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Page 1 of 13
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1997
Commission file number 1-19254
Lifetime Hoan Corporation
(Exact name of registrant as specified in its charter)
Delaware 11-2682486
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
One Merrick Avenue, Westbury, NY 11590
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 683-
6000
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
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 periods 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
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 Par Value 12,459,649 shares outstanding as of
July 31, 1997
INDEX
LIFETIME HOAN CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Income for the
Three and Six months ended June 30, 1997 and 1996 4
Condensed Consolidated Statement of Changes in Stockholders'
Equity for the
Six months ended June 30, 1997 5
Condensed Consolidated Statements of Cash Flows for the
Six months ended June 30, 1997 and 1996 6
Notes to Condensed Consolidated Financial Statements for the
Six months ended June 30, 1997 7
Item 2. Management's Discussion and Analysis of Financial
Condition
and Results of Operations 9
PART II. OTHER INFORMATION 12
SIGNATURES 14
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
LIFETIME HOAN CORPORATION
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June 30, December
31,
1997 1996
(unaudited) (Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $317,231 $1,093,432
Accounts receivable, less allowances of $807,000
(1997)
and $791,000 (1996) 10,968,194 14,000,366
Merchandise inventories 45,646,883 39,916,990
Prepaid expenses 5,137,240 4,930,194
Deferred income taxes 1,241,000 1,018,000
Other current assets 1,005,627 925,181
TOTAL CURRENT ASSETS 64,316,175 61,884,163
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation
and amortization of $4,624,909 (1997) and 8,952,080 8,696,802
$4,016,403 (1996)
EXCESS OF COST OVER NET ASSETS ACQUIRED, net of
Accumulated amortization of $805,900 (1997) and 1,873,302 1,905,902
$773,300 (1996)
OTHER INTANGIBLES, net of accumulated
amortization of
$530,750 (1997) and $335,250 (1996) 11,145,384 11,340,884
OTHER ASSETS 962,709 944,164
$87,249,650 $84,771,915
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and trade acceptances $4,830,590 $4,012,132
Accrued expenses 5,114,265 6,882,422
Income taxes 466,431 1,318,728
Short term borrowings 2,100,000 1,000,000
TOTAL CURRENT LIABILITIES 12,511,286 13,213,282
STOCKHOLDERS' EQUITY
Series B Preferred Stock, $1 par value,
authorized 2,000,000
Shares; none issued
Common Stock, $.01 par value, authorized
25,000,000 shares;
Issued and outstanding 12,459,649 (1997) and 124,596 124,065
12,406,509 (1996)
Paid-in capital 75,027,619 74,756,842
Retained earnings 563,870 (2,336,661)
75,716,085 72,544,246
Less:
Notes receivable for shares issued to 908,064 908,064
stockholders
Deferred compensation 69,657 77,549
74,738,364 71,558,633
$87,249,650 $84,771,915
Note: The Balance Sheet at December 31, 1996 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to condensed consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
LIFETIME HOAN CORPORATION
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Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Net sales $22,133,306 $20,990,920 $43,241,435 $40,264,318
Cost of sales 11,203,002 10,895,171 22,335,953 21,074,821
Gross Profit 10,930,304 10,095,749 20,905,482 19,189,497
Selling, general and 8,352,582 7,801,227 16,090,013 14,120,230
administrative expenses
INCOME FROM OPERATIONS 2,577,722 2,294,522 4,815,469 5,069,267
Other (income) deductions:
Interest expense 24,341 270,949 47,441 334,535
Other (income), net (19,329) (21,019) (59,503) (53,761)
INCOME BEFORE INCOME TAXES 2,572,710 2,044,592 4,827,531 4,788,493
Provision for federal, state
and local
income taxes 1,035,000 775,000 1,927,000 1,845,000
NET INCOME $1,537,710 $1,269,592 $2,900,531 $2,943,493
NET INCOME PER SHARE $0.12 $0.10 $0.23 $0.23
WEIGHTED AVERAGE SHARES
OUTSTANDING 12,654,866 12,686,684 12,639,587 12,684,452
See notes to condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
LIFETIME HOAN CORPORATION
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Common Stock Paid-in Retained Notes Deferred
Receivable
Shares Amount Capital Earnings from Compensati Total
Stockholders on
Balance at
Dec. 31,1996 12,406,509 $124,065 $74,756,842 ($2,336,661) ($908,064) ($77,549) $71,558,633
Exercise of 53,140 531 270,777 271,308
stock options
Net income for
the six months
ended
June 30, 1997 2,900,531 2,900,531
Amortization of
deferred compensation 7,892 7,892
Balance at
June 30,1997 12,459,649 $124,596 $75,027,619 $563,870 ($908,064) ($69,657) $74,738,364
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
LIFETIME HOAN CORPORATION
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Six Six
Months Months
Ended Ended
June 30, June 30,
1997 1996
OPERATING ACTIVITIES
Net income $2,900,531 $2,943,493
Adjustments to reconcile net income to
net cash
provided by / (used in) operating
activities:
Depreciation and amortization 842,836 682,336
Amortization of deferred compensation 7,892 7,892
Deferred tax (benefit) (223,000) 70,000
Provision for losses on accounts 1,097,204 236,073
receivable
Changes in operating assets and
liabilities:
Accounts receivable 1,934,968 848,847
Merchandise inventories (5,729,893) (310,308)
Prepaid expenses, other current assets
and other assets (306,037) (1,414,573)
Accounts payable and trade acceptances
and accrued expenses (949,699) (108,181)
Income taxes payable (852,297) (232,447)
NET CASH PROVIDED BY / (USED IN)
OPERATING ACTIVITIES (1,277,495) 2,723,132
INVESTING ACTIVITIES
Purchase of property and equipment, net (870,014) (1,401,284)
Purchase of intangibles (9,077,616)
NET CASH (USED IN)
INVESTING ACTIVITIES (870,014) (10,478,900)
FINANCING ACTIVITIES
Proceeds from short term borrowings, net 1,100,000 7,900,000
Proceeds from the exercise of warrants 6,147
Proceeds from the exercise of stock 271,308 95,843
options
Repayment of note receivable 140,000
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,371,308 8,141,990
INCREASE / (DECREASE) IN CASH AND CASH
EQUIVALENTS (776,201) 386,222
Cash and cash equivalents at beginning of 1,093,432 89,797
period
CASH AND CASH EQUIVALENTS AT END OF $317,231 $476,019
PERIOD...
See notes to condensed consolidated
financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
LIFETIME HOAN CORPORATION
Note A - Basis of Presentation The accompanying unaudited
condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-
Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six
month period ended June 30, 1997 are not necessarily indicative of
the results that may be expected for the year ended December 31,
1997. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
Note B - Inventories
Merchandise inventories, principally finished goods, are recorded
at the lower of cost (first-in, first-out basis) or market.
Note C - Line of Credit Agreement
The Company has available an unsecured $25,000,000 line of credit
with a bank (the "Line") which may be used for short term
borrowings or letters of credit. As of June 30, 1997, the Company
had $2,100,000 of borrowings and $13,813,000 of letters of credit
outstanding. The line is cancelable by either party at any time.
Borrowings under the Line bear interest payable daily at a
negotiated short term borrowing rate (7.375% at June 30, 1997).
The Company is charged a nominal fee on the entire Line.
Note D - Capital Stock
Net Income Per Share: Net income per common share is based on net
income divided by the weighted average number of common shares and
equivalents outstanding during the periods.
