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, 1996 - 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 -- 10,944,026 shares as of May 10, 1996
Page 1 of 18
Exhibit Index on Page 17
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Concord Camera Corp.
Consolidated Balance Sheets
March 31, 1996
(Unaudited) June 30,1995
Current assets:
Cash $ 3,958,533 $ 4,533,216
Accounts receivable, net 7,728,195 8,589,790
Inventories 21,871,152 18,865,323
Prepaid expenses and other current assets 2,330,796 2,494,559
Total current assets 35,888,676 34,482,888
Plant and equipment, net 11,870,625 10,802,688
Goodwill, net 1,552,561 1,678,629
Investments in joint ventures 27,606 91,984
Other assets 2,994,790 3,132,566
Total assets $52,334,258 $50,188,755
Current liabilities:
Short-term debt $ 7,500,975 $ 5,742,063
Current portion of long-term debt 28,752 24,836
Current obligations under capital leases 232,339 788,165
Accounts payable 6,090,124 6,993,857
Accrued expenses 2,089,924 2,902,282
Income taxes payable 110,470 294,584
Other current liabilities 159,809 305,175
Total current liabilities 16,212,393 17,050,962
Deferred income taxes 442,889 484,842
Long-term debt 438,472 264,432
Obligations under capital leases 488,286 123,626
Other long-term liabilities 648 648
Total liabilities 17,582,688 17,924,510
Stockholders' equity:
Common stock, no par value, 20,000,000 authorized;
10,944,026 and 10,490,526 issued as of
March 31, 1996 and June 30, 1995 39,361,894 36,935,174
Paid in capital 850,786 850,786
Deficit (2,564,807) (5,068,796)
Notes receivable arising from common stock
purchase agreements (2,443,384) -
35,204,489 32,717,164
Less: treasury stock, at cost; 63,553 shares (452,919) (452,919)
Total stockholders' equity 34,751,570 32,264,245
Total liabilities and stockholders' equity $52,334,258 $50,188,755
See accompanying notes to consolidated financial statements.
Concord Camera Corp.
Consolidated statements of operations
(Unaudited)
for the three months ended
March 31,
1996 1995
Net sales $15,534,417 $13,783,022
Cost of products sold 10,986,508 9,212,844
Gross profit 4,547,909 4,570,178
Selling expenses 1,732,617 1,721,518
General and administrative expenses 2,091,121 2,003,847
Financial expenses 384,500 347,959
Other income, net (70,583) (14,618)
Legal expenses and settlement costs 323,593 219,263
Income from operations before income taxes (benefit) 86,661 292,209
Provision (benefit) for income taxes (145) 41,824
Net Income $ 86,806 $ 250,385
Earnings per common and common equivalent share $0.01 $0.02
Weighted average number of common and common
equivalent shares outstanding 10,959,899 10,529,991
See accompanying notes to consolidated financial statements.
Concord Camera Corp.
Consolidated statements of operations
(unaudited)
for the nine months ended
March 31,
1996 1995
Net sales $50,933,925 $47,054,815
Cost of products sold 34,360,134 31,917,977
Gross profit 16,573,791 15,136,584
Selling expenses 5,814,955 5,338,584
General and administrative expenses 6,545,838 5,789,738
Financial expenses 1,128,616 1,102,419
Other income, net (29,508) (112,826)
Legal expenses and settlement costs 609,275 710,237
Income from operations before income taxes 2,504,615 2,308,686
Provision for income taxes 626 144,769
Net income $2,503,989 $ 2,163,917
Earnings per common and common equivalent share $0.22 $0.21
Weighted average number of common and common
equivalent shares outstanding 11,218,845 10,507,684
See accompanying notes to consolidated financial statements.
Concord Camera Corp.
Consolidated statements of cash flows
(Unaudited)
For the nine months ended
March 31,
1996 1995
Cash flows from operating activities:
Net income $ 2,503,989 $ 2,163,917
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,182,168 1,760,827
Net gain on sale of property & equipment - (5,027)
(Decrease) in deferred income taxes (41,953) (78,048)
Interest income on notes receivable arising from
common stock agreements (56,884) -
Change in assets and liabilities:
(Increase) decrease in accounts receivable 861,595 (1,930,120)
(Increase) decrease in inventories (3,005,829) 1,257,835
Decrease in prepaid expenses and other
current assets 101,702 171,432
(Increase) in other assets (229,779) (903,472)
Increase (decrease)in accounts payable (903,733) 335,119
(Decrease) in accrued expenses (812,358) (154,332)
Increase (decrease) in income taxes payable (184,114) 185,582
Increase (decrease) in other current liabilities (145,366) 63,367
(Decrease) in other liabilities - (120,002)
Total adjustments (2,234,551) 583,161
Net cash provided by operating activities 269,438 2,747,078
Cash flows from investing activities:
Purchase of property, plant and equipment (2,129,917) (887,756)
Proceeds from sale of long term assets - 30,176
Decrease in investments and advances to
joint ventures 64,378 75,000
Net cash (used in) investing activities (2,065,539) (782,580)
Cash flows from financing activities:
Net borrowings under short-term debt agreements 1,758,912 2,108,905
Net borrowings (repayments)of long-term debt 177,955 (3,013,710)
Principal payments under capital lease obligations (755,699) (524,257)
Net proceeds from issuance of common stock 40,250 -
Net cash provided by (used in) financing activities 1,221,418 (1,429,062)
Net increase (decrease)in cash (574,683) 535,436
Cash at beginning of period 4,533,216 3,394,658
Cash at end of period $ 3,958,533 $ 3,930,094
See accompanying notes to consolidated financial statements.
See Note 3 - Supplemental Disclosure of cash flow information.
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(unaudited)
NOTE 1 - General
In the opinion of Concord Camera Corp. ("the Company"), the accompanying
unaudited financial statements contain all adjustments, consisting of normal
recurring adjustments, necessary for the fair presentation of the Company`s
financial position as of March 31, 1996, and the results of operations and cash
flows for the periods ended March 31, 1996 and 1995.
The Notes to Consolidated Financial Statements, which are included in the
Company's 1995 Form 10-K Annual Report, should be read with the accompanying
financial statements.
Earnings per common and common equivalent share, for the nine months
ended March 31, 1996, are based on the weighted average number of common shares
outstanding and the dilutive effect of common stock equivalents, which include
stock options and/or warrants that are exercisable at prices below the average
price of the Company's common stock during the nine months ended March 31, 1996.
Earnings per common share, for the three months ended March 31, 1995 and 1996
and for the nine months ended March 31, 1995, are based on the weighted average
number of common shares outstanding. Common stock equivalents outstanding
during those periods were not included in the calculation of earnings per share
because their effect was antidilutive.
The Company operates on a worldwide basis and its results may be
adversely or positively affected by fluctuations of various foreign currencies
against the U.S. Dollar, specifically, the Canadian Dollar, German Mark, British
Pound Sterling, Hungarian Forint, French Franc, and Japanese Yen. Each of the
Company's foreign subsidiaries purchases its inventories in U.S. Dollars and
sells them in local currency, thereby creating an exposure to fluctuations in
foreign currency exchange rates. Certain components needed to manufacture
cameras are priced in Japanese Yen. The impact of foreign exchange transactions
is reflected in the profit and loss statement. The Company continues to analyze
the benefits and costs associated with hedging against foreign currency
fluctuations.
