SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11 (copyright) or Rule 14a-12
Concord Camera Corp.
---------------------------
(Name of Registrant as Specified in its Charter)
Jay Sturm, Counsel
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(copyright)(1)(ii), 14a-6(I)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(I)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ----------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- ----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- ----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------
(4) Date filed:
------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
CONCORD CAMERA CORP.
35 MILEED WAY
AVENEL, NEW JERSEY 07001
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------
JANUARY 18, 1996
-----------------
To the Shareholders of Concord Camera Corp.:
Notice is hereby given that the Annual Meeting of Shareholders of Concord
Camera Corp. (the "Company") will be held at the Sheraton Woodbridge Place
Hotel, 515 Route 1 South (New Jersey Turnpike -- Exit 11), Iselin, New Jersey
08830, on Thursday, January 18, 1996, at 10:00 a.m., local time, for the
following purposes:
1. To elect directors for the ensuing year;
2. To ratify the selection of Ernst & Young LLP (Ernst & Young) as
independent auditors of the Company for the fiscal year ending
June 30, 1996; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on December 1, 1995
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting or any adjournments thereof.
MANAGEMENT REQUESTS ALL SHAREHOLDERS TO SIGN AND DATE THE ENCLOSED FORM OF
PROXY AND RETURN IT IN THE POSTAGE PAID, SELF-ADDRESSED ENVELOPE PROVIDED FOR
YOUR CONVENIENCE. PLEASE DO THIS WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
SHOULD YOU ATTEND, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
By Order of the Board of Directors
Gary M. Simon
Secretary
Avenel, New Jersey
December 22, 1995
<PAGE>
CONCORD CAMERA CORP.
-----------------
PROXY STATEMENT
DATED DECEMBER 22, 1995
-----------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, JANUARY 18, 1996
-----------------
This Proxy Statement is furnished by the Board of Directors (the "Board")
of CONCORD CAMERA CORP. (the "Company") in connection with the solicitation of
proxies to be voted at the Annual Meeting of Shareholders which will be held at
the Sheraton Woodbridge Place Hotel, 515 Route 1 South (New Jersey Turnpike --
Exit 11), Iselin, New Jersey 08830, on Thursday, January 18, 1996, at 10:00
a.m., local time, and all adjournments thereof (the "Annual Meeting"). The Board
has fixed the close of business on December 1, 1995 as the record date for the
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments thereof.
Any shareholder giving a proxy will have the right to revoke it at any time
prior to the time it is voted. A proxy may be revoked by written notice to the
Company, Attention: Secretary, by execution of a subsequent proxy or by
attendance and voting in person at the Annual Meeting. Attendance at the Annual
Meeting will not automatically revoke the proxy. All shares represented by
effective proxies will be voted at the Annual Meeting or at any adjournment
thereof. UNLESS OTHERWISE SPECIFIED IN THE PROXY, SHARES REPRESENTED BY PROXIES
WILL BE VOTED (I) FOR THE ELECTION OF MANAGEMENT'S NOMINEES FOR DIRECTORS, (II)
FOR THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP ("ERNST & YOUNG") AS
INDEPENDENT AUDITORS OF THE COMPANY, AND (III) IN THE DISCRETION OF THE PROXY
HOLDERS WITH RESPECT TO SUCH OTHER MATTERS AS MAY COME BEFORE THE ANNUAL
MEETING.
The Company's executive offices are located at 35 Mileed Way, Avenel, New
Jersey 07001. On or about December 22, 1995, this Proxy Statement and the
accompanying form of proxy together with a copy of the Annual Report of the
Company for the fiscal year ended June 30, 1995 ("Fiscal 1995"), including
financial statements, are to be mailed to each shareholder of record at the
close of business on December 1, 1995.
As of December 1, 1995, the Company had issued and outstanding 10,947,526
shares of no par value, Common Stock (the "Common Shares"), the Company's only
class of voting securities outstanding. Each Common Share entitles the holder
thereof to one vote. The majority of all the outstanding Common Shares
constitutes a quorum at the Annual Meeting. Abstentions and broker non-votes
will be counted as votes represented and entitled to vote (but not voting) at
the Annual Meeting for purposes of determining the number of votes required to
approve a proposal.
PROPOSAL ONE: ELECTION OF DIRECTORS
NOMINEES FOR ELECTION OF DIRECTORS
Pursuant to Article III of the Company's By-laws, as amended, the Board has
fixed the number of directors constituting the entire Board at 7. All seven
directors are to be elected at the Annual Meeting, each to hold office until the
next annual meeting of shareholders and until his successor is duly elected and
qualified. In voting for directors, each shareholder is entitled to cast one
vote for each share held of record, either in favor of or against the election
of each candidate, or to abstain from voting on any or all candidates. If any of
the nominees should become unavailable for election, the shares represented by
such proxies will be voted for such substitute nominees as may be nominated by
the Board. THE BOARD RECOMMENDS A VOTE FOR THE PERSONS NAMED BELOW. IT IS
INTENDED THAT PROXIES THAT DO NOT WITHHOLD THE AUTHORITY TO VOTE FOR ANY OR ALL
OF THE NOMINEES WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE PERSONS NAMED
BELOW. The election of directors requires the affirmative vote of the holders of
a majority of the shares represented and entitled to vote at the Annual Meeting.
1
<PAGE>
The following table sets forth information with respect to each nominee for
director, all of whom are currently serving as directors of the Company. The
information has been furnished to the Company by the individual named.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED/
NOMINATED
NAME OF NOMINEE AGE DIRECTOR POSITIONS AND OFFICES WITH THE COMPANY
- --------------- --- -------- --------------------------------------
<S> <C> <C> <C>
Ira B. Lampert(1) ........... 50 1993 Chairman, Chief Executive Officer, President, Chief
Operating Officer and Director; Director of Concord Camera
HK Limited, Concord Camera GmbH, Concord Camera UK Limited
and Concord Camera France
Eli Arenberg (2) ............ 68 1988 Director
Joel L. Gold (3) ............ 54 1991 Director
Morris H. Gindi (4) ......... 51 1988 Director
J. David Hakman (5) ......... 54 1993 Director
Ira J. Hechler (6) .......... 77 1992 Director
Kent M. Klineman (7) ........ 63 1993 Director
</TABLE>
(1) On July 13, 1994 Ira B. Lampert was appointed to the additional positions
of Chairman and Chief Executive Officer of the Company. Mr. Lampert has
been President and Chief Operating Officer since June 1, 1993, and a
Director of the Company since June 29, 1993. Mr. Lampert is also a director
of Concord HK, Concord UK, Concord Germany and Concord Camera France. From
April 1992 through May 30, 1993, Mr. Lampert's services were made available
to the Company under consulting agreements with Whitehall Enterprises Inc.
("WEI"), an investment banking company for the middle-market, of which Mr.
Lampert was the President since August 1990. Mr. Lampert is a Board Member
of the Queens College Foundation which is part of the City University of
New York and is the Treasurer of the Boys Brotherhood Republic, a
non-profit organization for underprivileged children in the New York City
area.
(2) Eli Arenberg joined the Company in April 1984 as Vice President of Sales
and Marketing and in September 1989 was promoted to Senior Vice President
of Sales. In February 1992 Mr. Arenberg retired from such positions and in
July 1994 made his services available to the Company under a consulting
agreement with ELA Enterprises, Inc. (the "ELA Enterprises Consulting
Agreement"), a Florida corporation wholly-owned by Mr. Arenberg.
