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 March 31, 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 --10,460,081 shares as of May 10, 1995
______________________________
Page 1 of 37
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
Concord Camera Corp.
Consolidated Balance Sheets
<S> <C> <C>
March 31,
1995 June 30,
(unaudited) 1994 ___________
Current assets:
Cash $ 3,930,094 $3,394,658
Accounts receivable, net 10,419,781 8,489,661
Inventories 17,849,183 19,107,018
Prepaid expenses and other
current assets 2,386,186 2,610,127
Total current assets 34,585,244 33,601,464
Plant and equipment, net 9,896,616 10,306,659
Goodwill, net 1,621,215 1,728,783
Investment in joint ventures 93,634 168,634
Other assets 3,215,266 2,377,018
Total assets $49,411,975 $48,182,558
Current liabilities:
Short-term debt $ 5,817,881 $ 3,708,976
Current portion of long-term debt 24,350 23,646
Current obligations under capital
leases 974,720 877,998
Accounts payable 5,772,051 5,436,932
Accrued expenses 1,793,189 1,947,521
Income taxes payable 370,053 184,471
Due to officer 0 100,000
Other current liabilities 370,700 207,333
Total current liabilities 15,122,944 12,486,877
Deferred income taxes 431,142 509,190
Long-term debt 270,120 3,284,534
Obligations under capital leases 223,184 713,721
2
Other long-term liabilities 13,010 133,011
Total liabilities 16,060,400 17,127,333
Stockholders' equity:
Common stock, no par value,
20,000,000 authorized; 10,523,634
and 10,490,526 issued as of March 37,067,607 36,935,174
31, and June 30, 1994
Paid in capital 850,786 850,786
Deficit (4,113,899) (6,277,816)
Less: treasury stock, at cost; 33,804,494 31,508,144
63,553 shares (452,919) (452,919)
Total stockholders' equity 33,351,575 31,055,225
Total liabilities and
stockholders' equity $49,411,975 $48,182,558
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated Statements of Operations
<CAPTION>
(Unaudited)
for the three months ended
March 31,
<S> <C> <C>
1995 1994
Net sales $13,783,022 $12,133,669
Cost of products sold 9,212,844 9,215,315
Gross profit 4,570,178 2,918,354
Selling Expenses 1,721,518 1,195,600
General and administrative 2,186,545 2,451,107
expenses
Financial expenses 347,959 500,735
Other (income) expense, net 21,947 (57,076)
Income (loss) from operations
before income taxes 292,209 (1,172,010)
Provision for income taxes 41,824 0
Net Income (loss) $250,385 ($1,172,010)
Earnings (loss) per common and
common equivalent share $0.02 ($0.11)
Weighted average number of common
and common equivalent shares 10,529,991 10,352,440
outstanding
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated statements of operations
<CAPTION>
(unaudited)
for the nine months ended
March 31,
<S> <C> <C>
1995 1994
Net Sales 47,054,815 $41,933,216
Cost of products sold 31,917,977 27,782,966
Gross profit 15,136,838 14,150,250
Selling Expenses 5,338,584 3,965,446
General and administrative
expenses 6,463,410 7,422,257
Financial expenses 1,102,419 1,477,738
Other income, net (76,261) (271,078)
Income from operations before
income taxes 2,308,686 1,555,887
Provision for income taxes 144,769 70,279
Net Income $2,163,917 $1,485,608
Earnings per common and common
equivalent share $0.21 $0.15
Weighted average number of common
and common equivalent shares 10,507,684 10,235,412
outstanding
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
Concord Camera Corp.
Consolidated Statements of Cash Flows
<CAPTION>
(Unaudited)
For the nine Months ended
March 31,
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Net income $2,163,917 $1,485,608
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,760,827 1,652,545
(Gain) loss on sale of long term
assets (5,027) 456
Change in assets and liabilities, net
of effects from purchase of joint
venture interests:
(Increase) in accounts receivable (1,930,120) (1,292,991)
(Increase) decrease in inventories 1,257,835 (174,294)
(Increase) decrease in prepaid
expenses and other current assets 171,432 (942,925)
(Increase) in other assets (903,472) (223,781)
Increase (decrease) in accounts
payable 335,119 (1,949,469)
(Decrease) in accrued expenses (154,332) (1,302,051)
(Decrease) in payable to joint
ventures - (24,344)
Increase in income taxes payable 185,582 324,488
Increase (decrease) in other current
liabilities 63,367 (193,237)
(Decrease) in deferred income taxes (78,048) (12,845)
Increase (decrease) in other
liabilities (120,002) 16,609
Total adjustments 583,161 (4,121,839)
Net cash provided by (used in)
operating activities 2,747,078 (2,636,231)
Cash flows from investing activities:
Purchase of property, plant and
equipment (887,756) (1,275,051)
6
Purchase of certificate of deposit - (1,000,000)
Proceeds from sale of long term
assets 30,176 67,850
Decrease (increase) in investment
and advances to joint ventures 75,000 (51,078)
Net cash (used in) investing
activities (782,579) (2,258,279)
Cash flows from financing activities:
Net borrowings under short-term debt
agreements 2,108,905 1,873,237
Repayments of long-term debt (3,013,710) (26,434)
Principal payments under capital
lease obligations (524,257) (899,191)
Net repayments to shareholder - (105,170)
Changes in paid in capital - (33,206)
Net proceeds from issuance of common
stock - 5,805,103
Net cash provided by (used in)
financing activities (1,429,062) 6,614,339
Net increase in cash 535,436 1,719,829
Cash at beginning of period 3,394,658 2,112,289
Cash at end of period $3,930,094 $3,832,118
See Note 3
See accompanying notes to consolidated financial statements.
</TABLE>
7
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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 March 31, 1995, and the results of operations and cash flows
for the periods presented.
The Notes to Consolidated Financial Statements, which are
included in the Company's 1994 Form 10-K Annual Report, should be
read with the accompanying financial statements.
Earnings per common share, for the three months ended March 31,
1995 and 1994 and for the nine months ended March 31, 1995 are
based on the weighted average number of common shares outstanding
during such periods. Common stock equivalents outstanding during
those periods were not included in the calculation of earnings
per share because their effect was not dilutive. Earnings per
common and common equivalent share for the nine months ended
March 31, 1994 are based on the weighted average number of common
shares outstanding during such period 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 March
31, 1994.
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 translation from the applicable foreign currencies to
U.S. dollars is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and
for revenue and expense accounts using a weighted average
exchange rate during the period. Gains or losses resulting from
foreign currency transactions are included in "other (Income)
expense, net" in the statement of operations. The Company
continues to analyze the benefits and costs associated with
hedging against foreign currency fluctuations.
8
<PAGE>
<TABLE>
NOTE 2 - Inventories
<CAPTION>
Inventories are comprised of the following:
<S> <C> <C>
March 31, June 30,
1995 1994
Raw material $ 8,265,699 $ 5,648,318
Finished goods 9,583,514 13,458,700
$17,849,183 $19,107,018
Note 3 - Supplemental Disclosures of Cash Flow Information:
For the nine months ended March
31,
1995 1994
Cash paid for interest $630,671 $786,617
Cash paid for taxes $ 87,917 $ 29,491
Noncash investing and financing activities:
On November 9, 1994 the Company issued 33,108 shares of Common
Stock valued at $132,433 in satisfaction of the first payment
required for the land use rights in the PRC. ("See Other
arrangements and future cash commitments").
During the nine months ended March 31, 1995 and 1994, capital
lease obligations of approximately $130,000 and $192,000 were
incurred when the Company entered into leases for the purchase of
equipment.
</TABLE>
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three months ended March 31, 1995 compared to three months ended
March 31, 1994
Revenues
Total revenues for the three months ended March 31, 1995 and 1994
were approximately $13,783,000 and $12,134,000, respectively, an
increase of approximately $1,649,000 or 13.6%. The increase,
which is net of decreases in non-camera revenues and revenues
from promotional sales, is due to the Company's European
expansion, continued acceptance of the Company's new products,
principally the single-use and slim-line camera models, and an
increase in OEM revenues. Revenues from traditional camera sales
and OEM sales increased by approximately $1,806,000 or 23.5% and
$1,536,000 or 56.0% respectively for the three months ended March
31, 1995 to $9,506,00 and $4,277,000, respectively, from
$7,700,00 and $2,741,000, respectively, for the three months
ended March 31, 1994. In the three months ended March 31, 1995,
there were no non-camera or promotional sales compared to
approximately $653,000 and $1,039,000, respectively, of such
sales in the three months ended March 31, 1994. Non-camera sales
were substantially discontinued by the Company as of the end of
the three month period ended September 30, 1994. The increase in
OEM sales is attributable to increased purchases from the
Company's preexisting OEM customer and from sales to a new OEM
customer.
Sales by Concord Camera HK Limited ("Concord HK"), for the three
months ended March 1995 and 1994 were approximately $7,976,000
and $2,538,000, respectively, an increase of approximately
$5,438,000 or 214.3%. The increase is due to the continued
acceptance of the Company's new products, principally the single-
use and slim-line camera models, the successful implementation of
certain sales programs with the Company's larger customers which
are on an FOB Hong Kong basis, and resulted in a change in the
OEM point of sale from the United States to Hong Kong during the
three months ended December 31, 1994. The Company effected a
change in the OEM point of sale in order to secure an additional
working capital credit line (see Bank of East Asia, New York.)
Payment for FOB sales are primarily by letter of credit.
Sales by the Company's United States operation for the three
months ended March 31, 1995 and 1994 were approximately
$2,964,000 and $6,631,000, respectively, a decrease of
approximately $3,667,000 or 55.3%. In the three month period
ended March 31, 1995 there were no promotional sales and OEM
sales with the point of sale out of the U.S. as compared to
approximately $1,039,000 and $2,741,000, respectively for the
three months ended March 31, 1994. After giving effect for these
sales, traditional camera sales in the United States increased by
approximately $113,000 or 4.0% for the three months ended March
31, 1995 over the comparable period last year. In addition,
certain United States customers increased merchandise purchases
on an FOB Hong Kong basis from Concord HK, which merchandise was
previously purchased from Concord in the United States. During
the three months ended March 31, 1995 and 1994, United States
customers purchased approximately $2,763,000 and $1,661,000,
respectively, an increase of approximately $1,102,000 or 66.3%
10
of merchandise on an FOB Hong Kong basis. On a combined basis sales
to U.S. customers increased 26.9%.