NOTE 2 - Inventories
Inventories are comprised of the following:
March 31, June 30,
1996 1995
Raw material $ 9,774,681 $ 7,162,899
Finished goods 12,096,471 11,702,424
$21,871,152 $18,865,323
Note 3 - Supplemental Disclosures of Cash Flow Information:
For the nine months ended March 31,
1996 1995
Cash paid for interest $ 651,537 $ 630,671
Cash paid for taxes $ 252,518 $ 87,917
During the nine months ended March 31, 1996 and 1995, capital lease
obligations of approximately $565,000 and $130,000, respectively were incurred
when the company entered into leases for the purchase of equipment.
Note 4 - Stockholders' Equity
For financial reporting purposes, 444,000 shares of common stock, which
were issued in exchange for notes of $2,386,500 pursuant to the Company's Senior
Management Common Stock Purchase Award Provisions, forming a part of the
Company's Incentive Plan, have been treated as outstanding since August 23,
1995, the date upon which commitments for the purchase of such shares were made
by the purchasers. Definitive agreements and the related notes for such
purchases were executed on November 7, 1995 when the shares were issued.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Three months ended March 31, 1996 compared to the three months ended March 31,
1995.
Total revenues for the three months ended March 31, 1996 and 1995 were
approximately $15,534,000 and $13,783,000, respectively, an increase of
approximately $1,751,000 or 12.7%. The increase is primarily attributable to
increases in OEM revenues, the Company's European expansion, and the continued
acceptance of the Company's single-use camera models, partially offset by
decreases in traditional camera sales. Revenues from OEM sales increased by
approximately $3,480,000 or 83.5% for the three months ended March 31, 1996 to
$7,646,000 from $4,166,000 for the three months ended March 31, 1995. The
increase in OEM sales is attributable to increased purchases by the Company's
one new and two preexisting OEM customers. Revenues from traditional sales of
cameras decreased by approximately $1,730,000 or 18.0% for the three months
ended March 31, 1996 to $7,888,000 from $9,618,000 for the three months ended
March 31, 1995. The decrease in traditional camera sales is attributable to the
reluctance of retailers to process new orders for traditional 35 millimeter
hard body cameras until the impact on the market place of the Advanced Photo
System's ("APS") introduction is quantified.
Sales by Concord Camera HK Limited ("Concord HK") for the three months
ended March 31, 1996 and 1995 were approximately $11,552,000 and $7,976,000,
respectively, an increase of approximately $3,576,000 or 44.8%. The increase is
due primarily to the increase in OEM sales.
Consolidated sales of the Company's United States, Canadian, and
Panamanian operations, collectively "Concord Americas," for the three months
ended March 31, 1996 and 1995 were approximately $2,475,000 and $3,794,000,
respectively, a decrease of approximately $1,319,000 or 34.8%. In addition,
certain Concord Americas' customers decreased merchandise purchases on an F.O.B.
Hong Kong basis from Concord HK. During the three months ended March 31, 1996
and 1995 Concord Americas customers purchased approximately $2,488,000 and
$3,005,000, respectively, from Concord HK, a decrease of approximately $517,000
or 17.2%. If these Concord HK sales to Concord Americas' customers were
included as Concord Americas' sales for the three month period, sales of
traditional cameras to Concord Americas' customers would have decreased by
27.0%, reflecting a slower retail environment, in general, and a decision not to
ship certain customers that became financially unstable during this and the
preceding period.
Consolidated sales of Concord Camera GmbH ("Concord Germany"), Concord
Camera UK Limited ("Concord UK"), Concord Camera France ("Concord France"), and
Concord Camera (Hungary) Ltd. ("Concord Hungary"), collectively "Concord Europe"
for the three months ended March 31, 1996 and 1995, were approximately
$1,497,000 and $2,013,000, respectively, a decrease of approximately $516,000 or
25.6%. In addition, certain European customers increased merchandise purchases
on an F.O.B. Hong Kong basis from Concord HK. During the three months ended
March 31, 1996 and 1995 European customers purchased approximately $1,259,000
and $583,000, respectively, from Concord HK, an increase of approximately
$676,000 or 115.9%. If these Concord HK sales to Concord Europe's customers
were included as Concord Europe's sales for the three month period, sales of
traditional cameras to Concord Europe's customers would have increased by 6.1%.
This increase is primarily attributable to sales to new customers by the
Company's increased European Sales and Marketing force.
<PAGE>
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 29.3% for
the three months ended March 31, 1996 from 33.2% for the three months ended
March 31, 1995. This decrease was due in part to the sale of product with lower
gross profit margins, partially offset by improved manufacturing efficiencies.
Expenses
Operating expenses consisting of selling, general and administrative and
financial expenses, increased to $4,208,000 in the three months ended March 31,
1996 from $4,073,000 in the three months ended March 31, 1995, an increase of
$135,000 or 3.3%. As a percentage of sales, operating expenses decreased to
27.1% in the three months ended March 31, 1996 from 29.6% in the three months
ended March 31, 1995.
Selling expenses increased to $1,733,000 or 11.2% of net sales in the
three months ended March 31, 1996 from $1,722,000 or 12.5% of net sales in the
three months ended March 31, 1995. The increase was primarily attributable to
the Company's increased sales volume and increases in royalty expenses and
promotion allowances, net of decreases in freight, compensation, commissions,
and marketing expenses.
General and administrative expenses increased to $2,091,000 or 13.5% of
net sales in the three months ended March 31, 1996 from $2,004,000 or 14.5% of
net sales in the three months ended March 31, 1995. The increase is primarily
attributable to increases in costs associated with building the necessary
infrastructure to support the anticipated continuing growth in volume.
Financial expenses increased to $385,000 or 2.5 % of net sales in the
three months ended March 31, 1996 from $348,000 or 2.5% of net sales in the
three months ended March 31, 1995. The increase was primarily a result of an
increase in average debt outstanding during the three months ended March 31,
1996, net of a decrease in loan guarantee fees.
<PAGE>
Litigation and settlement costs in the three months ended March 31, 1996
and 1995 were approximately $324,000 and $219,000, respectively. The Company
incurred significant legal expenses and settlement costs in connection with
non-operating matters. In the three months ended March 31, 1996, those matters
consisted primarily of the demand for arbitration and other litigation against
Jack C. Benun, a purported class action, and legal fees related to the Roland
Kohl Settlement. In the three months ended March 31, 1995, these matters
consisted primarily of the demand for arbitration against Jack C. Benun, a
purported class action, the Roland Kohl Settlement, and the Argus settlement.
Other (Income), net
Other (income), net includes interest income and gains from the sale of
fixed assets net of, directors fees, certain public relations costs, and foreign
exchange gains and losses.
<PAGE>
Nine months ended March 31, 1996 compared to the nine months ended March 31,
1995.
Total revenues for the nine months ended March 31, 1996 and 1995 were
approximately $50,934,000 and $47,055,000, respectively, an increase of
approximately $3,879,000 or 8.2%. The increase, which is net of decreases in
non-camera revenues, is due to an increase in OEM revenues, the Company's
European expansion, and the continued acceptance of the Company's single-use
camera models. Revenues from traditional camera sales decreased by approximately
$5,273,000 or 14.4% for the nine months ended March 31, 1996 to $31,263,000 from
$36,536,000 for the nine months ended March 31, 1995, while revenues from OEM
sales increased by approximately $11,628,000 or 144.6% for the nine months ended
March 31, 1996 to $19,671,000 from $8,043,000 for the nine months ended March 31
1995. In the nine months ended March 31, 1996, there were no non-camera sales
compared to approximately $2,476,000 of such sales in the nine months ended
March 31, 1995. Non-camera sales were substantially discontinued by the Company
as of the end of the six months ended December 31, 1994. The increase in OEM
sales is attributable to increased purchases by the Company's one new and two
preexisting OEM customers.