(3) Joel L. Gold is currently a managing director at Fector Detwiler & Co, Inc.
an investment bank. From January 1992 through April 1995 Mr. Gold was a
director at Furman Selz Incorporated, an investment bank. From April 1990
through December 1991 Mr. Gold was a managing director at Bear, Stearns &
Co. Inc., New York, New York. From April 1971 through February 1990 Mr.
Gold was a managing director at Drexel Burnham Lambert. Mr. Gold is
currently a member of the board of directors of Biomechanics Corporation of
America, Action Industries, Inc. and Life Medical Sciences.
(4) Morris H. Gindi is the Chief Executive Officer of Notra Trading Inc.,
located in Woodbridge, New Jersey, and has served in such capacity since
1983. Notra Trading Inc. is an import agent in the housewares and domestics
industry. Mr. Gindi has over 26 years experience in importing.
(5) J. David Hakman is the owner and Chief Executive Officer of Hakman Capital
Corporation, a merchant banking concern, and has held such position since
1980. Mr. Hakman is President of Hakman & Company, Inc., an investment
banking concern and a member of the National Association of Securities
Dealers, Inc., and has held such position since 1974. Mr. Hakman has been a
director since 1989 and a member of the Audit and Nominating Committees
since 1991 of Hanover Direct, Inc., a firm engaged in the direct marketing
business. Mr. Hakman was the Chairman and a director of AFD Acquisition
Corporation which filed for protection under Chapter 11 of the U.S.
Bankruptcy Laws in June 1991 and emerged from Chapter 11 in September 1993.
(6) Ira J. Hechler is a partner and a director of the investment firm Ira J.
Hechler & Associates located in New York, New York. Mr. Hechler has been
associated with such firm since June 1987. The firm's principal business is
holding stock, partnership interests and other property for investment
purposes. Mr. Hechler is currently a
2
<PAGE>
member of the board of directors of The Leslie Fay Companies, Inc. and
United States Banknote Corporation. SEE "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
(7) Kent M. Klineman is an attorney and private investor and serves as a
director of several closely-held companies. He is also a general partner of
ConArb Partners, L.P., a securities dealer engaged in arbitrage and trading
of convertible securities for its own account. Mr. Klineman is a director,
Secretary and a member of the Compensation Committee of EIS International,
Inc. Mr. Klineman's initial nomination to serve as a director to the
Company in 1993 was made by Mr. Hechler. SEE "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."
MEETINGS AND COMMITTEES
In Fiscal 1995, the Board held eight meetings of which two were telephonic.
The Board has an Audit Committee, a Compensation and Stock Option Committee, an
Executive Committee, and a Nominating Committee.
The Audit Committee, consisting of Kent M. Klineman (Chairman), J. David
Hakman and Eli Arenberg, reviews and reports to the Board with respect to
various auditing and accounting matters, including recommendations to the Board
as to the selection of the Company's independent public accountants, the scope
of audit procedures, general accounting policy matters and the performance of
the Company's independent public accountants. The Audit Committee held 3
meetings in Fiscal 1995.
The Compensation and Stock Option Committee, consisting of Joel L. Gold
(Chairman), Ira J. Hechler, and Morris Gindi, was formed to review and make
recommendations to the Board regarding all executive compensation matters. The
Compensation Committee held 2 meetings in Fiscal 1995.
The Executive Committee, consisting of Ira B. Lampert, Kent Klineman and
Ira J. Hechler, has the full power of the Board when the Board is not in
session, including the authority to bind the Company to new borrowings and other
financing commitments.
On November 10, 1994 the Board established a Nominating Committee for the
purpose of nominating those persons who shall be invited to stand for election
to the Board of Directors as management nominees at each ensuing meeting of the
shareholders of the Company or pursuant to any actions with respect to the
election of directors to be taken by written consent of the shareholders. The
Nominating Committee consists of Ira B. Lampert, Joel Gold, Ira J. Hechler and
Kent Klineman. The Nominating Committee has proposed the slate of direction
proposed herein. Shareholder suggestions of one or more nominees for election to
the Board may be sent in writing to the Nominating Committee, Attention:
Chairman, C/O the Company, 35 Mileed Way, Avenel, New Jersey 07001.
In Fiscal 1995, all of the directors attended at least 75% of the aggregate
of the total number of meetings of the Board and committees of which they were
members.
DIRECTORS COMPENSATION
Non-employee members of the Board receive (i) an annual fee of $10,000,
(ii) a $2,500 annual fee for serving on each committee of the Board with the
Chairman thereof receiving a $3,500 annual fee, and (iii) a meeting fee of $750
for each meeting attended in person and $250 for each meeting attended
telephonically. In addition, under the Company's Incentive Plan each
non-employee director is entitled to receive options pursuant to a formula to
purchase up to 20,000 Common Shares upon his/her appointment as director. The
Incentive Plan also provides for the grant of an immediately exercisable option
to purchase 1,000 Common Shares on the date of the original grant and on each
anniversary of the original grant. Pursuant to this plan each non-employee
director (except for Mr. Arenberg) has received options to purchase 23,000
Common Shares. Mr Arenberg has received options to purchase 22,000 Common Shares
and will receive another grant of options to purchase 1,000 Common Shares on
July 18, 1996, the anniversary date of his becoming a non-employee director. In
addition, Mr. Arenberg, through a company controlled by him, is a party to a
consulting agreement with the Company. SEE "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
3
<PAGE>
EXECUTIVE OFFICERS
The names of the current executive officers of the Company together with
certain biographical information for each of them (other than Mr. Lampert for
whom biographical information is provided above) is set forth below:
NAME OF EXECUTIVE OFFICER AGE POSITIONS AND OFFICES WITH THE COMPANY
- ------------------------- --- --------------------------------------
Eli Shoer ................ 46 Senior Vice President of the Company and
Managing Director of Concord HK
Gary M. Simon ............ 35 Chief Financial Officer, Secretary and
Treasurer
Harlan I. Press .......... 31 Chief Accounting Officer
Steve Jackel ............. 59 Consultant
Len Easterbrook .......... 63 Managing Director/General Manager-European
Operations
George Erfurt ............ 51 Managing Director/General Manager-Americas
Gary Kaess ............... 62 Vice President, Product Development
Jay Sturm ................ 40 Counsel and Assistant Secretary
Eli Shoer is Senior Vice President of the Company and Managing Director of
Concord HK and has held such positions since August 1994. From April 1991 to
August 1994 Mr. Shoer was Director of Operations of Concord HK and managed the
Company's manufacturing facilities in the Far East. Mr. Shoer worked as Senior
Vice President for Operations of Keystone Camera Corporation from November 1990
through February 1991. Mr. Shoer's principal occupation from 1987 through April
1990, until he initially joined Concord HK, was President of Artstar Productions
Ltd., a manufacturing company in the Far East owned by Mr. Shoer.
Gary M. Simon is Chief Financial Officer, Treasurer and Secretary of the
Company. Mr. Simon has been Chief Financial Officer and Treasurer since June
1992 and was appointed Secretary in January 1994. From December 1989 through May
1992, Mr. Simon was a Vice President of Oxbridge Partners, a Merchant Bank. From
1985 through 1989, Mr. Simon was a Senior Manager in Ernst & Young's Mergers &
Acquisitions Practice, a division within its Corporate Finance Group.