Sales by Concord Camera (Panama) Inc. ("Concord Panama") into
select areas of Central and South American markets for the three
months ended March 31, 1995 and 1994 were approximately $381,000
and $509,000, respectively, representing a decrease of
approximately $128,000 or 25.2%. Concord Panama commenced
operations in Fiscal 1992 and, over its first two full years of
operation, has successfully marketed the Company's products in
Central and South America.
Sales by Concord Camera Canada Corp. ("Concord Canada") for the
three months ended March 31, 1995 and 1994 were approximately
$449,000 and $492,000, respectively, representing a decrease of
approximately $43,000 or 8.7%. The decrease was primarily a
result of the reduction of non-camera revenues, and the depressed
economic conditions of the Canadian market.
Consolidated sales of Concord Camera GmbH ("Concord Germany"),
Concord Camera UK Limited ("Concord UK"), Concord Camera
(Hungary) Ltd. ("Concord Hungary") and Concord Camera France
("Concord France"), collectively "Concord Europe," for the three
months ended March 31, 1995 and 1994, were approximately
$2,013,000 and $1,311,000, respectively, an increase of
approximately $702,000 or 53.6%. During the quarter ended
September 30, 1993, the Company formed Concord Hungary which
commenced sales operations in the quarter ended June 30, 1994.
During the quarter ended June 30, 1994, the Company formed
Concord France which commenced operations on July 1, 1994. Sales
by Concord Hungary and Concord France were $82,000 and $283,000,
respectively, during the quarter ended March 31, 1995. After
giving effect to the sales by the new subsidiaries, sales by
Concord Europe increased by approximately $337,000 or 25.8%.
This increase is primarily attributable to sales to new customers
by the Company's increased European sales and marketing force.
Sales in this region are improving, but are still affected by the
sluggish economic conditions in the Region.
Gross Profit
Gross profit, expressed as a percentage of sales, increased to
33.2% for the three months ended March 31, 1995 from 24.1% for
the three months ended March 31, 1994. This increase is net of
any competitive price pressure that the Company has experienced
in connection with certain product, especially in the single-use
camera market. This increase was due principally from improved
control over production and inventory levels during the previous
quarter and improvements in manufacturing efficiencies. The
increase in gross profits is net of price pressures which the
Company faces in the competitive marketplace. In addition, net
sales during the three months ended March 31, 1994 included a
premium sale and non-camera revenues that were at gross margins
below the Company's normal gross margin.
Expenses
Operating expenses, consisting of selling, general and
administrative and financial expenses, increased to $4,256,000 in
the three months ended March 31, 1995 from $4,147,000 in the
three months ended March 31, 1994, an increase of $109,000 or
2.6%. As a percentage
11
of sales, operating expenses decreased to 30.9% in the three months
ended March 31, 1995 from 34.2% in the three months ended
March 31, 1994.
Selling expenses increased to $1,722,000 or 12.5% of net sales in
the three months ended March 31, 1995 from $1,196,000 or 9.9% of
net sales in the three months ended March 31, 1994 The increase
was primarily attributable to the Company's expansion of the
worldwide sales force including increases in sales salaries,
sales commissions, co-operative advertising expenses, marketing
and trade show related expenses.
General and Administrative expenses decreased to $2,187,000 or
15.9% of net sales in the three months ended March 31, 1995 from
$2,451,000 or 20.2% of net sales in the three months ended March
31, 1994. Included in the total for the three months ended March
31, 1995 and 1994 is approximately $251,000 and $453,000,
respectively, of professional expenses incurred relating to non-
operating matters, primarily the SEC investigation (since
terminated) and two continuing litigation matters. After
excluding such professional fees, general and administrative
expenses decreased to $1,934,000 or 14.0% of net sales for the
three months ended March 31, 1995 and $1,998,000 or 16.5% of net
sales for the three months ended March 31, 1994. The decrease is
primarily due to cost control on a worldwide basis, which
includes but is not limited to, a reduction in officer salaries
and bonuses, administrative salaries, related payroll expenses,
rent and engineering expenses, net of approximately $54,000 in
increased expenses attributable to the opening of the two new
subsidiaries (see "Revenues").
Financial expenses decreased to $348,000 or 2.5% of net sales in
the three months ended March 31, 1995 from $501,000 or 4.1% of
net sales in the three months ended March 31, 1994. Such
decrease was primarily a result of a reduction in average debt
outstanding during the three months ended March 31, 1995, and a
reduction in loan guarantee fees.
Other (income), expense Net
Other (Income) expense, net during the three months ended March
31, 1995 and 1994 of $22,000 and 57,000, respectively is
primarily comprised of net foreign exchange gains/losses and
other non-operating expenses.
Income Taxes
The Company's provision for income taxes for the three months
ended March 31, 1995 is related to the earnings of the Company's
Far East operations.
12
<PAGE>
Nine months ended March 31, 1995 compared to nine months ended
March 31, 1994
Revenues
Total revenues for the nine months ended March 31, 1995 and 1994
were approximately $47,055,000 and $41,933,000, respectively, an
increase of approximately $5,122,000 or 12.2%. The increase,
which is net of decreases in non-camera revenues and revenues
from promotional sales, is due to the Company's European
expansion, continued acceptance of the Company's new products,
principally the single-use and slim-line camera models, and an
increase in OEM revenues. Revenues from traditional camera sales
and OEM sales increased by approximately $6,520,000 or 21.8% and
$2,438,000 or 42.7% respectively for the nine months ended March
31, 1995 to $36,432,000 and $8,147,000, respectively, from
$29,912,000 and $5,709,000, respectively, for the nine months
ended March 31, 1994. Included in net sales during the nine
months ended March 31, 1995 were approximately $2,476,000 of non-
camera sales and no revenues from promotional sales compared to
approximately $3,413,000 and $2,900,000, respectively, of such
sales in the nine months ended March 31, 1994. Non-camera sales
were substantially discontinued by the Company as of the end of
the three month period ended September 30, 1994. The increase in
OEM sales is attributable to increased purchases from the
Company's preexisting OEM customer and from sales to a new OEM
customer.
Sales by Concord HK, for the nine months ended March 31, 1995 and
1994 were approximately $19,071,000 and $9,097,000, respectively,
an increase of approximately $9,974,000 or 109.6%. The increase
is due to the continued acceptance of the Company's new products,
principally the single-use and slim-line camera models, the
successful implementation of certain sales programs with the
Company's larger customers which are on an FOB Hong Kong basis,
and resulted in a change in the OEM point of sale from the United
States to Hong during the three months ended December 31, 1994.
The Company effectuated a change in the OEM point of sale in
order to secure an additional working capital credit line from
the Bank of East Asia, New York (see Bank of East Asia, New
York.) Payment for FOB sales are primarily by letter of credit.
Sales by the Company's United States operation for the nine
months ended March 31, 1995 and 1994 were approximately
$17,681,000 and $22,601,000, respectively, a decrease of
approximately $4,920,000 or 21.8%. Net sales for the nine months
ended March 31, 1995 and 1994 included OEM sales with point of
sale out of U.S. of approximately $2,225,000 and $5,709,000,
respectively, a decrease of approximately $3,484,000 or 61.0%;
non-camera revenues of approximately $2,476,000 and $3,413,000,
respectively, a decrease of approximately $937,000 or 27.5%; and
no revenues from promotional sales in the nine months ended March
31, 1995 as compared to $2,900,000 for the nine months ended
March 31, 1994. After giving effect to these sales, traditional
camera sales in the United States increased by approximately
$2,401,000 or 22.7% for the nine months ended March 31, 1995 over
the comparable period last year. In addition, certain United
increased merchandise purchases on an FOB Hong Kong basis from Concord
HK, which merchandise was previously purchased from Concord in the
United States. During the nine months ended March 31, 1995 and 1994,
United States customers purchased approximately $9,728,000 and
$4,832,000, respectively, an increase of approximately $4,896,000
or 101.3% of merchandise on an FOB Hong Kong basis. On a combined
basis sales to U.S. customers increased 35.0%.
13
Sales by Concord Panama into select areas of Central and South
American markets for the nine months ended March 31, 1995 and 1994
were approximately $1,412,000 and $1,445,000, respectively,
representing a decrease of approximately $33,000 or 2.2%. Concord
Panama commenced operations in Fiscal 1992 and, over its first two
full years of operation, has successfully marketed the Company's
product in Central and South America.
Sales by Concord Canada for the nine months ended March 31, 1995 and
1994 were approximately $2,424,000 and $3,460,000, respectively,
representing a decrease of approximately $1,036,000 or 30.0%. The
decrease was primarily a result of the reduction on non-camera
revenues, the successful implementation of certain sales programs with
the Company's larger customers which are on an FOB Hong Kong basis,
and the depressed economic conditions of the Canadian market.
Consolidated sales of Concord Europe, for the nine months ended March
31, 1995 and 1994, were approximately $6,466,000 and $4,677,000,
respectively, an incrase of approximately $1,789,000 or 38.3%. During
the quarter ended September 30, 1993, the Company formed Concord
Hungary which commenced sales operations in the quarter ended
June 30, 1994. During the quarter ended June 30, 1994, the Company
formed Concord France which commenced operations on July 1, 1994.
Sales by Concord Hungary and Concord France were $276,000 and
$942,000, respectively, during the nine months ended March 31, 1995.
After giving effect to the sales by the new subsidiaries, sales by
Concord Europe increased by approximatley $571,000 or 12.3%. This
increase is primarily attributable to sales to new customers by the
Company's increased European Sales and Marketing force. Sales in this
region are improving, but are still affected by the sluggish economic
conditions in the region.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 32.2%
for the nine months ended March 31, 1995 from 33.7% for the nine
months ended March 31, 1994. This decrease was due in part from
competitive price pressure in connection with certain product,
especially in the single-use camera market, but principally from
improved control over production and inventory levels during the past
nine months, the benefit of which began to be realized in the quarter
ending March 31, 1995.