Sales by Concord Camera HK Limited ("Concord HK") for the nine months
ended March 31, 1996 and 1995 were approximately $32,213,000 and $19,071,000,
respectively, an increase of approximately $13,142,000 or 68.9%. The increase
is due primarily to the increase in OEM sales and a change in the OEM point of
sale from the United States to Hong Kong during the quarter ended December 31,
1994. The Company effectuated a change in the OEM point of sale in order to
secure an additional working capital line from the Bank of East Asia, New York
(see Bank of East Asia, New York.)
Consolidated sales of the Company's United States, Canadian, and
Panamanian operations, collectively "Concord Americas," for the nine months
ended March 31, 1996 and 1995 were approximately $11,890,000 and $21,517,000,
respectively, a decrease of approximately $9,627,000 or 44.7%. Net sales for
the nine months ended March 31, 1995 included OEM sales with point of sale out
of U.S. of approximately $2,225,000, and non-camera revenues of approximately
$2,476,000. If the foregoing sales were eliminated from Concord Americas'
operations in the nine months ended March 31, 1995 it would reflect a decrease
in traditional camera sales in the Americas for the nine months ended March 31,
1996 of approximately $4,926,000 or 29.3% from such sales for the comparable
period last year. In addition, certain Concord Americas' customers decreased
merchandise purchases on an F.O.B. Hong Kong basis from Concord HK. During the
nine months ended March 31, 1996 and 1995 Concord Americas' customers purchased
approximately $18,966,000 and $22,909,000, respectively, from Concord HK, a
decrease of approximately $3,943,000 or 17.2%. If these Concord HK sales to
Concord Americas' customers were included as Concord Americas' sales for the
nine month period, sales of traditional cameras to Concord Americas' customers
would have decreased by 22.3% reflecting a slower retail environment, in
general, and certain customers that became financially unstable that the company
did not ship product to during this and the preceding period.
<PAGE>
Consolidated sales of Concord Camera GmbH ("Concord Germany"), Concord
Camera UK Limited ("Concord UK"), Concord Camera France ("Concord France"), and
Concord Camera (Hungary) Ltd. ("Concord Hungary"), collectively "Concord Europe"
for the nine months ended March 31, 1996 and 1995, were approximately $6,821,000
and $6,466,000, respectively, an increase of approximately $355,000 or 5.5%. In
addition, certain European customers increased merchandise purchases on an F.O.B
Hong Kong basis from Concord HK. During the nine months ended March 31, 1996
and 1995 European customers purchased approximately $3,614,000 and $1,938,000,
respectively, from Concord HK, an increase of approximately $1,676,000 or 86.5%.
If these Concord HK sales to Concord Europe's customers were included as Concord
Europe's sales for the nine month period, sales of traditional cameras to
Concord Europe's customers would have increased by 24.2%. This increase is
primarily attributable to sales to new customers by the Company's increased
European Sales and Marketing force.
Gross Profit
Gross profit, expressed as a percentage of sales, increased to 32.5% for
the nine months ended March 31, 1996 from 32.2% for the nine months ended March
31, 1995. This increase was due in part to improved manufacturing efficiencies
as well as the sale of product with higher margins, and the discontinuance of
lower margin non-camera products.
Expenses
Operating expenses consisting of selling, general and administrative and
financial expenses, increased to $13,489,000 in the nine months ended March 31,
1996 from $12,231,000 in the nine months ended March 31, 1995, an increase of
$1,258,000 or 10.3%. As a percentage of sales, operating expenses increased to
26.5% in the nine months ended March 31, 1996 from 26.0% in the nine months
ended March 31, 1995.
Selling expenses increased to $5,815,000 or 11.4% of net sales in the
nine months ended March 31, 1996 from $5,339,000 or 11.3% of net sales in the
nine months ended March 31, 1995 The increase was primarily attributable to the
Company's increased sales volume and increases in freight costs, royalty
expenses, and promotion allowances, net of decreases in compensation,
commissions, and marketing expenses.
General and administrative expenses increased to $6,546,000 or 12.9% of
net sales in the nine months ended March 31, 1996 from $5,790,000 or 12.3% of
net sales in the nine months ended March 31, 1995. The increase is primarily
attributable to increases in costs associated with building the necessary
infrastructure to support the growth in volume.
Financial expenses increased to $1,129,000 or 2.2 % of net sales in the
nine months ended March 31, 1996 from $1,102,000 or 2.3% of net sales in the
nine months ended March 31, 1995. Financial expenses for the nine months ended
March 31, 1996 included anticipation discounts granted to a customer totaling
approximately $44,000. After giving effect to these cash discounts, financial
expenses decreased by approximately $17,000 or 1.5% in the nine months ended
March 31, 1996. Such decrease was primarily a result of a reduction in average
debt outstanding during the nine months ended March 31, 1996, and a reduction in
loan guarantee fees.
<PAGE>
Litigation and settlement costs in the nine months ended March 31, 1996
and 1995 were approximately $609,000 and $710,000, respectively. The Company
incurred significant legal expenses and settlement costs in connection with
non-operating matters. In the nine months ended March 31, 1996, those matters
consisted primarily of the demand for arbitration and other litigation against
Jack C. Benun, a purported class action, and legal fees related to the Roland
Kohl Settlement. In the nine months ended March 31, 1995, those matters
consisted primarily of the demand for arbitration against Jack C. Benun, a
purported class action, the Roland Kohl settlement, and the Argus settlement.
Other (Income), net
Other (income), net includes interest income and gains from the sale of
fixed assets, net of directors fees, certain public relations costs, and foreign
exchange gains and losses.
Income Taxes
The Company's provision for income taxes for the nine months ended March
31, 1996 is primarily related to the earnings of the Company's Far East
operations, net of benefits relating to overpayments/refunds on the Company's
other foreign Subsidiaries.
<PAGE>
Liquidity and Capital Resources
At March 31, 1996 the Company had working capital of $19,676,000 as
compared to $17,432,000 at June 30, 1995. Cash flow provided by operating
activities was approximately $269,000 for the nine months ended March 31, 1996
as compared to $2,747,000 for the nine months ended March 31, 1995. Capital
expenditures, excluding assets financed under capital leases, for the nine
months ended March 31, 1996 and 1995 were approximately $2,130,000 and $888,000,
respectively. The Company's principal funding requirement has been, and is
expected to continue to be, the financing of accounts receivable and inventory.
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. On September 20, 1995, the Company
executed an amendment to its revolving line of credit with BOEA NY to increase
the credit facility to $3,000,000. The facility has also been extended to
December 19, 1996. 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 8.25% at March 31, 1996. Availability
under the BOEA NY Facility is subject to advance formulas based on eligible
accounts receivable with no minimum borrowing. At March 31, 1996, approximately
$2,396,000 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 was to have expired on March 29,
1996. The CIT Facility which has been reduced to a $5 million facility had its
term extended to May 31, 1996. The Company is currently in discussions with
potential alternative financing sources. 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 8.25% at March 31, 1996. Availability under the CIT Facility is subject to
advance formulas based on eligible inventory and accounts receivable. At March
31, 1996, approximately $1,573,000 was outstanding and classified as short-term
debt under the CIT Facility.
The 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 25, 1996, BOEA increased the total amount available
under the BOEA facility up to $6,900,000 as follows: letters of credit and
standby letters of credit up to $2,825,000, overdraft and packing loans of up to
$3,600,000, and an installment loan of $475,000. The installment loan was
utilized in part to repay the outstanding mortgage obligation on the Hong Kong
office property to the Bank of China. As of March 31, 1996, approximately
$5,151,000 was utilized and approximately $1,274,000 was available under the
BOEA Facility. Approximately $3,532,000 of the total $5,151,000 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 trust receipts and 2.25% above BOEA's prime
lending rate for overdraft and packing loans. At March 31, 1996 BOEA's prime
lending rate was 8.25%. In connection with the BOEA Facility, Concord HK has
placed a $1,124,000 time deposit with BOEA, which is included in prepaid and
other current assets at March 31, 1996 and such deposit is pledged as collateral
for the BOEA facility. In addition, all amounts outstanding under the BOEA
Facility are guaranteed by Concord.