Steve Jackel's services are rendered to the Company pursuant to a
consulting agreement dated May 1, 1995 between the Company and Harjac Consulting
Corp., a corporation owned by Mr. Jackel. Mr. Jackel is not an employee of the
Company and does not have a corporate title. His consulting activities on behalf
of the Company, however, have evolved to the point where Mr. Jackel is
considered to be a member of the Company's senior management team performing a
policy making function. From February 1993 to 1994 Mr. Jackel was President of
McCrory's Corporation and Chairman of McCrory Stores. From June 1992 through
February 1993 he was Co-President of McCrory Stores. From February 1991 through
June 1992 he was Executive Vice President Specialty Operation for McCrory
Stores. Prior to that time Mr. Jackel was an Independent Management Consultant.
Harlan I. Press is Chief Accounting Officer and has held this position
since November 1994. Mr. Press was a Senior Field Examiner for the CIT Group
from April 1993 through April 1994. From December 1991 through April 1993, Mr.
Press served as the Production Manager and Inventory Controller for Sandberg and
Sikorski Diamond Corp. Prior to then Mr. Press was a Senior Accountant in BDO
Seidman's Audit Division.
George Erfurt is Managing Director/General Manager-Americas, a position
which he assumed in July, 1995. Mr. Erfurt joined the Company in 1991 and has
held several management positions with the Company, including Sales Manager of
National Accounts, his most recent position prior to his latest promotion. Prior
to joining the Company, he was Executive Vice President of Sales and Marketing
for Keystone Camera Corp.
Len Easterbrook is Managing Director/General Manager-European Operations
and has held such position since July, 1995. Mr. Easterbrook joined the Company
in 1990 as Managing Director of Concord (UK) Ltd. and held such position until
1993. From 1993 until July, 1995 Mr. Easterbrook was Managing Director of Trade
Quota Ltd., a specialist marketing company dealing with Eastern Europe.
Gary Kaess is Vice President Product Development and has held such position
since November, 1994. Mr. Kaess joined the Company in 1990 and has held a
variety of positions related to research and development since that time.
Jay Sturm is Counsel and Assistant Secretary and joined the Company in
April, 1995. Prior to joining the Company, Mr. Sturm was Vice President, General
Counsel and Secretary of Allerion, Inc., a reseller of computer
4
<PAGE>
hardware and software and a provider of computer network maintenance and
services. Allerion filed for Chapter 11 protection under the U.S. Bankruptcy
Code on December 7, 1994. The bankruptcy filing was subsequently converted to a
Chapter 7 proceeding.
On August 23, 1995, the Compensation Committee of the Board of Directors
approved stock purchase awards under the Company's Incentive Plan pursuant to
which 500,000 Common Shares were made available for purchase by senior
management of the Company at a price per share equal to $5.375 per share (the
closing price of the common stock on August 23, 1995) pursuant to binding
commitments to be made by such persons by August 31, 1995. The Company received
commitments for the purchase of 444,000 of such shares. Each senior management
purchaser was also granted the right to receive a contingent restricted stock
award covering a number of shares equal to the number of shares purchased by
such purchaser. The contingent restricted stock will only be issued based upon
attainment of increases in shareholder value in accordance with the Incentive
Plan as follows:
PERCENTAGE OF RESTRICTED STOCK FAIR MARKET VALUE LATEST ATTAINMENT DATE
------------------------------ ----------------- ----------------------
33 1/3 $10.00 August 31, 1997
663 2/3 $15.00 February 28, 1999
100% $20.00 August 31, 2000
If issued such contingent restricted shares will vest over a three year
period. As payment for such shares, each senior management purchaser executed a
full recourse promissory note secured by the Common Shares purchased. The notes
mature five years from the date of purchase, November 7, 1995, and bear interest
at 6%. For such time as any of the management purchasers remain as a member of
senior management, such person must continue to own no less than an amount of
Common Shares equal to 50% of the sum of the purchased shares and any issued
contingent stock. The following executive officers of the Company are indebted
to the Company for amounts in excess of $60,000 as a result of such purchases:
Ira B. Lampert ....................................... $1,612,000
Steve Jackel ......................................... $ 537,500
Gary M. Simon ........................................ $ 134,375
SECTION 16 REPORTING OBLIGATIONS
The following officers and directors of the Company filed late reports
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the period July 1, 1994 through June 30, 1995: (i) Mark
Welland, former President of U.S. Branch Operations and a Vice President of the
Company, late filing of a Form 4 due July 10, 1994; (ii) Gary M. Simon, Chief
Financial Officer, late filing of a Form 4 due August 10, 1994; (iii) Eli
Arenberg, Director, late filing of Forms 4 due August 10 and September 16, 1994;
(iv) Ira B. Lampert, Chairman and CEO, late filing of a Form 4 due October 10,
1994; and (v) Harlan I. Press late filing a Form 3 due February 25, 1995. There
are no known failures to file a required report for any of the Company's
reporting persons during such time period.
[INTENTIONALLY LEFT BLANK]
5
<PAGE>
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
AWARDS
------------
(A) (B) (C) (D) (E) (F) (G)
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- --------------------------- ------ ----- ------- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Ira B. Lampert ...................... 1995 $495,515 $ -- $196,648(1) 600,000(2)(3) $ 11,477(4)
Chief Executive Officer 1994 475,000 -- 78,475(5) 340,000 47,200(6)
and Chairman 1993 -- -- -- -- --
Eli Shoer ........................... 1995 207,307 -- 66,850(8) 150,000(2) --
Senior Vice President and 1994 200,000 -- 60,000(7) 25,000 --
Managing Director of
Concord HK 1993 146,154 -- 60,000(8) 70,000 --
Gary M. Simon ....................... 1995 175,000 -- 16,800(9) 190,000(2) 2,260(4)
Chief Financial Officer, 1994 151,923 37,500 -- -- 2,260(4)
Secretary and Treasurer 1993 140,503 37,500 -- 50,000 --
Mark Welland(10) .................... 1995 175,000 -- 34,600(11) -- 1,940(4)
Vice President and President 1994 175,000 -- 34,600(11) 10,000 1,940(4)
of United States Operations 1993 -- -- -- -- --
George Erfurt ....................... 1995 113,461 20,000 119,522(12) -- --
Managing Director/General 1994 90,000 -- 93,492(12) -- --
Manager-Americas 1993 -- -- -- -- --
Steve Jackel(13) .................... 1995 87,500 -- 7,500 100,000 --
Consultant 1994 -- -- -- -- --
1993 -- -- -- -- --
Jack C. Benun ....................... 1995 66,923 -- -- -- 11,000(16)
Former Chief Executive 1994 600,000 150,000 96,057(14) 500,000(15) 220,441(17)
Officer 1993 600,000 -- 45,693(18) 600,000(15)(19) 39,000(16)
</TABLE>
- ------------
(1) Includes $102,740 paid to Mr. Lampert for reimbursement of taxes and also
includes reimbursement for Mr. Lampert's auto allowance, housing
allowance, reimbursement of moving expenses and reimbursement for spousel
travel expenses on Company business.
(2) These options include options repriced and re-issued during the fiscal
year.
(3) Does not include 150,000 options contingent upon the consummation of an
acquisition described in Mr. Lampert's employment agreement.
(4) Represents amount paid by the Company for insurance premiums.
(5) Includes $24,260 and $25,179 paid to Mr. Lampert for his auto allowance
and reimbursement of taxes, respectively, and $22,210 paid for
Mr. Lampert's housing allowance.
(6) Includes $25,208 paid by the Company for insurance premiums and $21,992
paid to Mr. Lampert for consulting fees and expenses in connection with
consulting services provided by Mr. Lampert pursuant to the Company's
consulting agreement with WEI, which terminated upon Mr. Lampert's
employment with the Company.
(7) Includes a $60,000 housing allowance paid to Mr. Shoer for his living
arrangements in the Far East.
(8) Represents a housing allowance paid to Mr. Shoer for his living
arrangements in the Far East.
(9) Represents payment for auto allowances.
(10) Mr. Welland resigned from the Company on July 28, 1995.
6
<PAGE>
(11) Includes $25,000 paid to Mr. Welland for the Company's repurchase of his
option relating to 10,000 Common Shares underlying such option.
(12) Represents 114,522 and $88,692, respectively paid as sales commissions in
Fiscal 1995 and Fiscal 1994 and $4,800 paid for his auto allowance in each
fiscal year.
(13) Mr. Jackel's services are rendered to the Company pursuant to a consulting
agreement dated May 1, 1995 between the Company and Harjac Consulting
Corp., a corporation owned by Mr. Jackel. Mr. Jackel is not an employee of
the Company and he does not have any corporate title. His consulting
activities on behalf of the Company, however, have evolved to the point
where Mr. Jackel is considered to be a member of the Company's senior
management team performing a policy making function. Therefore, the
Company considers Mr. Jackel to be an officer of the Company for
Securities Acts purposes. The consulting agreement has a one year term
and calls for payment of consulting fees of $300,000 for the term as well
as reimbursement of automobile expenses of up to $2,000 per month and
reimbursement of certain insurance payments.
(14) Includes $53,012 paid to Mr. Benun for his auto allowance.
(15) All options granted to Mr. Benun were canceled upon his termination on July
14, 1994.
(16) Represents interest accrued on loans from Mr. Benun to the Company. On
November 14, 1995, Mr. Benun commenced an action against the Company
demanding the immediate payment of the principal and interest. The Company
asserts that in any final adjudication of the Rights of the Company
against Benun, these sums will be offset by the monies which Benun will be
found to owe the Company.
(17) Represents a $184,096 fee paid to Mr. Benun for his guarantee of certain
loans, and reimbursement of taxes $26,580 paid to Mr. Benun for interest
accrued on loans from Mr. Benun to the Company, and $9,765 paid for Mr.
Benun's insurance premiums.
(18) Represents amounts paid to Mr. Benun for certain income tax related
interest and penalties which resulted from the Company being unable to
timely repay loans made by Mr. Benun to the Company. Also includes monies
paid as reimbursement for companion travel.
(19) Includes 150,000 Common Shares underlying stock options which were canceled
in January 1994.
II. OPTION GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
POTENTIAL REALIZABLE ANNUAL
VALUE AT ASSUMED RATES OF
STOCK PRICE APPRECIATION FOR
OPTION TERM
-----------------------------
MARKET
PRICE OF
NUMBER OF % OF TOTAL COMMON
SECURITIES OPTIONS STOCK ON
UNDERLYING GRANTED TO EXERCISE DATE OF
NAME OF OPTIONS EMPLOYEES PRICE GRANT EXPIRATION
EXECUTIVE OFFICER GRANTED (#)(1) IN 1994(2) ($/SH)(3) ($/SH) DATE 5%($) 10%($)
- ----------------- -------------- ---------- --------- -------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ira B. Lampert(4) ..... 340,000 $4.00 -- July 13, 2003 855,297 2,167,490
260,000 $4.00 -- Sept. 30, 2004 654,000 1,657,492
150,000(5) $6.00 --
Gary M. Simon ......... 70,000 10.77% $3.00 -- July 13, 2004 132,068 334,686
120,000 18.46% $4.00 -- Feb. 20, 2005 301,869 764,996
Eli Shoer ............. 75,000 11.54% $3.25 -- Oct. 3, 2004 153,293 388,475
75,000 11.54% $4.00 -- Sept. 30, 2004 188,668 478,123
Steve Jackel .......... 25,000 3.85% $3.00 -- Dec. 31, 2000 47,167 119,531
75,000 11.54% $4.00 -- May 1, 2001 188,668 478,123
</TABLE>
- ----------
(1) Includes options repriced during Fiscal 1995 for Messrs. Lampert, Simon and
Shoer.
(2) The Company granted incentive stock options under the Company's 1988 Stock
Option Plan and the Company's Incentive Plan to purchase an aggregate of
649,450 Common Shares. Mr. Lampert's options are issued pursuant to a
separate plan applicable only to Mr. Lampert and are not included in the
computation herein.
7
<PAGE>
(3) The market price on date of grant was either above or equal to the option
price on the date of the grant.
(4) Mr. Lampert's grant of stock options is under a separate plan and are not
issued under the Company's Incentive Plan.
(5) The grant of 150,000 shares at $6.00 is contingent upon the consummation of
an acquisition described in Mr. Lampert's employment agreement.
III. AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995 AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($)(1)
------------------------------- -----------------------
SHARES
ACQUIRED VALUE
ON EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------ ------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ira B. Lampert ............ -- -- 275,000 475,000 1,221,000 1,443,000
Eli Shoer ................. -- -- 75,000 75,000 333,000 333,000
Gary M. Simon ............. -- -- 71,500 118,500 317,460 526,140
Steve Jackel .............. -- -- -- 100,000 -- 444,000
Mark Welland .............. -- 25,000(2) -- -- -- --
</TABLE>
- -----------
(1) The closing price of the Company's Common Stock at 1995 fiscal year end was
$4.44.
(2) Mr. Welland was granted options to purchase 20,000 Common Shares at an
exercise price of $8.00 per share with the right to put to the Company at
$10.50 per share 10,000 of such options per year. In Fiscal 1995, Mr.
Welland exercised such right and the Company repurchased for Mr. Welland
the option as to 10,000 Common Shares for $25,000.
8
<PAGE>
<TABLE>
<CAPTION>
IV. TEN-YEAR OPTION REPRICINGS
(A) (B) (C) (D) (E) (F) (G)
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION
UNDERLYING STOCK AT PRICE AT TERM
OPTIONS TIME OF TIME OF REMAINING
REPRICED OR REPRICING OR REPRICING OR NEW AT DATE OF
AMENDED AMENDMENT AMENDMENT EXERCISE REPRICING OR
NAME DATE (#) ($) ($) PRICE ($) AMENDMENT
- ---- ---- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ira B. Lampert ........... 9/13/94 340,000 $3.875 $5.125 $4.00 8.84
Gary M. Simon(1) ......... 7/13/94 2,500 $2.50 $8.125 $3.00 8.20
7/13/94 10,000 $2.50 $5.375 $3.00 8.28
7/13/94 10,000 $2.50 $5.375 $3.00 8.28
7/13/94 10,000 $2.50 $5.375 $3.00 8.28
7/13/94 2,500 $2.50 $5.438 $3.00 8.41
7/13/94 5,000 $2.50 $5.313 $3.00 8.52
Eli Shoer(2) ............. 10/1/94 25,000 $3.25 $5.00 $3.25 7.37
10/1/94 15,000 $3.25 $6.50 $3.25 7.47
10/1/94 10,000 $3.25 $8.875 $3.25 7.47
10/1/94 25,000 $3.25 $6.125 $3.25 8.02
10/1/94 10,000 $3.25 $6.125 $4.00 8.02
10/1/94 35,000 $3.25 $6.125 $4.00 8.02
10/1/94 25,000 $3.25 $6.125 $4.00 7.78
Jack C. Benun ............ 5/25/93 500,000(3) $7.625 (4) $5.00 (5)
Former Chairman and
Former Chief
Executive Officer(5)
</TABLE>
- ------------
(1) Mr. Simon forfeited 70,000 options and received 40,000 options at the new
exercise price. In addition he received 30,000 options upon execution of
his new employment agreement as of June 1, 1994.