Recent Accounting Pronouncement: In February 1997, the Financial
Accounting Standards Board issued Statement No. 128, Earnings Per
Share, which is required to be adopted on December 31, 1997. At
that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be
excluded. The new requirement is expected to have no impact on
the second quarter ended June 30, 1997 or June 30, 1996 earnings
per share. It is expected to have no impact on the six months
ended June 30, 1997 earnings per share and increase earnings per
share by $0.01 for the six months ended June 30, 1996. There is
no expected impact of Statement 128 on the calculation of fully
diluted earnings per share for these quarters or six month
periods.
Stock Dividend: On February 5, 1997, the Board of Directors of
the Company declared a 10% stock dividend to shareholders of
record on February 18, 1997, paid February 26, 1997. The stock
dividend was recorded at its market value, $12.00 per share. All
common stock data in the condensed consolidated financial
statements give retroactive effect to the February 1997 stock
dividend.
Note E - Meyer Agreement
On July 1, 1997, the Company entered into an agreement with Meyer
Corporation, regarding the operation of the Company's Farberware
retail outlet stores. Pursuant to the agreement, the Company will
continue to own and operate the Farberware retail outlet stores,
which the Company acquired in 1996. Meyer Corporation, the
licensed manufacturer of Farberware branded cookware products,
will merchandise, stock and offer Farberware cookware products for
sale directly to the public in the Farberware stores and will be
apportioned 60% of the selling space. Meyer Corporation will
receive all revenue from sales of Farberware cookware, and will
reimburse the Company an amount equal to 62.5% of the expenses, as
defined, attributable to the stores.
In addition, Meyer has acquired all cookware inventory from the
Company for approximately $3.1 million. The Company has not
recognized any gain or loss as a result of this transaction.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the operating data of the Company
as a percentage of net sales for the periods indicated below.
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Three Months Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
Net Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 50.6 51.9 51.6 52.3
Gross profit 49.4 48.1 48.4 47.7
Selling, general and 37.7 37.2 37.2 35.1
administrative expenses
Income from operations 11.7 10.9 11.2 12.6
Other (income), expense 0.1 1.2 0.0 0.7
Income before income taxes 11.6 9.7 11.2 11.9
Income taxes 4.7 3.7 4.5 4.6
Net Income 6.9 % 6.0 % 6.7 % 7.3 %
Three Months Ended June 30, 1997
Compared to Three Months ended June 30, 1996
Net Sales
Net sales for the three months ended June 30, 1997 were $22.1
million, an increase of $1.1 million or 5.4% from the comparable
1996 period. Net sales increased primarily due to increased sales
in the Hoffritz and Farberware lines offset by decreased sales of
certain "impulse-purchase" products developed for a single
customer.
Gross Profit
Gross profit for the three months ended June 30, 1997 was $10.9
million, an increase of 8.3% or $0.8 million over the comparable
1996 period. Gross profit as a percentage of net sales was 49.4%
as compared to 48.1% for the 1996 period. This increase is
primarily due to a change in the overall sales mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months
ended June 30, 1997 were $8.4 million, an increase of $0.6
million or 7.1% from the comparable 1996 period. Selling, general
and administrative expenses as a percentage of net sales were
37.7% during the three month period in 1997 as compared to 37.2%
for the 1996 period. This percentage increase is primarily
attributable to the operations of the Farberware Outlet Stores.
Six Months Ended June 30, 1997
Compared to Six Months ended June 30, 1996
Net Sales
Net sales for the six months ended June 30, 1997 were $43.2
million, an increase of $3.0 million or 7.4% from the comparable
1996 period. The sales growth was primarily due to net sales in
the Hoffritz line and Farberware Outlet Stores offset by decreased
sales of certain "impulse-purchase" products developed for a
single customer.
Gross Profit
Gross profit for the six months ended June 30, 1997 was $20.9
million, an increase of $1.7 million or 8.9% over the comparable
1996 period. Gross profit as a percentage of net sales was 48.4%
as compared to 47.7% for the 1996 period. This increase is
primarily due to a change in the overall sales mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the six months
ended June 30, 1997 were $16.1 million, an increase of $2.0
million or 14.0% from the comparable 1996 period. Selling, general
and administrative expenses as a percentage of net sales were
37.2% during the six month period in 1997 as compared to 35.1%
for the 1996 period. This percentage increase is primarily
attributable to the operations of the Farberware Outlet Stores.
Forward Looking Statements: This Quarterly Report on Form 10-Q
contains certain forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, including statements concerning the Company's
future products, results of operations and prospects. These
forward-looking statements involve risks and uncertainties,
including risks relating to general economic and business
conditions, including changes which could affect customer payment
practices or consumer spending; industry trends; the loss of major
customers; changes in demand for the Company's products; the
timing of orders received from customers; cost and availability of
raw materials; increases in costs relating to manufacturing and
transportation of products; dependence on foreign sources of
supply and foreign manufacturing; and the seasonal nature of the
business as detailed elsewhere in this Quarterly Report on Form 10-
Q and from time to time in the Company's filings with the
Securities and Exchange Commission. Such statements are based on
management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to
differ materially from those described in the forward-looking
statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company has available an unsecured $25,000,000 line of credit
with a bank (the "Line") which may be used for short term
borrowings or letters of credit.
Borrowings under the Line bear interest payable daily at a
negotiated short term borrowing rate (7.375% at June 30, 1997).
The Company is charged a nominal fee on the entire Line. As of
June 30, 1997, the Company had $2,100,000 of borrowings and
$13,813,000 of letters of credit outstanding under the Line and,
as a result, the availability under the Line was $9,087,000. The
Line is cancelable by either party at any time.
At June 30, 1997, the Company had cash and cash equivalents of
$317,000 versus $1.1 million at December 31, 1996, a decrease of
$776,000. The decrease is primarily attributable to the Company's
increased inventory levels, decreased accrued expenses and income
taxes payable offset by decreased accounts receivable and
increased accounts payable and trade acceptances.
The Company estimates that approximately $7.0 million of capital
expenditures originally scheduled for 1997 will be incurred in
1998. These expenditures are primarily for the new state of the
art distribution facility. These expenditures will be financed
from current operations and, if needed, short term borrowings.
Products are sold to retailers primarily on 30-day credit terms,
and to distributors primarily on 60-day credit terms.
On July 1, 1997, the Company entered into an agreement with Meyer
Corporation, regarding the operation of the Company's Farberware
retail outlet stores. Pursuant to the agreement, the Company will
continue to own and operate the Farberware retail outlet stores,
which the Company acquired in 1996. Meyer Corporation, the
licensed manufacturer of Farberware branded cookware products,
will merchandise, stock and offer Farberware cookware products for
sale directly to the public in the Farberware stores. Meyer
Corporation will receive all revenue from sales of Farberware
cookware, and will reimburse the Company an amount equal to 62.5%
of the expenses, as defined, attributable to the stores.
In addition, Meyer has acquired all cookware inventory from the
Company for approximately $3.1 million. The Company will not
recognize any gain or loss as a result of this transaction.
The Company believes that its cash and cash equivalents,
internally generated funds and its existing credit arrangements
will be sufficient to finance its operations for the next 12
months.
The results of operations of the Company for the periods discussed
have not been significantly affected by inflation or foreign
currency fluctuation. The Company negotiates its purchase orders
with its foreign manufacturers in United States dollars. Thus,
notwithstanding any fluctuation in foreign currencies, the
Company's cost for any purchase order is not subject to change
after the time the order is placed. However, the weakening of the
United States dollar against local currencies could lead certain
manufacturers to increase their United States dollar prices for
products. The Company believes it would be able to compensate for
any such price increase.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company's annual meeting of stockholders was held on June
10, 1997. At the meeting, all five director nominees were elected
and the appointment of Ernst & Young LLP as independent auditors
was ratified.