In the fourth quarter of Fiscal 1995, East Asia Finance Company, a
wholly-owned subsidiary of BOEA, extended to Concord HK a five year equipment
leasing facility in the amount of approximately one million dollars. At March
31, 1996, approximately $463,000 was outstanding and classified as capital lease
obligations.
Other arrangements and future cash commitments
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 $670,000 for its United States and Far East operations;
at March 31, 1996, approximately $516,000 of that amount had been paid. The
Company anticipates incurring approximately $154,000 of additional costs for
hardware, software and other related items for the balance of the Company's
worldwide operations.
In connection with its construction activities in China, the Company
anticipated incurring costs of approximately $1,850,000; at March 31, 1996,
approximately $907,000 of that amount had been incurred. The Company
anticipates incurring approximately $943,000 of additional construction costs
for the completion of the additional factory building ("Addition") and the
conversion of the current Company owned dormitory into office and administrative
space, engineering facility, a small factory space for pilot runs, and living
quarters for foreign employees.
Management believes that the anticipated cash flow from operations
together with financing from BOEA and CIT or its replacement will be sufficient
to fund its operating cash needs over the next twelve months.
<PAGE>
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
On October 19, 1995, the Company was served with a summons and complaint
in an action styled Fuji Photo Film Co., Ltd. ("Fuji") V. Concord Camera Corp.,
filed in the United States District Court for the Southern District of New
Jersey. The action is for patent infringement in connection with certain of the
Company's single-use cameras. The Company has answered the complaint and
served its counter-claim seeking a declaratory judgement that the Fuji patents
are invalid, unenforceable and not infringed by the Company. At a status
conference before Judge Chin on April 19, 1996, Fuji and the Company stated that
the parties were attempting to settle the matter and that they had agreed to
stay further discovery pending the results of settlement negotiations. Judge
Chin directed that if the parties do not execute settlement documents by May 31,
1996, discovery is to proceed.
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. On
September 5, 1995, plaintiffs in response to motions to dismiss by the Company
and the individual defendants, filed a motion to file an amended complaint. The
complaint and the amended complaint were predicated upon the wrongdoing of Jack
C. Benun, the Company's former Chairman and CEO, and the failure of the Company
and the individual members of the Board of Directors to properly address such
actions. By order of United States District Judge Sand, dated January 10, 1996,
the matter was placed on the suspense calendar until March 25, 1996 pending
Plaintiffs' ability to obtain substitute counsel. Following the filing of
certain affidavits, by order dated April 1, 1996 the matter was dismissed for
lack of diligent prosecution.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
On January 18, 1996 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 10,288,596 for, 137,934 withheld;
Mr. Eli Arenberg 10,221,636 for, 144,894 withheld;
Mr. Morris H. Gindi 10,288,795 for, 77,735 withheld;
Mr. Joel L. Gold 10,289,096 for, 77,434 withheld;
Mr. J. David Hakman 10,289,086 for, 77,444 withheld;
Mr. Ira J. Hechler 10,286,786 for, 79,744 withheld; and
Mr. Kent M. Klineman 10,286,796 for, 79,734 withheld
The shareholders also ratified the selection of Ernst & Young LLP as the
Company's independent auditors by a vote of 10,315,515 for, 27,726 withheld and
23,289 abstain.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.55 Employment Agreement between the Company and Steve Jackel
dated as of January 1, 1996.
(b) Reports on Form 8-K.
None
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONCORD CAMERA CORP.
(Registrant)
BY: s/Harlan I. Press
(Signature)
Harlan I. Press
Chief Accounting Officer
DULY AUTHORIZED AND PRINCIPAL ACCOUNTING
OFFICER
DATE: May 10, 1996
<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, 1996 and the
results of operations for the nine months ended March 31, 1996 and is qualified
in its entirety to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> $3,958,533
<SECURITIES> 0
<RECEIVABLES> 9,588,904
<ALLOWANCES> (1,860,709)
<INVENTORY> 21,871,152
<CURRENT-ASSETS> 35,888,676
<PP&E> 21,719,516
<DEPRECIATION> (9,848,891)
<TOTAL-ASSETS> 52,334,258
<CURRENT-LIABILITIES> 16,212,393
<BONDS> 438,472
0
0
<COMMON> 39,361,894
<OTHER-SE> (4,610,324)
<TOTAL-LIABILITY-AND-EQUITY> 52,334,258
<SALES> 50,933,925
<TOTAL-REVENUES> 50,933,925
<CGS> 34,360,134
<TOTAL-COSTS> 14,098,683
<OTHER-EXPENSES> (29,508)
<LOSS-PROVISION> 340,275
<INTEREST-EXPENSE> 703,046
<INCOME-PRETAX> 2,504,615
<INCOME-TAX> 626
<INCOME-CONTINUING> 2,503,989
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,503,989
<EPS-PRIMARY> $0.22
<EPS-DILUTED> $0.22
</TABLE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 1996, between STEVE
JACKEL ("Executive") and CONCORD CAMERA CORP., a New Jersey corporation
("Employer").
RECITALS:
Employer and Harjac Consulting Corp., a company owned and controlled
by Executive, are parties to a Consulting Agreement (the "Harjac Consulting
Agreement") and an Option Agreement (the "Harjac Option Agreement") each dated
as of May 1, 1995.
Employer desires to employ Executive, and Executive desires to be
employed by Employer, upon the terms and subject to the conditions hereinafter
set forth; it being understood that, concurrently with the execution and
delivery hereof, such Consulting Agreement will be terminated.
In consideration of the premises and the mutual covenants hereinafter
set forth, the parties hereto hereby agree as follows:
1. 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.
2. 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 December 31,
1998. The Employment Period shall be automatically renewed thereafter for
successive one-year periods unless, at least 90 days before the end of the
initial period or any subsequent one-year period, either party gives notice to
the other of his or its desire to terminate the Employment Period, in which case
the Employment Period shall terminate as of the end of such period. The last
day of the Employment Period, as it may be renewed, is referred to herein as the
"Expiration Date."
3. Duties and Responsibilities
During the Employment Period, Executive (i) shall have the title of
President and Chief Operating Officer 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 officer and its Board of
Directors, and (iv) shall be subject to all of the policies, rules and
regulations applicable to senior level executives of Employer, and shall comply
with all directions and instructions consistent with Executive's position of
Employer's chief executive officer. During the Employment Period, 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, it being the intention of the parties that during the Employment
Period Executive serve as a member of Employer's Board of Directors. 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.
4. Compensation and Related Matters
4.1 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") and stock options as are set forth on Exhibit 4.1. Base Salary will be
reviewed annually and may be adjusted upward in the discretion of Employer.
During the Employment Period Executive shall also be eligible to participate in
the long-term incentive and annual bonus programs of the Company on the same
basis as other senior level executives of Employer.
4.2 Automobile. During the Employment Period, Employer shall lease
or acquire for Executive's exclusive use, or promptly reimburse Executive for
the cost of leasing or acquiring, an automobile at a rate not to exceed $2,000
per month. Employer shall promptly reimburse Executive for all expenses,
including without limitation, parking and commutation expenses, incurred in
connection with Executive's use and operation of such automobile in connection
with the performance of his duties under this Agreement.
