will be fully paid and
nonassessable.
Preferred Stock
The Company is authorized by its Articles of Incorporation to issue a
maximum of 1,453,020 shares of preferred stock, in one or more series and
containing such rights, privileges and limitations, including voting rights,
dividend rates, conversion privileges, redemption rights and terms, redemption
prices and liquidation preferences, as the Board of Directors of the Company
may, from time to time, determine.
The issuance of shares of preferred stock pursuant to the Board's
authority could decrease the amount of earnings and assets available for
distribution to holders of Common Stock, and otherwise adversely affect the
rights and powers, including voting rights, of such holders and may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company is not required by current Delaware Law to seek stockholder approval
prior to any issuance of authorized but unissued stock and the Board of
Directors does not currently intend to seek stockholder approval prior to any
issuance of authorized but unissued shares of preferred stock or Common Stock,
unless otherwise required by law.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the securities
offered hereby will be passed upon for the Company by Lane & Mittendorf LLP, 320
Park Avenue, New York, New York 10022. Martin C. Licht, Esq. a member of Lane &
Mittendorf LLP, counsel to the Company is a member of the Board of Directors of
the Company.
EXPERTS
The financial statements of the Company incorporated herein by
reference to the Company's Annual Report on Form 10-KSB have been audited by
Goldstein Golub Kessler & Company, P.C., independent auditors. The financial
statements referred to above are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
- 28 -
<PAGE>
- ------------------------------------------------
- ---------------------------------------------------
No dealer, salesperson or any other person is authorized to give any
information or to make any representations in connection with this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or the Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities offered by this Prospectus, or an
offer to sell or a solicitation of an offer to buy any securities by anyone in
any jurisdiction in which such offer or solicitation is not authorized or is
unlawful. The delivery of this Prospectus shall not, under any circumstances,
create any implication that the information herein is correct as of any time
subsequent to the date of the Prospectus.
---------------------
TABLE OF CONTENTS
Page
THE COMPANY
RISK FACTORS
USE OF PROCEEDS
SELLING STOCK HOLDERS
PLAN OF DISTRIBUTION
DESCRIPTION OF SECURITIES
LEGAL MATTERS
EXPERTS
Until ______________, 1997 (25 days after the date of this Prospectus),
all dealers effecting transactions in the securities, whether or not
participating in the distribution, may be required to deliver a Prospectus. This
is in addition to the obligation of dealers to deliver a Prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
=====================================================
- -----------------------------------------------------
13,690,000 SHARES OF COMMON STOCK
CABLE & CO. WORLDWIDE, INC.
_______________
PROSPECTUS
_______________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses which will be paid by the
Company in connection with the shares of Common Stock being registered. With the
exception of the registration fee, all amounts shown are estimates.
Registration fee...........................................$ 1,685
Printing expenses..........................................$ 2,500
Legal fees and expenses (other than Blue Sky)..............$ 27,000
Accounting fees and expenses...............................$ 2,500
Miscellaneous expenses.....................................$ 2,000
--------
Total .........................................$ 35,685
Item 15. Indemnification of Officers and Directors.
Section 145 of the Delaware General Corporation Law (the "DGCL")
permits, in general, a Delaware corporation to indemnify any person who was or
is a party to an action or proceeding by reason of the fact that he or she was a
director or officer of the corporation, or served another entity in any capacity
at the request of the corporation, against liability incurred in connection with
such proceeding including the estimated expenses of litigating the proceeding to
conclusion and the expenses, actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof, if
such person acted in good faith, for a purpose he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation and, in criminal
actions or proceedings, in addition had no reasonable cause to believe that his
or her conduct was unlawful. Section 145(e) of the DGCL permits the corporation
to pay in advance of a final disposition of such action or proceeding the
expenses incurred in defending such action or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount as,
and to the extent, required by statute. Section 145(f) of the DGCL provides that
the indemnification and advancement of expense provisions contained in the DGCL
shall not be deemed exclusive of any rights to which a director or officer
seeking indemnification or advancement of expenses may be entitled.
The Company's Certificate of Incorporation provides, in general, that
the Company shall indemnify, to the fullest extent permitted by Section 145 of
the DGCL, any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or other
matters referred to in, or covered by, said section. The Certificate of
Incorporation also provides that the indemnification provided for therein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law,
II-1
<PAGE>
agreement, vote of stockholders or disinterested directors or otherwise, both as
to actions taken in his or her official capacity and as to acts in another
capacity while holding such office.
In accordance with that provision of the Certificate of Incorporation,
the Company shall indemnify any officer or director (including officers and
directors serving another corporation, partnership, joint venture, trust, or
other enterprise in any capacity at the Company's request) made, or threatened
to be made, a party to an action or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he or she was
serving in any of those capacities against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees) incurred as a
result of such action or proceeding. Indemnification would not be available if a
judgment or other final adjudication adverse to such director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty or (ii) he or she personally gained
in fact a financial profit or other advantage to which he or she was not legally
entitled.
The Registration Rights Agreement contains, among other things,
provisions whereby the Selling Stockholders agree to indemnify the Company, each
officer and director of the Company who has signed the Registration Statement,
and each person who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, liabilities, claims or damages arising out
of alleged untrue statements or alleged omissions of material facts with respect
to information furnished to the Company by the Selling Stockholders for use in
the Registration Statement or Prospectus. See Item 17, "UNDERTAKINGS."
Item 16. Exhibit Index.
Number Description of Exhibit
2.1 -- Assignment of Trademark dated July 29, 1997 between D&D Design and
Details Limited and the Company(1)
2.2 -- Assignment of Trademark dated July 29, 1997 between Cable & Co. S.R.L.