Expenses
Operating expenses, consisting of selling, general and
administrative and financial expenses, increased to $12,904,000 in the
nine months ended March 31, 1995 from $12,865,000 in the nine months
ended March 31, 1994, an increase of $39,000 or .3%. As a percentage
of sales, operating expenses decreased to 27.4% in the nine months
ended March 31, 1995 from 30.7% in the nine months ended
March 31, 1994.
Selling expenses increased to $5,339,000 or 11.4% of net sales in
the nine months ended March 31, 1995 from $3,965,000 or 9.5% of
net sales in the nine months ended March 31, 1994. The increase
was primarily attributable to the Company's expansion of the
worldwide sales force including increases in sales salaries,
sales commissions, co-operative advertising expenses, marketing
and trade show related expenses.
14
General and Administrative expenses decreased to $6,463,000 or
13.7% of net sales in the nine months ended March 31, 1995 from
$7,422,000 or 17.7% of net sales in the nine months ended March
31, 1994. Included in the total for the nine months ended March
31, 1995 and 1994 is approximately $585,000 and $659,000,
respectively, of professional expenses incurred relating to non-
operating matters, primarily the SEC investigation (since
terminated) and two continuing litigation matters. After
excluding such professional fees, general and administrative
expenses decreased to $5,878,000 or 12.5% of net sales for the
nine months ended March 31, 1995 and $6,763,000 or 16.1% of net
sales for the nine months ended March 31, 1994. The decrease is
primarily due to cost control on a worldwide basis, which
includes but is not limited to, a reduction in officer salaries
and bonuses, administrative salaries, related payroll expenses,
rent and engineering expenses, net of approximately $227,000 in
increased expenses attributable to the opening of the two new
subsidiaries (see "Revenues").
Financial expenses decreased to $1,102,000 or 2.3% of net sales
in the nine months ended March 31, 1995 from $1,478,000 or 3.5%
of net sales in the nine months ended March 31, 1994. Such
decrease was primarily a result of a reduction in average debt
outstanding during the nine months ended March 31, 1995, and a
reduction in loan guarantee fees.
Other Income, Net
Other (Income) expense, net during the nine months ended March
31, 1995 and 1994 $76,000 and $270,000, respectively is
primarily comprised of net foreign exchange gains/losses and
other non-operating expenses.
Income Taxes
The Company's provision for income taxes for the nine months
ended March 31, 1995 is 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.
Liquidity and Capital Resources
At March 31, 1995, the Company had working capital of $19,462,000
as compared to $21,115,000 at June 30, 1994. Cash flow provided
by (used in) operating activities was approximately $2,747,000
for the nine months ended March 31, 1995 compared to ($2,636,000)
for the nine months ended March 31, 1994. Capital expenditures,
excluding assets financed under capital leases, for the nine
months ended March 31, 1995 and 1994 were approximately $888,000
and $1,275,000, respectively. During the nine months ended March
31, 1994, the Company purchased a $1,000,000 time deposit in
connection with a short-term credit arrangement (see Bank of East
Asia, Limited below). The Company's principal funding
requirement has been, and is expected to continue to be, the
financing of accounts receivable and inventory.
During the nine months ended March 31, 1994, certain warrants and
options to purchase the Company's common stock were exercised.
Such exercise generated net proceeds of approximately $5,805,000
which were used to reduce debt and for working capital purposes.
15
The Bank of East Asia, Limited New York ("BOEA NY")
On December 20, 1994, the Company obtained a one year, $1,500,000
revolving credit facility with BOEA NY which expires on December
20, 1995. The BOEA NY Facility is secured by certain accounts
receivable of the Company's Hong Kong operations and bears
interest at 2% above BOEA NY's prime lending rate, which was 9.0%
at March 31, 1995. Availability under the BOEA NY Facility is
subject to advance formulas based on eligible accounts receivable
with no minimum borrowing. At March 31, 1995, approximately
$615,000 was outstanding and classified as short-term debt under
the BOEA NY Facility.
The CIT Group/Credit Finance, Inc ("CIT")
On March 30, 1994, the Company obtained a two year, $10,000,000
credit facility with CIT (the "CIT Facility") which expires on
March 29, 1996. The CIT Facility is secured by accounts
receivable inventory and other related assets of the Company's
United States operations and bears interest at 2% above CIT's
prime lending rate, which was 9.0% at March 31, 1995.
Availability under the CIT Facility is subject to advance
formulas based on eligible inventory and accounts receivable with
minimum borrowing of $2,000,000. The Company used certain of the
availability under the CIT Facility to repay all amounts due to
Midlantic National Bank ("Midlantic") under the Company's credit
facilities with Midlantic. At March 31, 1995, approximately
$2,931,000 was outstanding and classified as short-term debt
under the CIT Facility.
Bank of East Asia, Limited ("BOEA") - Hong Kong
Effective August 2, 1993, Concord HK entered into a credit
arrangement (the "BOEA Facility") with BOEA that provides Concord
HK with up to $4,000,000 of financing, including, but not limited
to trade finance and overdraft privileges. On January 11, 1994,
BOEA increased the total amount available under the BOEA Facility
to $4,800,000 as follows: letters of credit and standby letters
of credit $3,300,000, overdraft and packing loan of $1,500,000.
As of March 31, 1995, approximately $3,167,000 was utilized and
approximately $633,000 was available under the BOEA Facility.
Approximately $2,272,000 of the total $3,167,000 utilized, was in
the form of trade finance, including but not limited to import
letters of credit. The BOEA Facility, which is payable on
demand, bears interest at 2% above BOEA's prime lending rate for
letters of credit and 2.25% above BOEA's prime lending rate for
overdraft and packing loans. At March 31, 1995 BOEA's prime
lending rate was 9.0%. In connection with the BOEA Facility,
Concord HK has placed a $1,000,000 time deposit with BOEA, which
is included in prepaid and other current assets at March 31, 1995
and such deposit is pledged as collateral for the BOEA facility.
In addition, all amounts outstanding under the BOEA Facility are
guaranteed by Concord.
Other arrangements and future cash commitments
In connection with the acquisition of certain production
equipment and intellectual property, in the three months ended
September 30, 1991 the Company entered into a five year financing
lease with EDS (the "EDS Lease"). During April 1994, the Company
and EDS amended the EDS Lease and applied a $1 million
certificate of deposit which had been pledged to EDS to the
outstanding principal balance due under the EDS Lease. This
$1,000,000 principal payment reduced the monthly payments under
the EDS Lease from $114,700 to $72,048. As of March 31, 1995,
the balance outstanding under the EDS Lease was approximately
$919,000.
16
In connection with the upgrading of its worldwide information
systems, the Company has committed to purchase hardware and
software and incur other costs of approximately $660,000 for its
United States and Far East operations; at March 31, 1995,
approximately $414,000 of that amount had been paid. The Company
anticipates incurring approximately $200,000 of additional costs
for hardware, software and other related items for the balance of
the Company's worldwide operations.
Management believes that the anticipated cash flow from
operations together with financing from CIT and BOEA will be
sufficient to fund its operating cash needs over the next twelve
months.
PRC - Operations. Cameras and components are manufactured and
assembled at three manufacturing facilities located in Baoan
County, Shenzhen Municipal, People's Republic of China ("PRC").
Two of the manufacturing facilities are leased from a PRC Entity
(the "Leased Facilities") for which the Company pays rent of
$21,000 per month. The other manufacturing facility is owned by
the Company (the "Company Facility"). The leased Facilities and
the Company Facility each have a related employee dormitory (the
"Related Dormitory"). The aggregate square footage of the leased
Facilities, Company Facility and Related Dormitory is
approximately 384,000 square feet.
In Fiscal 1995 the Company expects to commence construction of an
addition (the "Addition") to the Company Facility to accommodate
increased production and to facilitate the consolidation of the
Leased Facilities into the Company Facility. The Company also
anticipates commencing construction of a dormitory (The "New
Dormitory") in Fiscal 1995. The total cost to construct the
Addition and the New Dormitory will be approximately $703,400 and
$797,000 respectively. Such cost will be amortized over the
expected useful life of the Addition and New Dormitory once they
are completed and placed in service, which is expected to be by
the end of Fiscal 1996. Upon completion of the Addition and New
Dormitory, the Company will vacate the leased Facilities and
Related Dormitory.
The Company negotiated and executed new agreements (the "Land Use
Agreements") with PRC Entities for the use of PRC land (the "PRC
Land") for the Company Facility and the Addition. Under the Land
Use Agreements, which have FERO approval, the Company obtained
land use rights for approximately eight acres of land from a PRC
Entity for the Company Facilities, the Addition and construction
of factories, dormitories and other ancillary buildings. The
Company has the right to use the PRC Land for 50 years ending in
2042 (the "Term"). Under the Land Use Agreements, the Company
paid an application fee of approximately $329,000 and is required
to pay a land use fee totaling approximately $330,000 payable in
4 installments. Since the Company has not yet obtained the Land
Use Rights Certificate from the PRC Entity at March 31, 1995,
these payments are reflected as Other assets on the Balance
Sheet. The remaining balance of $197,635 is payable in three
equal annual installments on each June 30 (commencing June 30,
1995). In satisfaction of the first payment required by the Land
Use Agreement, the Company issued 33,108 shares of Common Stock
valued at $132,365 on November 9, 1994. In addition, the Company
will be responsible for stipulated land management fees and for
the installation of certain utilities. The Land Use Agreements
17
permit the Company to transfer, lease or mortgage its rights
under the Land Use Agreements and in the buildings developed
thereunder during the Term. At the end of the Term, all
facilities on the PRC Land will belong to the PRC Entity and the
Company shall have the right to lease the PRC Land and facilities
thereon at the prevailing rent under regular lease terms.