(a)The following directors were elected for a one-year term by the
votes indicated:
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FOR AGAINST ABSTAIN
Milton L. Cohen 10,372,221 14,268 0
Jeffrey Siegel 10,375,521 10,968 0
Craig Phillips 10,372,221 14,268 0
Ronald Shiftan 10,375,400 11,089 0
Howard Bernstein 10,371,121 15,368 0
(b) The appointment of Ernst & Young LLP was ratified by the
following vote:
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FOR AGAINST ABSTAIN
10,370,693 15,796 0
Item 6. Exhibit(s) and Reports on Form 8-K.
(a) Exhibit(s) in the second quarter of 1997:
Exhibit Description
No.
27 Financial Data Schedule
10.25 Meyer Operating Agreement - dated July 1, 1997
between Lifetime Hoan Corporation and Meyer
Corporation.
10.26 Jeffrey Siegel Employment Agreement Amendment
No. 1, dated June 6,1997
10.27 Milton L. Cohen Employment Agreement Amendment
No. 1, dated June 6,1997
(b) Reports on Form 8-K in the second quarter of 1997: NONE
Exhibit 27. Financial Data Schedule
Lifetime Hoan Corporation
Financial Data Schedule
Pursuant to Item 601(c) of Regulation S-K
This schedule contains summary financial information extracted
from the financial statements included in the form 10-Q
and is qualified in its entirety by reference to such financial
statements
for the six months ended June 30, 1997.
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Item Item Description Amount
Number
5-02(1) Cash and Cash Items $ 317,231
5-02(2) Marketable Securities $ 0
5- Notes and Accounts Receivable $ 11,043,194
02(3)(a)( Trade
1)
5-02(4) Allowances for Doubtful $ 75,000
Accounts
5-02(6) Inventory $ 45,646,883
5-02(9) Total Current Assets $ 64,316,175
5-02(13) Property, Plant and Equipment $ 13,576,989
5-02(14) Accumulated Depreciation $ 4,624,909
5-02(18) Total Assets $ 87,249,650
5-02(21) Total Current Liabilities $ 12,511,276
5-02(22) Bonds, Mortgages and Similar $ 0
Debt
5-02(28) Preferred Stock - Mandatory $ 0
Redemption
5-02(29) Preferred Stock - No Mandatory $ 0
Redemption
5-02(30) Common Stock $ 124,597
5-02(31) Other Stockholders' Equity $ 74,613,777
5-02(32) Total Liabilities and $ 87,249,650
Stockholders' Equity
5- Net Sales of Tangible Products $ 43,051,092
03(b)1(a)
5-03(b)1 Total Revenues $ 43,241,435
5- Cost of Tangible Goods Sold $ 22,335,953
03(b)2(a)
5-03(b)2 Total Costs and Expenses
Applicable
to Sales and Revenues $ 22,335,953
5-03(b)3 Other Costs and Expenses $ 0
5-03(b)5 Provision for Doubtful Accounts $ 206,313
and Notes
5- Interest and Amortization of $ 47,441
03(b)(8) Debt Discount
5- Income Before Taxes and Other $ 4,827,531
03(b)(10) Items
5- Income Tax Expense $ 1,927,000
03(b)(11)
5- Income/Loss Continuing $ 2,900,531
03(b)(14) Operations
5- Discontinued Operations $ 0
03(b)(15)
5- Extraordinary Items $ 0
03(b)(17)
5- Cumulative effect - Changes in
03(b)(18) Accounting
Principles $ 0
5- Net Income or Loss $ 2,900,531
03(b)(19)
5- Earnings Per Share - Primary $ 0.23
03(b)(20)
5- Earnings Per Share - Fully $ 0.23
03(b)(20) Diluted
SIGNATURES
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.
Lifetime Hoan Corporation
/s/ Milton L. Cohen August 14, 1997
__________________________________
Milton L. Cohen
Chairman of the Board of Directors
and President
(Principal Executive Officer)
/s/ Fred Spivak August 14, 1997
__________________________________
Fred Spivak
Vice President - Finance and Treasurer
(Principal Financial and Accounting Officer)
Exhibit 10.25 - Meyer Operating Agreement
OUTLET STORE OPERATING AGREEMENT
This Agreement entered into on the 30th day of June,
1997 and effective as of July 1, 1997 (the "Effective Date") by
and between Outlet Retail Stores, Inc., a Delaware corporation
having offices at One Merrick Avenue, Westbury, New York 11590
("ORSI"), and Cookware Concepts, Inc., a Delaware corporation
having offices at 525 Curtola Parkway, Vallejo, California 94590
("CCI").
WHEREAS, ORSI has the right, pursuant to the LHC
License, to operate the Farberware Outlet Stores and is the owner
or assignee of the Leases for the Existing Farberware Outlet
Stores;
WHEREAS, CCI is a wholly owned subsidiary of Meyer
Corporation, U.S. ("Meyer U.S.");
WHEREAS, Meyer U.S. has the exclusive right, pursuant
to the Meyer Agreement with Meyer Marketing Company Ltd, a
British Virgin Islands corporation, to sell certain Farberware-
branded products and also manufactures (and/or causes to be
manufactured) and markets certain other products that compete
with such Farberware-branded products (collectively, the "Meyer
Products"); and
WHEREAS, ORSI and CCI wish to enter into an arrangement
whereby, among other things, 60% of the square footage of each
Farberware Outlet Store will be devoted to Meyer Products and CCI
will assume 62.5% of the costs and expenses of the development
and operation of Farberware Outlet Stores,
NOW, THEREFORE, in consideration of the foregoing, and
of the respective covenants and agreements of the parties herein
contained, the parties hereto agree as follows:
1.Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Farberware, Inc." (formerly Far-B Acquisition
Corp.) means a Delaware corporation that is the owner of certain
patents, copyrights and trademarks, trade names, service marks,
copyrights (including applications for, rights to acquire and
other rights with respect to, any of the foregoing), licenses,
technology, know-how, trade secrets, franchises, authorizations
used or relating to products manufactured and distributed under
the name "Farberware."
"Farberware Outlet Stores" means stores that sell
only certain merchandise that is manufactured under Farberware
licenses (with the exception of limited sales of non-Farberware
or Farberware-licensed products) and includes the outlet stores
operated as "Farberware" stores at the locations identified on
the schedule annexed hereto as Exhibit A (the "Existing
Farberware Outlet Stores") and any substitutions therefor or
additions thereto.
"Leases" means the leases for all Existing and
new Farberware Outlet Stores.
"LHC" means Lifetime Hoan Corporation, a Delaware
corporation, of which ORSI is a wholly-owned subsidiary.
"LHC License" means the license granted by
Farberware, Inc., as licensor, to LHC, as licensee, set forth in
Section 5.4 of an agreement, dated as of February 2, 1996 by and
among Syratech Corporation, Farberware, Inc. (formerly Far-B
Acquisition Corp.) and LHC, and assigned by LHC to ORSI, to
operate the Farberware Outlet Stores.
"Meyer Agreement" means the agreement with Meyer
Marketing Company, Ltd., a British Virgin Islands corporation
("Meyer Marketing"), pursuant to which Meyer U.S. has the
exclusive right to sell certain Farberware-branded products
manufactured (or caused to be manufactured) and distributed by
Meyer Marketing pursuant to the Meyer License.
"Meyer License" means the license to manufacture
(or caused to be manufactured) and distribute certain Farberware-
branded products granted to Meyer Marketing by Farberware, Inc.