and the Company(1)
2.3 -- Asset Purchase Agreement dated January 16, 1995 between Hongson, Inc.,
as seller and Cable & Co. Worldwide, Inc., as buyer(2)
3.1 -- Certificate of Incorporation of the Company, as amended(2)
3.2 -- By-Laws of the Company(2)
4.1 -- Form of Warrant Agreement between the Company and American Stock
Transfer & Trust, as warrant agent(2)
4.2 -- Specimen Certificate of the Company's Common Stock(2)
II-2
<PAGE>
4.3 -- 1996 Stock Option Plan(2)
4.4 -- Specimen Certificate of the Company's Warrant(2)
5.1 -- Opinion of Counsel of Lane & Mittendorf LLP(1)
10.1 -- Employment Agreement dated as of July 1, 1997 between the Company and
Alan Kandall(4)
10.2 -- Agreements between the Company and Heller Financial, Inc.(2)
10.3 -- Agreement dated as of the 26th day of January 1996 between U.K. Hyde
Park Consultants, Ltd. and the Company(2)
10.4 -- Lease dated July 28, 1995 between Raritan Plaza I Associates, L.P., as
landlord, and Cable & Company Enterprises, Ltd., as tenant(2)
10.5 -- Lease dated May 16, 1995 between 724 Fifth Avenue Realty Co., as
landlord, and Cable & Co. Enterprises Ltd., as tenant(2)
10.6 -- Agreement dated May 15, 1996 among D&D Design and Details Limited,
Pio Alberto Salvucci and Cable & Co. Worldwide, Inc.(2)
10.7 -- License Agreement dated July 1, 1997 between the Company and Roffe
Accessories, Inc.(3)
10.8 -- Stock Option Agreement dated as of July 21, 1997 between the Company and
David Albahari(3)
10.9 -- Agreement dated as of July 21, 1997 between the Company and David
Albahari(3)
23.1 -- Consent of Goldstein Golub Kessler and Company, P.C.(3)
23.2 -- Consent of Lane & Mittendorf LLP (included in Exhibit 5.1)(1)
99.1 -- Cable & Co. Trademark Registration from the United States Patent and
Trademark Office(2)
- -------------
(1) Previously filed with initial filing of this Registration Statement
(2) Previously filed with Registration Statement No. 333-3000
(3) Filed herewith
(4) Previously filed with the Company's Form 10-QSB for the six months ended
June 30, 1997
II-3
<PAGE>
Item 17. Undertakings.
1. The undersigned, Company, hereby undertakes:
(a) To file, during any period in which the Company
offers or sells securities, a post-effective
amendment(s) to this registration statement:
(1) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(2) To reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the registration statement;
and
(3) To include any additional or changed material
information with respect to the plan of
distribution not previously disclosed in the
registration statement or any material change
to such information in the registration
statement;
Provided, however, that paragraphs (1)(a)(1) and 1(a)(2) do not apply
if the information required or to be included in a post effective amendment by
these paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(b) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering; and
(c) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of
<PAGE>
expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
3. That, for purposes of determining any liability under the Act, each
filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Amendment No. 1 to Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on October 20, 1997.
CABLE & CO. WORLDWIDE, INC.
By: /s/Alan Kandall
Alan Kandall, Chief Executive Officer,
and President
By: /s/Joel Brooks
Joel Brooks, Chief Financial Officer and
Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/Alan Kandall President, Chief Executive Officer October 20, 1997
----------------- and Director
Alan Kandall
Chairman of the Board and Director
- --------------------
Alberto Salvucci
October , 1997
<PAGE>
/s/Martin C. Licht Secretary and Director October 20, 1997
-----------------
Martin C. Licht
/s/Steven Katz Director
Steven Katz October 20, 1997
CABLE & CO. AND ROFFE ACCESSORIES, INC.
LICENSE AGREEMENT
This Agreement is made effective this 1st day of July, 1997,
between CABLE & COMPANY WORLDWIDE, INC., a Delaware corporation with offices
located at 724 Fifth Avenue, New York, New York 10019 ("Licensor") and ROFFE
ACCESSORIES, INC., a New York corporation with offices located at 347 Fifth
Avenue, Suite 1409, New York, New York 10016 ("Licensee").
WHEREAS the Licensor is the proprietor of the trademark CABLE
& CO., a graphic design representing two columns and an arch which is often,
although not always, used in conjunction with same and which also is
copyrighted, and the promotional phrase "The art of Movement" (hereinafter
referred to as the "Trademarks"), and related proprietary designs;
WHEREAS this Agreement pertains to the use by Licensee of the
Licensor's trademarks as set forth in Schedule A attached hereto and no other
trademarks owned by Licensor;
WHEREAS the Licensee is a leading manufacturer of high quality
silk neckwear for men;
WHEREAS the products utilizing the trademarks that are
authorized for production by Licensee under this Agreement are listed on
Schedule B attached hereto (hereinafter referred to as "Licensed Products") and
no other products, unless express written consent is obtained from the Licensor
prior to production of such new product, which consent shall not be unreasonably
withheld.
<PAGE>
WHEREAS the Licensee desires to use the Designs and Trademarks
in the Territory of North America (hereinafter referred to as the "Territory")
for distribution through Licensee's traditional channels of department stores
and specialty store outlets and not for distribution by Licensee to those
outlets described as national mass merchant chains or discount distribution
outlets, in relation to the goods, and only those goods, listed in attached
Schedules B as Licensed Products.
NOW THEREFORE, IT IS HEREBY AGREED as follows:
1. AUTHORITY TO USE
(a) The Licensor hereby authorized the Licensee to
use the Trademarks in the Territory upon or in relation to the Licensed Products
subject to the terms and conditions of this Agreement.
(b) Licensee recognizes the Trademarks to be valid
and the exclusive intellectual property rights of Licensor.
(c) The Licensee will permanently mark or label all
Licensed Products sold as first quality goods with the Trademarks in a manner
approved by Licensor. The Licensee may also prominently display the Trademarks
on packaging and advertising material associated with or sold in connection with
the Licensed Products. Within fourteen days of the Effective Date of this
Agreement, Licensor will provide Licensee with artwork for the Licensor's label
or mark to be used, in the form of a reprostats and/or drawings or sketches
illustrating such label or mark. The Licensee will, from this artwork, develop
and produce the Licensor's label or mark for use with the Licensed Products, and
Licensor will approve such label or mark before me on the Licensed Products.
-2-
<PAGE>
(d) The authority granted herein shall be exclusive
for the Licensed Products in the Territory.
2. DESIGNS
(a) The Licensee will use commercially reasonable
efforts, commensurate with efforts used in producing Licensee's own designs and
other products, to produce a group of original Designs for the Licensed Products
(hereinafter "the Designs"). Within four to ten weeks after the Effective Date
hereof, Licensee will provide Licensor with sketches or artwork to be approved
for the Licensed Products as stated in paragraphs 2(d), and further sketches
will be provided to Licensor thereafter at such regular times as the parties
agree to. At a minimum, the Licensee will produce annually Designs to allow for
representation at major men's fashion markets with which Licensee has in the
past participated and/or of which Licensee is aware, which fashion markets are
described on the annexed Schedule D.
(b) The Licensee agrees that all Designs (including
coloration) used in relation to the Licensed Products are to be used exclusively
for the Licensor's products for a period of 8 weeks after the Designs have been
approved under Section 3 hereof.
(c) Other than as provided in paragraph 1(c),
prototypes or other forms of sample of any Designs, as well as additional
artwork that may be required in order to place such Designs in form for
production, shall be prepared and produced by Licensee at its sole cost and
expense.