4.3 Life and Disability Insurance. In addition to any life and
disability insurance provided pursuant to Section 4.4, Employer shall maintain
in effect at all times during the Employment Period, at Employer's expense, (i)
a term life insurance policy covering Executive in the amount of $3,200,000 face
value naming such Person as Executive shall designate from time to time as the
owner and beneficiary thereof, and (ii) a long-term disability insurance policy
covering Executive with an annual benefit of $180,000. If the parties agree,
Employer may satisfy its obligations under the preceding sentence by paying the
premiums when due on, or reimbursing Executive for his payment of such premiums
on, his existing life and/or long-term disability insurance policies (to the
extent of the portion of such premiums providing the insurance coverage required
to be so provided by Employer hereunder). In addition, Employer may purchase,
maintain and be the beneficiary of a key-man life insurance policy on
Executive's life. Executive agrees to aid, and cooperate in all reasonable
respects with, Employer in procuring any and all insurance policies required to
be procured by Employer pursuant to this Section 4.3, 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.
4.4 Long-Term Incentive and Employer Benefit Programs. During the
Employment Period Executive shall be eligible to participate in the long-term
incentive and annual bonus programs of the Company on the same basis as other
senior level executives of Employer. During the Employment Period, subject to,
and to the extent Executive is eligible under their respective terms, Executive
shall also be entitled to receive such other 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, dental 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.
4.5 Expense Reimbursement. Employer shall reimburse Executive for
all business expenses reasonably incurred by him in the performance of his
duties under this Agreement, including without limitation the reasonable costs
and expenses associated with acquiring and maintaining a telephone, facsimile,
duplicating and other office equipment and supplies at Executive's home. Such
reimbursement to Executive shall be made 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.
4.6 After-Tax Reimbursements. It is the intention of Employer that
Executive shall, after taking into account any taxes on the reimbursements,
expenses and perquisites referred to in Sections 4.2 [Automobile], 4.3 [Life and
Disability Insurance] and 4.5 [Expense Reimbursement] that are provided to him
pursuant to such Sections, be kept whole in respect of such reimbursements,
expenses and perquisites. Accordingly, to the extent Executive is taxable on
any such reimbursements, expenses and perquisites Employer shall pay Executive
in connection therewith an amount that after all taxes incurred by Executive at
the highest applicable marginal rate on such amount shall equal the amount of
such reimbursements, expenses and perquisites being provided pursuant to such
Sections. Any gross-up amounts paid pursuant to this Section 4.6 shall be paid
to Executive on or before April 10 of the year following the year of receipt of
such reimbursements, expenses and perquisites.
4.7 Vacations. Executive shall be entitled to three weeks vacation
per year, which vacation shall be taken at such time or times as shall not
unreasonably interfere with Executive's performance of his duties under this
Agreement. Vacation not taken within one year of the end of the fiscal year of
the Company in which it accrued shall lapse, without payment of additional
compensation.
5. Termination of Employment Period
5.1 By Employer: Cause. Employer may, at any time during the
Employment Period by notice to Executive ("Notice of Termination"), terminate
the Employment Period for "Cause" effective immediately, subject to the last
sentence of this Section 5.1. "Cause" shall mean a termination of employment by
Employer based upon (i) the continued failure by Executive substantially to
perform his duties with Employer; (ii) Executive's conviction of any felony or
any crime involving moral turpitude or theft; (iii) theft, fraud or embezzlement
resulting in each case 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; provided, that "Cause" shall not mean (A) differences of opinion
between Executive and Employer concerning corporate or business policy; (B) any
act or omission believed by Executive in good faith to have been in or not
opposed to the interest of Employer (without intent of Executive to gain
therefrom, directly or indirectly, a profit or other benefit to which Executive
was not legally entitled); or any act or omission with respect to which Notice
of Termination was given by Employer more than 12 months after the earliest date
on which the Company's Chief Executive Officer knew of such act or omission.
Prior to terminating Executive for Cause for any reason set forth in clause (I),
(iv) or (v) of the definition of Cause, (x) Employer shall give Executive
written notice of the facts and circumstances giving rise to Cause and provide
Executive with 30 days to cure, remedy or rectify the situation, to the extent
such cure, remedy or rectification is possible, and (y) if Executive so requests
in writing within 10 days after the date on which such notice is given, he shall
be entitled to a hearing before Employer's Board of Directors, which hearing
shall be held within 15 days after the date on which such notice is given, and
if a hearing is required to be so held, then within 15 days thereafter Executive
shall be given written Notice of Termination by Employer's Board of Directors
confirming that, in its judgment, grounds for Cause exist on the basis provided
in the original notice to Executive (which have not been cured, remedied or
rectified within the 30-day period referred to in clause (x) of this sentence).
5.2 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. The existence of the disability shall be determined by a reputable
licensed physician selected by Employer, whose determination shall be final and
binding on the parties. Executive shall cooperate in all reasonable respects to
enable an examination to be made by such physician.
5.3 Death. The Employment Period shall end on the date of
Executive's death.
5.4 By Executive: Good Reason. Executive may, at any time during
the Employment Period by notice to Employer, voluntarily terminate his
employment under this Agreement for "Good Reason" effective immediately. For
the purposes hereof, "Good Reason" shall mean, without Executive's express
written consent, the occurrence of any of the following circumstances: (i) the
removal of Executive from his position as President and Chief Operating Officer
of Employer, (ii) the assignment to Executive of any duties or responsibilities
inconsistent with his status and authority as set forth in Sections 3 or 6, 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, (iii) the material breach by Employer of this Agreement, or (iv)
the failure to have Executive re-elected as a director of Employer prior to any
termination of the Employment Period. 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 Employer with 30 days to
cure, remedy or rectify the situation.
5.5 Termination Compensation. Executive shall not be entitled to
compensation in respect of any period following the termination of the
Employment Period pursuant to Section 5.1 or 5.3 or following the termination of
the Employment Period by reason of Employer's or Executive's decision not to
renew the Employment Period; provided, however, that if Executive's employment
is terminated at the end of the Employment Period by reason of Employer's
decision not to renew the Employment Period, Executive shall be entitled to the
continuation of payment of his Base Salary for one year (subject to Section 5.6)
and participation in Employer's medical, dental, hospitalization, life insurance
coverage and other employee benefit programs in which he was participating on
the date of termination also for a period of one year. If, prior to the
Expiration Date, Executive's employment is terminated by Employer without Cause
or for Disability, or if Executive's employment is terminated by Executive for
Good Reason, Executive shall receive the compensation and benefits set forth in
Section 4 (net of any disability insurance payments) for the longer of one year
or the duration of the Employment Period (as if it had not been so terminated),
subject to Section 5.6, including for this purpose the pro rata portion of the
bonus, if any, to which he would have been entitled under any applicable annual
bonus program for the year in which such termination occurs (based on the
assumption that any applicable targets under such program have been or will be
met). The pro rata portion of the bonus, if any, for such year shall be
determined based on the relative number of days within such year prior to
termination compared to the total number of days within such year. Such bonus,
if any, shall be payable promptly following termination.