"Meyer Products" means the Farberware-branded
cookware, namely pots and pans (but not including bakeware), sold
by CCI pursuant to the Meyer Agreement and any non-Farberware-
branded cookware, namely pots and pans (but not including
bakeware), made by or for, or sold by, CCI that compete with
such Farberware-branded products.
"Term" means the Initial Term and any Renewal
Term.
Term. This Agreement shall commence on July 1,
1997 (the "Effective Date") and continue until June 30, 2002,
(the "Initial Term"), and shall thereafter continue for
successive renewal terms of one (1) year (each, a "Renewal
Term"), unless either party shall give written notice, not less
than six (6) months prior to the end of the Initial Term or any
Renewal Term of its intention to terminate this Agreement at the
end of the Initial Term or such Renewal Term, as the case may be.
3. Allocation of Space to Meyer Products; Allocation of
Outlet Store Costs.
(a)(i)In each Farberware Outlet Store, 60% of the
display and storage space (based on square footage) shall be
allocated to Meyer Products.
(ii)The location of the actual space in each
Farberware Outlet Store allocated to Meyer Products shall be
made, from time to time, and at any time during the Term, by
ORSI, in its sole discretion. ORSI agrees to allocate prime
selling space within each store between Meyer Products and LHC's
products on an equitable basis. The frontage selling space
within the store, including window display area, that is
allocated to CCI shall be no less than 50% of the space available
for allocation.
(b)CCI shall pay 62.5% (the "Meyer Payable") of the
operating, development, marketing and other costs and expenses of
the Farberware Outlet Stores during the Term (the "Outlet Store
Costs"). The Outlet Store Costs shall be determined in
accordance with generally accepted accounting principles (except
as specified below in Section 3(b)(xi)) based on LHC's regularly
prepared financial statements and shall include all direct and
indirect costs and expenses of ORSI and LHC relating to the
Farberware Outlet Stores including, without limitation, the
following:
(i)All amounts payable under, arising in
connection with, or otherwise related to any and all Leases,
whether in effect as of the date of this Agreement or entered
into during the Term of this Agreement including, without
limitation, security or other deposits, base rent, additional
rents, taxes, surcharges, late fees and assessments, common
charges, usage fees or additional charges of any kind, damages,
claims and attorney's fees.
(ii)All maintenance, service, engineering,
landscaping, labor, equipment and supplies costs relating to
operating, repairing and maintaining any Farberware Outlet Stores
or any part thereof, and all equipment lease and service contract
expenses;
(iii)All utility charges, telecommunications
charges and electronic communications charges including, without
limitation, deposits, installation fees, basic fees, usage
charges, maintenance, service, replacement and repair charges and
any other charges relating to heating, ventilation, air
conditioning, lighting, telephone, telefax, electronic
communication, Internet access and similar services;
(iv)All security system equipment, maintenance and
service costs;
(v)All personnel costs relating to the operation,
maintenance and security of the Farberware Outlet Stores
including, without limitation, salaries, wages, fees, benefits,
taxes and other expenses relating to employees, independent
contractors, service providers, agents and others;
(vi)All advertising, promotion and marketing costs
and expenses including, without limitation, costs of creation,
production, distribution and dissemination of promotional,
marketing and advertising programs and materials; provided that
only generic advertising for Farberware Outlet Stores and not
advertising that refers to specific products may be treated as
expenses for this purpose;
(vii)All insurance costs relating to the operation
of the Farberware Outlet Stores including, without limitation,
the costs of all property, casualty and general liability
coverage;
(viii)All taxes payable or collectible in
connection with the occupancy of the Lease premises and the
operation of the Farberware Outlet Stores; provided that CCI and
ORSI shall not be responsible for any Federal, state or local
taxes levied against or measured by the net income of the other;
(ix)All extraordinary costs including, without
limitation, attorney's fees, accounting fees, and the amounts of
any judgments, fees, settlement amounts or other costs in excess
of insurance coverage, incurred in connection with, or arising
out of claims (including tort claims, contract claims and claims
arising under the Leases) relating to, the development and
operation of new or Existing Farberware Outlet Stores; ORSI
agrees to consult with CCI on any costs applicable to this
paragraph that exceeds $50,000;
(x)An allocable portion of the personnel costs and
costs of equipment, supplies and other expenses of LHC incurred
in connection with bookkeeping, accounts payable, accounting and
executive functions and other general and administrative expenses
relating to the Farberware Outlet Stores; It is agreed that the
allocation at the time of the commencement of this agreement is
$75,000 per annum. This allocation will not increase by more
than 15% per annum without prior approval from CCI; and
(xi)All costs and expenses related to designing,
"building out," constructing, opening, redesigning,
reconstructing or renovating any new or Existing Farberware
Outlet Stores or any part thereof including, without limitation,
all construction, architectural, interior and exterior design,
engineering, landscaping, labor, leasehold improvement, fixture,
shelving, furniture and equipment costs (net of any buildout
allowances provided by a lessor under any Lease), not included as
an expense under generally accepted accounting principles. This
expense, net of buildout allowance, will not exceed $40,000 for
any Farberware Outlet Store without prior approval from CCI.
(c)Any personal property taxes on inventory held in the
Farberware Outlet Stores or in ORSI or its affiliates' warehouses
relating to Farberware Outlet Stores shall be allocated between
ORSI and the CCI in proportion to the value, determined in
accordance with generally accepted accounting principles, of the
Meyer Products held in inventory and ORSI and its affiliates'
products held in inventory, as the case may be.
(d)ORSI and CCI agree that, except as specifically
provided herein, to the extent that any function relating to the
Farberware Outlet Stores can be specifically identified as
relating to ORSI or the CCI or their products, the expense
relating to that function shall be borne by ORSI or the CCI, as
the case may be, and shall not be treated as an expense of the
Farberware Outlet Stores for purposes of Section 3.
4.Reports of Sales and Amounts Due; Payments.
(a)On the 15th day of each month (or the first weekday
succeeding such day, if it is not a week day), ORSI shall
deliver to CCI a sales and expense report (a "Monthly Report"),
which shall set forth, for the preceding month, (i) the amount of
receipts received by the Farberware Outlet Stores from the sales
(less returns) of the Meyer Products (the "Meyer Receipts"),
(ii) the total amount of the Outlet Store Costs, (iii) any Meyer
Receipts or Outlet Store Costs relating to prior months that were
not included in the Monthly Reports for such months, and (iv) the
amount due to or from CCI as of the end of such preceding month,
which amount shall be equal to the difference between the Meyer
Receipts for such month (together with any other amounts, due to
CCI pursuant to this Agreement, including unpaid balances due to
CCI and amounts due to CCI as a result of prior period
adjustments) and the Meyer Payable for such month (together with
any amounts due from CCI pursuant to this Agreement, including
unpaid balances due from CCI and amounts due from CCI as a
result of prior period adjustments). Any amount due, as
reflected in any Monthly Report, shall be paid by CCI to ORSI, or
by ORSI to CCI, as the case may be, on or before the last
business day of the month following the month to which the
Monthly Report relates.
(b)Not later than 90 days after the end of each
calendar year during the Term and (if the Agreement is terminated
or expires on a date that is not the end of a calendar year)
after the termination of the Agreement, ORSI shall deliver a
sales and expense report for the preceding year or shorter
period immediately preceding the termination or expiration of the
Agreement (an "Annual Report"). Any adjustment in the aggregate
amount due to either party, as reflected in the Annual Report for
such year (or portion of a year preceding the termination or
expiration of the Agreement), whether nor not this Agreement is
in effect at the time such report is issued, shall be paid by
the appropriate party within 15 days of issuance of such Annual
Report.