(d) Licensee shall prepare Design sketches for the
Licensed Products and provide such sketches to Licensor for approval. Such
approval shall be deemed granted
-3-
<PAGE>
by Licensor if within fourteen days after the sketches are submitted to
Licensor, no written approval or written disapproval has been received by
Licensee. Any approvals given shall extend to all aspects of the Designs,
including layout, graphics, lines, and coloration
(e) Licensee shall own all copyrights and other
rights to the Designs that are developed solely or jointly with Licensor
pursuant to this Agreement. To the extent Licensor may assist in developing
Designs hereunder, Licensor assigns to Licensee all rights to all such ideas or
designs. Nothing herein shall be construed as granting Licensee any rights in or
to Licensor's Trademarks.
3. STANDARD OF QUALITY
(a) The Licensee undertakes to use the Trademarks
only in relation to the Licensed Products manufactured in accordance with the
specifications agreed upon by the Licensor and Licensee from time to time, and
described as a minimum standard in Schedule C.
(b) Upon reasonable notice, the Licensee will permit
the Licensor or his authorized representative at normal business hours, to enter
the Licensee's premises where the Licensed Products are fabricated, processed,
or stored for purposes of inspection thereof; and the Licensee shall at the
request of the Licensor be required to promptly produce no more than three
random samples to the Licensor for purposes of inspection only while at the
Licensee's premises.
(c) The Licensee will submit prototypes of Licensed
Products for Licensor's approval before use, incorporating Designs approved
under paragraph 2(d). Such prototypes should be submitted within a timeframe and
in such form that, if necessary,
-4-
<PAGE>
changes to the Licensed Products (other than to the Designs), may be made prior
to production. Submissions or prototypes will be dated as to the actual date of
submission. No advertising or sales may occur prior to approval. Such approval
shall be deemed granted by Licensor to Licensee if within fourteen (14) days
after the actual date of submission of such prototypes, no written approval or
written disapproval has been received by Licensee.
(d) Licensee agrees to comply with all standards by
Federal and State Statutes and Regulations concerning the nature and quality of
goods.
(e) Before sale, Distribution and Advertising,
Licensee agrees to submit, at its own expense, a representative production
sample of each product to Licensor for written approval and showroom display.
Such approval shall be deemed granted by Licensor of such samples, if no written
approval or written disapproval has been received by Licensee within fourteen
(14) days of Licensor's receipt. After approving the prototype sample, the
Licensor will approve the production sample if it is an accurate reproduction of
the prototype sample on which it is based and meets the quality level
established herein and for the balance of the Licensor's products of similar
quality.
(f) Licensee agrees to submit before actual use,
labeling, packaging and advertising materials showing representative use of the
Trademark(s) to Licensor for approval. Such approval shall be deemed granted, if
within fourteen (14) days after receipt by Licensor of such materials, no
written approval or written disapproval is received by Licensee.
(g) The Licensor and Licensee mutually undertake to
keep and procure to be kept confidential all information and material which is
designated confidential
-5-
<PAGE>
concerning specifications, directions and teachings regarding the design,
production, and sale of the Licensed Products. Confidential information shall
include without limitation all marketing information provided under Section 5
hereof.
(h) The Licensee will not use the Licensor's
Trademark(s) on any merchandise identified as "Seconds" ("Seconds" are defined
as merchandise below first quality standard(s)), and Licensee will inform
Licensor if it intends to do so. This paragraph shall apply with regard to the
use of the Trademark(s) on any part of the tie, including the lining.
(i) Licensor's approval or disapproval of Designs
presented under this Section will have no effect upon Licensee's rights to such
Designs under Section 2 hereof.
4. DURATION AND TERMINATION
(a) This Agreement shall operate as from the date
hereof and shall continue subject to the provisions for termination hereinafter
contained, for a period of three (3) years, at which time it will automatically
renew itself yearly unless Licensee or Licensor terminates the contract. The
termination shall be done by written notice, in the manner hereafter described,
at least thirty (30) days in advance of the termination.
(b) The License herein granted shall be forthwith
terminated upon the happening of one or more of the following events:
(1) If Licensee or Licensor shall, for any
reason, fail to carry on the terms and intent of this Agreement and such failure
or refusal shall continue for a
-6-
<PAGE>
period of thirty (30) days after one party has served written notice with
detailed reasons upon the other of such failure or refusal.
(2) If Licensee or Licensor shall fail to
make any payment, furnish any statement and/or permit any inspection as herein
provided, and such failure shall continue for a period of thirty (30) days after
the other party has given written notice thereof to the party allegedly in
breach.
(3) If Licensee shall breach any of the
material terms of this Agreement and fail to cure same within thirty (30) days
after the date of Licensor's written demands to do so.
(4) On the date of the filing of the
petition in bankruptcy by Licensee, or the date Licensee is adjudged bankrupt or
make any assignment for the benefit or creditors or becomes insolvent, or is
placed in the hands of a trustee or receiver, whichever is sooner. Licensee, its
receiver, representative, trustees, agents, administrator, successors and
assigns shall have no further rights hereunder, excepting with and under the
special consent and instructions of Licensor, in writing.
(5) If Licensor shall breach any material
terms of the Agreement to be performed and fails to cure same within thirty (30)
days after the date of the Licensee's written demand to do so.
(6) On the date of the filing of a petition
in bankruptcy by Licensor or the date Licensor is adjudged bankrupt or makes any
assignment of the benefit of creditors becomes insolvent, or is placed in the
hands of a trustee or receiver, whichever is sooner. Licensor, its receiver,
representative, trustees, agents, administrator, successors and
-7-
<PAGE>
assigns shall have no further rights hereunder, excepting with and under the
special consent and instructions of Licensee, in writing.
(7) During the first contract year, the
parties' rights to terminate this Agreement are limited to those events
specified in paragraphs 4(b) (1)-(6). After the first contract year, either
party shall have the right to terminate this Agreement upon thirty days' advance
notice to the other, provided however, that Licensor's right to terminate herein
is subject to paragraph 4(d) hereof.
(c) If this Agreement is terminated for any of the
reasons set forth in the prior subdivisions of this section, then upon such
termination Licensee shall have 180 days to dispose of any inventory on hand or
work in progress of Licensed Products. Sales made during such period will be
subject to the Fee provisions provided for herein. In any event, the Licensee
shall offer the Licensor the right of first refusal to purchase such inventory,
net of any fee provisions, on a most favored basis.
(d) Notwithstanding paragraph 4(b)(7), a two year
renewal of this Agreement will be automatic at Licensor's & Licensee option in
the event that Licensee achieves sales of at least the minimum amount required
by this Agreement during any one of the contract years specified in paragraph 9.