18
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Jack C. Benun. On November 18, 1994 the Company filed a
demand for arbitration in New Jersey, for money damages in excess
of $1.5 million, against Jack C. Benun, the Company's former
Chairman and Chief Executive Officer and an owner of record of
more than 5% of the Company's common shares. This action was
taken due to Mr. Benun's failure to compensate the Company for
damages it sustained as a result of Mr. Benun's breaching his
employment obligations, his fiduciary obligations and
perpetrating frauds upon the Company including the
misappropriation of funds from the Company. Mr. Benun was
terminated for cause by the Company in July 1994 as a consequence
of his actions.
Mr. Benun has submitted a counterclaim in which he alleges
among other things a wrongful termination by Concord. The
Company intends to vigorously pursue its action as well as defend
the counterclaim. The Company has reserved its rights under any
other claims it may have against Mr. Benun. [See below Purported
Class Action]
Purported Class Action. On February 22, 1995 the Company was
served with a complaint purporting to be a class action on behalf
of purchasers of the Company's common stock throughout the period
from January 1, 1991 through December 31, 1994 seeking damages in
an unspecified amount. The complaint appears to be predicated on
the wrongdoing of the Company's former chief executive officer
who was terminated for cause by the Company in July 1994 and an
alleged failure by the Company promptly to disclose such
wrongdoing to the public. The Company intends vigorously to
contest the litigation and believes that it has good defenses to
the purported claims in the complaint. The matter is in its
earliest stage and there can be no assurance as to its eventual
outcome. The Company has already commenced an arbitration
proceeding described above against its former chief executive
officer and intends to file a claim against him for all costs
incurred by the Company in connection with the litigation.
Argus. Effective March 31, 1992, the Company sold to Argus, a
company controlled by two former Company executives, the rights
to the ARGUS trademark and trade name in Mexico and the United
States for approximately $500,000 of which $200,000 was paid in
cash and the balance was paid by delivery of a promissory note
(the" Argus Note".) At June 30, 1994, $113,500 was outstanding
on the Argus Note. The Company retains a security interest in
the ARGUS tradename in the United States and Mexico as security
for the Argus Note. The Company has been informed that James
Carfagno, Sr., one of the two former Company executives, sold his
entire Argus interest to William Pearson.
Argus failed to comply with certain payment and other terms in
the purchase agreement and the Company declared a default under
such agreement. On November 23, 1992, Argus commenced litigation
against the Company and its subsidiary Concord Camera Illinois
Corp. in the Superior Court of New Jersey alleging, among other
things, that the Company breached its agreements with Argus and
violated the New Jersey Civil RICO statute. Argus sought, among
other relief, injunctions and monetary damages. The Company
denied all of Argus' substantive claims and filed counter-claims.
In connection with the Argus litigation and Agrus' default on
certain of its purchase obligations, the Company, in response,
19
mitigated damages by selling certain of the inventories to third
parties (the "Resale") and filed two motions for partial summary
judgement seeking recovery for the deficiency of approximately
$39,000 for unsold inventory. The Court granted both of the
Company's motions and entered judgements in those amounts. Argus
has satisfied the judgement of approximately $39,000. The
Company had initiated proceedings to levy upon certain Argus
assets to satisfy the judgement of approximately $70,000. Prior
to finalization of those proceedings the parties agreed to settle
all claims between them. The claims were settled on terms
favorable to the Company but which do not have any material
impact upon the Company's financial condition.
Roland Kohl. During the last quarter of Fiscal 1990, Concord
HK terminated for cause certain of its former officers and
directors, including Roland Walter Kohl ("Kohl"), its former
Managing Director. On April 10, 1990, the Company and Concord HK
instituted proceedings in the Supreme Court of Hong Kong, High
Court against such individuals for alleged breach of employment
contracts and breach of duties owed to Concord HK. Concord HK's
claims against those persons included damages caused by an
alleged conspiracy to impede Concord HK's production
capabilities, disruption of Concord HK's business, ordering of
unnecessary or obsolete inventory, impeding Concord HK from
obtaining credit and loss of profits. The Company and Concord HK
claimed damages of approximately $5.9 million, including claims
for lost business. The defendants have served answers and have
counter-claimed for arrears of salary, salary in lieu of notice
and bonuses held in escrow by Concord HK's former attorneys.
Except with respect to a certain amount of salary arrears, the
Company and its Hong Kong attorney believe those counter-claims
to be without merit. Concord HK has a court order with respect
to Kohl which froze his Hong Kong assets pending resolution of
this lawsuit. As of June 1994, the value of the frozen assets,
as estimated by the Company's Hong Kong attorney, were
approximately $1.2 million.
The Company has agreed in principle to a settlement with all
of the defendants, subject to execution of definitive settlement
documents. Prior to reaching the settlement, the Company engaged
in an analysis of the status of the case. It appeared that trial
would take place in Hong Kong with a trial date scheduled to
commence May 31, 1995. Anticipated trial time was 8 to 10 weeks.
Anticipated trial costs to be incurred by the Company including
but not limited to attorneys fees, travel expenses and witness
fees had the potential of exceeding $750,000. With the passage
of time, the value of the frozen assets of Kohl had diminished as
of March 31, 1995 to approximately $0.8 million dollars. Those
funds would be further depleted as a result of the litigation,
since pursuant to court order, Kohl had the ability to draw upon
the funds to pay his living expenses and to pay counsel to defend
the litigation. Therefore, there existed a substantial question
as to whether any judgement obtained against Kohl could be
satisfied. The settlement will result in all claims being
dismissed. As a result of the settlement, Concord will not
receive any money. Concord will not pay any money to Kohl and
one other defendant. Payment will, however, be made by the
Company to certain other defendants who had claims for salary
arrearages and legal fees incurred in asserting those claims in
the aggregate amount of $800,000 which will be paid by the
release of certain escrowed funds of approximately $287,000 with
the balance being payable over time, through May 1996. If the
settlement is not consummated, the litigation will proceed in the
ordinary course.
20
Item 4. Submission of Matters to a Vote of Security Holders
On January 18, 1995 the Company held its Annual Meeting of
Shareholders at which all of the Company's nominees for directors
were elected. The Shareholders' vote electing each of the
directors was as follows:
Mr. Ira B. Lampert 7,743,952 for, 1,937,422 withheld;
Mr. Eli Arenberg 7,746,252 for, 1,935,122 withheld;
Mr. Joel L. Gold 7,744,252 for, 1,937,122 withheld;
Mr. Morris H. Gindi 7,746,252 for, 1,935,122 withheld;
Mr. J. David Hakman 7,701,251 for, 1,980,123 withheld;
Mr. Ira J. Hechler 7,705,252 for, 1,976,122 withheld; and
Mr. Kent M. Klineman 7,744,052 for, 1,937,322 withheld
The Shareholders also ratified the selection of Deloitte &
Touche as the Company's independent auditors by a vote of
9,573,121 for, 93,545 withheld and 57,700 abstain.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Employment Agreement between the Company and Eli
Shoer dated as of October 1, 1994.
10.2 Employment Agreement between the Company and Gary
Kaess dated as of November 3, 1994.
10.3 Amended and Restated Employment Agreement between
Concord Camera HK Limited and Arthur Zawodny dated
as of October 21, 1994.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None
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.
21
CONCORD CAMERA CORP.
(Registrant)
BY: /s/ Harlan I. Press
(Signature)
Harlan I. Press
Chief Accounting Officer
DATE: May 10, 1995
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Concord
Camera Corp.'s Consolidated financial statements as of March 31, 1995 and the
results of operations for the nine months ended March 31, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,930,094
<SECURITIES> 0
<RECEIVABLES> 11,840,525
<ALLOWANCES> (1,420,744)
<INVENTORY> 17,849,183
<CURRENT-ASSETS> 34,585,244
<PP&E> 17,826,406
<DEPRECIATION> (7,929,790)
<TOTAL-ASSETS> 49,411,975
<CURRENT-LIABILITIES> 15,122,944
<BONDS> 294,470
<COMMON> 37,067,607
0
0
<OTHER-SE> (3,716,032)
<TOTAL-LIABILITY-AND-EQUITY> 49,411,975
<SALES> 47,054,815
<TOTAL-REVENUES> 47,054,815
<CGS> 31,917,977
<TOTAL-COSTS> 12,904,413
<OTHER-EXPENSES> (76,261)
<LOSS-PROVISION> 88,576
<INTEREST-EXPENSE> 589,672
<INCOME-PRETAX> 2,308,686
<INCOME-TAX> 144,769
<INCOME-CONTINUING> 2,163,917
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,163,917
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of October 1, 1994
between ELI SHOER ("Executive") and CONCORD CAMERA CORP., a New
Jersey corporation ("Employer").
In consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree
as follows:
I. Employment of Executive
Employer hereby agrees to employ Executive and
Executive hereby agrees to be and remain in the employ of
Employer upon the terms and conditions hereinafter set forth.
II. Employment Period
The term of Executive's employment under this Agreement
(the "Employment Period") shall commence as of the date hereof
and, subject to earlier termination as provided in Section 5,
shall terminate on September 30, 1997 (the "Expiration Date").
III. Duties and Responsibilities
During the Employment Period, Executive (i) shall have the
title of Managing Director Concord Camera HK Limited and Senior
Vice President of Employer, (ii) shall devote his full attention
and expend his best efforts, energies and skills on a full-time
basis to the business of the Company (as hereinafter defined),
(iii) shall report to, and shall perform such duties consistent
with his position as he may be assigned from time to time by,
Employer's chief executive and chief operating officers, and (iv)
shall be subject to all of the policies, rules and regulations
applicable to executives of Employer of comparable status, and
shall comply with all reasonable directions and instructions of
such senior executives to whom Executive reports. Executive
shall also serve without additional compensation as an officer
and director of Employer and any of its subsidiaries, if so
elected or appointed, but if he is not so elected or appointed
his compensation hereunder shall in no way be affected. For all
purposes of this Agreement, the term "Company" means Employer and
all corporations, associations, companies, partnerships, firms
and other enterprises controlled by or under common control with
Employer.
IV. Compensation and Related Matters
A. Compensation, Generally. For all services rendered
and required to be rendered by, covenants of, and restrictions
imposed on, Executive under this Agreement, Employer shall pay to
Executive during and with respect to the Employment Period, and
Executive agrees to accept, such base salary ("Base Salary"),
bonus and stock options as are set forth on Exhibit 4.1.