(2) Mr. Shoer forfeited 145,000 options and received 75,000 options at the new
exercise price.
(3) Exercisable at time of grant as to 200,000 Common Shares, became
exercisable as to an additional 100,000 Common Shares on June 30, 1994 and
was to become exercisable as to an additional 100,000 Common Shares on each
of June 30, 1995 and 1996. All such options were canceled upon Mr. Benun's
termination from the Company on July 14, 1994.
(4) Pursuant to Mr. Benun's stock option plan, certain options were granted or
were to be granted to Mr. Benun, subject to certain contingencies. Certain
of these options, which represented options to purchase an aggregate of
900,000 Common Shares were canceled pursuant to the cancellation of a
substantial part of Mr. Benun's stock option plan upon shareholder approval
on January 18, 1994 at the 1993 Annual Meeting of Shareholders of the
Company's Incentive Plan. Options canceled on January 18, 1994, including
options to be granted at future dates, were as follows and had the
following exercise prices: (i) an option to be granted July 1, 1994 to
purchase 150,000 Common Shares at $5.00 per share subject to the Company
attaining specified Fiscal 1994 earnings, (ii) an option to purchase
500,000 Common Shares at $9.00 per share, 200,000 of which were granted
January 5, 1993, and 200,000 and 100,000 of which were to be granted on
each of January 5, 1994, and January 5, 1995, in each case subject to the
Company consummating a "significant transaction" (as defined in Mr. Benun's
Stock Option Plan) by October 12, 1993 (which consummation never occurred),
and (iii) an option to purchase 250,000 Common Shares at $8.375 per share
granted January 1, 1993, subject to shareholder approval at the fiscal 1993
Annual Meeting of Shareholders and which approval was never obtained.
(5) Of the options described in footnote (2), the options described in (ii) had
remaining terms of nine and ten years respectively, and the option
described in (iii) had a remaining term of ten years. All other options
described in footnote (2) were never granted. Any remaining options were
terminated effective with Mr. Benun's termination from the Company on July
14, 1994. Mr. Benun has asserted, both in his counter-claim in the
arbitration action initiated by the Company and in the litigation commenced
by him on November 14, 1995, that he should continue to have the right to
enforce the option agreements.
9
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON TEN-YEAR OPTION REPRICINGS
The issuance of certain existing stock options granted to Messrs. Lampert,
Simon, Kaess and Shoer were effected for the purpose of tying future vesting of
options to continued employment and for providing an appropriate incentive for
the Executive Officers, in light of then current conditions, to advance the
Company's interest.
Joel Gold
Ira J. Hechler
Morris Gindi
EXECUTIVE EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTRACT
ARRANGEMENTS
On July 14, 1994 the Board of Directors of the Company (the "Board")
terminated Jack C. Benun for cause from his positions as Chairman and Chief
Executive Officer and his status as a director of the Company as a result of its
adoption of a report from the Ad Hoc Committee of the Board indicating that Mr.
Benun had misappropriated $150,000 from the Company. Accordingly, the employment
agreement between the Company and Mr. Benun executed on July 12, 1988, and
amended and restated on September 15, 1993, which provided that Mr. Benun serve
in the capacities of Chairman and Chief Executive Officer of the Company and be
paid an annual salary of $600,000 for a term of three years, was terminated.
The employment agreement between the Company and Ira B. Lampert effective
July 1, 1993 was amended and restated as of September 1, 1994 (the "Lampert
Agreement"). The Lampert Agreement provides that Mr. Lampert serve in the
additional capacities of Chairman and Chief Executive Officer of the Company.
The Lampert Agreement provides for an annual salary of $500,000, has a term of
four years and provides for automatic one year renewals, unless prior written
notice is given by either party. Under the Lampert Agreement, Mr. Lampert's
grant of an option to purchase 340,000 Common Shares was amended and restated to
an exercise price of $4.00 per share, of which 215,000 are presently exercisable
with the balance exercisable in allotments of 12,500 on each November 30,
February 28 (or February 29 as the case may be), May 31 and August 31 until
exercisable as to the entire amount. Such shares have anti-dilution provisions
and are exercisable through July 2003. In addition, the Lampert Agreement
granted Mr. Lampert an additional option to purchase 260,000 Common Shares at an
exercise price of $4.00 per share, of which 135,000 are presently exercisable
with the balance exercisable in allotments of 12,500 on each November 30,
February 28 (or February 29 as the case may be), May 31 and August 31 until
exercisable as to the entire amount. Such shares also have anti-dilution
provisions and are exercisable through September 2004. The Lampert Agreement
prohibits Mr. Lampert from competing with the Company for a one year period upon
expiration of the Lampert Agreement. The Lampert Agreement also provides that if
the Company consummates an acquisition identified in the Lampert Agreement
during Mr. Lampert's term of employment with the Company, Mr. Lampert will
receive a cash bonus of $300,000 and will be granted an option to purchase
150,000 Common Shares at an exercise price of $6.00 per share.
Effective October 1, 1994, the Company entered into an employment agreement
with Eli Shoer, whereby Mr. Shoer is employed as Managing Director of Operations
of the Company's Far East operations and as Senior Vice President of the
Company. The employment agreement has a term of three years and provides for an
annual salary of $210,000. In addition, Mr. Shoer receives an annual housing
allowance of $75,000. Mr. Shoer's employment agreement prohibits Mr. Shoer from
competing with the Company for a one year period upon termination of such
employment agreement. The agreement also provides that previous stock option
agreements for an aggregate of 145,000 shares at varying prices ranging from a
high of $8.875 to a low of $4.4375 are relinquished by Mr. Shoer. In lieu of
such options he was granted options for 75,000 shares at $3.25 and 75,000 shares
at $4.00. This agreement supersedes the July 1, 1993 agreement between Mr. Shoer
and the Company.
Effective November 3, 1994 the Company entered into an employment agreement
with Gary Kaess, whereby Mr. Kaess is employed as Vice President, Product
Development for the Company. The agreement provides for salary at the rate of
$150,000 per annum and the grant of options to purchase 30,000 shares of the
Company's common stock at an exercise price of $3.25. Of said option 10,000 are
currently exercisable. The balance vest as to 10,000 on November 3, 1996 and as
to the balance on November 3, 1997.
Effective June 1, 1994, the Company entered into an employment agreement
with Gary M. Simon whereby Mr. Simon is employed as Chief Financial Officer and
Treasurer of the Company. The Agreement is for a term of three
10
<PAGE>
years and provides for an annual salary of $175,000. Under the Agreement Mr.
Simon was granted an option to purchase 30,000 Common Shares at an exercise
price of $3.00 per share, 7,500 of which are presently exercisable with the
balance exercisable in allotments of 7,500 after the completion of the first,
second and third years of his term of employment. In addition, Mr. Simon was
granted a presently exercisable option to purchase 40,000 and 120,000 Common
Shares at an exercise price of $3.00 and $4.00 per share, respectively. Options
to purchase 50,000 Common Shares granted to Mr. Simon prior to June 1, 1994 were
canceled. Mr. Simon's employment agreement prohibits Mr. Simon from competing
with the Company for a one year period upon termination of such employment
agreement.
