SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 - Commission file Number
0-17038
Concord Camera Corp.
(Exact names of registrant as specified in its charter)
New Jersey 13-3152196
(State or other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
35 Mileed Way, Avenel, New Jersey 07001
(Address of principal executive office) (Zip code)
908/499-8280
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, no par value -- 10,941,526 shares as of November 9,
1995
Page 1 of 12
Exhibit Index on Page 11
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Concord Camera Corp.
Consolidated Balance Sheets
September 30,
1995 June 30,
(unaudited) 1995
<S> <C> <C>
Current assets:
Cash $ 3,284,397 $ 4,533,216
Accounts receivable, net 10,012,945 8,589,790
Inventories 21,819,907 18,865,323
Prepaid expenses and other current
assets 2,755,981 2,494,559
Total current assets 37,873,230 34,482,888
Plant and equipment, net 11,266,088 10,802,688
Goodwill, net 1,636,576 1,678,629
Investments in joint ventures 82,819 91,984
Other assets 3,116,769 3,132,566
Total assets $53,975,482 $50,188,755
Current liabilities:
Short-term debt $ 6,028,104 $ 5,742,063
Current portion of long-term debt 23,235 24,836
Current obligations under
capital leases 669,662 788,165
Accounts payable 8,835,218 6,993,857
Accrued expenses 3,507,232 2,902,282
Income taxes payable 229,705 294,584
Other current liabilities 2,340 305,175
Total current liabilities 19,295,496 17,050,962
Deferred income taxes 484,467 484,842
Long-term debt 264,570 264,432
Obligations under capital leases 523,930 123,626
Other long-term liabilities 648 648
Total liabilities 20,569,111 17,924,510
Stockholders' equity:
Common stock, no par value, 20,000,000
authorized; 10,938,526 and 10,490,526
issued as of September 30, 1995 and June
30, 1995 39,346,930 36,935,174
Paid in capital 850,786 850,786
Deficit (3,951,926) (5,068,796)
Common Stock Subscriptions (2,386,500) -
33,859,290 32,717,164
Less: treasury stock, at
cost; 63,553 shares (452,919) (452,919)
Total stockholders' equity 33,406,371 32,264,245
Total liabilities and stockholders'
equity $53,975,482 $50,188,755
See accompanying notes to consolidated financial statements.
</TABLE>
3
<TABLE>
Concord Camera Corp.
Consolidated statements of operations
(audited)
For three months ended
September 30,
<S> <C> <C>
1995 1994
Net sales $17,535,733 $14,716,848
Cost of products sold 11,740,551 9,997,954
Gross profit 5,795,182 4,718,894
Selling Expenses 1,873,075 1,676,475
General and administrative expenses 2,320,989 1,919,127
Financial expenses 335,209 362,523
Other expense, net 48,140 57,471
Legal Expenses and Settlement Costs 100,894 210,232
Income from operations before
income taxes 1,116,875 493,066
Provision for income taxes 0 1,645
Net Income $1,116,875 $ 491,421
Earnings per common and common equivalent
share $ 0.10 $ 0.05
Weighted average number of common and common
equivalent shares outstanding 10,998,929 10,497,000
See accompanying notes to consolidated financial statements.
</TABLE>
4
<TABLE>
Concord Camera Corp.
Consolidated statements of cash flows
(unaudited)
For the three months ended
September 30,
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Net income $ 1,116,875 $ 491,421
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 714,263 583,658
Net gain on sale of property & equipment 0 (1,812)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable (1,423,155) 83,471
(Increase)in inventories (2,954,584) (1,790,677)
(Increase)in prepaid expenses and other
current assets (284,225) (31,504)
(Increase) decrease in other assets (97,252) 79,582
Increase in accounts payable 1,841,361 1,360,786
Increase (decrease) in accrued expenses 604,950 (54,303)
Increase (decrease) in income taxes payable (64,879) 68,852
(Decrease) in other current liabilities (302,835) (35,198)
(Decrease) in deferred income taxes (375) (747)
(Decrease) in other liabilities 0 (15,625)
Total adjustments (1,966,731) 246,483
Net cash provided by (used in) operating
activities (849,856) 737,904
Cash flows from investing activities:
Purchase of property, plant and equipment (476,482) (254,286)
Proceeds from sale of long term assets 0 12,207
Decrease in Investments and advances to
joint ventures 9,165 75,000
Cash flows from financing activities:
Net borrowings (repayments) under short-term
debt agreements 286,041 (199,462)
5
(Repayments) of long-term debt (1,462) (3,416)
Principal payments under capital lease
obligations (241,481) (83,872)
Net proceeds from issuance of common stock 25,256 -
Net cash provided by (used in) financing
activities 68,354 (286,750)
Net increase (decrease) in cash (1,248,819) 284,075
Cash at beginning of period 4,533,216 3,394,658
Cash at end of period $3,284,397 $3,678,733
See accompanying notes to consolidated financial statements.