B. Automobile. To facilitate the performance of
Executive's responsibilities hereunder, at all times during the
Employment Period while Executive is performing services for the
Company in Hong Kong or China, Employer shall either a. pay to
Executive an automobile allowance of $1,000 per month, or b. make
available to Executive, at Employer's expense, an automobile
suitable, in Employer's reasonable judgment, for Executive (in
which case Employer shall pay the costs of operating,
maintaining, insuring and garaging such automobile, subject to
such policies as may be in effect from time to time applicable to
senior executive officers of Employer).
C. Life Insurance. Employer shall maintain in effect
at all times during the Employment Period, at Employer's expense,
a policy of insurance on the life of Executive in the amount of
$400,000 naming such person as Executive shall designate from
time to time as the owner and beneficiary thereof. Employer may,
at its option, obtain additional life insurance on the life of
Executive in such amounts as it shall determine designating
Employer as the owner and beneficiary thereof. Executive agrees
to aid, and cooperate in all reasonable respects with, Employer
in procuring any and all such insurance, including, without
limitation, by submitting to the usual and customary medical
examinations and filling out, executing and delivering such
applications and other instruments in writing as may be
reasonably required by an insurance company or companies to which
any application or applications for such insurance may be made by
or for Employer.
D. Housing Allowance. At all times during the
Employment Period while Executive is performing services for the
Company in Hong Kong or China, Employer shall provide to
Executive a housing allowance in the amount of $75,000 per annum
(exclusive of expenses for lodging and hotels, which shall be
reimbursed by Employer pursuant to Section 4.6).
E. Other Benefits. During the Employment Period,
subject to, and to the extent Executive is eligible under their
respective terms, Executive shall be entitled to receive such
fringe benefits as are, or are from time to time hereafter,
generally provided by Employer to Employer's employees of
comparable status (other than those provided under or pursuant to
separately negotiated individual employment agreements or
arrangements and other than as would duplicate benefits otherwise
provided to Executive) under any pension or retirement plan,
disability plan or insurance, group life insurance, medical
insurance, travel accident insurance, or other similar plan or
program of Employer. Executive's Base Salary shall (where
applicable) constitute the compensation on the basis of which the
amount of Executive's benefits under any such plan or program
shall be fixed and determined.
F. Expense Reimbursement. Employer shall reimburse
Executive for all business expenses reasonably incurred by him in
the performance of his duties under this Agreement upon his
presentation, not less frequently than monthly, of signed,
itemized accounts of such expenditures all in accordance with
Employer's procedures and policies as adopted and in effect from
time to time and applicable to its employees of comparable
status.
G. Vacations. Executive shall be entitled to three
weeks vacation, which shall be taken at such time or times as
shall not unreasonably interfere with Executive's performance of
his duties under this Agreement.
V. Termination of Employment Period
A. By Employer: Cause. Employer may, at any time
during the Employment Period by notice to Executive, terminate
the Employment Period for "Cause". "Cause" shall mean a
termination of employment by the Employer based upon (i) the
continued failure by Executive to substantially perform his
duties with the Employer; (ii) Executive's conviction of any
felony or any crime involving moral turpitude or theft; (iii)
theft, fraud or embezzlement, resulting in gain or personal
enrichment to Executive at Employer's expense; (iv) the material
breach by Executive of this Agreement; (v) the inability of
Executive to perform his duties as a result of his addiction to
alcohol or drugs, other than drugs legally prescribed and
administered by a duly licensed physician; or (vi) an act of
gross neglect or gross misconduct by Executive. Prior to
terminating the Executive for Cause for any reason set forth in
clause (i), (iv) or (v) of the preceding sentence, the Employer
must give the Executive written notice of the facts and
circumstances giving rise to Cause and provide the Executive with
thirty (30) days to cure, remedy or rectify the situation.
B. Disability. During the Employment Period, if,
solely as a result of physical or mental incapacity or infirmity
(other than alcoholism or drug addiction), Executive shall be
unable to perform in any material respect his duties under this
Agreement for periods aggregating at least 180 days during any
period of 12 consecutive months (each a "Disability Period"),
Executive shall be deemed disabled ("the Disability") and
Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after
the end of the Disability Period. Employer may net against Base
Salary payments made to Executive in respect of any Disability
Period any payments made to Executive under any disability
insurance carried on Executive at the expense of Employer.
C. Death. The Employment Period shall end on the date
of Executive's death.
D. By Executive: Good Reason. Executive may, at any
time during the Employment Period by notice to Employer,
voluntarily terminate his employment for "Good Reason". For
purposes of this Agreement, "Good Reason" shall mean, without
Executive's express written consent, the occurrence of any of the
following circumstances: (i) the removal of Executive from the
position of Managing Director of Concord Camera HK Limited and
Senior Vice President of Employer; (ii) the assignment to
Executive of any duties or responsibilities inconsistent with his
status and authority as set forth in Paragraphs 3 or 6 hereof,
or a substantial adverse alteration in the nature or status of
his responsibilities from those in effect at the commencement of
his employment, if such assignment or alteration reduces the
authority, responsibilities, importance or scope of his position
or modifies Executive's principal place of business (other than a
transfer to the Employer's headquarters in the USA), or (iii) the
material breach by Employer of this Agreement. Prior to
terminating his employment for Good Reason, Executive shall first
give Employer written notice of the facts and circumstances
giving rise to Good Reason and provide the Employer with thirty
(30) days to cure, remedy or rectify the situation.
E. Termination Compensation. Executive shall not be
entitled to compensation in respect of any period following the
termination of the Employment Period pursuant to subsections 5.1,
5.2 or 5.3 or the expiration of the Employment Period. If, prior
to the Expiration Date, Executive's employment is terminated by
Employer without Cause, or if Executive's employment is
terminated by Executive for Good Reason, Executive shall receive
the compensation and benefits set forth in Section 4 for the
duration of the Employment Period, subject to Executive's duty to
mitigate set forth in subsection 5.6.
F. Mitigation. If, prior to the Expiration Date,
Executive's employment is terminated by Employer without Cause or
if Executive's employment is terminated by Executive for Good
Reason, Executive shall mitigate, by seeking employment
consistent with his skills and experience with any other person
or otherwise, the amount of any payments or benefits to which he
may be entitled following such termination. If, at any time
during the period commencing on the date of such termination
through the Expiration Date (the "Relevant Period"), Executive
shall commence employment with or engagement for the rendition of
services to any other business, the amount of any such payments
or benefits to which Executive would otherwise be entitled shall
be reduced by any compensation, benefit or other amount earned
by, accrued for or paid to Executive pursuant to such other
employment or engagement in respect of the Relevant Period. In
connection with the foregoing, Executive shall provide Employer,
and shall instruct his new employer (or the person to which
Executive renders such services) to provide Employer, with such
information as to Executive's compensation during such period as
Employer may request (and Executive hereby authorizes Employer to
obtain such information directly from Executive's new employer
(or such other person)).
VI. Location of Executive's Activities
Executive's principal place of business in the
performance of his duties and obligations under this Agreement
shall be in the Far East and Executive shall engage in such
travel and spend such time in the Far East and such other places
as may be necessary or appropriate in furtherance of his duties
hereunder.
VII. Exclusivity of Services, Confidential Information and
Restrictive Covenants
A. Exclusivity of Services and Restrictions. During
the Employment Period and the Post-Employment Restriction Period,
Executive shall not, directly or indirectly, (a) be or become
interested in or associated with or represent or otherwise render
assistance or services to (as an officer, director, stockholder,
partner, consultant, owner, employee, agent, creditor or
otherwise) any business that is then, or which then proposes to
become, a competitor of the Company anywhere in the world;
provided, that the foregoing shall not restrict Executive from
the ownership, solely as an investment, of securities of any
business if such ownership is (i) not as controlling person of
such business, (ii) not as a member of a group that controls such
business, and (iii) not as a direct or indirect beneficial owner
of 5% or more of any class of securities of such business, (b)
induce or seek to influence any employee of (or consultant to)
the Company to leave its employ (or terminate such consultancy)
or to become financially interested in a similar business, (c)
aid a competitor or supplier of the Company in any attempt to
hire a person who shall have been employed by, or who was a
consultant to, the Company within the one-year period preceding
the date of any such aid, or (d) induce or attempt to influence
any person who was a customer or supplier to the Company during
such period to transact business with a competitor of the Company
or not to do business with the Company. For the purposes hereof,
"Post-Employment Restriction Period" means the period commencing
on the date of termination of Executive's employment hereunder
and terminating on the later of a. the first anniversary of the
date of termination of Executive's employment hereunder, and b.
the date that Employer ceases to pay to Executive, or Executive
irrevocably declines to accept, Base Salary payments.
B. Confidential Information. Except in the course of
his employment hereunder and in furtherance of the business of
the Company, during the Employment Period and at all times
thereafter, Executive shall keep secret and retain in strictest
confidence, and shall not to the detriment of the Company
knowingly use or disclose, directly or indirectly, any
confidential information, trade secrets or proprietary data of
the Company, including without limitation, any proprietary
processes of the Company or any other confidential or non-public
information or material concerning the business, affairs,
patents, trademarks, service marks, products, suppliers or
customers of the Company. Executive shall not be deemed to have
violated this Section 7.2 by disclosure of information that at
the time of disclosure (a) is publicly available or becomes
publicly available through no act or omission of Executive, or
(b) is disclosed as required by court order or as otherwise
required by law, on condition that notice of the requirement for
such disclosure is given to Employer prior to making any
disclosure and Executive cooperates as Employer may reasonably
request in resisting it. In connection with Executive's
obligations pursuant to this Section 7.2, a. Executive shall keep
all papers relating to Company and Executive's responsibilities
and duties hereunder at the principal place of business of
Employer or at such other place as may be designated by Employer
from time to time, and b. upon the termination of his employment,
Executive will deliver to Employer all documents, papers,
records, files, recordings, computer or word processing software
and hardware and other material containing confidential material,
and will retain no copy, duplicate, summary or description
thereof.