(c)From time to time during the Term, ORSI will provide
CCI with interim reports of sales of the Meyer Products in the
Farberware Outlet Stores.
(d)During the Term, and for a period of two (2) years
thereafter, ORSI shall keep accurate and complete records of all
data necessary for the computation of all Meyer Receipts and
Meyer Payables. From time to time (but not more than four (4)
times per year during the Term and one (1) time after termination
of this Agreement), upon five (5) business days written notice
to ORSI, CCI or its designated independent public accountant
shall have the right at reasonable times during normal business
hours to examine the records of ORSI applicable to the
calculation of the Meyer Receipts and Meyer Payables for the
purpose of verifying the amounts owed to or by CCI and the
accuracy of the reports furnished by ORSI hereunder.
(e)In the event either party does not pay any amounts
due pursuant to this Agreement, the delinquent party shall pay
late charges on such past due amounts at a monthly rate of one
and one-half percent (1 1/2%) (or, if less, the maximum interest
rate then allowed under applicable law).
5.Rights and Obligations of ORSI.
(a)The Farberware Outlet Stores shall be owned,
operated and managed by ORSI, and nothing herein shall be deemed
to give CCI any right or interest in or to the Farberware Outlet
Stores. In such regard, ORSI shall have the exclusive right, in
its sole discretion, to, among others things and without
limitation, to determine the hours of operation and to make all
decisions relating to levels of staffing and to make all
personnel decisions; to close existing and new Farberware Outlet
Stores; to open new Farberware Outlet Stores and to determine the
locations thereof; to negotiate and agree to the terms of, and to
enter into, Leases for new Farberware Outlet Stores and to
negotiate revised terms and/or new Leases for Existing Farberware
Outlet Stores; to design, construct and maintain the interior and
exterior of each Farberware Outlet Stores; to make all decisions
as to the location of products, including all Meyer Products,
within the Farberware Outlet Stores, and to make all decisions
relating to marketing, advertising and promotion. ORSI shall
consult with CCI regarding decisions materially affecting the
Farberware Outlet Stores, including, but not limited to,
decisions relating to opening and closing Farberware Outlet
Stores and major store renovations.
(b)ORSI shall be solely responsible for costs and
expenses relating to returns and warranties of LHC's products
including, without limitation, shipping, repair and replacement
costs, and all costs and expenses, including attorney's fees,
relating to claims for damages.
(c)ORSI will not enter into a Lease for a Farberware
Outlet Store for a term of more than five (5) years without the
prior written consent of CCI.
(d)ORSI agrees that it will be responsible for
collection of sales tax on Meyer Products sold in the Farberware
Outlet Stores and payment of the amount collected to the taxing
authorities.
(e)If CCI has incurred net losses from the operations
of any Farberware Outlet Store for any year ending at the end of
its most recent fiscal quarter and gives written notice to ORSI,
and ORSI has also incurred net losses from the operations of such
Farberware Outlet Store for the one (1) year ending at the end of
its most recent fiscal quarter or has net profits from such
Farberware Outlet Store of less than $10,000 for such period
then ORSI agrees to use commercially reasonable efforts to
minimize the losses from such Store, if practicable, including,
in its good faith judgment, renegotiating the terms of the Lease
relating to the Farberware Outlet Store or closing such
Farberware Outlet Store.
(f)ORSI shall be solely responsible for costs and
expenses relating to returns and warranties for products other
than Meyer Products sold in the Farberware Outlet Stores,
including, without limitation, shipping, repair and replacement
costs, and all costs and expenses including attorney's fees
relating to claims for damages, and such costs and expenses shall
not be included in determining expenses under Section 3.
(g)(i)ORSI agrees that if it determines to close down
the Farberware Outlet Stores, it will promptly notify the CCI
with respect to such determination, consult with the CCI
concerning such close down and the steps to be taken to reduce
the losses to ORSI and CCI in connection with such close down,
and use commercially reasonable efforts to complete such close
down within six (6) months of the date of such notice.
(ii)In connection with a determination by ORSI to
close down and/or attempt to sell the business of the Farberware
Outlet Stores, CCI shall have a right of first refusal to acquire
such business on terms no less favorable to ORSI than it would
receive upon the sale of such business to a third party or upon
the liquidation of such business.
(iii) In the event ORSI liquidates the business of
the Farberware Outlet Stores, CCI shall be entitled to receive
that portion of the proceeds, if any, of the disposition of the
capital assets of such business that is in the same proportion to
the total amount of such proceeds that CCI's participation in
capital expenditures for the Farberware Outlet Stores bore to the
total amount of such expenditures.
6. Meyer Products; Obligations of CCI.
(a)CCI shall at all times during the Term supply Meyer
Products to the Farberware Outlet Stores in amounts sufficient to
stock the Farberware Outlet Stores with such products at a level
commensurate with the display and inventory quantities of other
products carried by the Farberware Outlet Stores.
(b)CCI shall determine the product mix of the Meyer
Products delivered to each Farberware Outlet Store, subject to
the reasonable approval of ORSI, and the sales price for Meyer
Products; provided, however, that CCI shall not provide to the
Farberware Outlet Stores Meyer Products which are non-Farberware-
branded products which would result in sales of such non-
Farberware-branded products exceeding 25% of the dollar volume of
all sales of Meyer Products made either in any one (1) Farberware
Outlet Store and/or in all Farberware Outlet Stores taken as a
group.
(c)(i)The parties agree that Meyer Products delivered
to the Outlet Retail Stores or held in the warehouse shall be
held by ORSI on consignment. Title to the Meyer Products shall
remain in CCI, and the Meyer Products shall be sold directly to,
and title shall pass directly from CCI to, the purchasers
thereof.
(ii)ORSI agrees to execute as requested, from time
to time, Uniform Commercial Code filings to give proper notice
that the Meyer Products located in the Farberware Outlet Stores
or in the warehouse are consigned goods belonging to CCI.
(d)CCI shall be solely responsible for paying the
purchase price, shipping and delivery charges, insurance costs
and all other costs relating to delivery of any Meyer Products
shipped to any Farberware Outlet Stores and for paying amounts
due to any manufacturer, supplier or other person with which CCI
transacts business in connection with the Meyer Products.
(e)(i)CCI agrees to purchase from LHC or ORSI any
products owned by ORSI or LHC and located in the Farberware
Outlet Stores and/or warehouses maintained by ORSI or LHC as of
the commencement of the Term of this Agreement that are of a type
defined as Meyer Products, at a purchase price equal to ORSI's or
LHC's landed cost of acquiring such products. Such products
will be deemed to be Meyer Products for purposes of this
Agreement. Any such products which are currently in LHC's or
ORSI's warehouses shall continue to be stored in such warehouses
and will be shipped to the Farberware Outlet Stores from time to
time as needed, as determined by CCI. Cost of shipping and
handling to be borne by CCI. CCI will not be required to
purchase any non-saleable inventory from ORSI.
(ii)Determination of the products to be purchased
by CCI pursuant to Section 6(e)(i) and payment of the purchase
price therefor shall be made as follows:
(A)The parties shall make a preliminary
determination of such products by reference to the most recent
available inventory reports, and CCI shall pay, on the date of
the execution of this Agreement, an amount equal to 95% of the
total purchase price of such products as so determined.
(B)A physical inventory of such products
shall be taken during the period June 25, 1997 through July 2,
1997, the cost of which CCI shall pay 62.5% and ORSI shall pay
37.5%.