See Note 3 - Supplemental Disclosure of cash flow information.
</TABLE>
6
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(unaudited)
NOTE 1 - General
In the opinion of Concord Camera Corp. ("the Company"), the
accompanying unaudited financial statements contain all
adjustments, including normal recurring adjustments, necessary
for the fair presentation of the Company`s financial position as
of September 30, 1995, and the results of operations and cash
flows for the periods ended September 30, 1995 and 1994.
The Notes to Consolidated Financial Statements, which are
included in the Company's 1995 Form 10-K Annual Report, should be
read with the accompanying financial statements.
Earnings per common and common equivalent share, for the three
months ended September 30, 1995 are based on the weighted average
number of common shares outstanding and the dilutive effect of
common stock equivalents, which include stock options and/or
warrants that are exercisable at prices below the average price
of the Company's common stock during the three months ended
September 30, 1995. Earnings per common share, for the three
months ended September 30, 1994, are based on the weighted
average number of common shares outstanding during such three
month period. Common stock equivalents outstanding during the
three months ended September 30, 1994 were not included in the
calculation of earnings per share because their effect was
antidilutive.
The Company operates on a worldwide basis and its results may be
adversely or positively affected by fluctuations of various
foreign currencies against the U.S. Dollar, specifically, the
Canadian Dollar, German Mark, British Pound Sterling, Hungarian
Forints, French Francs, and Japanese Yen. Each of the Company's
foreign subsidiaries purchases its inventories in U.S. Dollars
and sells them in local currency, thereby creating an exposure to
fluctuations in foreign currency exchange rates. Certain
components needed to manufacture cameras are priced in Japanese
Yen. The impact of foreign exchange transactions is reflected in
the profit and loss statement. The Company continues to analyze
the benefits and costs associated with hedging against foreign
currency fluctuations.
NOTE 2 - Inventories
Inventories are comprised of the following:
7
<TABLE>
<S> <C> <C>
September 30 June 30,
1995 1995
Raw material $ 9,852,288 $ 7,162,899
Finished goods 11,967,619 11,702,424
$21,819,907 $18,865,323
</TABLE>
<TABLE>
Note 3 - Supplemental Disclosures of Cash Flow Information:
For the Three months ended September 30,
<S> <C> <C>
1995 1994
Cash paid for interest $ 191,424 $ 199,994
Cash paid for taxes $ 72,567 $ 535
</TABLE>
During the three months ended September 30, 1995 and 1995,
capital lease obligations of approximately $523,000 and $50,000,
respectively were incurred when the company entered into leases
for the purchase of equipment.
Note 4 - Stockholder's Equity
For financial reporting purposes, 444,000 shares of Common Stock
to be issued in exchange for notes of $2,386,500 pursuant to the
Company's Senior Management Common Stock Purchase Award
Provisions, forming a part of the Company's Incentive Plan have
been treated as outstanding since August 23, 1995, the date upon
which commitments for the purchase of such shares were made by
the purchasers. Definitive agreements and the related notes for
such purchases were executed on November 7, 1995 when the shares
were issued. Since the aggregate purchase price of $2,386,500
was included in stockholder s equity a corresponding reduction in
stockholder s equity was made since the notes were not received
by the Company until November 7, 1995.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three months ended September 30, 1995 compared to the three
months ended September 30, 1994.
8
Total revenues for the three months ended September 30,
1995 and 1994 were approximately $17,536,000 and $14,717,000,
respectively, an increase of approximately $2,819,000 or 19.2%.
The increase, which is net of decreases in non-camera revenues,
is due to an increase in OEM revenues, the Company's European
expansion, and the continued acceptance of the Company's single-
use and slim-line camera models. Revenues from traditional
camera sales and OEM sales increased by approximately $114,000 or
1.0% and $4,994,000 or 595.4% respectively for the three months
ended September 30, 1995 to $11,703,000 and $5,833,000,
respectively, from $11,589,000 and $839,000, respectively, for
the three months ended September 30, 1994. In the three months
ended September 30, 1995, there were no non-camera sales compared
to approximately $2,289,000 of such sales in the three months
ended September 30, 1994. Non-camera sales were substantially
discontinued by the Company as of the end of the three months
ended September 30, 1994. The increase in OEM sales is
attributable to increased purchases from the Company's
preexisting OEM customers.
Sales by Concord Camera HK Limited ("Concord HK") for the
three months ended September 30, 1995 and 1994 were approximately
$10,827,000 and $4,844,000, respectively, an increase of
approximately $5,983,000 or 123.5%. The increase is due
primarily to the increase in OEM sales and a change in the OEM
point of sale from the United States to Hong Kong during the
quarter ended December 31, 1994. The Company effectuated a change
in the OEM point of sale in order to secure an additional working
capital line from the Bank of East Asia, New York (see Bank of
East Asia, New York.) Payment of FOB sales are primarily by
letter of credit.
Consolidated sales of the Company's United States,
Canadian, and Panamanian operations, collectively "Concord
Americas," for the three months ended September 30, 1995 and 1994
were approximately $4,101,000 and $7,903,000, respectively, a
decrease of approximately $3,802,000 or 48.1%. Net sales for the
three months ended September 30, 1994 included OEM sales with
point of sale out of U.S. of approximately $831,000, and non-
camera revenues of approximately $2,289,000. If the foregoing
sales were eliminated from Concord Americas' operations in the
three months ended September 30, 1994 it would reflect a decrease
in traditional camera sales in the Americas for the three months
ended September 30, 1995 of approximately $682,000 or 14.3% over
such sales for the comparable period last year. In addition,
certain Concord Americas customers decreased merchandise
purchases on an F.O.B. Hong Kong basis from Concord HK. During
the three months ended September 30, 1995 and 1994 Concord
Americas customers purchased approximately $3,676,000 and
$4,133,000, respectively, from Concord HK, a decrease of
approximately $457,000 or 11.1%. If this decrease were added to
from the three months ended September 30, 1995 sales, sales of
9
traditional cameras to Concord Americas customers would have
decreased by 12.8% reflecting a slower retail environment, in
general, and certain customers that became financially unstable
that the company did not ship product to during the period.
Consolidated sales of Concord Camera GmbH ("Concord
Germany"), Concord Camera UK Limited ("Concord UK"), Concord
Camera France ("Concord France"), and Concord Camera (Hungary)
Ltd. ("Concord Hungary"), collectively "Concord Europe", for the
three months ended September 30, 1995 and 1994, were
approximately $2,608,000 and $1,969,000, respectively, an
increase of approximately $638,000 or 32.4%. In addition,
certain European customers increased merchandise purchases on an
F.O.B. Hong Kong basis from Concord HK. During the three months
ended September 30, 1995 and 1994 European customers purchased
approximately $1,327,000 and $301,000, respectively, from
Concord HK, an increase of approximately $1,026,000 or 340.8%.
If this increase were added to the three months ended September
30, 1995 sales, sales to European customers would have increased
by 73.3%. This increase is primarily attributable to sales to
new customers by the Company's increased European Sales and
Marketing force.
Gross Profit
Gross profit, expressed as a percentage of sales,
increased to 33.0% for the three months ended September 30, 1995
from 32.1% for the three months ended September 30, 1994. This
increase was due in part to improved control over production and
inventory levels during the past fiscal year and the
discontinuance of lower margin non-camera products.
Expenses
Operating expenses consisting of selling, general and
administrative and financial expenses, increased to $4,630,000 in
the three months ended September 30, 1995 from $4,168,000 in the
three months ended September 30, 1994, an increase of $462,000 or
11.1%. As a percentage of sales, operating expenses decreased to
26.4% in the three months ended September 30, 1995 from 28.3% in
the three months ended September 30, 1994.
Selling expenses increased to $1,873,000 or 10.7% of net
sales in the three months ended September 30, 1995 from
$1,676,000 or 11.4% of net sales in the three months ended
September 30, 1994 The increase was primarily attributable to
the Company's increased sales volume and increases in freight
costs, royalty expenses, sales allowances, and marketing
expenses.
General and Administrative expenses increased to
$2,321,000 or 13.2% of net sales in the three months ended
10
September 30, 1995 from $1,919,000 or 13.0% of net sales in the
three months ended September 30, 1994. The increase is primarily
attributable to certain specific provisions for doubtful
accounts, increases in professional fees, rent expense, and costs
associated with building the necessary infrastructure to support
the growth in volume.
Financial expenses decreased to $335,000 or 1.9 % of net
sales in the three months ended September 30, 1995 from $363,000
or 2.5% of net sales in the three months ended September 30,
1994. Such decrease was primarily a result of a reduction in
average debt outstanding during the three months ended September
30, 1995, and a reduction in loan guarantee fees.
Litigation and settlement costs in the three months ended
September 30, 1995 and 1994 were approximately $101,000 and
$210,000, respectively. The Company incurred significant legal
expenses and settlement costs in connection with non-operating
matters, primarily the demand for arbitration against Jack Benun,
the purported class action, the Roland Kohl litigation, and the
Argus settlement.
Other Expense, Net
Other expense, net includes directors fees, certain public
relations costs, and foreign exchange gains and losses net of
interest income and gains from the sale of fixed assets.
Income Taxes
The Company's provision for income taxes for the three
months ended September 30, 1995 is primarily related to the
earnings of the Company's Far East operations, net of benefits
relating to overpayments/refunds on the Company's other foreign
Subsidiaries.
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
Fuji Photo Film Co., Ltd. ("Fuji"). On October 19, 1995,
the Company was served with a summons and complaint in an action
styled Fuji Photo Film Co., Ltd. V. Concord Camera Corp., filed
in the United States District Court for the Southern District of
New Jersey. The action is for patent infringement in connection
with certain of the Company s single-use cameras. The Company
has answered the complaint and served its counter-claim seeking a
declaratory judgement that the Fuji patents are invalid,
unenforceable and not infringed by the Company.
11
Exhibits and Reports on Form 8-K
8-K dated October 19, 1995 in connection with a lawsuit
filed by Fuji Photo Film Co., Ltd.
Item 6. Exhibits
10.55 - First Amendment to Revolving Line of Credit and
Security Agreement between the Company and the Bank of
East Asia Limited, New York Branch.
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CONCORD CAMERA CORP.
(Registrant)
BY: s/Harlan Press
(Signature)
Harlan Press
Chief Accounting Officer
DULY AUTHORIZED AND PRINCIPAL ACCOUNTING
OFFICER
DATE: November 10, 1995
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Concord
Camera Corp.'s Consolidated Financial Statements as of September 30, 1995 and
the results of operations for the quarter ended September 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-END> Sep-30-1995
<CASH> 3,284,397
<SECURITIES> 0
<RECEIVABLES> 11,474,689
<ALLOWANCES> (1,461,744)
<INVENTORY> 21,819,907
<CURRENT-ASSETS> 37,873,230
<PP&E> 20,003,674
<DEPRECIATION> (8,737,586)
<TOTAL-ASSETS> 53,975,482
<CURRENT-LIABILITIES> 19,295,496
<BONDS> 264,570
<COMMON> 39,346,930
0
0
<OTHER-SE> (5,940,559)
<TOTAL-LIABILITY-AND-EQUITY> 53,975,482
<SALES> 17,535,733
<TOTAL-REVENUES> 17,535,733
<CGS> 11,740,551
<TOTAL-COSTS> 4,630,167
<OTHER-EXPENSES> 48,140
<LOSS-PROVISION> 206,392
<INTEREST-EXPENSE> 213,392
<INCOME-PRETAX> 213,430
<INCOME-TAX> 1,116,875
<INCOME-CONTINUING> 0
<DISCONTINUED> 1,116,875
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 1,116,875
<EPS-DILUTED> .10
</TABLE>
FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT
FIRST AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT, dated
as of September 20, 1995, by and between THE BANK OF EAST ASIA, LIMITED, NEW
YORK BRANCH, a Hong Kong banking association having a federally chartered
branch at 202 Canal Street, New York, New York 10013 (the "Bank") and CONCORD
CAMERA HK, LIMITED, a Hong Kong corporation with an address c/o Concord Camera
Corp., 35 Mileed Way, Avenel, New Jersey 07001 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower and the Bank entered into a Revolving Credit
And Security Agreement, dated as of December 20, 1994 (as from time to time
may be amended, supplemented or modified, the "Credit Agreement"), pursuant to
which the Bank agreed to make Advances to Borrower from time to time in an
aggregate principal amount not to exceed the lesser of US $1,500,000.00 and
the Borrowing Base at the time of any Advance;
WHEREAS, in connection with the Credit Agreement, the Borrower has
executed and delivered or has caused to be executed and delivered to the Bank
the Line of Credit Note, the Corporate Guaranty of Concord Camera Corp., and
the other Loan Documents (all as from time to time may be amended,
supplemented or modified); and
WHEREAS, the Borrower and the Bank desire to amend certain of the
terms and conditions of the transactions contemplated in the Loan Documents as
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Borrower and the Bank agree as
follows:
1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to such terms in
the Credit Agreement.
2. Representations and Warranties. In order to induce the Bank
to enter into this Agreement, the Borrower hereby represents and warrants to
the Bank as follows:
(a) the representations and warranties of the Borrower contained
in the Credit Agreement are true on and as of the date hereof to
the same extent as though made on and as of the date hereof;
(b) it has the general corporate power and authority to own its
assets and conduct its business as now conducted and to execute,
deliver and perform its obligations under this Agreement, the
first amended and restated note, in the form of Exhibit A attached
hereto (the "First Amended and Restated Note"), and all other
documents, instruments, agreements and certificates delivered to
the Bank by the Borrower pursuant hereto, on the date hereof or
hereafter in connection with this Agreement (collectively, the
"First Amendment Loan Documents");
(c) the consummation of the transactions described in this
Agreement, the First Amended and Restated Note and the other First
Amendment Loan Documents have been duly authorized by all
requisite corporate action;
(d) this Agreement, the First Amended and Restated Note and the
other First Amendment Loan Documents constitute its respective
legal, valid and binding obligations, enforceable against it in
accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles,
regardless whether enforceability is considered in a proceeding in
equity or at law;
(e) the execution, delivery and performance by it of this
Agreement, the First Amended and Restated Note and the other First
Amendment Loan Documents do not, (i) violate any material
provision of any law, rule, regulations, judgment, injunction or
order applicable to it, or its certificate of incorporation or
by-laws, or (ii) result in a breach of, or constitute a default
under, any contractual obligation;
(f) no consent, approval or other action by, or any notice to or
filing with, any governmental authority (other than UCC filings,
if applicable) is or will be necessary for the valid execution,
delivery or performance by it of this Agreement, the First Amended
and Restated Note or any other First Amendment Loan Documents;
(g) it has good and marketable legal and beneficial title to the
Collateral (as amended herein), free and clear of any Liens,
except Permitted Liens. On and after the date hereof, this
Agreement creates, as security for the payment and performance
when and as due of the Obligations (as amended by the terms
herein), a valid and enforceable first priority and, upon (i)
filing of the appropriate financing statement, (ii) filing of a
charge in Hong Kong, and (iii) giving of written notice to 3M,
Polaroid Corporation, Auchan , Agfa-Gevaert AG, and The Boots
Company PLC (collectively, the "Account Debtors"), perfected
security interest in, and Lien against, the Collateral in favor of
the Bank, superior and prior to the rights of all persons and
entities and subject to no other Liens, except Permitted Liens;
(h) it is the sole owner of its Accounts (as amended by the terms
herein) and no person has or claims to have an interest of any
kind therein or thereto; the Account Debtors are indebted to it in
the amounts and on the terms indicated in their respective
invoices of Accounts; each Account is bona fide and arises out of
the sale or lease of goods and services; and none of the Accounts
is now, nor will at any time in the future become, contingent upon
the fulfillment of any contract or condition whatsoever, nor
subject to any Lien (except those of the Bank), deduction,
defense, setoff or counterclaim;
(i) no material adverse change has occurred in its business,
operations, properties or condition (financial or otherwise),
taken as a whole, since the date of its most recent financial
statements delivered to the Bank;
(j) no financial statements, accounts receivable sub-ledgers, or
other documents furnished to the Bank by or on behalf of it
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein
not misleading in light of the circumstances under which it was
made;
(k) the proceeds of the Advances will be used for its working
capital purposes;
(l) no event of default has occurred and is continuing which
constitutes or will constitute an Event of Default under the
Credit Agreement or the other Loan Documents; and
(m) there exists no right of setoff or recoupment, counterclaim or
defense of any kind or nature whatsoever to payment of the
Obligations.
3. First Amended and Restated Note. The Advances shall be
evidenced by the First Amended and Restated Note of the Borrower. All
references in the Credit Agreement and the other Loan Documents to the "Note"
shall be deemed to be referenced to the "First Amended and Restated Note".
4. Amendments to Credit Agreement. To induce the Bank to enter
into this Agreement, the Borrower hereby agrees that the Credit Agreement
shall be amended as follows:
(a) All references in the Credit Agreement and the other Loan
Documents to "3M" shall be deemed to be references to the "Account Debtors".
(b) Section 1(a) of the Credit Agreement is hereby amended by
deleting the words "One Million Five Hundred Thousand Unites States Dollars
(US $1,500,000.00)" after the subsection "(i)" in the fourth line thereof and
inserting the words "Three Million United States Dollars (US $3,000,000.00)".
(c) Section 2(b) of the Credit Agreement is hereby amended as
follows:
(i) by inserting the phrase ", and 35 millimeter cameras
with film" after the word "subassemblies" in the ninth line thereof;
(ii) by inserting the phrase ", Polaroid Corporation,
Auchan, Agfa-Gevaert AG, or The Boots Company PLC" after the word "Company" in
the eleventh line thereof;
(iii) by replacing the word "its" after the word "of" in
the eleventh line thereof with the words "their respective"; and
(iv) by replacing the quote "3M" after the word
"collectively" in the eleventh line thereof with the quote "Account Debtors".
(d) Section 9(b)(iii)(A) of the Credit Agreement is hereby amended
by deleting the phrase "# 3003671" and by inserting the letter "s" after the
word "account" in the first line thereof.
5. Conditions to Effectiveness. This Agreement shall not
become effective unless or until each of the following conditions shall have
been satisfied:
(a) receipt by the Bank of a duly executed counterpart of this
Agreement;
(b) receipt by the Bank of the duly executed First Amended and
Restated Note;
(c) receipt by the Bank of the duly executed First Amended and
Restated Continuing Corporate Guaranty of Guarantor, in the form of Exhibit B
attached hereto;
(d) receipt by the Bank of certified copies of all corporate
action taken by the Borrower and Guarantor, as the case may be, to authorize
the execution, delivery and performance of this Agreement, the First Amended
and Restated Note, and the other First Amendment Loan Documents;
(e) receipt by the Bank of certificates, dated the date hereof, of
duly authorized officers or representatives of Borrower and Guarantor, as the
case may be, as to the incumbency, and setting forth the specimen signatures,
of the persons who have signed this Agreement, the First Amended and Restated
Note, and the other First Amendment Loan Documents;
(f) receipt by the Bank of duly executed UCC financing statements
as requested by the Bank;
(g) receipt by the Bank of an opinion of counsel for the Borrower
in the form as Exhibit C attached hereto;
(h) receipt by the Bank of an opinion of counsel for the Guarantor
in the form as Exhibit D attached hereto;
(i) receipt by the Bank of an opinion of Hong Kong counsel for the
Borrower in the form as Exhibit E attached hereto;
(j) copies of accounts receivable sub-ledger attributable to the
sale of the Product by Borrower to each of the Account Debtors for the most
recent past six (6) months;
(k) payment to the Bank of all fees and expenses of the Bank in
the amount of $5,000.00, and fees and disbursements of its legal counsel;
(l) at the closing of the transactions contemplated hereunder, the
Bank shall deliver and return to Borrower the Note and Guaranty.
6. Effect of Agreement.
(a) This Agreement shall be limited precisely as written.
(b) Except as specifically provided herein, this Agreement shall
not in any way affect or impair the terms and conditions of the Credit
Agreement and the other Loan Documents, and all terms and conditions of the
Credit Agreement and the other Loan Documents shall remain in full force and
effect, and are hereby ratified and confirmed in all respects by the Borrower,
unless otherwise specifically amended, waived or changed pursuant to the terms
and conditions of this Agreement. Except as specifically provided herein,
this Agreement is not a consent to any waiver or modification of any term or
condition of the Credit Agreement or of any instrument referred to therein and
does not require the Bank to extend or renew the Facility.
(c) In the event of any inconsistency between the terms of this
Agreement and the Credit Agreement, this Agreement shall govern. The Borrower
acknowledges that it has consulted with counsel and such other experts and
advisors as it has deemed necessary in connection with the negotiation,
execution and delivery of this Agreement.
7. General Conditions.
(a) The Borrower agrees that it shall reimburse the Bank upon
request for all out-of-pocket costs and expenses that the Bank may incur,
including, without limitation, fees and disbursements of counsel, in
connection with respect to the enforcement of the Bank's rights under this
Agreement, the First Amended and Restated Note or any other First Amendment
Loan Documents.
(b) This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the laws of
the State of New York, without giving effect to its conflicts of law
principles.
(c) This Agreement shall create a continuing security interest in
the Collateral, which shall remain in full force and effect until indefeasible
payment in full of the Obligations and the expiration or termination of the
Bank's commitments hereunder. Upon the indefeasible payment in full of the
Obligations and the expiration or termination of the Bank's commitments
hereunder, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Borrower.
(d) All agreements, indemnifications, representations and
warranties made herein by the Borrower shall survive and not be waived by the
execution and delivery of this Agreement, the First Amended and Restated Note,
or any other First Amendment Loan Document, any investigations by the Bank, or
the making and repayment of the Advances.
(e) All Exhibits and Schedules, if any, attached hereto are hereby
incorporated by reference and are part of this Agreement as if expressly set
forth at length herein.
(f) If any provision of this Agreement is determined to be
unenforceable or invalid under applicable law, such unenforceability or
invalidity shall not affect the enforceability or validity of any other
provision of this Agreement, and the parties hereto expressly agree that such
unenforceable or invalid provision shall be deemed severed from this
Agreement.
(g) The descriptive headings of the several sections and
subsections of this Agreement are inserted for convenience only, and are in no
way intended or to be used or applied to describe, interpret, construe, define
or limit the scope, extent or operation of this Agreement or of any term or
provision hereof.
(h) This Agreement may be executed in any number of counterparts,
and by the different parties hereto on the same or separate counterparts, each
of which shall be deemed to be an original instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and to be executed and delivered by their respective
officers thereunto authorized as of the date first above written.
THE BORROWER
CONCORD CAMERA HK, LIMITED
By:___________________________
Name:
Title:
THE BANK
THE BANK OF EAST ASIA, LIMITED
NEW YORK BRANCH
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
THE GUARANTOR
CONCORD CAMERA CORP.
By:___________________________
Name:
Title:
EXHIBIT A
[FIRST AMENDED AND RESTATED NOTE]
<PAGE>
EXHIBIT B
[FIRST AMENDED AND RESTATED CONTINUING GUARANTY]
<PAGE>
EXHIBIT C
[BORROWER'S COUNSEL OPINION]<PAGE>
EXHIBIT D
[GUARANTOR'S COUNSEL OPINION]<PAGE>
EXHIBIT E
[BORROWER'S HONG KONG COUNSEL OPINION]