C. Intellectual Property. All copyrights, trademarks,
trade names, service marks, inventions, processes and other
intangible or intellectual property rights that may be invented,
conceived, developed or enhanced by Executive during the term of
this Agreement that relate to the business or operations of the
Company or that result from any work performed by Executive for
the Company shall be the sole property of the Company, and
Executive hereby waives any right or interest that he may
otherwise have in respect thereof. Upon the reasonable request
of Employer, Executive shall execute, acknowledge, deliver and
file any instrument or document necessary or appropriate to give
effect to this Section 7.3 and do all other acts and things
necessary to enable Company to exploit the same or to obtain
patents or similar protection with respect thereto.
D. Disclosure of Restrictions. If Executive shall
accept or commence employment with, or agree to provide services
to, any person (except a person who is then affiliated with
Employer) during the period from the date hereof through the end
of the Post-Employment Restriction Period then, and in such
event, on or before the date of such acceptance or agreement (and
before commencement of employment or the provision of services)
Executive shall deliver a copy of this Section 7 to his proposed
employer.
E. Breaches of Provisions. If Executive breaches any
of the provisions of this Section 7 then, and in any such event,
in addition to any other remedies available to Employer,
Executive shall not be entitled to compensation, if any, payable
following termination of this Agreement and upon demand shall
immediately repay to Employer an amount equal to all payments of
compensation, if any, made to him hereunder prior to Employer's
discovery of such breach.
F. Injunction. Notwithstanding any other provisions
of this Agreement, Executive acknowledges and agrees that in the
event of a violation or threatened violation of any of the
provisions of this Section 7, Employer shall have no adequate
remedy at law and shall therefore be entitled to enforce each
such provision by temporary or permanent injunctive or mandatory
relief obtained in any court of competent jurisdiction without
the necessity of proving damage or posting any bond or other
security, and without prejudice to any other remedies that may be
available at law or in equity.
G. Notice. Notwithstanding anything to the contrary
in this Agreement (and without limiting anything hereinabove
provided), if, during the Employment Period or the
Post-Employment Restriction Period, Executive obtains other
employment or engages in his own business or otherwise engages in
any business activities for his own benefit or account, Executive
shall immediately notify Employer of the same, identifying his
employer and disclosing his business activity.
VIII. Miscellaneous
A. Notices. Any notice, consent or authorization
required or permitted to be given pursuant to this Agreement
shall be in writing and sent to the party for or to whom
intended, at the address of such party set forth below, by
registered or certified mail (if available), postage paid, or at
such other address as either party shall designate by notice
given to the other in the manner provided herein.
If to Employer:
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
Atten: Ira B. Lampert, Chief Executive Officer
If to Executive:
Eli Shoer
4 Ross Avenue
Spring Valley, New York 10977
B. Taxes. Employer is authorized to withhold (from
any compensation or benefits payable hereunder to Executive) such
amounts for income tax, social security, unemployment
compensation and other taxes as shall be necessary or appropriate
in the reasonable judgment of Employer to comply with applicable
laws and regulations.
C. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of New
Jersey applicable to agreements made and to be performed therein.
D. Disputes. Any controversy or claim arising out of
or relating to this Agreement or any breach thereof, shall be
settled by submitting the matter to one arbitrator pursuant to
the Commercial Arbitration Rules of the American Arbitration
Association in New Jersey. The award may be entered in any court
of competent jurisdiction.
E. Headings. All descriptive headings in this
Agreement are inserted for convenience only and shall be
disregarded in construing or applying any provision of this
Agreement.
F. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument.
G. Severability. If any provision of this Agreement,
or part thereof, is held to be unenforceable, the remainder of
such provision and this Agreement, as the case may be, shall
nevertheless remain in full force and effect.
H. Entire Agreement and Representation. This
Agreement contains the entire agreement and understanding between
Employer and Executive with respect to the subject matter hereof.
No representations or warranties of any kind or nature relating
to the Company or its several businesses, or relating to the
Company's assets, liabilities, operations, future plans or
prospects have been made by or on behalf of Employer to
Executive. This Agreement supersedes any prior agreement between
the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
CONCORD CAMERA CORP.
By:______________________________
Name:
Title:
_________________________________
ELI SHOER
Exhibit 4.1
<PAGE>
Compensation
1. Base Salary: During the Employment Period, Employer shall pay
to Executive Base Salary at the rate of $210,000 per annum.
2. Incentive Bonus Plan: Employer intends to establish an
incentive bonus plan for all its corporate executives, with
anticipated implementation of such plan for the fiscal year ended
June 30, 1994. Executive shall be eligible to participate in
such plan in accordance with its terms.
3. Stock Options - General. Executive shall be granted such
options, if any, as the Board of Directors of Employer (or
appropriate committee thereof) may determine to grant to
Executive in accordance with the terms of Employer's Incentive
Plan or any future employee stock option plan adopted by Employer
at any time hereafter during the Employment Period.
4. Stock Option Award. In cancellation of all options granted to
Executive prior to October 4, 1994 as set forth below and in
consideration of Executive's employment and Executive's past
performance, Executive shall be granted an option to purchase
75,000 shares of common stock of Employer in form and substance
as set forth below and in the form of option agreement attached
hereto as Exhibit 4.1.1 (the "New Option"). In addition and in
consideration of Executive's continued employment and on going
performance under the herein Employment Agreement, Executive
shall be granted an option to purchase 75,000 shares of common
stock of Employer in form and substance as set forth below and in
the form of option agreement attached hereto as Exhibit 4.1.2
(the Employment Option).
Cancelled Options
Date of Grant Number of Shares Exercise Price
1. February 11, 1992 25,000 $5.0000
2. March 20, 1992 15,000 $6.5000
3. March 20, 1992 10,000 $8.8750
4. October 6, 1992 35,000 $6.1250
5. October 6, 1992 35,000 $6.1250
6. July 9, 1993 25,000 $4.4375
TOTAL 145,000
New Option
75,000 shares at an exercise price of $3.25 per share vesting as
follows:
1. 25,000 on October 1, 1995
2. 25,000 on October 1, 1996
3. 25,000 on October 1, 1997
Exhibit 4.1
Employment Option
75,000 shares at an exercise price of $4.00 per share vesting as
follows:
1. 25,000 on October 1, 1995
2. 25,000 on October 1, 1996
3. 25,000 on October 1, 1997
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of November 3, 1994
between Gary Kaess ("Executive") and CONCORD CAMERA CORP., a New
Jersey corporation ("Employer").
In consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree
as follows:
I. Employment of Executive
Employer hereby agrees to employ Executive and
Executive hereby agrees to be and remain in the employ of
Employer upon the terms and conditions hereinafter set forth.
II. Employment Period
The term of Executive's employment under this Agreement
(the "Employment Period") shall commence as of the date hereof
and, subject to earlier termination as provided in Section 5,
shall terminate on November 2, 1997 (the "Expiration Date").
III. Duties and Responsibilities
During the Employment Period, Executive (i) shall have
the title of Vice President of Product and Business Development
of Employer, (ii) shall devote his full attention and expend his
best efforts, energies and skills on a full-time basis to the
business of the Company (as hereinafter defined), (iii) shall
report to, and shall perform such duties consistent with his
position as he may be assigned from time to time by, Employer's
chief executive and chief operating officers, and (iv) shall be
subject to all of the policies, rules and regulations applicable
to executives of Employer of comparable status, and shall comply
with all reasonable directions and instructions of such senior
executives to whom Executive reports. Executive shall also serve
without additional compensation as an officer and director of
Employer and any of its subsidiaries, if so elected or appointed,
but if he is not so elected or appointed his compensation
hereunder shall in no way be affected. For all purposes of this
Agreement, the term "Company" means Employer and all
corporations, associations, companies, partnerships, firms and
other enterprises controlled by or under common control with
Employer.
IV. Compensation and Related Matters
A. Compensation, Generally. For all services rendered
and required to be rendered by, covenants of, and restrictions
imposed on, Executive under this Agreement, Employer shall pay to
Executive during and with respect to the Employment Period, and
Executive agrees to accept, such base salary ("Base Salary"),
bonus and stock options as are set forth on Exhibit 4.1.
B. Automobile. To facilitate the performance of
Executive's responsibilities hereunder, at all times during the
Employment Period while Executive is performing services for the
Company, Employer shall either a. pay to Executive an automobile
allowance of $1,000 per month, or b. make available to Executive,
at Employer's expense, an automobile suitable, in Employer's
reasonable judgment, for Executive (in which case Employer shall
pay the costs of operating, maintaining, insuring and garaging
such automobile, subject to such policies as may be in effect
from time to time applicable to senior executive officers of
Employer).
C. Life Insurance. Employer shall maintain in effect
at all times during the Employment Period, at Employer's expense,
a policy of insurance on the life of Executive in the amount of
$400,000 naming such person as Executive shall designate from
time to time as the owner and beneficiary thereof. Employer may,
at its option, obtain additional life insurance on the life of
Executive in such amounts as it shall determine designating
Employer as the owner and beneficiary thereof. Executive agrees
to aid, and cooperate in all reasonable respects with, Employer
in procuring any and all such insurance, including, without
limitation, by submitting to the usual and customary medical
examinations and filling out, executing and delivering such
applications and other instruments in writing as may be
reasonably required by an insurance company or companies to which
any application or applications for such insurance may be made by
or for Employer.
D. Other Benefits. During the Employment Period,
subject to, and to the extent Executive is eligible under their
respective terms, Executive shall be entitled to receive such
fringe benefits as are, or are from time to time hereafter,
generally provided by Employer to Employer's employees of
comparable status (other than those provided under or pursuant to
separately negotiated individual employment agreements or
arrangements and other than as would duplicate benefits otherwise
provided to Executive) under any pension or retirement plan,
disability plan or insurance, group life insurance, medical
insurance, travel accident insurance, or other similar plan or
program of Employer. Executive's Base Salary shall (where
applicable) constitute the compensation on the basis of which the
amount of Executive's benefits under any such plan or program
shall be fixed and determined.
E. Expense Reimbursement. Employer shall reimburse
Executive for all business expenses reasonably incurred by him in
the performance of his duties under this Agreement upon his
presentation, not less frequently than monthly, of signed,
itemized accounts of such expenditures all in accordance with
Employer's procedures and policies as adopted and in effect from
time to time and applicable to its employees of comparable
status.