5.6 Mitigation. Executive shall not be required to mitigate the
amount of any payments provided for hereunder by seeking employment with any
other Person, or otherwise if (I) prior to the Expiration Date, Executive's
employment is terminated by Employer without Cause or Executive's employment is
terminated by Executive for Good Reason or (ii) Executive's employment is
terminated at the end of the Employment Period by reason of Employer's decision
not to renew the Employment Period; provided, however, that if, at any time
during the period following termination of his employment through the later of
the Expiration Date or, if applicable, the expiration of the one-year period
referred to in Section 5.5 (the "Relevant Period"), Executive shall commence
employment with or engagement for the rendition of services to any other
business (whether those services are rendered by him directly or indirectly
through any company owned or controlled by him), then, the amount of any such
payments or benefits to which Executive would otherwise be entitled pursuant to
Section 5.5 shall be reduced by any compensation, benefit or other amount earned
by, accrued for or paid to Executive (or such other company) pursuant to such
other employment or engagement in respect of the Relevant Period (such
compensation, benefits and other amounts being referred to collectively as
"Other Compensation"). Other Compensation shall not include fees or other
compensation received by Executive (or any company owned or controlled by him)
which are of a transactional nature, such as investment banking or finders'
fees. 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 Other
Compensation as Employer may request (and Executive hereby authorizes Employer
to obtain such information directly from Executive's new employer (or such other
Person)).
6. Location of Executive's Activities
Executive's principal place of business in the performance of his
duties and obligations under this Agreement shall be at the Company's principal
executive offices, wherever located. Notwithstanding the preceding sentence,
Executive will engage in such travel and spend such time in other places
(including the Company's other business locations throughout the world) as may
be necessary or appropriate in furtherance of his duties hereunder.
7. Exclusivity of Services, Confidential Information and Restrictive
Covenants
7.1 Exclusivity of Services and Restrictions. (a) During the
Employment Period and the Post-Employment Restriction Period (as hereinafter
defined), Executive shall not, directly or indirectly, (i) 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 (A) not as
controlling Person of such business, (B) not as a member of a group that
controls such business, and not as a direct or indirect beneficial owner of 5%
or more of any class of securities of such business, (ii) 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, (iii) 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
(iv) 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) Anything herein to the contrary notwithstanding, nothing shall
preclude Executive from (I) serving on the boards of directors of a reasonable
number of other corporations not engaged in competition with the Company or the
boards of a reasonable number of trade associations and/or charitable
organizations, (ii) engaging in charitable activities and community affairs,
(iii) managing his personal investments and affairs and (iv) being involved in
other business transactions, provided that such activities do not interfere with
the proper performance of his duties and responsibilities as Employer's
President and Chief Operating Officer.
7.2 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 Company or any other confidential or
non-public information or material concerning the business, affairs, patents,
trademarks, service marks, products, suppliers or customers of Company.
Executive shall not be deemed to have violated this Section 7.2 by disclosure of
information that at the time of disclosure (i) is publicly available or becomes
publicly available through no act or omission of Executive, or (ii) 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.
7.3 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 Company or that result from any work performed by Executive for
Company shall be the sole property of 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
7.4 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.
7.5 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 any
Termination Compensation and upon demand shall immediately repay to Employer an
amount equal to all payments of Termination Compensation, if any, made to him
hereunder prior to Employer's discovery of such breach.
7.6 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.
7.7 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.
8. Indemnification
8.1 General. Employer agrees that if Executive is made a party, or
is threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that he is or was a director, officer or employee of Employer or is or
was serving at the request of Employer as a director, officer, member, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether or
not the basis of such Proceeding is Executive's alleged action in an official
capacity while serving as a director, officer, member, employee or agent,
Executive shall be indemnified and held harmless by Employer to the fullest
extent permitted or authorized by Employer's certificate of incorporation or
bylaws or, if greater, by the laws of the State of New Jersey, against all cost,
expense, liability and loss (including, without limitation, attorney's fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by Executive in connection
therewith, and such indemnification shall continue as to Executive even if he
has ceased to be a director, member, employee or agent of Employer or such other
entity and shall inure to the benefit of Executive's heirs, executors and
administrators. Employer shall advance to Executive to the extent permitted by
law all reasonable costs and expenses incurred by him in connection with a
Proceeding within 20 days after receipt by Employer of a written request, with
appropriate documentation, for such advance. Such request shall include an
undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.
8.2 No Presumption. Neither the failure of Employer (including its
board of directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by Executive under Section 8.1 that indemnification of Executive
is proper because he has met the applicable standard of conduct, nor a
determination by Employer (including its board of directors, independent legal
counsel or stockholders) that Executive has not met such applicable standard of
conduct, shall create a presumption that Executive has not met the applicable
standard of conduct.
8.3 Directors' and Officers' Insurance. Employer agrees to continue
and maintain a directors' and officers' liability insurance policy covering
Executive to the extent Employer provides such coverage for its other executive
officers.
8.4 Indemnification Procedure. Promptly after receipt by Executive
of notice of any claim or the commencement of any action or proceeding with
respect to which Executive is entitled to indemnity hereunder, Executive shall
notify Employer in writing of such claim or the commencement of such action or
proceeding, and Employer shall (i) assume the defense of such action or
proceeding, (ii) employ counsel reasonably satisfactory to Executive and (iii)
pay the reasonable fees and expenses of such counsel. Notwithstanding the
preceding sentence, Executive shall be entitled to employ counsel separate from
counsel for Employer and from any other party in such action if Executive
reasonably determines that a conflict of interest exists that makes
representation by counsel chosen by Employer not advisable. In such event, the
reasonable fees and disbursements of such separate counsel for Executive shall
be paid by Employer to the extent permitted by law.
8.5 Reimbursement. After the termination of this Agreement and upon
the request of Executive, Employer agrees to reimburse Executive for all
reasonable travel, legal and other out-of-pocket expenses related to assisting
Employer to prepare for or defend against any action, suit, proceeding or claim
brought or threatened to be brought against Employer or to prepare for or
institute any action, suit, proceeding or claim to be brought or threatened to
be brought against a third party arising out of or based upon the transactions
contemplated herein and in providing evidence, producing documents or otherwise
participating in any such action, suit, proceeding or claim. If Executive is
required to appear after termination of this Agreement at a judicial or
regulatory hearing in connection with Executive's employment hereunder, or
Executive's role in connection therewith, Employer agrees to pay Executive a sum
to be mutually agreed upon by Executive and Employer, per diem for each day of
his appearance and each day of preparation therefor.
9. Effect of Agreement on Other Benefits
Except as specifically provided in this Agreement, the existence of
this Agreement shall not prohibit or restrict Executive's entitlement to full
participation in the employee benefit and other plans or programs in which
senior executives of Employer are eligible to participate.
10. Adequacy of Disclosure
Employer acknowledges that it has been provided with the requested
information concerning the background of Executive. Employer further
acknowledges that it has been given the right to independently examine, inspect
and make inquiry with respect to Executive.
11. Acknowledgment of Representation of Counsel
Employer and Executive acknowledge that they have been represented
by counsel or knowingly waive their right to be represented by counsel with
regard to this Agreement and the subject matter hereof. Each party agrees and
acknowledges that he or it has not relied upon any tax advice, legal counsel or
business advice provided by the other party.
12. Cooperation Between the Parties
12.1 Best Efforts. The parties agree that each party will use its
or his best efforts in carrying out the terms of this Agreement, including, but
not limited to, the furnishing and supplying of all necessary information and
documents to the other party.
12.2 Tax Audits. If at any time after the date of this Agreement
the Internal Revenue Service or any state or local taxing authority audits the
tax returns of the Executive for any taxable year or years, Employer shall use
its best efforts to cooperate with the Executive in connection with such audit
and shall provide the Executive with access to the books and records of Employer
in connection with matters under audit.