(C)Based on the physical inventory, and
within 30 days of the completion thereof, the parties shall make
a final determination of the total purchase price of such
products, and the excess, if any, of such total purchase price
over the amount paid by CCI to ORSI on the date of the execution
of this Agreement shall be paid by CCI to ORSI (or, if the amount
paid by CCI exceeds such total, such excess shall be paid by ORSI
to CCI).
(f)CCI shall be responsible for supplying all display
racks and special fixtures relating to the Meyer Products and
shall have the right to design the space allocated to Meyer
Products in each Farberware Outlet Store; provided, however,
that such fixtures and design shall be consistent (although they
need not be identical) with the style and size of the other
fixtures in, and the overall appearance of, the Farberware
Outlet Stores, and shall be subject to the reasonable approval of
ORSI. ORSI will supply all display racks and special fixtures
relating to the LHC's products. For all fixturing that is common
to both companies, CCI will pay 62.5% of the cost and ORSI will
pay 37.5% of the cost.
(g)CCI shall not engage in any promotion, marketing or
advertising of any Meyer Product that names the Farberware
Outlet Stores without the prior written consent of ORSI.
(h)During the Term and for a period of six (6) months
after the expiration or termination of this Agreement, CCI shall
be responsible for 62.5% of all amounts payable under, arising in
connection with, or otherwise related to any and all Leases,
whether in effect as of the date of this Agreement or entered
into during the Term of this Agreement, during the terms of such
Leases (including portions of such terms that extend beyond the
expiration or termination of this Agreement and including any
renewals or extensions of such terms entered into during the
Term) including, without limitation, security or other deposits,
base rent, additional rents, taxes, surcharges, late fees and
assessments, common charges, usage fees or additional charges of
any kind, damages, claims and attorney's fees. If, from time to
time, any such amounts become payable after the expiration or
termination of this Agreement, ORSI will notify of such amounts,
and CCI shall remit payment thereof within 15 days of receipt of
the notification. ORSI agrees that any expenses which CCI is
responsible for subsequent to the expiration or termination of
the Agreement under this section shall be reduced by the
allocable portion of amounts received by ORSI in respect of
payments due under such Leases pursuant to any assignment or
sublease of such Leases, and any marketing or sales arrangement
entered into similar to that set forth herein and by the amount
of any reduction in amounts due pursuant to the Leases as a
result of any agreement with the landlords thereof.
(i)CCI shall be solely responsible for costs and
expenses relating to returns and warranties of Meyer Products
including, without limitation, shipping, repair and replacement
costs, and all costs and expenses, including attorney's fees,
relating to claims for damages.
(j)During the Term, neither CCI nor any of its
affiliates will own or operate any stores that sell Farberware-
branded products, regardless of geographical location.
Furthermore, it is understood that it would be detrimental to the
Farberware Outlet Stores if competitors were selling Meyer
Products which are Farberware-licensed at prices cheaper than the
Farberware Outlet Stores were selling them and, accordingly, CCI
agrees not to enter into any arrangements which will allow for
such sales.
(k)(i)Upon expiration of this Agreement or termination
hereof in accordance with the provision of Section 7, ORSI shall
have the right to purchase any or all the Meyer Products in the
Farberware Outlet Stores. To the extent that ORSI does not
purchase such products, CCI will remove any such products from
the Farberware Outlet Stores at its sole cost, and if CCI fails
to timely remove such Meyer Products from the Farberware Outlet
Stores, ORSI shall have the right to have such products shipped
to CCI at CCI's expense.
(ii)In addition, upon expiration of this Agreement
or termination hereof in accordance with the provision of
Section 7, and until the end of the term of any Lease in effect
at the date of such expiration or termination (whether in effect
as of the date of this Agreement or entered into during the Term
of this Agreement, including portions of such terms that extend
beyond the expiration or termination of this Agreement and
including any renewals or extensions of such terms, but only if
entered into prior to the expiration or termination of this
Agreement) (the "existing Farberware Outlet Stores"), CCI shall
be obligated to sell to ORSI Meyer Products sufficient to stock
the existing Farberware Outlet Stores with such products at a
level commensurate with the display and inventory quantities of
other products carried by such existing Farberware Outlet Stores.
(iii) The purchase price to be paid by ORSI for
Meyer Products purchased pursuant to Sections 6(k)(i) and (ii)
shall be as follows:
(A)If ORSI elects to terminate the Agreement,
then the purchase price shall not be greater than the price at
which CCI would be required to sell such products to ORSI under
the terms of the Meyer License.
(B)If CCI elects to terminate the Agreement, then
the purchase price shall be Meyer U.S.'s manufacturing cost, plus
freight, duties, insurance and inland freight (but not including
any mark-up), plus 10%.
7.Termination.
(a)Either party (the "non-breaching party") shall have
the right to terminate this Agreement upon 30 days' prior written
notice to the other party (the "breaching party") upon the
occurrence of one or more of the following events:
(i)the breach of any material provision of this
Agreement, unless the breaching party cures or corrects such
breach within the 30 days after the written notice by the non-
breaching party;
(ii)the insolvency of the breaching party;
(iii) the institution of any proceeding against
the breaching party under any bankruptcy, insolvency or
moratorium law, to which the breaching party consents or which is
not dismissed with 60 days thereafter;
(iv)any assignment by the breaching party of
substantially all of its assets for the benefit of creditors; or
(v)the placement of the assets of the breaching
party in the hands of a trustee or receiver, unless the
receivership or trust is dissolved within 60 days thereafter.
(b)ORSI may terminate this Agreement if either the
Meyer Agreement or the Meyer License are terminated for any
reason.
(c)CCI may terminate this Agreement if the LHC License
is terminated for any reason.
(d)Upon expiration of this Agreement or termination
hereof in accordance with the provisions of this Section 7,
(i)All amounts due hereunder, as reflected in the
Monthly Reports required to be issued pursuant to Section 4(a)
and the Annual Reports required to be issued pursuant to Section
4(b), shall be paid within 15 days of issuance of the last
Monthly Report and Annual Report, respectively;
(ii)If ORSI has not determined to liquidate the
business of the Farberware Outlet Stores and continues to operate
such stores, ORSI shall pay to CCI an amount equal to 62.5% of
the book value of the nondepreciated removable fixturing or,
alternatively, In ORSI's sole discretion, may allow CCI to remove
such removable fixturing; and
(iii)The provisions of Section 6(k) shall apply.
8.Warranties, Indemnification and Insurance.
(a)(i)CCI shall indemnify and hold harmless ORSI and
its directors, officers and control persons, or any of them from
any loss, liability, damage, costs, claims, causes of actions,
proceedings, judgments and expense (including, without
limitation, attorneys' fees and costs) in connection with any
claim arising out of the manufacture of the Meyer Products, or
the sales or distribution of the Meyer Products in the Farberware
Outlet Stores.
(ii)ORSI shall indemnify and hold harmless CCI
and its directors, officers and control persons, or any of them
from any loss, liability, damage, costs, claims, causes of
actions, proceedings, judgments and expense (including, without
limitation, attorneys' fees and costs) in connection with any
claim arising out of the manufacture of products manufactured by
or for LHC for sale in the Farberware Outlet Stores, or the sales
or distribution of such products in the Farberware Outlet Stores.
(b)Each party agrees to purchase and keep in full force
and effect, during the term of this Agreement, a policy of
insurance in a commercially reasonable amount insuring against
those risks customarily insured under the comprehensive general
liability policies, including "product liability," etc., which
policy shall name the other as an additional named insured
thereunder. Each party shall provide to the other, within 30
days of the effective date of this Agreement, a certificate
showing proof that such policy of insurance is in effect. Each
party agrees to give the other notice of any termination of such
policy of insurance or any notice received with respect to any
contemplated termination.