F. Vacations. Executive shall be entitled to three
weeks vacation, which shall be taken at such time or times as
shall not unreasonably interfere with Executive's performance of
his duties under this Agreement.
V. Termination of Employment Period
A. By Employer: Cause. Employer may, at any time
during the Employment Period by notice to Executive, terminate
the Employment Period for "Cause". "Cause" shall mean a
termination of employment by the Employer based upon (i) the
continued failure by Executive to substantially perform his
duties with the Employer; (ii) Executive's conviction of any
felony or any crime involving moral turpitude or theft; (iii)
theft, fraud or embezzlement, resulting in gain or personal
enrichment to Executive at Employer's expense; (iv) the material
breach by Executive of this Agreement; (v) the inability of
Executive to perform his duties as a result of his addiction to
alcohol or drugs, other than drugs legally prescribed and
administered by a duly licensed physician; or (vi) an act of
gross neglect or gross misconduct by Executive. Prior to
terminating the Executive for Cause for any reason set forth in
clause (i), (iv) or (v) of the preceding sentence, the Employer
must give the Executive written notice of the facts and
circumstances giving rise to Cause and provide the Executive with
thirty (30) days to cure, remedy or rectify the situation.
B. Disability. During the Employment Period, if,
solely as a result of physical or mental incapacity or infirmity
(other than alcoholism or drug addiction), Executive shall be
unable to perform in any material respect his duties under this
Agreement for periods aggregating at least 180 days during any
period of 12 consecutive months (each a "Disability Period"),
Executive shall be deemed disabled ("the Disability") and
Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after
the end of the Disability Period. Employer may net against Base
Salary payments made to Executive in respect of any Disability
Period any payments made to Executive under any disability
insurance carried on Executive at the expense of Employer.
C. Death. The Employment Period shall end on the date
of Executive's death.
D. By Executive: Good Reason. Executive may, at any
time during the Employment Period by notice to Employer,
voluntarily terminate his employment for "Good Reason". For
purposes of this Agreement, "Good Reason" shall mean, without
Executive's express written consent, the occurrence of any of the
following circumstances: (i) the removal of Executive from the
position of Vice President of Product and Business Development;
(ii) the assignment to Executive of any duties or
responsibilities inconsistent with his status and authority as
set forth in Paragraphs 3 or 6 hereof, or a substantial adverse
alteration in the nature or status of his responsibilities from
those in effect at the commencement of his employment, if such
assignment or alteration reduces the authority, responsibilities,
importance or scope of his position or modifies Executive's
principal place of business, or (iii) the material breach by
Employer of this Agreement. Prior to terminating his employment
for Good Reason, Executive shall first give Employer written
notice of the facts and circumstances giving rise to Good Reason
and provide the Employer with thirty (30) days to cure, remedy or
rectify the situation.
E. Termination Compensation. Executive shall not be
entitled to compensation in respect of any period following the
termination of the Employment Period pursuant to subsections 5.1,
5.2 or 5.3 or the expiration of the Employment Period. If, prior
to the Expiration Date, Executive's employment is terminated by
Employer without Cause, or if Executive's employment is
terminated by Executive for Good Reason, Executive shall receive
the compensation and benefits set forth in Section 4 for the
duration of the Employment Period, subject to Executive's duty to
mitigate set forth in subsection 5.6.
F. Mitigation. If, prior to the Expiration Date,
Executive's employment is terminated by Employer without Cause or
if Executive's employment is terminated by Executive for Good
Reason, Executive shall mitigate, by seeking employment
consistent with his skills and experience with any other person
or otherwise, the amount of any payments or benefits to which he
may be entitled following such termination. If, at any time
during the period commencing on the date of such termination
through the Expiration Date (the "Relevant Period"), Executive
shall commence employment with or engagement for the rendition of
services to any other business, the amount of any such payments
or benefits to which Executive would otherwise be entitled shall
be reduced by any compensation, benefit or other amount earned
by, accrued for or paid to Executive pursuant to such other
employment or engagement in respect of the Relevant Period. In
connection with the foregoing, Executive shall provide Employer,
and shall instruct his new employer (or the person to which
Executive renders such services) to provide Employer, with such
information as to Executive's compensation during such period as
Employer may request (and Executive hereby authorizes Employer to
obtain such information directly from Executive's new employer
(or such other person)).
VI. Location of Executive's Activities
Executive's principal place of business in the
performance of his duties and obligations under this Agreement
shall be Employer's headquarters in the USA and Executive shall
engage in such travel and spend such time in the Far East and
such other places as may be necessary or appropriate in
furtherance of his duties hereunder.
VII. Exclusivity of Services, Confidential Information and
Restrictive Covenants
A. Exclusivity of Services and Restrictions. During
the Employment Period and the Post-Employment Restriction Period,
Executive shall not, directly or indirectly, (a) be or become
interested in or associated with or represent or otherwise render
assistance or services to (as an officer, director, stockholder,
partner, consultant, owner, employee, agent, creditor or
otherwise) any business that is then, or which then proposes to
become, a competitor of the Company anywhere in the world;
provided, that the foregoing shall not restrict Executive from
the ownership, solely as an investment, of securities of any
business if such ownership is (i) not as controlling person of
such business, (ii) not as a member of a group that controls such
business, and (iii) not as a direct or indirect beneficial owner
of 5% or more of any class of securities of such business, (b)
induce or seek to influence any employee of (or consultant to)
the Company to leave its employ (or terminate such consultancy)
or to become financially interested in a similar business, (c)
aid a competitor or supplier of the Company in any attempt to
hire a person who shall have been employed by, or who was a
consultant to, the Company within the one-year period preceding
the date of any such aid, or (d) induce or attempt to influence
any person who was a customer or supplier to the Company during
such period to transact business with a competitor of the Company
or not to do business with the Company. For the purposes hereof,
"Post-Employment Restriction Period" means the period commencing
on the date of termination of Executive's employment hereunder
and terminating on the later of a. the first anniversary of the
date of termination of Executive's employment hereunder, and b.
the date that Employer ceases to pay to Executive, or Executive
irrevocably declines to accept, Base Salary payments.
B. Confidential Information. Except in the course of
his employment hereunder and in furtherance of the business of
the Company, during the Employment Period and at all times
thereafter, Executive shall keep secret and retain in strictest
confidence, and shall not to the detriment of the Company
knowingly use or disclose, directly or indirectly, any
confidential information, trade secrets or proprietary data of
the Company, including without limitation, any proprietary
processes of the Company or any other confidential or non-public
information or material concerning the business, affairs,
patents, trademarks, service marks, products, suppliers or
customers of the Company. Executive shall not be deemed to have
violated this Section 7.2 by disclosure of information that at
the time of disclosure (a) is publicly available or becomes
publicly available through no act or omission of Executive, or
(b) is disclosed as required by court order or as otherwise
required by law, on condition that notice of the requirement for
such disclosure is given to Employer prior to making any
disclosure and Executive cooperates as Employer may reasonably
request in resisting it. In connection with Executive's
obligations pursuant to this Section 7.2, a. Executive shall keep
all papers relating to Company and Executive's responsibilities
and duties hereunder at the principal place of business of
Employer or at such other place as may be designated by Employer
from time to time, and b. upon the termination of his employment,
Executive will deliver to Employer all documents, papers,
records, files, recordings, computer or word processing software
and hardware and other material containing confidential material,
and will retain no copy, duplicate, summary or description
thereof.
C. Intellectual Property. All copyrights, trademarks,
trade names, service marks, inventions, processes and other
intangible or intellectual property rights that may be invented,
conceived, developed or enhanced by Executive during the term of
this Agreement that relate to the business or operations of the
Company or that result from any work performed by Executive for
the Company shall be the sole property of the Company, and
Executive hereby waives any right or interest that he may
otherwise have in respect thereof. Upon the reasonable request
of Employer, Executive shall execute, acknowledge, deliver and
file any instrument or document necessary or appropriate to give
effect to this Section 7.3 and do all other acts and things
necessary to enable Company to exploit the same or to obtain
patents or similar protection with respect thereto.
D. Disclosure of Restrictions. If Executive shall
accept or commence employment with, or agree to provide services
to, any person (except a person who is then affiliated with
Employer) during the period from the date hereof through the end
of the Post-Employment Restriction Period then, and in such
event, on or before the date of such acceptance or agreement (and
before commencement of employment or the provision of services)
Executive shall deliver a copy of this Section 7 to his proposed
employer.
E. Breaches of Provisions. If Executive breaches any
of the provisions of this Section 7 then, and in any such event,
in addition to any other remedies available to Employer,
Executive shall not be entitled to compensation, if any, payable
following termination of this Agreement and upon demand shall
immediately repay to Employer an amount equal to all payments of
compensation, if any, made to him hereunder prior to Employer's
discovery of such breach.
F. Injunction. Notwithstanding any other provisions
of this Agreement, Executive acknowledges and agrees that in the
event of a violation or threatened violation of any of the
provisions of this Section 7, Employer shall have no adequate
remedy at law and shall therefore be entitled to enforce each
such provision by temporary or permanent injunctive or mandatory
relief obtained in any court of competent jurisdiction without
the necessity of proving damage or posting any bond or other
security, and without prejudice to any other remedies that may be
available at law or in equity.
G. Notice. Notwithstanding anything to the contrary
in this Agreement (and without limiting anything hereinabove
provided), if, during the Employment Period or the Post-
Employment Restriction Period, Executive obtains other employment
or engages in his own business or otherwise engages in any
business activities for his own benefit or account, Executive
shall immediately notify Employer of the same, identifying his
employer and disclosing his business activity.
VIII. Miscellaneous
A. Notices. Any notice, consent or authorization
required or permitted to be given pursuant to this Agreement
shall be in writing and sent to the party for or to whom
intended, at the address of such party set forth below, by
registered or certified mail (if available), postage paid, or at
such other address as either party shall designate by notice
given to the other in the manner provided herein.
If to Employer:
Concord Camera Corp.