13. Assignability; Binding Nature
This Agreement shall be binding upon and inure to the benefit of
Employer and Executive and their respective successors, heirs (in the case of
Executive) and assigns. No rights or obligations of Employer under this
Agreement may be assigned or transferred by Employer except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which Employer is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of Employer, provided that the assignee
or transferee is the successor to all or substantially all of the assets of
Employer and such assignee or transferee assumes the liabilities, obligations
and duties of Employer, as contained in this Agreement, either contractually or
as a matter of law. Employer further agrees that, in the event of a sale of
assets or liquidation as described in the preceding sentence, it shall take
whatever action it legally can to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of Employer hereunder. No rights
or obligations of Executive under this Agreement may be assigned or transferred
by Executive other than his rights to compensation and benefits.
14. Representation
Employer represents and warrants that this Agreement has been
authorized by its Board of Directors, it is fully empowered to enter into this
Agreement and that the performance of its obligations under this Agreement will
not violate any agreement between it and any other Person.
15. Miscellaneous
15.1 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
Attn: Ira B. Lampert, Chief Executive Officer
If to Executive:
Steven Jackel
150 East 61st Street
New York, New York 10021
15.2 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.
15.3 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.
15.4 Disputes. Any controversy or claim arising out of or relating
to this Agreement or any breach thereof shall be resolved by binding arbitration
before a single arbitrator, to be held in New Jersey in accordance with the
rules and procedures of the American Arbitration Association. The decision of
the arbitrator shall include findings of fact and conclusions of law. Judgment
upon the award rendered by the arbitrator shall be final and binding and subject
to appeal only to the extent permitted by law, and may be entered in any court
having jurisdiction thereof. Each party shall bear its or his own expenses
incurred in connection with any arbitration; provided, however, that the cost of
the arbitration, including without limitation attorneys' fees of Executive,
shall be borne by Employer if Executive is the prevailing party in the
arbitration. Anything to the contrary notwithstanding, each party hereto has
the right to proceed with a court action for a temporary restraining order or a
preliminary injunction in circumstances in which such relief is appropriate,
provided that any other relief shall be pursued through an arbitration
proceeding pursuant to this Section.
15.5 Prior Employment. Executive represents to Employer that
Executive is not a party to or bound by any agreement, understanding or
restriction that would or may be breached by Executive's execution and full
performance of this Agreement. Executive expressly undertakes and agrees that
he will do nothing in furtherance of this Agreement or his duties hereunder that
will violate any obligations he may have to any prior employer (or will impose
upon Employer any liability to any prior employer) and that he has complied with
all requirements of notice applicable to the termination of any prior employment
15.6 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.
15.7 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.
15.8 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.
15.9 Definition of Person. For the purposes of this Agreement, the
term "Person" means any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or governmental
body or subdivision, agency, commission or authority thereof.
15.10 Entire Agreement and Representation. This Agreement and the
Option Agreement (as defined in Exhibit 4.1) 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 and the Option Agreement
supersede any prior agreement between the parties relating to the subject matter
hereof, including, for this purpose, the Harjac Consulting Agreement, provided
that the Harjac Option Agreement, as amended by an agreement dated as of January
1, 1996 between Harjac Consulting Corp. and Employer, shall continue in full
force and effect. Except as otherwise provided herein, this Agreement cannot be
changed or terminated except by an instrument in writing signed by the parties
hereto.
15.11 Expenses. Employer will reimburse Executive for the reasonable
legal fees and expenses of Executive incurred in connection with the negotiation
and preparation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
CONCORD CAMERA CORP.
By:______________________________
Name: ___________________________
Title: __________________________
_________________________________
STEVE JACKEL<PAGE>
Exhibit 4.1
Compensation
1. Base Salary: During the Employment Period, Employer shall pay to Executive
Base Salary at the rate of $400,000 per annum, payable in accordance with
Employer's regular payroll practices.
2. Incentive Programs. During the Employment Period, Executive shall be
eligible to participate in the long-term incentive programs of the Company on
the same basis as other senior level executives of Employer.
3. Stock Options: Executive shall be granted options pursuant to Employer's
Incentive Plan to purchase 200,000 shares of Common Stock of Employer at an
exercise price of $4.00 per share, all upon the terms and subject to the
conditions set forth in the Option Agreement being entered into between
Executive and Employer concurrently with the execution and delivery of this
Employment Agreement.
<PAGE>
Exhibit 15.10
Agreement dated as of January 1, 1996 between CONCORD CAMERA CORP.
(the "Company") and HARJAC CONSULTING CORP. ("Consultant").
The Company and Consultant hereby agree as follows:
4. The Consulting Agreement dated as of May 1, 1995 (the "Harjac
Consulting Agreement") between the Company and the Consultant is hereby
terminated effective as of January 1, 1996, without any further obligation or
liability of either party to the other, except that the Consultant shall repay
to the Company the sum of $20,000 on the date of termination of the employment
period under the Employment Agreement (as defined below) in the event said
employment period is terminated prior to December 31, 1998 for Cause (as defined
in the Employment Agreement) or voluntarily by Executive without Good Reason (as
defined in the Employment Agreement). Otherwise, said amount shall be forgiven
on December 31, 1998.
5. Following the termination of the Harjac Consulting Agreement, the
option granted by the Company to Consultant pursuant to the Option Agreement
dated as of May 1, 1995 (the "Harjac Option Agreement") shall remain in full
force and effect, all upon the terms and subject to the conditions set forth in
the Option Agreement, except that Paragraphs 5(a) and (b) of the Harjac Option
Agreement are hereby amended to read in their entirety as follows:
"(a) If, prior to April 30, 1996, the Employment Period (as
defined in the Employment Agreement dated as of January 1, 1996 between
Steven Jackel and the Company, as it may hereafter be amended (the
"Employment Agreement")) is terminated by the Company for Cause (as
defined in Section 5.1 of the Employment Agreement) or by Steven Jackel
without Good Reason (as defined therein), the Option shall expire
forthwith."
"(b) If, prior to April 30, 1996, Steven Jackel's employment
is terminated by reason of his death or by the Company other than for
Cause, the Option shall become immediately exercisable with respect to the
Initial Option Shares and the Subsequent Option Shares (if not previously
exercisable with respect to either thereof) and shall remain exercisable
with respect to the Initial Option Shares and the Subsequent Option Shares
until the scheduled expiration of the Option with respect to the Initial
Option Shares and the Subsequent Option Shares, respectively, as set forth
in Paragraph 3(b) above."
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the date first above written.
CONCORD CAMERA CORP.
By:______________________________
Name: ___________________________
Title: __________________________
HARJAC CONSULTING CORP.
By:______________________________
Steve Jackel, President<PAGE>
OPTION AGREEMENT
OPTION AGREEMENT, dated as of February 15, 1996, between STEVE JACKEL
("Optionee"), residing at 150 East 61st Street, New York, New York 10021, and
CONCORD CAMERA CORP., a New Jersey corporation ("Concord").
RECITALS:
WHEREAS, Optionee is presently employed by Concord or a subsidiary
(as defined in Concord's Incentive Plan) thereof (collectively, the "Concord
Group of Companies"); and
WHEREAS, Concord is desirous of increasing the incentive of Optionee
to exert his utmost efforts to contribute to the future success and prosperity
of the Concord Group of Companies;
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option.
Pursuant to Concord's Incentive Plan (the "Plan"), and subject to the
terms and conditions set forth therein and herein, Concord hereby grants to
Optionee the right and option (the "Option") to purchase an aggregate of 200,000
shares (the "Option Shares") of Concord's Common Stock, no par value per share
(the "Common Stock"), which option is not intended to qualify as an incentive
stock option, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended.
2. Purchase Price.
The purchase price (the "Purchase Price") of the Option Shares shall
be $4.00 per share, subject to adjustment pursuant to Paragraph 6.