(c)EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND WITH RESPECT TO THE RESPECTIVE PRODUCTS TO BE SUPPLIED TO
THE FARBERWARE OUTLET STORES HEREUNDER, INCLUDING BUT NOT LIMITED
TO ANY WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
(d) ORSI shall have no liability to CCI for any action
or omission in connection with the management or operation of the
Farberware Outlet Stores, except to the extent such action or
omission results from ORSI's senior management's willful
misconduct or fraud. CCI acknowledges that shrinkage of inventory
is normally associated with retail operations and that LHC shall
not be responsible for any losses to CCI resulting from
shrinkage. Any losses due to shrinkage will be allocated on a
pro rate basis to all products sold in the Farberware Outlet
Stores and treated as an expense under Section 3.
9.Approval by Farberware, Inc.. Neither this
Agreement, nor any amendment or modification hereof shall be
effective unless and until approved and accepted, in writing, by
Farberware, Inc., to the extent necessary.
10.Representations.
(a)ORSI represents and warrants that, subject to
acceptance and approval of this Agreement by Farberware, Inc., it
has full corporate power and authority to enter into this
Agreement and to perform hereunder and that it has not made, nor
will it make, any commitment to any third party inconsistent with
or in derogation of the rights and obligations set forth herein.
(b)CCI represents and warrants that it has full
corporate power and authority to enter into this Agreement and to
perform hereunder and that it has not made, nor will it make, any
commitment to any third party inconsistent with or in derogation
of the rights and obligations set forth herein.
11.Dispute Resolution.In the event any dispute shall
arise between the parties relating to any term or condition of
this Agreement, the parties shall use their best efforts to
resolve such dispute by means of good faith negotiations,
including submitting the dispute to mediation if the parties
agree to do so. Except as otherwise herein set forth, any and all
disputes that have not been resolved in good faith negotiations
between the parties shall be resolved by binding arbitration
conducted in New York, New York. The arbitrators shall be
selected and the arbitration shall be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrators shall have no power to add to,
subtract from or modify any of the terms or conditions of this
Agreement. Any award rendered in such arbitration may be
enforced by either party in the courts of New York, or in the U.
S. District Court for the Southern District of New York, to whose
jurisdiction the parties each hereby irrevocably consent and
submit for such purpose.
12.Miscellaneous.
(a)All notices, requests, demands or other
communications required or permitted to be given or made
hereunder shall be in writing and delivered personally or sent by
pre-paid, first class, certified or registered mail, return
receipt requested, by express delivery service providing evidence
of delivery , or by confirmed facsimile transmission, to the
intended recipient thereof at its address or facsimile number as
set forth below:
If to ORSI:Outlet Retail Stores, Inc.
One Merrick Avenue
Westbury, New York 11590
Attention: Jeffrey Siegel,
Executive Vice President
Fax: (516) 683-6006
With a copy to:Bachner, Tally, Polevoy & Misher
LLP
380 Madison Avenue
New York, New York 10017
Attention: Steven A. Fishman, Esq.
Fax: (212) 682-5729
If to CCI:Cookware Concepts, Inc.
525 Curtola Parkway
Vallejo, California 94590
Attention: Norman Schoenfeld,
Executive Vice President
Fax: (707) 551-2951
With a copy to:Lanahan & Reilly LLP
500 Sansome Street
San Francisco, California 94111
Attention: Michael Schiffman, Esq.
Fax: (415) 421-1103
Any such notice, demand or communication shall be deemed to have
been duly given upon delivery (if made by express delivery
service), immediately (if given or made by confirmed facsimile),
or five (5) days after mailing. Any party may change the address
or facsimile number to which notices, requests, demands or other
communications to such party shall be delivered or mailed by
giving notice thereof to the other party hereto in the manner
provided herein.
(b)This Agreement does not constitute either party as
an agent, employee, legal representative, partner or joint
venturer of the other party for any purpose whatsoever. Neither
party is granted, nor shall it represent that it has been
granted, any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of or
in the name of the other party or to bind the other party in any
manner whatsoever.
(c)This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof, and
supersedes all prior and contemporaneous agreements, whether
written or oral, between the parties. This Agreement shall not
be modified, amended or terminated except as herein provided and
may be amended only by an instrument in writing executed by
authorized representatives of the parties hereto that expressly
refers to the Agreement and specifically states that it is
intended to amend, modify or terminate it. No party is relying
on any warranties, representations, or inducements not set forth
herein.
(d)All rights and restrictions contained herein may be
exercised and shall be applicable and binding only to the extent
that they do not violate any applicable laws and are intended to
be limited to the extent necessary so that they will not render
this Agreement illegal, invalid or unenforceable. If any
provision or portion of any provision of this Agreement not
essential to the commercial purpose of this Agreement shall be
held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, it is the intention of the parties that
the remaining provisions or portions thereof shall constitute
their agreement with respect to the subject matter hereof, and
all such remaining provisions or portions thereof shall remain in
full force and effect.
(e)The headings as to contents of particular paragraphs
are inserted only for convenience and shall not be construed as
part of this Agreement or as a limitation on the scope of any
terms or provisions of this Agreement.
(f) ORSI may assign its rights and obligations under
this agreement in connection with the sale of the business of
owning and operating the Farberware Outlet Stores provided that
the assignee assumes all of ORSI's obligations under this
Agreement and provided that the assignee does not compete with
the CCI or its affiliates in connection with any principal
product line of the CCI or its affiliates. The CCI may assign
its rights and obligations under this Agreement in connection
with the sale of its business relating to the Meyer Products,
provided that the assignee assumes all of the CCI's obligations
under this Agreement and provided that the assignee does not
compete with ORSI or its affiliates in connection with any
principal product line of ORSI and its affiliates. Except as
provided herein, neither party shall assign, delegate or transfer
any of its rights or obligations under this Agreement, in whole
or in part, without the prior written consent of the other party.
Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors and assigns.
(g)If either party is delayed or prevented from
performing its obligations under any provisions hereof by reasons
of fire, strike, labor dispute, government law or regulation,
insurrection, war, public disaster, flood, unavoidable casualty,
act of God or the elements, embargo, or any other material cause
beyond the control of the breaching party, then (i) the other
party shall have no right to terminate this Agreement and (ii)
such non-performance should not be deemed a breach of this
Agreement, unless the period of non-performance shall exceed two
(2) months.
(h)All notices, requests, and other communications
required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered
personally, by United States postal service, overnight delivery
or facsimile with transmission verification. The effective
notice date shall be the date of delivery to the address set
forth at the beginning of this Agreement.
(i)The parties may be exposed to financial and sales
information, improvements, concepts, designs, processes and other
confidential information regarding each other's products,
processes and businesses. Said confidential information is
considered to be trade secrets and each party agrees not to
disclose or divulge any such confidential information to any
other party. Neither party shall disclose to the public or any
other third party any term of this Agreement except by compulsion
of law. Notwithstanding the foregoing, the term confidential
information does not include information that (i) is or becomes
publicly available other than through breach of this Agreement by
the party in question; (ii) is already known to the party in
question at the time of disclosure; (iii) is received by the
party in question from a third party not under an obligation of
confidentiality to the other party or (iv) is independently
developed by the party in question without reference to the
confidential information. Failure to abide by this paragraph may
result in termination of this Agreement.
(j)If any legal action is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall
be entitled to reimbursement from the other party for reasonable
attorney's fees and costs in addition to any other relief to
which it may be entitled.
(k)This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York, and the
parties agree that it is executed and delivered in that state.