During the first quarter of fiscal 1996, and effective as of May 1, 1995,
the Company entered into a one year consulting agreement with Harjac Consulting
Inc., a company of which Steve Jackel is president, for the services of Mr.
Jackel as a special assistant to the Chairman and Chief Executive Officer. The
agreement provides for remuneration at the rate of $300,000 for the term of the
agreement plus certain expenses. The agreement also provides for options to
purchase 25,000 shares of the Company's common stock at $3.00 per share and
75,000 at $4.00 per share. The options have a five year term and are exercisable
as of December 31, 1995 and May 1, 1996, respectively.
Effective August 1, 1995, the Company entered into a six month employment
agreement with Len Easterbrook, whereby Mr. Easterbrook is employed as Managing
Director/General Manager European Operating of the Company. The agreement calls
for payment of salary at the rate of $12,500 per month.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
CHIEF EXECUTIVE OFFICER ("CEO"). The Lampert Agreement was amended and
restated as of September 1, 1994 to, among other matters, increase Mr. Lampert's
annual salary in connection with his appointment to the additional positions of
Chairman and CEO of the Company on July 14, 1994, the date on which Jack C.
Benun, the Company's former CEO, was terminated from the Company, and to provide
additional incentive to Mr. Lampert to continue to exert his utmost efforts to
contribute to the Company's success and prosperity and to thereby benefit the
Company and its shareholders. SEE "EXECUTIVE EMPLOYMENT CONTRACTS, TERMINATION
OF EMPLOYMENT AND CHANGE IN CONTRACT ARRANGEMENTS."
The Compensation Committee of the Board (the "Compensation Committee")
engaged the services of outside compensation consultants to obtain information
and advice about competitive levels of compensation and particular compensation
techniques of public companies of comparable size (i.e., annual sales volume)
for the installation of a new pay package for Mr. Lampert as set forth in the
Lampert Agreement. The Compensation Committee approved the Lampert Agreement
based on such subjective criteria as (i) the complex international structure and
operations of the Company, which are equivalent to those of large international
corporations although its revenues are not, (ii) the contentious legal
environment of the Company, (iii) the parity of CEO pay with other existing
executive officers of the Company and executive officers to be hired in the
future, (iv) the financial turn-around of the Company, (v) prior pay practices
of the Company for its former CEO, (vi) lack of retirement plan, and (vii) the
extensive amount of time and world-wide travel that the CEO position entails
(Mr. Lampert has spent, and continues to spend, a significant amount of time at
the Company's offices in Hong Kong, its manufacturing facilities in China in
addition to his travels to Japan, Eastern and Western Europe and Central
America).
EXECUTIVE OFFICERS GENERALLY. The CEO recommends the level of compensation
of each executive officer to the Compensation Committee based on such subjective
criteria as the compensation of executives at corporations of similar size and
operations, years of service to the Company, the amount of time and travel the
position requires, the effort put forth during the past year and the desire to
encourage the long-term commitment of the executive. The Compensation Committee
considers each of these factors in determining whether to approve or modify the
CEO's recommendation. With respect to new executives, the CEO and the
Compensation Committee also take into consideration the results of any
arms-length negotiations between the Company and such executive. In addition, as
part of the compensation package of each executive, the CEO recommends, and the
Compensation Committee considers, the grant of stock options to each executive
based on the above factors. It is the Compensation Committee's policy to make
stock options as large a portion of an executive's gross compensation package as
is reasonable because of the benefits such long-term incentives provide to the
shareholders and the Company.
Joel Gold
Ira J. Hechler
Morris Gindi
11
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CONCORD CAMERA CORP., THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
---GRAPHICAL REPRESENTATION OF DATA TABLE BELOW---
- ------------------------------------------------------------------------------
6/90 6/91 6/92 6/93 6/94 6/95
- ------------------------------------------------------------------------------
Concord Camera Corp 100 127 132 102 56 87
- ------------------------------------------------------------------------------
Peer Group 100 89 89 98 114 115
- ------------------------------------------------------------------------------
NASDAQ Stock
Market--US 100 106 127 160 162 215
- ------------------------------------------------------------------------------
12
<PAGE>
BENEFICIAL OWNERSHIP
The following table sets forth certain information as of December 1, 1995
with respect to (I) those persons or groups known to the Company to beneficially
own more than 5% of the Common Stock, (ii) each of the directors and nominees of
the Company, (iii) the Company's executive officers named in the summary
compensation table, and (iv) for the Company's directors and executive officers
as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(1)
- ------------------------------------ ----------------------- -----------
(i) Beneficial Owners of More than 5% of the Common Shares
<S> <C> <C>
Theodore H. Kruttschnitt ....................................... 1,205,000 11%
350 Bayshore Blvd
Suite 850
Burlingame, California 94010
VC Holdings, Inc.(2) ........................................... 927,306 8%
250 Park Avenue
New York, New York 10017
Jack Silver .................................................... 727,000(3) 6.7%
c/o Silverman, Collura & Chernis, P.L.
381 Park Avenue South
New York, New York 10016
(ii) Directors and Nominees of the Company
Ira B. Lampert ................................................. 799,000(4)(5) 7%
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Eli Arenberg ................................................... 93,500(6) *
9578 Harbour Lake Circle
Boynton Beach, Florida 33437
Joel L. Gold ................................................... 34,500(6) *
Fechtor & Detwiler
230 Park Avenue
New York, New York 10169
Morris Gindi ................................................... 14,000(6) *
Notra Trading, Inc.
One Woodbridge Center
Woodbridge, NJ 07095
J. David Hakman ................................................ 14,000(5) *
Hakman & Co., Inc.
Suite 300
1350 Bayshore Highway
Burlingame, CA 94010
Ira. J. Hechler ................................................ 472,000(7) 4.3%
Ira J. Hechler and Associates
45 Rockefeller Plaza
New York, New York 10111
Kent M. Klineman ............................................... 98,400(5) *
c/o Klineman Assoc., Inc.
1345 Avenue of the Americas
New York, NY 10105
13
<PAGE>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(1)
- ----------------------------------- ----------------------- -----------
<S> <C> <C>
(iii) Executive Officers
Eli Shoer ..................................................... 110,000(8) 1.0%
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Gary M. Simon ................................................. 104,000(9) 1.0%
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Steve Jackel .................................................. 125,000(10) 1.1%
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
George Erfurt ................................................. 37,000(11) *
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Gary Kaess .................................................... 200 *
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Len Easterbrook ............................................... -0- *
Concord Camera UK Limited
2 St. Margarets Business Centre
Moor Mead Road
Twickenham, Middlesex TW1 1JN
Mark Welland .................................................. -0- *
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Harlan Press .................................................. 10,000(6) *
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07711
(iv) All executive officers and directors as a group
(15 persons) ............................................. 1,911,600 17.5%
</TABLE>
- ------------
* Indicates less than 1%.
(1) All information is as of December 1, 1995 and was determined in accordance
with Rule 13d-3 under the Exchange Act based upon information furnished by
the persons listed or contained in filings made by them with the
Commission. As of December 1, 1995, the Company had issued and outstanding
10,947,526 Common Shares, the Company's only class of voting securities
outstanding. Unless otherwise indicated, beneficial ownership disclosed
consists of sole voting and dispositive power.
(2) VC Holding, Inc. is the sole manager and holds 100% of the voting interests
of Venture Capital Equities, L.L.C. Dominion Capital, Inc. contributed all
of its interests in a specified portfolio of investments, including the
above described Company securities to Venture Capital, L.L.C.
(3) Mr. Silver's holdings include shares held by Mr. Silver or his wife for the
benefit of his children and 426,000 shares held by Siar Money Purchase
Pension Plan. In addition, Mr. Silver holds warrants to purchase 73,333
shares of the Company's common stock.
14
<PAGE>
(4) Includes 30,000 shares purchased on the open market, 300,000 shares
purchased pursuant to the Management Equity Purchase Provisions of the
Company's Stock Incentive Plan and 25,000 shares underlying presently
exercisable options issued pursuant to such plan, and 25,000 shares
underlying options which will become exercisable on November 30, 1995. Also
includes 144,000 shares as to which Mr. Lampert has voting power pursuant
to a Voting Agreement among George Erfurt, Gary Simon, Gary Kaess, Arthur
Zawodny and Mr. Lampert, as described in EXECUTIVE OFFICERS above, and as
to which Mr. Lampert denies beneficial ownership.
Excludes 275,000 shares underlying presently unexercisable options.
Options with respect to 25,000 shares will become exercisable on the last
day of February, May, August and November each year until all such options
are exercisable. Also excludes: 300,000 shares of restricted stock which
may be issued pursuant to the Incentive Plan as described in EXECUTIVE
OFFICERS ABOVE.
(5) Mr. Lampert, Mr. Erfurt, Mr. Simon, Mr. Jackel, Mr. Shoer and Arthur
Zawodny, an employee of the Company, are parties to a voting agreement
wherein all signatures have authorized Mr. Lampert to vote certain of their
shares. The aggregate number of shares and percentage of outstanding shares
covered by the aforesaid agreement are 444,000 and 4%, respectively.
(6) Includes Common Shares underlying stock options exercisable within the
forthcoming 60 days. For Mr. Arenberg also includes 30,000 presently
exercisable options owned by ELA Associates, Inc., Company controlled by
him. Also includes 10,000 options presently exercisable and/or exercisable
within the next 60 days by Mr. Arenberg. For Mssrs. Gold, Gindi, Hakman and
Klineman includes 14,000 options presently exercisable and/or exercisable
within the next 60 days. For Mr. Press includes 10,000 presently
exercisable options.
(7) Does not include any shares owned by any other party to the Management
Agreement (as herein defined) which the Company believes is no longer
effective. Mr. Jack Benun, the former Chairman of the Company, and Mr.
Hechler agreed to vote their Common Shares in accordance with the terms of
the Management Agreement. Both Mr. Hechler and the Company assert that
such agreement is no longer of any force or effect. Mr. Benun is
currently in litigation with the Company and Mr. Hechler over the status
of the Management Agreement. SEE "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
(8) Includes 10,000 shares purchased pursuant to the Management Equity Purchase
Provisions of the Company's Stock Incentive Plan and 100,000 shares
underlying presently exercisable options issued pursuant to such plan.
Excludes 50,000 shares underlying presently unexercisable options which
will become exercisable in accordance with the following schedule: 25,000
on October 1, 1997, and 25,000 on October 4, 1997. Also excludes 10,000
shares of restricted stock which may be issued pursuant to the Incentive
Plan as described in EXECUTIVE OFFICERS above.
(9) Includes 25,000 shares purchased pursuant to the Management Equity Purchase
Provisions of the Company's Stock Incentive Plan and 79,000 shares
underlying presently exercisable options issued pursuant to such plan.
Excludes 109,000 shares underlying presently unexercisable options which
will become exercisable in accordance with the following schedule: 46,000
on June 1, 1996; 7,500 on July 14, 1996; 48,000 on June 1, 1997; and 7,500
on July 14, 1997. Also excludes 25,000 shares of restricted stock which
may be issued pursuant to the Incentive Plan as described in EXECUTIVE
OFFICERS above.
(10) Includes 100,000 shares purchased pursuant to the Management Equity
Purchase Provisions of the Company's Stock Incentive Plan and 25,000 shares
underlying an option which becomes exercisable on December 31, 1995.
Excludes 75,000 shares underlying presently unexercisable options which
will become exercisable on April 30, 1996. Also excludes 100,000 shares of
restricted stock which may be issued pursuant to the Incentive Plan as
described in EXECUTIVE OFFICERS above.
(11) Includes 2,000 shares purchased pursuant to the Management Equity Purchase
Provisions of the Company's Stock Incentive Plan and 35,000 shares
underlying presently exercisable options issued pursuant to such plan.
Excludes 2,000 shares of restricted stock which may be issued pursuant to
the Incentive Plan as described in EXECUTIVE OFFICERS above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A warrant (the "Warrant") to purchase 1,500,000 Common Shares at an
exercise price of $6.00 per share was issued to Ira J. Hechler in exchange for
certain short term loans and other financial accommodations provided to the
15
<PAGE>
Company by Mr. Hechler during the period May 29, 1992 through December 31, 1992
(the "Hechler Loans"). The market value of the Warrant on the date of issuance
was determined to be in the range of $.30 to $.60 per share and was amortized
as a financing cost through December 31, 1992. In November 1993 Mr. Hechler
exercised his right under the Warrant and purchased 900,000 Common Shares at
$6.00 per share. Such exercise generated net proceeds of approximately
$5,364,000 which was used to reduce debt and for working capital purposes. The
Warrant for the remaining 600,000 shares expired on June 2, 1994.
In connection with the Hechler Loans, Mr. Hechler was appointed to the
Board and given the right to nominate two other designees to the Board (the
"Hechler Nominees"). The Company agreed to include these nominees as
management's nominees in any proxy solicitation and to indemnify Mr. Hechler and
such nominees against certain liabilities pursuant to an indemnification
agreement. Mr. Hechler nominated Kent M. Klineman to the Board in 1993. Mr.
Hechler did not propose any other nominees at that time and in subsequent years
did not propose any nominees and has irrevocably terminated his rights to
propose any nominees.
In connection with Mr. Hechler's purchase of Common Shares in a private
placement completed on December 31, 1992 (the "Private Placement"), the Company,
Mr. Benun and Mr. Hechler entered into a certain Management Agreement, dated
December 31, 1992 (the "Management Agreement"), which provided among other
matters that (i) Mr. Benun would retain, on and after the closing of a proposed
loan facility with a new lender his position as Chairman and Chief Executive
Officer of the Company (Mr. Benun's employment with the Company was terminated
on July 13, 1994), (ii) Mr. Benun would propose, at any Meetings to Elect
Directors, a slate consisting of the Hechler Nominees, Mr. Benun and other
members of whom a majority would, to the extent practical, be new "unaffiliated"
or "independent" members of the Board, (iii) Mr. Benun would vote all Common
Shares over which he had sole voting power on the date of the Management
Agreement or acquired thereafter in favor of the Hechler Nominees for election
to the Board at all Meetings to Elect Directors, (iv) Mr. Hechler would vote or
cause to be voted all Common Shares over which he has sole voting power on the
date of the Management Agreement or acquired thereafter and all Common Shares
purchased by him or his designee in the Private Placement in favor of the Benun
Nominees at all Meetings to Elect Directors, (v) neither Mr. Benun nor Mr.
Hechler, Hechler & Associates or any of their respective affiliates (the
"Hechler Group"), without the consent of two-thirds of the Board, from December
31, 1992 through December 1, 1994 would (a) solicit proxies with respect to
securities of the Company or become a "participant" in any "election contest"
relating to the election of directors of the Company (as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act), or seek to advise or
influence any person or entity with respect to the voting of any voting
securities of the Company, (b) make any public announcement with respect to, or
submit a formal proposal for a transaction between any member of the Hechler
Group and the Company or any of its securities holders except proposals
recommending transactions in the ordinary course of the Company's business, (c)
act to seek control of management, Board or policies of the Company except in
any such person's capacity as a director, or (d) form, join or participate in a
group for purposes of any transactions referred to in (a), (b), or (c) above,
and (vi) the Warrant be amended (a) to extend the exercise period of the Warrant
until December 1, 1993, (b) to eliminate the mandatory exercise and early
termination provisions of the Warrant and (c) provide that the purchase by all
purchasers in the Private Placement will not trigger the anti-dilution
provisions of the Warrant. The Company believes that Mr. Benun no longer has any
rights under the Management Agreement to nominate directors of the Company. Mr.
Benun has asserted that he continues to have such rights and intends to enforce
them. In that regard, Mr. Benun commenced a litigation against the Company and
Mr. Hechler on November 14, 1995 to among other things enforce those rights. At
a hearing on December 8, 1995, Benun's request for an injunction ordering the
Company to propose a majority of Benun nominees as directors for the coming year
was denied. Both Mr. Hechler and the Company have asserted that the Management
agreement is null and void and no longer of any effect.
Certain of the Company's and Concord HK's financing and credit arrangements
in the past have been secured by the personal guarantees and/or assets of Mr.
Benun and Mr. Hechler. During Fiscal 1994, Mr. Benun was a guarantor of all of
the Company's borrowings under the loan agreements with Midlantic National Bank
and Canadian Imperial Bank of Commerce until their termination in March and
April 1994, respectively when such loans were repaid. Mr. Benun is currently a
guarantor of the Company's borrowings under the loan agreement with The CIT
Group/Credit Finance, Inc.
At June 30, 1995 the Company was indebted to Mr. Benun for certain loans
made by him to the Company in the principal amount of $100,000, which amount
bears interest at a rate per annum equal to 2% over CIT's prime lending rate.
The Company incurred approximately $11,000 in interest expense in Fiscal 1995 in
connection with the loans
16
<PAGE>
from Mr. Benun and suspended payment of the loans because the Company believes
that it has valid claims against Mr. Benun in excess of said loans. As part of
the litigation referred to above, Mr. Benun also seeks payments of these monies.
Mr. Benun's motion for summary judgement for the immediate payment of these
monies was denied on December 8, 1995.
The Company and Mr. Benun entered into and executed a Pledge Agreement on
each of March 7, and April 6, 1994 to secure the prompt payment of any liability
to the Company that Mr. Benun may incur as a result of the matters then under
investigation. Mr. Benun was terminated as Chief Executive Officer on July 14,
1994. Mr. Benun has violated the terms of the Pledge Agreement by refusing to
pledge the $400,000 in value as collateral as required by the Pledge Agreement.
On August 1, 1994 ELA Enterprises, Inc., a Company owned by Eli Arenberg,
was granted an option under the Company's Incentive Plan to purchase 10,000
Common Shares at an exercise price of $3.00 per share, 10,000 Common Shares at
an exercise price of $4.00 per share, and 10,000 Common Shares at an exercise
price of $5.00 per share, in connection with consulting services provided by Mr.
Arenberg to the Company pursuant to the ELA Enterprises Consulting Agreement.
All options previously granted to Mr. Arenberg were canceled. In addition, ELA
Enterprises is to be paid a yearly retainer of $10,000 for 387 hours of
consulting services and will be paid at an hourly rate of $37.50 for consulting
services in excess of the 387 hours provided to the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has reappointed the independent accounting firm of Ernst & Young
as auditors of the Company for Fiscal 1996. Shareholder approval requires the
affirmative vote of the holders of a majority of the shares represented and
entitled to vote at the Annual Meeting. A representative of Ernst & Young is
expected to attend the Annual Meeting, will have the opportunity to make a
statement should he desire to do so and is expected to be available to respond
to appropriate questions.
The Board is seeking shareholder approval of its selection of Ernst &
Young. If shareholders do not approve the appointment of Ernst & Young as the
auditors of the Company for Fiscal 1996 at the Annual Meeting, the Board, on
recommendation of its Audit Committee, may reconsider the selection.
On the recommendation of its Audit Committee and by action of its Board of
Directors, on May 18, 1995, the Company terminated the engagement of the firm of
Deloitte & Touche LLP ("Deloitte & Touche") as independent public accountants
for the Company and retained Ernst & Young LLP ("Ernst & Young") independent
public accountants, effective immediately. During the two most recent fiscal
years and for the period through May 18, 1995, the Company has not consulted
with Ernst & Young on items which (1) were or should have been subject to SAS
500 or (2) concerned the subject matter of a disagreement or reportable event
with the former auditor (as described in Regulation S-K Item 304 (a) (2)).
Deloitte & Touche's report on the Registrant's financial statements for the
fiscal years ended June 30, 1994 and 1993 contained no adverse opinion or a
disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit
scope, or accounting principles.
In connection with its audits for the fiscal years ended June 30, 1994 and
1993 and in the subsequent interim period preceding the termination of Deloitte
& Touche's engagement and the engagement of Ernst & Young, there have been no
disagreements with Deloitte & Touche on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of Deloitte & Touche would have
caused it to make a reference to the subject matter of the disagreements in
connection with its report.
No "Reportable event," as defined in Regulation S-K, Item 304 (a)(1)(v) has
occurred within the last two fiscal years and in the subsequent interim period
preceding the termination of Deloitte & Touche.
The Company has requested that Deloitte & Touche furnish the Company with a
copy of its letter to the Securities and Exchange Commission stating whether
Deloitte & Touche agreed with the foregoing statements. The letter provided by
Deloitte & Touche stated that it did agree with the foregoing statements. A copy
of said letter was filed as an exhibit to a report of Form 8-K filed by the
Company, dated May 18, 1995.
1996 SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal for action at the
Company's 1996 Annual Meeting of Shareholders must comply with and meet the
requirements of Regulation 14a-8 of the Exchange Act. That regulation
17
<PAGE>
requires, among other things, that any proposal be received by the Company at
its executive offices, 35 Mileed Way, Avenel, New Jersey 07001, by September 3,
1996.
GENERAL AND OTHER MATTERS
Management knows of no matter other than the matters described above which
will be presented at the Annual Meeting. However, if any other matters properly
come before the Annual Meeting, or any of its adjournments, the persons voting
the proxies will vote them as they deem in the best interest of the Company.
SOLICITATION OF PROXIES
The cost of proxy solicitations will be borne by the Company. In addition
to solicitations of proxies by use of the mails, some officers or employees of
the Company, without additional remuneration, may solicit proxies personally or
by telephone. The Company may retain the services of Continental Stock Transfer
& Trust Company ("Continental"), a professional proxy solicitation firm, to
assist in the solicitation of proxies. The Company may pay a fee of up to $4,500
plus expenses, not to exceed $500, for this service. Continental may solicit
proxies by use of the mails or by telephone. The Company will also request
brokers, dealers, banks and their nominees to solicit proxies from their
clients, where appropriate, and will reimburse them for reasonable expenses
related thereto.
GARY M. SIMON
Secretary
Avenel, New Jersey
December 22, 1995
18