5. MARKETING
On a semi-annual basis beginning with six months
following the Effective Date hereof, Licensee and Licensor shall discuss, either
orally or through writings, a "marketing plan" for the succeeding six-month
period. Each marketing plan shall include a summary of
-8-
<PAGE>
market information relevant to the period to which it relates and may include
but need not be limited to the following:
(a) a description of the Products to be sold and
developed, together with proposals for categories and designs of new proposed
Licensed Products,
(b) a list of customer accounts, see Schedule E & F
attached
(c) a review of the Licensee's market including any
trends and/or sales competitive developments which affect the sale of the
Products,
(d) estimated wholesale and retail price points for
the Licensed Products,
(e) proposals for the interpretation of the
Licensor's brand image in terms of advertising concepts, points of sale, and
promotional and sale materials,
(f) proposed advertising insertion schedules and
placements and promotional activities and expenditures for Licensed Products,
and
(g) a calendar, or market schedule, which specifies
the dates of which annual markets in which Licensed Products are shown to the
trade.
Licensee agrees that it will sell or distribute the Licensed
Products only to Approved Outlets. Licensee has no responsibility hereunder as
to inventory in stock at such Outlets or sales to such Outlets by third parties
not subject to its control. An Approved Outlet includes Federated Department
Stores and Dillards and such retail shops and department stores that sell Cable
& Co. brand products or brand products that are comparable in quality to Cable &
Co. brand products or otherwise in competition with the Cable & Co. brand.
-9-
<PAGE>
6. PROTECTION OF COPYRIGHTS & TRADEMARK
Licensee agrees to assist in the protection of Licensor's
copyrights and marks against infringement or usurpation by others as per the
following terms:
(a) Licensee shall give Licensor written notice of
any conduct, which in Licensee's opinion, appears to infringe upon Licensor's
marks or copyrights, or to interfere with or usurp any other rights of Licensor.
(b) The ultimate determination of whether or not
legal action shall be taken in any case shall lie with Licensor.
(c) When requested, Licensee shall in every way
cooperate with and assist Licensor at Licensor's expense, in its efforts to stop
such infringement and usurpation.
(d) No legal action for the protection of Licensor's
marks or other rights may be taken by Licensee without the consent of Licensor,
which consent shall not be unreasonably withheld.
(e) Licensee shall be afforded an opportunity to join
as party plaintiff, at its expense, in any action instituted by Licensor
pursuant to this paragraph. In the event such actions result in an award of
money damages to Licensor and Licensee, such moneys shall be divided between
them proportionate with the respective expenses relating to the action incurred
by them.
(f) This Section (6) pertains only to Trademarks
licensed to Licensee hereunder (as set forth on Schedule A), and has no
applicability with regard to Designs developed by Licensee hereunder.
-10-
<PAGE>
7. COVENANTS OF LICENSEE
In addition to agreements and obligations herein contained,
Licensee covenants and agrees:
(a) To use commercially reasonable efforts consistent
with its efforts in selling or producing other products, to:
(1) Advance the sale of Licensed Products;
(2) Meet, enhance, develop and expand the
popularity of and demand for the Licensed Products; and
(3) Secure distribution of Licensed
Products.
(b) To assure the production of the Licensed Products
in accordance with the Standard of Quality agreed upon by the Licensor and
Licensee.
(c) To maintain such manufacturing facilities,
financial capability and sales and distribution organization and personnel for
the manufacture and marketing of the Licensed Products as will accomplish the
responsibilities, covenants and agreements undertaken by Licensee hereunder.
(d) To comply with the standards of quality, service
and production of the Licensed Products established from time to time by
Licensee.
8. ROYALTIES
(a) In consideration for the Licensee to use the
Licensor's Trademark(s), Licensor's public relations and marketing support, and
for inclusion in Licensor's trade and consumer advertising programs, Licensee
agrees to pay Licensor a
-11-
<PAGE>
TOTAL FEE on all sales of Licensed Products in the amount of 7 or 8 percent of
gross sales, to be determined as per paragraphs 8(b) and 8(c).
(b) A fee of 5 percent of gross sales shall be
payable on all sales up to the initial $500,000. Thereafter, a six percent (6%)
fee will be applied to all sales in excess of $500,000.
(c) Two percent (2%) of the TOTAL FEE percentage is
designated for Advertising, including the placement of trade and/or consumer
advertising of the Licensee's Licensed Products in conjunction with others of
the Licensor's Licensed Products. With respect to this amount, Licensor is
authorized to act as agent for and in behalf of Licensee in the placement of
consumer and/or trade advertising featuring the Licensed Products manufactured
by Licensee. This amount is to be used for no other purpose than the advertising
of the Licensed Products. It is agreed that the Licensor will maintain and
provide for inspection by Licensor upon reasonable notice, records of
collections and disbursements made for such agreed-upon purpose.
(d) Gross sales are defined as Licensee's selling
prices to its customer less authorized returns (which in no case shall comprise
more than 5% of the total), and actual costs incurred in advertising dedicated
exclusively to the Licensed Products and allocated in the selling price but
which shall not include coop advertising expenditures. The actual cost of
advertising must be proven by ad media invoice, the allocated portion of which
may not exceed 10% of the selling price. Licensor's trademark(s) must be used in
such advertising to qualify for allowance. Gross sales adjustments for returns
and advertising will be allowed only for actual expenditure or allocation in the
quarter.
-12-
<PAGE>
(e) "Gross Sales" shall include sales of
"close-outs". "Close-outs" for this purpose is defined as merchandise sold 20%
or more below list price.
(f) Fees will be paid quarterly, within thirty (30)
days following the end of each quarter. Licensee will furnish Licensor with the
written statement, certified to be true and accurate by an officer of the
company, setting forth the relevant data pertaining to sales of Licensed
Products and the computation of the amount due to Licensor. The relevant data to
be provided with each such statement shall include the number of units and
dollar sales volume for each style of Licensed Products sold during such period.
Total sales amounts by account within the reported period shall also be provided
separately. Both parties presently, for accounting purposes, are on a calendar
year and hence, quarterly intervals shall be considered on a calendar year. If
either party decides to change its accounting procedures, it may do so upon
written notice to the other party.
(g) Licensee shall keep or cause to be kept accurate
and regular accounts of each Licensed Product subject to the provisions of the
Agreement, so long as it receives or is entitled to receive payment with respect
to sales of Licensed Products or within five years of such sales, whichever is
earlier. Said books of accounts and all other documents of Licensee relating
thereto, shall be kept at its place of business and shall, at any time during
normal business hours and from time to time, be produced for the inspection by
Licensor or Licensor's representatives at Licensee's place of business who shall
be at liberty to inspect the same and make copies of or extract therefrom, in
whole or in part. Such rights of Licensor shall be exercised, if at all, upon
reasonable notice to the Licensee and in a manner so as not to interfere with
the normal operations of Licensee. Any claim by Licensor that a report is
-13-
<PAGE>
inaccurate shall be raised no later than eighteen (18) months after preparation
of such report as per paragraph 8(f); otherwise such report shall be binding on
Licensor.
(h) Timely payment by Licensee to Licensor of the
fees provided herein is an essential element of this Agreement and failure to
report and pay fees as described above shall afford Licensor the option to
terminate Licensee's rights under this Agreement, unless the failure is cured
within fourteen (14) days after written notice from Licensor has been received
by Licensee; provided, however, the if Licensee has complied with its reporting
obligations under paragraph 8(f) and paid royalties conforming with its written
statement(s), but a dispute arises as to the accuracy of a report under
paragraph 8(g) and the parties in good faith dispute whether additional sums are
due, such additional disputed sums may be paid to an escrow account pending the
conclusion of the dispute, and payment of such additional sums into the escrow
account shall be considered a cure hereunder with regard to Licensor's option to
terminate.
9. MINIMUM ROYALTIES
Licensee agrees that in the event it does not in any Contract
year set forth below (i) make Gross Sales of Licensed Products in the Licensed
Territory in at least the relevant amount specified below and (ii) pay to
Licensor royalties in the amount specified, the Licensor shall have the option
exercisable on written notice to Licensee within sixty (60) days after such
calendar year to terminate this Agreement. The amounts are as follows:
-14-
<PAGE>
Contract Year Sales Minimums Minimum Royalties
1997/1998 $400K $20K
1998/1999 $600K $31K
1999/2000 $1100K $61K
Notwithstanding the foregoing, it is agreed by both parties
that for the purposes of determining the first contract year, it is understood
that this period shall encompass the first eighteen (18) months after the
signing date of this contract and will extend to no later than ___________.
Subsequent years are successive twelve month periods after such date.
10. ADVANCE PAYMENT
Upon the signing of this Agreement by both parties, Licensee
agrees to provide Licensor with a non-refundable advance payment of $20,000,
which shall be payable in two installments. The first payment of $10,000 shall
be due upon the signing of this Agreement; the second payment shall be paid in
installments as follows: $2,500 on or before August 30, 1997; $2,500 on or
before October 30, 1997; and $5,000 on or before December 30, 1997. The $20,000
fee shall be applied as a credit against royalties earned and to be paid by
Licensee against 1st years royalties and may be deducted from such payments.
11. SAMPLES
Licensee will provide one single finished sample for each
Design produced under this Agreement, free of charge to Licensor, for display in
Licensor's showroom. Such finished samples will be provided to Licensor by
Licensee for use in publicity and advertising of Licensee's products bearing the
Licensor's Trademark. Licensee agrees to pay for such sample transportation
costs. No fees shall accrue on the free samples. However, if Licensor
-15-
<PAGE>
desires greater than one sample for each Design, such samples up to a total of
ten samples shall be provided to Licensor once production has begun at cost plus
a mark-up of ten percent. All other samples greater than ten shall be subject to
charges and/or fees.
12. NOTICE
All notices required or permitted herein shall be sent by
certified or registered mail, return receipt requested, postage prepaid, or by
telegram, the toll prepaid or charged to the sender. Notice shall be deemed to
have been given at the time of mailing or deposit with the telegraph company, as
the case may be.
The notices are to be sent to the below address of Licensor
and Licensee, unless written notice of change of address is sent in the manner
herein required. As to Licensor, notice shall be deemed effective as of the
mailing or deposit with respect to either the organization or its agent, or
alternatively, to Licensor's attorney.
LICENSOR:
Organization: David Albahari and Alan Kandall; CABLE & CO; 724 Fifth
Avenue, New York, New York 10024
Agent: Marilyn J. Bellock or Lawrence Appel of Appel Bellock Company,
515 West End Avenue, 16D, New York, New York 10024
OR;
Attorney: Martin Licht, Lane & Mittendorf, LLP, 320 Park Avenue, 10th
Floor, New York, NY 10022.
-16-
<PAGE>
LICENSEE: Murray Roffe, Roffe Accessories Inc., 347 Fifth Avenue, Suite
1409, New York, New York 10016
13. CONSTRUCTION
(a) This Agreement has been made in and shall be
construed in accordance with the laws of the State of New York. None of the
terms of this Agreement shall be deemed to be waived or modified, nor may this
Agreement be terminated or discharged other than pursuant to the express terms
hereof, except by an express agreement in writing signed by the party against
whom such waiver or modification is sought to be enforced. There are no
representations, promises, warranties, covenants or undertakings other than
those expressly set forth herein and this writing represents the entire
understanding of the parties. No omission or delay by either party in requiring
due and punctual fulfillment by the other in its obligations hereunder shall be
deemed to constitute a waiver and no express waiver shall be deemed to
constitute a waiver of similar rights or future performance unless expressly set
forth in such written waiver. If any term of this Agreement is held to be
illegal or unenforceable, such determination shall not affect the legality or
enforceability of any other term.
(b) Nothing herein contained shall be construed to
place the parties in the relationship of partner, joint venture or employee of
one another and, except as provided in this Agreement, neither party shall have
the power to bind or obligate the other in any manner whatsoever.
-17-
<PAGE>
14. INDEMNIFICATION
(a) The Licensor and Licensee each acknowledge and
represent to the other that it is not a joint venture, partner or co-venture
with the other and that neither Party shall incur any liability on behalf of the
other Party or purport to pledge the credit of the Party or accept any order or
obligation to be binding upon the other Party.
(b) The Licensee shall indemnify and hold the
Licensor and its respective officers and directors harmless from all claims,
suits, damages and costs, including reasonable legal fees and court costs, which
the Licensor may incur or suffer by reason of any acts or omissions of the
Licensee in connection with the importations, distribution, marketing or sale of
the Products, including but not limited to:
(1) any defect in the Licensed Products;
(2) the Licensee's manufacture, distribution
or sale of the Products; or
(3) the labeling, packaging or advertising
of the Products in violation of any applicable federal, state or local law or
regulation, other than as stated in paragraph 14(c) below.
(c) Licensor shall defend, indemnify and hold
Licensee harmless from any loss, liability or expense, arising out of claims by
third parties for trademark infringement, unfair competition, or other violation
of the law, to the extent such claims are based on Licensee's use of the
Licensed Trademarks as licensed under and in accordance with the provisions of
this Agreement.
-18-
<PAGE>
15. NON-ASSIGNMENT
This Agreement is personal to the Parties and may not be
assigned by either Party without the prior written consent of the other,
provided, however, that either Party shall have the right to assign this
contract to a wholly-owned subsidiary, provided further that prior notice is
given to the other Party within sixty days of any such assignment.
IN WITNESS WHEREOF the parties hereto have signified their
entry into this Agreement by procuring this Agreement to be signed by authorized
persons (or by personal signature).
COMPANY Roffe Accessories, Inc.
NAME Murray Roffe
TITLE President
DATE _____________________
COMPANY Cable & Co.
NAME Alan Kandall
TITLE President
DATE June 23, 1997
-19-
<PAGE>
SCHEDULE A
TRADEMARKS
1. Cable & Co.
2. [LOGO], a graphic device representing two columns and an arch
3. Promotional phrase "The Art of Movement"
-20-
<PAGE>
SCHEDULE B
LICENSED PRODUCTS
Men's Neckwear made with silk
-21-
<PAGE>
SCHEDULE C
STANDARD OF QUALITY
1. Full margin in 100% silk
2. 100% silk printed or woven
-22-
<PAGE>
SCHEDULE D
-- Fashion markets:
week after Father's Day
2nd week of January
-- Trade shows
two each year -- Spring and Fall
- -- MAGIC conventions
-23-
<PAGE>
SCHEDULE E
Intentionally Omitted
-24-
CABLE & CO. WORLDWIDE, INC.
STOCK OPTION AGREEMENT
This Agreement, dated as of July 21, 1997 by and between Cable
& Co. Worldwide, Inc., a Delaware corporation (the "Company"), and David
Albahari (the "Optionee").
W I T N E S S E T H:
WHEREAS, pursuant to a meeting of the Board of Directors on
July 14, 1997, the Company considers it to be in its best interests and in the
best interests of its stockholders that the Optionee be given the opportunity to
acquire a proprietary interest in the Company by possessing an option to
purchase certain shares of common stock, par value $.01 per share (the "Common
Stock"), of the Company in accordance with the provisions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
promises contained herein, it is agreed by and between the parties as follows:
1. Grant of Option. The Company hereby grants to Optionee the
right, privilege and option (the "Option") to purchase all or any part of
901,756 shares of Common Stock (the "Option Shares") at a purchase price of $.01
per share in the manner and subject to the conditions provided herein.
2. Time of Exercise of Option. The Option is exercisable in
full commencing on the date hereof, subject to the terms of this Agreement.
3. Method of Exercise. The Option shall be exercised by
written notice directed to the Company at the Company's principal place of
business, accompanied by a check in payment of the option price for the number
of Option Shares specified and paid for in full. The Company shall make prompt
delivery of such Option Shares once payment clears, provided that if any law or
regulation requires the Company to take any action with respect to the Option
Shares specified in such notice before the issuance thereof, then the date of
delivery of such Option Shares shall be extended for the period necessary to
take such action. If the Optionee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the Optionee's
right to purchase such Option Shares may be terminated by the Company. The date
specified in the Optionee's notice as the date of exercise shall be deemed the
date of exercise of the Option, provided that payment in full for the Option
Shares to be purchased upon such exercise shall have been received by such date.
No fractional shares may be purchased hereunder.
<PAGE>
4. Cashless Exercise. At any time during the term, the
Optionee may, at its election, exchange these options, in whole or in part (an
"Option Exchange"), into the number of shares determined in accordance with this
paragraph 4 by surrendering these Options at the principal office of the
Company, accompanied by a notice stating the Optionee's intent to effect such
exchange, the number of shares to be exchanged and the date on which the
Optionee requests that such Option Exchange occur (the "Notice of Exchange").
The Option Exchange shall take place on the date specified in the Notice of
Exchange or, if later, the date the Notice of Exchange is received by the
Company (the "Exchange Date"). Certificates for the shares issuable upon such
Option Exchange and, if applicable, a new Option of like tenor evidencing the
balance of the shares remaining subject to this Option, shall be issued as of
the Exchange Date and delivered to the Optionee within seven (7) business days
following the Exchange Date. In connection with any Option Exchange, this Option
shall represent the right to subscribe for and acquire the number of shares
(rounded to the next highest integer) equal to (i) the number of shares
specified by the Optionee in its Notice of Exchange (the "Total Number") less
(ii) the number of shares equal to the quotient obtained by dividing (A) the
product of the Total Number and the then existing exercise price by (B) the
current market value of a share of the Company's common stock.
5. Termination of Option. The Option and all rights granted by
this Agreement, to the extent such rights have not been exercised, will
terminate and become null and void ten years from the date hereof.
6. Adjustments in Event of Change in Common Stock. In the
event of any change in the Common Stock by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, or of any similar change affecting the Common Stock, the
number and kind of Option Shares subject to Option hereunder and the purchase
price per Option Share thereof shall be appropriately adjusted consistent with
such change in such manner as the Committee may reasonably deem equitable.
7. Rights Prior to Exercise of Option. The Optionee shall have
no rights as a stockholder of the Company with respect to the Option Shares
until full payment of the option price and delivery of such Option Shares as
herein provided. Nothing contained herein or in the Plan shall be construed as
creating or evidence of any agreement on the part of the Company to continue to
employ or retain the Optionee in any capacity.
8. Investment Representation. The Optionee, as a condition to
the Optionee's exercise of this Option, shall represent to the Company that the
shares of Common Stock that the Optionee acquires hereunder are being acquired
by the Optionee for investment and not with a view to distribution or resale
thereof, unless counsel for the Company is then of the opinion that such a
representation is not required under the Securities Act of 1933, as amended, or
any other applicable law, regulation or rule of any governmental agency, except
that this representation shall not apply to any transaction by Optionee pursuant
to a registration statement under the Securities Act.
-2-
<PAGE>
9. Waiver; Entire Agreement. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof.
10. Governing Law. The validity, construction, interpretation
and effect of this Agreement shall exclusively be governed by and determined in
accordance with the internal laws of the State of New York, which is the sole
jurisdiction in which any issues relating to this Agreement may be litigated.
11. Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date and year first above written.
CABLE & CO. WORLDWIDE, INC.
By: /s/ Alan Kandall
Alan Kandall, President
THE OPTIONEE
/s/ David Albahari
David Albahari
-3-
AGREEMENT
Agreement made and entered into as of the 21st day of July,
1997 between Cable & Co. Worldwide, Inc. ("Cable & Co."), a Delaware corporation
having its principal place of business at 724 Fifth Avenue, New York, New York,
and David Albahari ("Albahari") residing at 8 Ivanhoe Lane, Westport,
Connecticut 06880.
W I T N E S S E T H:
WHEREAS, Albahari is presently employed by Cable & Co.
pursuant to an employment agreement made and entered into as of the 1st day of
January, 1995 between Cable & Co. and Albahari (the "Employment Agreement"); and
WHEREAS, the parties would like to terminate this employment
relationship on amicable terms.
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, the parties agree as follows:
1. Termination. Albahari's employment with Cable & Co. will be
terminated effective as of July 21, 1997. Albahari will also resign as a
director of Cable & Co. effective as of July 21, 1997. Albahari also hereby
resigns as an officer and a director of any "affiliate" of Cable & Co. as
defined under Rule 405 under the Securities Act of 1933, as amended, including,
but not limited to, any wholly-owned subsidiaries of Cable & Co.
2. Payments.
(a) Cable & Co. shall pay Albahari at the rate of two hundred
thousand dollars ($200,000) per year through September 30, 1998. The payments
shall be made in equal semimonthly installments, subject to deduction for rent
payments made by Cable & Co. pursuant to Section 2(b) hereof. The period from
the date of this Agreement through September 30, 1998 is hereafter referred to
as the "Payment Period."
(b) Cable & Co. shall make all monthly payments of rent due
under the Lease between Albahari and Charles Brody (the "Lease") through June
30, 1998. The rent payments made pursuant to this Section 2(b) shall be deducted
from the payments made to Albahari pursuant to Section 2(a) of this Agreement in
equal semimonthly installments prorated over the term of the Payment Period.
Cable & Co. shall also pay Albahari four hundred dollars ($400) per month
through June 30, 1998 to reimburse him for expenses associated with the use his
automobile.
(c) Cable & Co. shall reimburse Albahari for up to twenty five
thousand dollars ($25,000) of the legal expenses incurred by him in connection
with his employment and the termination of his employment with Cable & Co. Cable
& Co. shall only be obligated to pay those expenses for which a written
statement from the provider and/or receipts are submitted to Cable & Co.
-1-
<PAGE>
3. Non-Competition Covenant. Cable & Co. hereby waives the
non-competition requirements imposed upon Albahari pursuant to Section 11 of the
Employment Agreement as well as any and all claims or causes of action Cable &
Co. may have in the event of Albahari's breach of such Section. In lieu of the
requirements imposed upon Albahari pursuant to Section 11 of the Employment
Agreement, and in consideration of the sum of $50,000 which amount is included
in the payments set forth in Paragraph 2(a) hereof, the following shall apply:
(a) For a period of one year after the date first above
noted (the "Non-Competition Period"), Albahari shall not (i) accept employment
by, or engage, directly or indirectly, in any work, labor or services for any of
the entities noted in Schedule "A" annexed hereto, their parents, subsidiaries
and affiliates. For purposes of this Agreement, "affiliates" of any entity noted
on Schedule "A" include any entity, directly or indirectly, controlling or
controlled by or under common control of such other entity or by any officer,
director or partner of such other entity; or (ii) induce or actively attempt to
influence any employee or consultant of Cable & Co. to terminate his or her
employment or consultancy with Cable & Co.. Nothing herein contained shall be
deemed to prevent ownership by Albahari and his associates (as said term is
defined in regulation 14(A) promulgated under the Securities Exchange Act of
1934 as in effect on the date hereof), collectively, of not more than 5% of the
outstanding capital stock of a corporation listed on a national securities
exchange.
(b) Enforceability: Injunctive Relief - (i) The parties to
this Agreement consider the restrictions contained herein reasonable as to the
duration of the Non-Competition Period and the extent of the Territory. However,
if the duration of the Non-Competition Period or the extent of the Territory
herein specified should be judged unreasonable in any Court of competent
jurisdiction, such Court may reduce the duration of the Non-Competition Period
by such number of months and/or reduce the area of the Territory such that the
foregoing covenant may be enforced.
(ii) Albahari agrees and recognizes that in
the event of a breach or threatened breach by him of the provisions of the
foregoing covenant, Cable & Co. may suffer irreparable harm, and money damages
may not be an adequate remedy. Therefore, Cable & Co. shall be entitled as a
matter of right to specific performance of the foregoing covenant by way of
temporary or permanent injunctive relief in a Court of competent jurisdiction.
4. Employee Benefits. Cable & Co. shall maintain health
insurance coverage for Albahari and his dependents through December 31, 1997
under the same terms and conditions as it did prior to the termination of his
employment; provided, however, that Cable & Co.'s obligation to reimburse
Albahari for any unreimbursed medical expenses incurred by Albahari before
December 31, 1997 shall be limited to an aggregate of $25,000. Albahari and his
dependents may elect continued coverage in accordance with the terms of COBRA
for up to an additional 18 month period beginning January 1, 1998. Albahari and
his dependents shall also be eligible to convert this health insurance coverage
to an individual policy on the same terms and conditions as other employees who
lose health insurance coverage.
-2-
<PAGE>
5. Mutual Release. Except for any benefits as of the date
hereof to which Albahari may be entitled under Internal Revenue Code ss. 401(k)
plans, Albahari hereby releases and discharges Cable & Co., its affiliates and
their respective partners, directors, officers, employees and agents
(collectively, "Releasees") from any and all claims, actions, causes of action,
damages, liabilities, promises, debts, compensation, losses, obligations, costs
or expenses of any kind or nature, which he ever had or now has against each or
any of the Releasees, including, but not limited to all claims alleged in an
action pending in the Superior Court, Judicial District of Stamford/Norwalk
entitled David Albahari v. Cable & Co. Worldwide, Inc., Alan Kandall and Martin
C. Licht; and those arising from or related to his shareholder status,
employment relationship, or service as a director with Cable & Co. or the
termination of such employment, any alleged violation of any covenant of good
faith and fair dealing relative to his employment or any applicable labor or
employer-employee statute, regulation or ordinance, whether federal, state or
local (including, by way of specificity but not of limitation, the Age
Discrimination Act of 1967, as amended, and the Americans With Disabilities
Act). Cable & Co. hereby releases and discharges Albahari from any and all
claims, actions, causes of action, damages, liabilities, promises, debts,
compensation, losses, obligations, costs or expenses of any kind or nature,
which Cable & Co. ever had or now has against Albahari, including, but not
limited to, those arising from his shareholder status, employment relationship,
or service as a director with Cable & Co., or the termination of such
employment. Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to release (i) Cable & Co. from: (a) its obligation to indemnify Albahari
for actions arising out of his duties as an officer and director of Cable & Co.;
and (b) any other obligation arising under this Agreement; and (ii) Albahari
from any obligation arising under this Agreement.
6. Protection of Reputation. Neither party hereto nor their
agents or employees will take any action which is intended, or would reasonably
be expected, to harm the other party's reputation or which would reasonably be
expected to lead to unwanted or unfavorable publicity to the other party;
provided, however, the foregoing limitation shall not apply to (a) compliance
with any legal process or subpoena or (b) statements in response to authorized
inquiry from a court or regulatory body.
7. Nondisclosure. Albahari and Cable & Co. agree that the
terms and conditions of this Agreement are confidential and that each will not,
without the express prior written consent of the other party, in any manner
publish, publicize, disclose or otherwise make known or permit or cause to be
made known such terms and conditions to anyone (other than such party's
prospective or current lenders or such party's financial and legal advisors, who
shall agree to be bound by this paragraph prior to disclosure of the terms or
conditions hereof to such persons), except as required by law, or in any
proceeding to enforce the terms of this Agreement.
8. Confidentiality. Albahari acknowledges that during the term
of his employment by Cable & Co., he had access to certain confidential
information of the Company, including without limitation information about
business plans, customers, manufacturers, suppliers sourcing, costs, profits,
markets, sales, products, product design, key personnel, pricing policies,
operational methods, reports on the results of research and development work
conducted by or on behalf of Cable & Co., other business affairs and methods and
other information not available to the public or in the public domain
(hereinafter referred to as
-3-
<PAGE>
"Confidential Information"). Albahari covenants and agrees that he will (i) keep
secret all Confidential Information of Cable & Co. and will not, directly or
indirectly, while such Confidential Information remains confidential, disclose
or disseminate to anyone, or make use of, for any purpose whatsoever, such
Confidential Information; and (ii) promptly deliver to the Company all tangible
materials and objects containing Confidential Information (including all copies
thereof, whether prepared by Albahari or others) which Albahari may possess or
have under his control.
9. Guarantees. Cable & Co. shall indemnify and hold harmless
Albahari from any and all liabilities associated with the personal guarantees he
executed in connection with his employment with Cable & Co.
10. Stock Options. Cable & Co. shall grant Albahari the option
to purchase all or any part of 901,756 shares of common stock of Cable & Co. at
a purchase price of $.01 per share in the manner and subject to the conditions
provided in the Stock Option Agreement dated as of July 21, 1997 ("Stock Option
Agreement") by and between Cable & Co. and Albahari. (Albahari acknowledges that
Cable & Co. is contemplating a reverse stock split and, in the event of such
reverse stock split, the shares underlying the stock options are subject to
adjustment as provided for in the Stock Option Agreement.) Cable & Co. hereby
agrees to register the shares of Common Stock underlying the stock options,
under the Securities Act of 1933, as amended, and cause such shares to be listed
on NASDAQ as soon as practicable within five business days.
11. Future Cooperation.
(a) Albahari agrees to consult with the Board of Directors and
management of Cable & Co., from time to time, as requested by Cable & Co. with
regard to operations, strategic planning and business development and such other
aspects of the business of Cable & Co. as Albahari and Cable & Co. may agree
from time to time. Albahari agrees to use his best efforts to perform all
services required hereunder in a competent and timely manner.
(b) Albahari hereby agrees to cooperate with Cable & Co. and
its attorneys in connection with the defense and preparation of a defense
relating to any claim or potential claim which arose during Albahari's
employment by Cable & Co.
12. No Waiver. No delay or failure by either party to this
Agreement to exercise any right under this Agreement and no partial or single
exercise of that right shall constitute a waiver of that or any other right. No
waiver shall be valid unless in writing and signed by Albahari or an authorized
officer of Cable & Co., as the case may be, and any waiver by either party of a
breach of any provision hereof shall not be construed as a waiver of any
subsequent breach or violation thereof.
13. Severability. If any provision of this Agreement shall
hereafter be held to be invalid, unenforceable or illegal in whole or in part,
in any jurisdiction under any circumstances for any reason, (i) such provision
shall be reformed to the minimum extent necessary to cause such provision to be
valid, enforceable and legal while preserving the intent of the parties as
expressed in, and the benefits to the parties provided by, this Agreement or
(ii)
-4-
<PAGE>
if such provision cannot be so reformed, such provision shall be severed from
this Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Agreement.
14. Governing Law; Submission to Jurisdiction. The validity,
interpretation, performance and enforcement of this agreement shall be governed
by the laws of the State of New York (without giving effect to the laws, rules
and principles of the State of New York regarding conflicts of laws). Albahari
and Cable & Co. agree that any action, proceeding or claim arising out of, or
relating in any way to, this Agreement shall be brought and enforced in the
courts of the State of New York and irrevocably submit to such jurisdiction,
which jurisdiction shall be exclusive. Albahari and Cable & Co. hereby
irrevocably waive any objection to such jurisdiction or an inconvenient forum.
15. Miscellaneous. This Agreement may not be amended except by
a written agreement signed by Albahari and a duly authorized officer of Cable &
Co. This Agreement shall be binding upon and inure to the benefit of Albahari
and Cable & Co. and his heirs and Cable & Co.'s successors and assigns.
16. Other. Within ten days of signing this Agreement, Albahari
shall (a) refund outstanding advances up to $13,393.42 or submit appropriate and
reasonable documentation for valid business expenses to Cable & Co.; (b) return
the personal laptop computer that was issued to him in working condition or pay
Cable & Co. $2,981.52; (c) return the painting from his office or pay Cable &
Co. $1,200; and (d) return to Cable & Co. the $1,900 security deposit for his
apartment. If the obligations stated in subsections (a) - (d) are not satisfied
within ten days of the date of this Agreement, Cable & Co. may deduct the
respective amounts stated above from the first payments due Albahari under
Section 2(a) above. Cable & Co. shall follow Albahari's instructions for
redeeming fifty percent of the bonus points accrued in the American Express
Membership Rewards program for Account No. 1M78486933 through June 30, 1997.
Cable & Co. shall also reimburse Albahari for the parking expenses he has
incurred through June 30, 1997 in accordance with the same terms and conditions
as it had prior to the termination of his employment.
17. Opportunity to Review. Albahari acknowledges and agrees
that he has been given a reasonable period, up to and including twenty-one days,
to review and sign this Agreement. Albahari further acknowledges that he has
reviewed this agreement with legal counsel before signing it.
18. Right to Revoke This Agreement. Albahari acknowledges that
he signed this Agreement on the date set forth above. In accordance with
applicable law, he may revoke this Agreement at any time during the seven-day
period after he signs this Agreement. Such revocation may be made by delivering
a written notice of revocation to Cable & Co. during such seven day period. This
Agreement will not be effective or enforceable until the date on which the
revocation period has expired (the "Effective Date").
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have affixed their signatures
the day and year written above.
CABLE & CO. WORLDWIDE, INC.
/s/ Alan Kandall
By: Alan Kandall
Title: President
/s/ David Albahari
David Albahari
-6-
<PAGE>
SCHEDULE A
Intentionally Omitted
-7-
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors and Shareholders of
Cable & Co. Worldwide, Inc.
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 of our report dated
February 17, 1997 except for the fourth paragraph of Note 5, as to which the
date is March 18, 1997, on the consolidated balance sheet of Cable & Co.
Worldwide, Inc. and Subsidiary as of December 31, 1996, and the related
consolidated statements of operations, shareholder's equity, and cash flows for
each of the two years in the period then ended, which report appears in the
December 31, 1996 annual report on Form 10-KSB of Cable & Co. Worldwide, Inc. We
also consent to the reference to our firm under the caption "experts" in such
Prospectus.
/s/ Goldstein Golub Kessler & Company, P.C.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
October 15, 1997