(l)The following provisions shall survive the
termination of this Agreement: 3(b), 3(c), 4, 5(b), 6(c), 6(g),
6(h), 6(j), 6(k), 7(d), 8, 11, 12(a), 12(i), 12(j), and 12(k).
In addition, until all amounts payable hereunder are paid in
full, all such obligations shall survive the termination of this
Agreement.
(m)This Agreement may be executed in two or more
counterparts and each such counterpart shall be deemed an
original hereof.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
OUTLET RETAIL STORES, INC.
By: /s/ Milton L. Cohen
Name: Milton L. Cohen
Title: President & CEO
COOKWARE CONCEPTS, INC.
By: /s/ Robert A. Rae
Name: Robert A. Rae
Title:President
GUARANTEE
Meyer Corporation, U.S. ("Meyer U.S.") hereby
guarantees the performance of all obligations and undertakings of
Cookware Concepts, Inc., its wholly-owned subsidiary ("CCI"), and
the payment when due of all amounts payable by, CCI under the
agreement (the "Agreement") dated June 30, 1997 and effective as
of July 1, 1997 between CCI and Outlet Retail Stores, Inc.
("ORSI"), and any amendment, modification or extension thereof,
or agreement entered into in connection therewith (collectively,
the "Meyer Obligations"). Meyer U.S. waives notice of acceptance
of the guarantee set forth herein and also presentment, demand,
protest, notice of protest and notice of dishonor of any of the
Meyer Obligations guaranteed hereunder. No extension of time or
other indulgence granted by ORSI under the Agreement to CCI,
modification or extension of the Agreement, or omission or delay
on the part of ORSI in exercising any right under this Guarantee
or taking any action to collect or enforce performance or payment
of any of the Meyer Obligations or any other matter or thing
which could operate as a discharge of a guarantor as a matter of
law, shall be deemed a waiver of such right or release or affect
the obligations of Meyer U.S. hereunder.
MEYER CORPORATION, U.S.
By: /s/ Robert A. Rae
Name: Robert A. Rae
Title: President
GUARANTEE
Lifetime Hoan Corporation ("LHC") hereby guarantees the
performance of all obligations and undertakings of Outlet Retail
Stores, Inc., its wholly-owned subsidiary ("ORSI"), and the
payment when due of all amounts payable by, ORSI under the
agreement (the "Agreement") dated June 30, 1997 and effective as
of July 1, 1997 between ORSI and Cookware Concepts, Inc.
("CCI"), and any amendment, modification or extension thereof, or
agreement entered into in connection therewith (collectively,
the "ORSI Obligations"). LHC waives notice of acceptance of the
guarantee set forth herein and also presentment, demand, protest,
notice of protest and notice of dishonor of any of the ORSI
Obligations guaranteed hereunder. No extension of time or other
indulgence granted by CCI under the Agreement to ORSI,
modification or extension of the Agreement, or omission or delay
on the part of CCI in exercising any right under this Guarantee
or taking any action to collect or enforce performance or payment
of any of the ORSI Obligations or any other matter or thing which
could operate as a discharge of a guarantor as a matter of law,
shall be deemed a waiver of such right or release or affect the
obligations of LHC hereunder.
LIFETIME HOAN CORPORATION
By: /s/ Milton L. Cohen
Name: Milton L. Cohen
Title: President & CEO
BILL OF SALE
Pursuant to the Outlet Store Operating Agreement
dated June 30, 1997 and effective as of July 1, 1997 (the "Outlet
Store Agreement") between OUTLET RETAIL STORES, INC., a Delaware
corporation ("ORSI") and COOKWARE CONCEPTS, INC., a Delaware
corporation ("CCI"), ORSI, in consideration of the payment of the
purchase price set forth in Section 6(e) of the Outlet Store
Agreement, receipt of which (subject to adjustment as set forth
in Section 6(e) of the Outlet Store Agreement) is hereby
acknowledged, hereby sells, conveys, transfers, assigns and de
livers to CCI, to and for the benefit of CCI and its successors
and assigns, to have and to hold all and singular to its own use
forever, all of ORSI's right, title and interest in and to the
the products described in Section 6(e) of the Outlet Store Agree
ment (the "Section 6(e) Products").
ORSI hereby constitutes and appoints CCI and its
successors and assigns, as the attorney-in-fact of ORSI, with
full power of substitution, to institute and prosecute, in the
name of ORSI or CCI but on behalf of and for the benefit of CCI,
and at the expense of CCI, all proceedings which CCI may deem
desirable to collect, assert or enforce any claim, right or title
of any kind in or to the assets hereby sold, transferred or
assigned and to defend and compromise any and all actions, suits
or proceedings in connection with such assets. ORSI agrees that
the foregoing powers are coupled with an interest and are and
shall be irrevocable by ORSI in any manner or for any reason.
EXCEPT AS SET FORTH IN THE OUTLET STORE AGREEMENT,
HAS NOT MADE AND DOES NOT MAKE AND HEREBY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE WITH RESPECT
TO THE SECTION 6(E) PRODUCTS, WHETHER EXPRESS OR IMPLIED, WHETHER
DIRECT OR INDIRECT, AS TO THE CONDITION OF THE SECTION 6(E)
PRODUCTS, THE MERCHANTABILITY OF THE SECTION 6(E) PRODUCTS, OR
THE FITNESS OF THE SECTION 6(E) PRODUCTS FOR THE PURPOSES OR USES
INTENDED.
Dated: July 1, 1997
OUTLET RETAIL STORE, INC.
By: /s/ Milton L. Cohen
Title: President & CEO
Exhibit 10.26 - Jeff Siegel Employment Agreement Amendment No. 1
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Amendment No. 1 dated as of June 6, 1997 to Employment
Agreement dated as of April 7, 1996 (the "Employment Agreement")
between Lifetime Hoan Corporation, a Delaware Corporation (the
"Corporation"), with principal offices located at One Merrick
Avenue, Westbury, New York 11590, and Jeffrey Siegel
("Executive"), residing at 40 Merivale Road, Great Neck, New York
11020.
1.Paragraph 2 of the Employment Agreement is amended by changing
the date April 6, 1999 appearing therein to April 6, 2000.
2.Paragraph 7(b) of the Employment Agreement is amended by
changing the word "three" in the first sentence thereof to
"five."
3.Except as amended as provided in paragraphs 1 and 2 above, the
Employment Agreement is hereby ratified and confirmed in all
respects.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 1 as in the date first above written.
Lifetime Hoan Corporation
By
:
/s/ Jeffrey Siegel
Jeffrey Siegel
Exhibit 10.27 - Milton L. Cohen Employment Agreement Amendment
No. 1
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Amendment No. 1 dated as of June 6, 1997 to Employment
Agreement dated as of April 7, 1996 (the "Employment Agreement")
between Lifetime Hoan Corporation, a Delaware Corporation (the
"Corporation"), with principal offices located at One Merrick
Avenue, Westbury, New York 11590, and Milton L. Cohen
("Executive"), residing at 153 Everett Avenue, Hewlett Bay Park,
New York 11557.
1.Paragraph 2 of the Employment Agreement is amended by changing
the date April 6, 1999 appearing therein to April 6, 2000.
2.Paragraph 7(b) of the Employment Agreement is amended by
changing the word "three" in the first sentence thereof to
"five."
3.Except as amended as provided in paragraphs 1 and 2 above, the
Employment Agreement is hereby ratified and confirmed in all
respects.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 1 as in the date first above written.
Lifetime Hoan Corporation
By
:
/s/ Milton L. Cohen
Milton L. Cohen
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