NOTE 13 – OTHER COMMITMENTS AND CONTINGENCIES

Indemnity Agreements - Under agreements with customers, licensors and parties from whom we have acquired assets or entered into business combinations, we indemnify these parties against liability associated with our products. Additionally, we are party to a number of agreements under leases where we indemnify the lessor for liabilities attributable to our actions or conduct. The indemnity agreements to which we are a party do not, in general, increase our liability for claims related to our products or actions and have not materially affected our consolidated financial statements.

Employment Contracts - During fiscal year 2012, we entered into an amended and restated employment agreement with Gerald J. Rubin, our former Chief Executive Officer and President (the “former CEO”). On January 14, 2014, the Company and the former CEO entered into a separation agreement (the “Separation Agreement”). Pursuant to the Separation Agreement, the former CEO ceased serving as the Chief Executive Officer and President and resigned as a director of the Company, effective January 14, 2014, but remained an employee of the Company through February 28, 2014. The former CEO’s employment with the Company was considered a termination without cause under the terms of his employment agreement. As a result, in connection with the termination of his employment, Mr. Rubin will only receive the amounts or payments due to him under the employment agreement for a termination of employment without cause as of February 28, 2014. As a result of the Separation Agreement, the Company recorded a charge of $16.34 million (after tax) in the fourth quarter of fiscal year 2014, which accrued for liabilities and associated legal and administrative costs as a result of the separation.

We have entered into employment contracts with certain officers, including an employment agreement with Mr. Mininberg effective March 1, 2014, in connection with his appointment as the Company’s new CEO. These agreements provide for minimum salary levels, potential incentive bonuses, and in some cases, performance based awards. These agreements also specify varying levels of salary continuation and / or severance compensation dependant on certain circumstances such as involuntary termination for other than cause or involuntary termination due to a change of control. In some cases, the expiration dates for these agreements are indefinite, unless terminated by either party. At February 28, 2014, the estimated aggregate commitment for potential future compensation and / or severance pursuant to all continuing employment contracts, was approximately $7.68 million, payable over varying terms for the next two years.

International Trade - We purchase most of our appliances and a significant portion of other products that we sell from unaffiliated manufacturers located in the Far East, mainly in China. With most of our products being manufactured in the Far East, we are subject to risks associated with trade barriers, currency exchange fluctuations and social, economic and political unrest. In recent years, increasing labor costs, regional labor dislocations driven by new government policies, local inflation, changes in ocean cargo carrier capacity and costs, the impact of energy prices on transportation, and the appreciation of the Chinese Renminbi against the U.S. Dollar have resulted in fluctuations in our cost of goods sold. In the past, certain Chinese suppliers have closed operations due to economic conditions that pressured their profitability. Any future supplier closings could cause periodic disruptions in delivery of certain items that can affect our sales. Although we have multiple sourcing partners for many of our products, occasionally we are unable to source certain items on a timely basis due to changes occurring with our suppliers. We believe supplier contraction continues to be a trend in our industry. We also believe that we could source similar products outside China, if necessary, and we continuously explore expanding sourcing alternatives in other countries. However, the relocation of any production capacity could require substantial time and increased costs.

Customer Incentives - We regularly enter into arrangements with customers whereby we offer various incentives, including incentives in the form of volume rebates. Our estimate of the liability for such incentives is included in the accompanying consolidated balance sheets on the line entitled “Accrued expenses and other current liabilities,” and in Note (7) included in the lines entitled “Accrued sales returns, discounts and allowances” and “Accrued advertising” and are based on incentives applicable to sales occurring up to the respective balance sheet dates.

Other Matters - We are involved in various legal claims and proceedings in the normal course of operations. We believe

the outcome of these matters will not have a material adverse effect on our consolidated financial position, results of

operations, or liquidity.

Contractual Obligations and Commercial Commitments - Our contractual obligations and commercial commitments at the end of fiscal year 2014 were:

PAYMENTS DUE BY PERIOD - TWELVE MONTHS ENDED THE LAST DAY OF FEBRUARY:

(in thousands)

			2015		2016		2017		2018		2019		After
	Total		1 year		2 years		3 years		4 years		5 years		5 years

Term debt - fixed rate	$	80,000	$	20,000	$	20,000	$	20,000	$	20,000	$	-	$	-
Term debt - floating rate (1)	112,607		76,900		1,900		3,800		5,700		1,900		22,407
Long-term incentive plan payouts	11,145		5,300		3,801		2,044		-		-		-
Interest on fixed rate debt	7,384		3,016		2,236		1,456		676		-		-
Interest on floating rate debt (1)	4,066		1,927		390		347		281		259		862
Open purchase orders	188,770		188,770		-		-		-		-		-
Long-term purchase commitments	2,957		836		606		606		606		303		-
Minimum royalty payments	78,632		12,689		12,731		12,545		9,674		9,488		21,505
Advertising and promotional	49,969		6,685		5,160		5,263		5,368		5,476		22,017
Operating leases	10,656		3,849		2,472		1,780		1,287		1,268		-
Capital spending commitments	423		423		-		-		-		-		-
Total contractual obligations (2)	$	546,609	$	320,395	$	49,296	$	47,841	$	43,592	$	18,694	$	66,791

(1) The Company uses an interest rate swap in conjunction with its unsecured floating rate, $75 million, Senior Notes due June 2014. The swap hedges the variable LIBOR rates used to reset the floating rates on these Senior Notes. The swap effectively fixes the interest rates on the Senior Notes due June 2014 at 6.01 percent.

(2) In addition to the contractual obligations and commercial commitments in the table above, as of February 28, 2014, we have recorded a provision for uncertain tax positions of $13.92 million. We are unable to reliably estimate the timing of most of the future payments, if any, related to our uncertain tax positions; therefore, we have excluded these tax liabilities from the table above.