3. Time of Exercise; Term.
(a) The Option shall be or become exercisable as to 50,000 Option
Shares on the date hereof. In the case of the remaining 150,000 Option Shares,
the Option shall become exercisable, on a cumulative basis, as to an equal
amount of additional Option Shares (rounded down to the nearest whole number of
shares), on the Thursday of each successive week after the date hereof through
and including December 31, 1998, as of which date the Option shall be
exercisable as to the entire 200,000 Option Shares; it being understood that the
Option shall not be exercisable as to any fractional shares.
(b) The Option shall expire and shall not be exercisable after the
expiration of ten (10) years from the date hereof, unless the Option shall be
sooner terminated pursuant to Paragraph 4 hereof.
4. Death or Termination of Employment.
(a) If the employment of Optionee with a member of the Concord Group
of Companies shall be terminated voluntarily by Optionee without "Good Reason"
(as hereinafter defined) or without the consent of such employer or for "Cause"
(as hereinafter defined), and immediately after such termination Optionee shall
not then be employed by any other member of the Concord Group of Companies, the
Option shall expire forthwith. For purposes of this Option Agreement, "Good
Reason" and "Cause" shall mean "Good Reason" and "Cause", respectively, as
defined in the Employment Agreement dated as of January 1, 1996 between Optionee
and Concord, as in effect on the date hereof and irrespective of its continued
effectiveness or amendment at any date of determination.
(b) In the event (i) Optionee's employment with a member of the
Concord Group of Companies shall terminate other than (A) voluntarily by
Optionee without "Good Reason" or without the consent of his employer, or (B)
for Cause, and immediately after such termination Optionee shall not then be
employed by any other member of the Concord Group of Companies, or (ii) Optionee
dies while employed by any member of the Concord Group of Companies, then, in
any such event, the Option shall continue to become exercisable pursuant to the
provisions of Section 3(a) and, to the extent unexercised, shall remain
exercisable in accordance with the terms of this Agreement. For the purposes of
this Option Agreement, the retirement of Optionee either pursuant to a pension
or retirement plan adopted by his employer on or the normal retirement date
prescribed from time to time by his employer, and the termination of employment
as a result of a disability (as defined in Section 22(e)(3) of the Code) shall
be deemed to be a termination of such Optionee's employment other than
voluntarily by the Optionee.
5. Leave of Absence.
If Optionee is on military or sick leave or other bona fide leave of
absence (such as temporary employment by the United States or any state
government), Optionee shall be considered as remaining in the employ of his
employer for 90 days or such longer period as shall be determined by the
Committee.
6. Adjustment Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are hereafter changed
by reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock splitup, combination or exchange of shares or the like,
or in the event of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Stock Option Committee of the Board of Directors
(the "Committee") in the aggregate number of Option Shares and the Purchase
Price. If Concord shall be reorganized, consolidated or merged with another
corporation, or if all or substantially all of the assets of Concord shall be
sold or exchanged, Optionee shall thereupon be entitled to receive upon the
exercise of the Option the same number and kind of shares of stock or the same
amount of property, cash or securities as he would have been entitled to receive
upon the occurrence of any such event as if he had been, immediately prior to
such event, the holder of the number of Option Shares covered by the Option.
(b) Any adjustment under this Paragraph 6 in the number of shares
of Common Stock subject to the Option shall apply proportionately to only the
unexercised portion of the Option. If fractions of a share would result from
any such adjustment, the adjustment shall be revised to the next lower whole
number of shares.
7. Method of Exercising Option.
(a) The Option shall be exercised by the delivery by Optionee to
Concord at its principal office (or at such other address as may be established
by the Committee) of written notice of the number of shares of Common Stock with
respect to which the Option is being exercised, accompanied by payment in full
of the aggregate Purchase Price for such shares. Payment for the Purchase Price
for such shares of Common Stock may be made (i) in U.S. dollars by delivery of
cash or personal check, bank draft or money order payable to the order of
Concord or by money transfers or direct account debits, (ii) by delivery of
certificates representing shares of Common Stock having a fair market value
(as defined below) equal to such Purchase Price, (iii) pursuant to a
broker-assisted "cashless exercise" program if established by Concord, or (iv)
by any combination of the methods of payment described in clauses (i) through
(iii) of this sentence.
(b) For purposes of this Paragraph 7, the fair market value of a
share of Common Stock on a particular day shall be the closing price for the
Common Stock on the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System on such day or, if there
were no sales on such day, on the next preceding day on which such closing price
was recorded.
8. Withholding. Concord's obligation to deliver shares of Common
Stock upon the exercise of the Option shall be subject to the payment by
Optionee of any applicable federal, state and local withholding tax. Concord
shall, to the extent permitted by law, have the right to deduct from any payment
of any kind otherwise due to Optionee any federal, state or local taxes required
to be withheld with respect to such payment. Subject to the right of Concord's
Board of Directors or any committee thereof to disapprove any such election and
require the withholding tax in cash, Optionee shall have the right to elect to
pay the withholding tax with shares of Common Stock to be received upon exercise
of the Option or which are otherwise owned by Optionee. Any election to pay
withholding taxes with stock shall be irrevocable once made.
9. Representations.
(a) Optionee represents that, unless at the time of exercise of the
Option the Option Shares are registered under the Securities Act of 1933, any
and all Option Shares purchased hereunder shall be acquired for investment only
and without a view to the resale or distribution thereof. If the Option Shares
are not so registered, certificates for the Option Shares shall bear a legend
reciting the fact that such Option Shares may only be transferred pursuant to an
effective registration statement under the Securities Act of 1933 or an opinion
of counsel to Concord (or an opinion of counsel to Optionee reasonably
satisfactory to Concord) that such registration is not required. Concord may
also issue "stop transfer" instructions with respect to such Option Shares while
they are subject to such restrictions.
(b) Concord shall use its best efforts to have the Option Shares
listed on each securities exchange on which the shares of Common Stock are then
listed as promptly as possible. Concord shall not be obligated to issue or sell
any Option Shares until they have been listed on each securities exchange on
which the shares of Common Stock are then listed and until and unless, in the
opinion of counsel to Concord, Concord may issue such shares pursuant to a
qualification or an effective registration statement, or an exemption from
registration, under such state and federal laws, rules or regulations as such
counsel may deem applicable. Concord shall use its reasonable efforts to effect
such listing, qualification and/or registration, as the case may be, as promptly
as practicable.
10. Option Cannot Be Transferred. The Option is not transferable
otherwise than by will or the laws of descent and distribution, and the Option
may be exercised during Optionee's lifetime only by Optionee. Any attempt to
transfer the Option in contravention of this Paragraph 10 is void ab initio.
The Option shall not be subject to execution, attachment or other process.
11. No Rights in Option Shares. Optionee shall have none of the
rights of a shareholder with respect to any Option Shares unless and until such
Option Shares shall be issued to him upon exercise of the Option.
12. Not a Contract of Employment. Nothing contained herein shall
be deemed to confer upon Optionee any right to remain in the employ of any
member of the Concord Group of Companies.
13. Reservation of Common Stock. Concord shall at all times reserve
sufficient shares of Common Stock for delivery upon exercise of the Option.
14. Miscellaneous. This Option Agreement cannot be changed or
terminated orally. This Option Agreement contains the entire agreement between
the parties relating to the subject matter hereof. This Option Agreement was
executed in the State of New Jersey and shall be governed by and construed in
accordance with the laws of the State of New Jersey without reference to
principles of conflict of laws. The parties agree to abide by and follow the
dispute resolution <PAGE>
provision of Section 8.4 of the Employment Agreement. The
section headings herein are intended for reference only and shall not affect the
interpretation hereof.
______________________________
STEVE JACKEL
CONCORD CAMERA CORP.
By:___________________________