35 Mileed Way
Avenel, New Jersey 07001
If to Executive:
Gary Kaess
627 Rosewood Terrace
Linden, New Jersey 07036
B. Taxes. Employer is authorized to withhold (from
any compensation or benefits payable hereunder to Executive) such
amounts for income tax, social security, unemployment
compensation and other taxes as shall be necessary or appropriate
in the reasonable judgment of Employer to comply with applicable
laws and regulations.
C. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of New
Jersey applicable to agreements made and to be performed therein.
D. Disputes. Any controversy or claim arising out of
or relating to this Agreement or any breach thereof, shall be
settled by submitting the matter to one arbitrator pursuant to
the Commercial Arbitration Rules of the American Arbitration
Association in New Jersey. The award may be entered in any court
of competent jurisdiction.
E. Headings. All descriptive headings in this
Agreement are inserted for convenience only and shall be
disregarded in construing or applying any provision of this
Agreement.
F. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument.
G. Severability. If any provision of this Agreement,
or part thereof, is held to be unenforceable, the remainder of
such provision and this Agreement, as the case may be, shall
nevertheless remain in full force and effect.
H. Entire Agreement and Representation. This
Agreement contains the entire agreement and understanding between
Employer and Executive with respect to the subject matter hereof.
No representations or warranties of any kind or nature relating
to the Company or its several businesses, or relating to the
Company's assets, liabilities, operations, future plans or
prospects have been made by or on behalf of Employer to
Executive. This Agreement supersedes any prior agreement between
the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
CONCORD CAMERA CORP.
By:______________________________
Ira B. Lampert
Chairman and Chief
Executive Officer
_________________________________
GARY KAESS
Exhibit 4.1
<PAGE>
Compensation
1. Base Salary: During the Employment Period, Employer shall pay
to Executive Base Salary at the rate of $150,000 per annum.
2. Incentive Bonus Plan: Employer intends to establish an
incentive bonus plan for all its corporate executives, with
anticipated implementation of such plan for the fiscal year ended
June 30, 1994. Executive shall be eligible to participate in
such plan in accordance with its terms.
3. Stock Options - General. Executive shall be granted such
options, if any, as the Board of Directors of Employer (or
appropriate committee thereof) may determine to grant to
Executive in accordance with the terms of Employer's Incentive
Plan or any future employee stock option plan adopted by Employer
at any time hereafter during the Employment Period.
4. Stock Option Award. In cancellation of all options granted to
Executive prior to November 3, 1994 as set forth below and in
consideration of Executive's employment and Executive's past
performance, Executive shall be granted an option to purchase
30,000 shares of common stock of Employer in form and substance
as set forth below and in the form of option agreement attached
hereto as Exhibit 4.1.1 (the "New Option").
Cancelled Options
Date of Grant Number of Shares Exercise Price
April 16, 1992 8,500 $5.4375
November 27, 1992 10,000 $6.2500
TOTAL 18,500
New Option
30,000 shares at an exercise price of $3.25 per share vesting as
follows:
10,000 on November 3, 1995
10,000 on November 3, 1996
10,000 on November 3, 1997
EXHIBIT 10.3
ARTHUR ZAWODNY ("EMPLOYEE")
TERMS OF EMPLOYMENT
AMENDED AND RESTATED WITH
CONCORD CAMERA HK LIMITED ("CONCORD HK")
AS OF OCTOBER 21, 19941
1) POSITION
Director - Design Engineering.
2) TERM
Four Years (May 1, 1994 to April 30, 1998) (the "Term").
3) REPORTS TO
Eli Shoer, Managing Director of CONCORD HK.
Board of Directors of CONCORD HK.
4) COMPENSATION
A) Salary - US$86,000 per annum, paid monthly
B) Housing Allowance - HK$22,750 per month during the
Term.
5) OPTIONS
To be granted from time to time at the discretion of Concord
Camera Corp., taking into account, among other things,
individual performance and general business conditions. In
consideration of employment, the following options are
granted and vested as follows:
10,000 @ $3.25 per share
Vesting: 2,000 immediately on execution of this agreement
2,000 after completion of 1st year of term of employment
2,000 after completion of 2nd year of term of employment
2,000 after completion of 3rd year of term of employment
2,000 after completion of 4th year of term of employment
In addition, in cancellation of all options granted prior to
this agreement, and in consideration of past performance,
the following options are granted:
10,000 @ $3.25 per share
Vesting: 10,000 immediately on execution of this agreement.
6) PAID VACATION
____________________
1Amends and restates Employee's Terms of Employment with
Concord HK dated as of May 1, 1994.
First Year: four months
Second Year: five months
Third Year: five months
Fourth Year: five months
Any unused vacation by Employee during the Term will be paid
to him on/or about April 30 each year.
7) EXPENSE REIMBURSEMENT
All reasonable and necessary expenses incurred in
performance of duties during the Term, including relocation
of house boat to Hong Kong and back to the United States up
to US$15,000 for each relocation.
8) TERMINATION
A) Termination by CONCORD HK for cause (crime, willful
failure to follow instructions or failure to
satisfactorily perform duties) - effective
immediately.
B.i) Either party may terminate at any time for any reason
upon giving the other party three-month's written
notice.
B.ii) In the event CONCORD HK elects to terminate, it may
at its option request employee remain in its
employment during the three-month period, at his then
effective salary rate. Alternatively, CONCORD HK may
request employee cease working at any time during the
three-month termination period in which case:
a) the employee will be paid for a three-month
period, at his then effective salary rate, in
scheduled monthly termination payments;
b) CONCORD HK 's obligation to pay such termination
payments will be offset to the extent of any
salary or other payments received by employee
during the balance of the three-month notice
period from other employment employee may
obtain.
9) BENEFITS
Disability Insurance - Employee will be eligible to
participate in Concord Camera Corp.'s existing
employee disability insurance plan.
Health Insurance - Employee will be eligible to
participate in Concord Camera Corp.'s existing
employee medical and dental plan.
10) AGREEMENT NOT TO COMPETE
In consideration of CONCORD HK's employment, employee will
not compete in North, Central and South America, the Far and
Middle East, Europe, Africa and Australia and New Zealand
during the Term, and in the event of a termination for any
reason, for one year following the later of the end of the
end of the employment term or the date of the last scheduled
severance payment by CONCORD HK.
11) COVENANTS OF EMPLOYEE
A) Any discovery, invention or secret process or
improvement in a procedure used by, or useful to,
CONCORD HK in the operation of its business, made or
discovered by employee during his employment with
CONCORD HK in connection with or in any way affecting
or relating to the business of CONCORD HK or capable
of being used or adapted for use therein or in
connection therewith shall forthwith be disclosed to
CONCORD HK and shall belong to and be the absolute
property of CONCORD HK.
B) Employee shall, whether during or after any
Termination, at the expense of CONCORD HK or its
nominee, complete and file any patent applications or
other requests for protection of any such discovery,
invention process or improvement described herein and
shall execute all instruments and do all things
necessary for vesting such patent rights or other
similar protection in the name of CONCORD HK (or any
nominee) absolutely and as the sole beneficial owner.
C) Pursuant to this Agreement, employee shall be
rendering to CONCORD HK services of a valuable,
special, unique and extraordinary nature, and shall
be obtaining substantial economic benefits. Employee
acknowledges that the temporal and geographic
limitations imposed herein on his post-employment
activities are necessary and reasonable in order to
protect CONCORD HK in the conduct of its business and
while in effect will not preclude employee from
earning a living.
D) Employee and CONCORD HK acknowledge and agree that
for purposes of this Section 11 and Sections 12 and
13 hereof, the term "CONCORD HK" shall be deemed to
include CONCORD HK, its parent company, and any
subsidiaries, joint venturers, or affiliates thereof.
12) CONFIDENTIALITY
From and after the date hereof, including both prior to and
after termination, for any reason whatsoever, whether by
CONCORD HK or employee, employee shall treat as CONCORD HK's
confidential trade secrets all data, information, ideas,
knowledge and papers pertaining to the affairs of CONCORD
HK. Without limiting the generality of the foregoing, such
trade secrets shall include: the identity of CONCORD HK's
customers, suppliers and prospective customers and
suppliers; the identity of CONCORD HK's creditors and other
sources of financing or potential creditors and other
potential sources of financing; CONCORD HK's estimating and
costing procedures and the cost and gross prices charged by
CONCORD HK for its products; the prices or other
consideration charged to or required of CONCORD HK by any of
its suppliers or potential suppliers; CONCORD HK's sales and
promotional policies; and engineering manufacture, design,
product development and other information and specifications
of CONCORD HK's molds and other product fabrication
equipment and CONCORD HK's catalogs and other promotional
materials. Employee shall not reveal said trade secrets to
others except in the proper exercise of his duties and
authorities for CONCORD HK, nor use his knowledge thereof in
any way that would be detrimental to the interests of
CONCORD HK. Employee shall also treat all information
pertaining to the affairs of CONCORD HK's customers and
suppliers and prospective customers and suppliers as
confidential trade secrets of such customers and suppliers
and prospective customers and suppliers.
13) REMEDIES
A) Employee acknowledges and agrees that in the event he
shall violate or threaten to violate any of the
provisions of Section 10 or 11 hereof, CONCORD HK may
have no adequate remedies at law and may suffer
irreparable injury and agrees that CONCORD HK will
therefore be entitled to enforce such provisions by
temporary or permanent injunctive relief obtained in
an action or proceeding instituted in any court of
competent jurisdiction without the necessity of
proving damages or irreparable injury, without regard
to the ability of employee to answer in damages for
any such breach, and without prejudice to any other
remedies which it may have in law or inequity, and
shall, without limitation, as a provisional remedy,
be entitled to terminate all payments to employee or
any designee thereof hereunder.
B) If any restriction contained in Section 10 or 11
hereof is found to be unenforceable by reason of the
extent duration or scope thereof, or otherwise, then
the court making such determination shall have the
right to reduce such extent, duration, scope or other
provision and in its reduced form any such
restriction shall thereafter be enforceable as
contemplated hereby.
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
CONCORD CAMERA HK LIMITED
By: By:
Arthur Zawodny Ira B. Lampert, Director
Date: Date:
