L. LURIA & SON, INC.
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
----------------------
Report Pursuant to Rule 14f-1 of
the Securities Exchange Act of 1934
---------------------
To the Shareholders of
L. Luria & Son, Inc.:
This information statement is being mailed commencing on or about
August 20, 1996, to shareholders of record as of August 12, 1996, of L. Luria &
Son, Inc., a Florida corporation (the "Company"), in connection with a pending
change in the majority of the Company's Board of Directors. On August 9, 1996,
Edwin D. Marks, Jorgen Petersen and Jeremy R. Serwer resigned from the Board of
Directors of the Company. Pursuant to the Company's charter documents, the
remaining members of the Board of Directors then voted to fill the vacancies on
the Board, including one vacancy not previously filled as a result of the
resignation of Sydney A. Luria from the Board in July 1996, and appointed
Rachmil Lekach, Ilia Lekach, Erwin Zafir and Fred Fuhrmann to the Board. Mr.
Rachmil Lekach was appointed Chairman of the Board and Mr. Zafir was appointed
Vice Chairman of the Board. Mr. Leonard Luria was appointed Chairman of the
Board (Emeritus). Pursuant to an understanding between the Company and Ocean
Reef Management, Inc. ("the Ocean Reef"), the size of the Board will be
increased to nine and Ocean Reef will have the right to designate the ninth
member. See "Security Ownership of Certain Beneficial Owners and Management" and
"Recent Change in Control."
By Order of the Board of Directors
RACHMIL LEKACH
Chairman of the Board
Miami Lakes, Florida
August 20, 1996
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on August 12, 1996, there were 5,442,091
shares of Common Stock, $.01 par value per share ("Common Stock"), outstanding.
In addition, on such date there were 423 shares of Class B Stock, $.01 par value
per share ("Class B Stock"), outstanding. Holders of Common Stock are entitled
to one vote for each share held and holders of Class B Stock are entitled to ten
votes for each share held.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 12, 1996, the number of
shares of Common Stock of the Company which were owned beneficially by (i) each
person who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each Director and nominee for Director, (iii) each of the
named executive officers listed in the Summary Compensation Table (see
"Executive Compensation"), and (iv) the officers and Directors (including the
nominee for Director) of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER(1) BENEFICIALLY OWNED
- - ----------------------------------------------------- -----------------------------------------------
SHARES PERCENT
--------------------- -------------------
<S> <C> <C>
Ocean Reef Management, Inc.(2) 1,320,105 24.3%
19495 Biscayne Boulevard
One Turnberry Place
Suite 800
Aventura, Florida 33180
Rachmil Lekach(3) 1,320,105 24.3%
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Ilia Lekach(4) 1,335,105 24.5%
5770 Miami Lakes Drive
Miami Lakes, Drive
Joel Eidelstein(5) 1,320,105 24.3%
19495 Biscayne Boulevard
One Turnberry Place
Suite 800
Aventura, Florida 33180
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER(1) BENEFICIALLY OWNED
- - ----------------------------------------------------- -----------------------------------------------
SHARES PERCENT
--------------------- -------------------
<S> <C> <C>
Leonard Luria(6) 1,050 *
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Peter P. Luria (7) 50,020 *
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Nancy Luria-Cohen(8) 2,112 *
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Harry J. Diven, Jr.(9) 5,333 *
315 West 70th Street
New York, New York 10023
Gerald Nathanson(10) 400,000 6.8%
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Erwin Zafir -0- 0%
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Fred Fuhrmann -0- 0%
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Craig Kurlander -0- 0%
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Richard Loebl -0- 0%
5770 Miami Lakes Drive
Miami Lakes, Florida 33014
Franklin Resources, Inc.(11) 438,630 10.8%
777 Mariners Island Boulevard
San Mateo, California 94404
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER(1) BENEFICIALLY OWNED
- - ----------------------------------------------------- -----------------------------------------------
SHARES PERCENT
--------------------- -------------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. (11)(12) 339,837 8.3%
1299 Ocean Avenue
Santa Monica, California 90401
Tweedy, Browne Company L.P.(13) 331,315 8.1%
52 Vanderbilt Avenue
New York, New York 10017
FMR Corp.(11) 230,000 5.6%
82 Devonshire Street
Boston, Massachusetts 02109
All Directors and officers as a group 1,793,620 30.4%
(15 persons)(14)
- - --------------------
<FN>
* Less than 1%.
(1) All shares are owned directly unless otherwise indicated. Does not include Common Stock vested under the
Company's Tax Deferred Savings Plan.
(2) Includes 660,053 shares of Common Stock held by Ocean Reef, L.P. and 660,052 shares held by Ocean Reef
Cayman I, Ltd. Ocean Reef Management, Inc. is the sole general partner of Ocean Reef, L.P. and has the
right to vote the shares owned by Ocean Reef Cayman I, Ltd. pursuant to a management agreement.
(3) Includes 660,053 shares of Common Stock held by Ocean Reef, L.P., a Delaware limited partnership, and
660,052 shares held by Ocean Reef Cayman I, Ltd., a Cayman Island corporation. Ocean Reef Management, Inc.
is the sole general partner of Ocean Reef, L.P. and has the right to vote the shares owned by Ocean Reef
Cayman I, Ltd. pursuant to a management agreement. Rachmil Lekach is the Chief Executive Officer of Ocean
Reef Management, Inc. and a director of Ocean Reef Cayman I, Ltd.
(4) Includes 660,053 shares of Common Stock held by Ocean Reef, L.P. and 660,052 shares held by Ocean Reef
Cayman I, Ltd. Ocean Reef Management, Inc. is the sole general partner of Ocean Reef, L.P. and has the
right to vote the shares owned by Ocean Reef Cayman I, Ltd. pursuant to a management agreement. Ilia
Lekach is a principal shareholder of Ocean Reef Management, Inc.
-4-
<PAGE>
(5) Includes 660,053 shares of Common Stock held by Ocean Reef, L.P. and 660,052 shares held by Ocean Reef
Cayman I, Ltd. Ocean Reef Management, Inc. is the sole general partner of Ocean Reef, L.P. and has the
right to vote the shares owned by Ocean Reef Cayman I, Ltd. pursuant to a management agreement. Mr.
Eidelstein is the President of Ocean Reef Management, Inc. and a director of Ocean Reef Cayman I, Ltd.
(6) Does not include shares shown in the above tables as being owned by Leonard Luria's wife, Gloria Luria, or
his three adult children, Peter and Henry Luria and Nancy Luria-Cohen, as to all of which shares Mr. Luria,
an officer and Director of the Company, disclaims beneficial ownership.
(7) Includes 50,000 shares of Common Stock subject to presently exercisable options.
(8) Does not include 1,800 shares of Common Stock owned by Dan Cohen, the
husband of Nancy Luria-Cohen, as to which shares Ms. Luria-Cohen
disclaims beneficial ownership.
(9) Includes 5,333 shares of Common Stock subject to presently exercisable stock options.
(10) Includes 400,000 shares of Common Stock subject to presently exercisable stock options.
(11) Based upon most recent Schedule 13G filing.
(12) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 339,837 shares of
Common Stock of the Company as of December 31, 1995, all of which shares
are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disdains beneficial ownership of all such
shares.
(13) Based upon most recent Schedule 13D filing.
(14) Includes 455,333 shares of Common Stock subject to presently exercisable stock options.
</FN>
</TABLE>
RECENT CHANGE IN CONTROL
On August 9, 1996, two companies affiliated with Ocean Reef purchased
an aggregate of 1,320,105 shares of the Company's Class B Stock from certain
members and affiliated entities of the Luria family, including Leonard Luria,
the Chairman of the Board (Emeritus) of the Company, Peter P. Luria, the
President, Treasurer and Director of the Company, and Nancy Luria-Cohen, the
Vice President - General Counsel and Secretary of the Company. Upon such
purchase, the Class B Stock was converted into Common Stock in accordance with
the Company's articles of
-5-
<PAGE>
incorporation. Rachmil Lekach and Ilia Lekach, who are current members of the
Board of Directors, and Joel Eidelstein, who is a director nominee, are
affiliates of Ocean Reef. See "Security Ownership of Certain Beneficial Owners
and Managers."
The stock purchase was completed pursuant to the terms of a stock
purchase agreement, dated as of July 15, 1996 (the "Purchase Agreement"). The
Purchase Agreement provided for the purchase of the 1,320,105 shares of Class B
Stock at a price of $6.00 per share, for an aggregate purchase price of
$7,920,630, of which $5.0 million was paid to the sellers in cash and the
remaining $2,920,630 was paid by delivery of promissory notes. The promissory
notes mature in two years and bear interest at the rate of 8% per anum, with
interest payable quarterly commencing on January 1, 1997. The promissory notes
are secured by the shares purchased by Ocean Reef. The source of the $5.0
million paid by Ocean Reef was the working capital of the two purchasing
entities, Ocean Reef, L.P. and Ocean Reef Cayman I, Ltd.
As a result of this transaction, Ocean Reef, through its affiliates, is
now the Company's largest shareholder, holding an aggregate of 24.3% of the
Company's outstanding Common Stock, based on the number of shares of Common
Stock outstanding on August 12, 1996. On August 9, 1996, Edwin D. Marks, Jorgen
Petersen and Jeremy R. Serwer resigned from the Board of Directors of the
Company. Pursuant to the Company's charter documents, the remaining members of
the Board of Directors then voted to fill the vacancies on the Board, including
one vacancy not previously filled as a result of the resignation of Sydney A.
Luria from the Board in July 1996, and appointed Rachmil Lekach, Ilia Lekach,
Erwin Zafir and Fred Fuhrmann to the Board. Mr. Rachmil Lekach was appointed
Chairman of the Board and Mr. Zafir was appointed Vice Chairman of the Board.
Mr. Leonard Luria was appointed Chairman of the Board (Emeritus). The newly
appointed members of the Board were designated by Ocean Reef. Pursuant to an
understanding between the Company and Ocean Reef, the size of the Board will be
increased to nine and Ocean Reef will have the right to designate the ninth
member. After the appointment of the director nominee and, in connection with
the consummation of the Purchase Agreement, Ocean Reef will control a majority
of the Board.
Pursuant to the Company's articles of incorporation, once the number of
shares of Class B Stock outstanding represents less than 12.5% of the aggregate
number of outstanding shares of Class B Stock and Common Stock, the holders of
Class B Stock no longer have the right to vote as a separate class for election
of directors. As a result of the sale of the shares of the Class B Stock to
Ocean Reef pursuant to the Purchase Agreement, only 423 shares of Class B Stock
remain outstanding. Accordingly, the full Board of Directors will be elected by
the holders of the Common Stock and the Class B Stock voting together as one
class. Previously, the holders of the Class B Stock had the right to elect 75%
of the directors.
-6-
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
NAME AGE POSITION
- - ---- --- --------
Rachmil Lekach 48 Chairman of the Board
Erwin Zafir 48 Vice Chairman of the Board
Leonard Luria 72 Chairman of the Board (Emeritus)
Gerald Nathanson 59 Chief Executive Officer and Director
Peter P. Luria 44 President, Treasurer and Director
Craig Kurlander 50 Executive Vice President--Store
Operations
Thomas A. Floerchinger 51 Senior Vice President--Finance
Stephen L. Higgins 47 Senior Vice President--General
Merchandise
Richard Loebl 45 Senior Vice President--Jewelry
Merchandise
Ron Angelo 49 Vice President--MIS
Nancy Luria-Cohen 39 Vice President--General Counsel and
Secretary
Harry J. Diven, Jr. 71 Director
Ilia Lekach 46 Director
Fred Fuhrmann 46 Director
Joel Eidelstein 28 Director Nominee
RACHMIL LEKACH was appointed Chairman of the Board on August 9, 1996.
Mr. Lekach also serves as Chairman of the Board and Chief Executive Officer of
Ocean Reef, a privately held company engaged in various investment activities
and the Company's largest shareholder. Ocean Reef is under the common control of
Messrs. R. Lekach, I. Lekach and Eidelstein. From June 1994 to May 1996, Mr.
Lekach was President of Parlux Fragrances, Inc., a publicly traded manufacturer
and global marketer of prestige fragrances and related beauty products
("Parlux"). He has served as a director of Parlux from December 1993 to present.
From September 1990 to June 1994, Mr. Lekach held various executive positions
with Perfumania, Inc., a publicly traded specialty retailer and wholesale
distributor of a wide range of brand name and designer fragrances and related
products ("Perfumania"), most recently as President of Retail Operations.
Rachmil Lekach is the brother of Ilia Lekach.
ERWIN ZAFIR was appointed Vice Chairman of the Board on August 9, 1996.
Mr. Zafir has been President and Chief Executive Officer of Blue Spot, Inc., an
importer and distributor of electronics and watches, from 1973 to present.
LEONARD LURIA has been employed by the Company for 44 years and serves
as the Company's Chairman of the Board (Emeritus). Until January 1996, Mr. Luria
served as Chief
-7-
<PAGE>
Executive Officer of the Company and until August 1996, Mr. Luria also served as
the Company's Chairman of the Board.
GERALD NATHANSON joined the Company as Chief Executive Officer in
January 1996. Prior to joining the Company he was a private investor from 1989.
Formerly Mr. Nathanson was the Chief Executive Officer of Pay N Save from
1987-1989 and prior to that time he was the Chief Executive Officer of Jefferson
Ward from 1982. Mr. Nathanson also is a director of PSS, Inc., a publicly-traded
company.
PETER P. LURIA, a son of Leonard Luria, has been employed by the
Company since 1974 in various capacities at the store, merchandising and
management levels. He was named President of the Company in 1989.
CRAIG KURLANDER has been employed by the Company since February 1995.
Mr. Kurlander became Executive Vice President--Store Operations in 1995.
Previously, Mr. Kurlander was Senior Vice President--Stores for Kay-Bee Toys, a
division of Melville Corporation for four years and before that was Senior Vice
President--Stores for Zayre Corp.
THOMAS A. FLOERCHINGER joined the Company in October 1995. Prior to
joining the Company, Mr. Floerchinger was President of Digital Impact. From May
1994 until September 1994, Mr. Floerchinger served as Chief Operating Officer of
Absolute Entertainment, Inc. and from 1992 until May 1994 served as a consultant
and Chief Financial Officer at Sound Advice, Inc. From November 1991 until March
1992, Mr. Floerchinger was Chief Financial Officer of Intellicall, Inc.
STEPHEN L. HIGGINS joined the Company in February 1996. Prior to
joining the Company, Mr. Higgins was President and Chief Executive Officer of
Everything Organized, Inc., a regional specialty retailer in Atlanta, Georgia
since September 1994, and was President and Chief Operating Officer of Tuesday
Morning, Inc., a national specialty retailer in Dallas, Texas for seven years
prior to that time.
RICHARD LOEBL has been employed by the Company since February 1995 as
Senior Vice President--Jewelry Merchandise. Previously, Mr. Loebl was Senior
Vice President with Finlay's Fine Jewelry for eleven years.
RON ANGELO joined the Company as Vice President--MIS in August, 1995.
Prior to that time Mr. Angelo was the Director of MIS for Clothestime, Inc. for
more than five years.
NANCY LURIA-COHEN, daughter of Leonard Luria, has been employed by the
Company since 1988 as General Counsel and became Vice President in 1991.
HARRY J. DIVEN, JR. has been a Certified Public Accountant, private
investor and financial consultant since 1979.
-8-
<PAGE>
ILIA LEKACH was appointed a Director on August 9, 1996. Mr. Lekach also
serves as Chairman of the Board and Chief Executive Officer of Parlux. Mr.
Lekach has served as a director of Parlux from February 1989 to present,
Chairman of the Board from November 1990 to present and Chief Executive Officer
from December 1993 to present. He served as Chairman of the Board and Chief
Executive Officer of Perfumania from its incorporation in 1988 to April 1994.
Ilia Lekach is the brother of Rachmil Lekach.
FRED FUHRMANN was appointed a Director on August 9, 1996. Mr. Fuhrmann
as been the Managing Director of La Zahav, N.V., a jewelry wholesaler and
distributor operating in the Caribbean and South America, from 1983 to present.
JOEL EIDELSTEIN is President and a director of Ocean Reef. From
November 1990 to present, Mr. Eidelstein has served as a director of Jack-Carl
312 Futures, Inc., a publicly traded discount commodities brokerage firm
("Jack-Carl"). From January 1994 to June 1996, Mr. Eidelstein was Vice President
of Index Futures Group, Inc., a subsidiary of Jack-Carl, and was responsible for
trading operations in foreign currencies and Eurodollars. From June 1988 to
December 1993, engaged in commodities transactions for his own account. Mr.
Eidelstein has been a member of the International Monetary Market of the Chicago
Mercantile Exchange since 1988.
CLASSIFIED BOARD
The Board of Directors is divided into three classes. Generally each
class is elected every third year. Directors who are voted into a class during
the term of the class may serve less than a three year term. The following table
sets forth certain information with respect to each Director (and Director
nominee) of the Company:
NAME CURRENT TERM EXPIRES(1)
---- -----------------------
Ilia Lekach 1999 Annual Meeting
Rachmil Lekach 1999 Annual Meeting
Leonard Luria 1999 Annual Meeting
Harry J. Diven, Jr. 1998 Annual Meeting
Peter P. Luria 1998 Annual Meeting
Gerald Nathanson 1998 Annual Meeting
Erwin Zafir 1997 Annual Meeting
Fred Fuhrmann 1997 Annual Meeting
Joel Eidelstein 1997 Annual Meeting
- - -------------
(1) The Company intends to hold a special meeting of shareholders
in October 1996 to ratify the election of the directors
appointed to the Board since the last Annual Meeting of
Shareholders.
-9-
<PAGE>
COMMITTEES
The principal standing committees of the Board of Directors include the
following:
AUDIT COMMITTEE. The Audit Committee was established by the Board of
Directors in March 1981 and during the fiscal year ended February 3, 1996 was
comprised of Harry J. Diven, Jr. (Chairman), Sydney A. Luria and Cynthia Cohen
Turk. Mr. Luria and Ms. Cohen Turk have since resigned from the Board. The
current members of the Audit Committee consist of Messrs. Diven, Zafir and
Fuhrmann. The Audit Committee meets with management regarding the internal
controls of the Company and the objectivity of its financial reporting. The
Committee also meets with the Company's independent auditors and with
appropriate Company financial personnel concerning these matters. Other
functions of the Audit Committee include recommending to the Directors the
appointment of the independent auditors and reviewing the Company's audited
financial statements and the auditors' report thereon with the auditors and the
Company's management. The Audit Committee met three times during the fiscal year
ended February 3, 1996.
COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock
Option Committee was established by the Board of Directors in June 1993 and
combines the functions of the Compensation Committee and the Stock Option
Committee, each of which was originally established in March 1981. During the
fiscal year ended February 3, 1996, the Compensation and Stock Option Committee
was comprised of Jeremy Serwer (Chairman), Cynthia Cohen Turk, Edwin D. Marks
and Jorgen Petersen. Ms. Cohen Turk and Messrs. Serwer, Marks and Petersen have
since resigned from the Board. The Board has not yet appointed new members for
the Compensation and Stock Option Committee. The Compensation and Stock Option
Committee's responsibilities consist of recommending, reviewing and approving
the salary and fringe benefits policies of the Company, reviewing compensation
policies for Directors and reviewing and approving the compensation of officers
of the Company. The Compensation and Stock Option Committee also recommends and
approves stock awards and option grants under the Company's employee benefit
plans, including the 1992 Stock Option Plan and the 1996 Stock Option Plan, and
recommends amendments to such plans, subject to approval by the Board of
Directors. The Compensation and Stock Option Committee met three times during
the fiscal year ended February 3, 1996. The Compensation and Stock Option
Committee also took action by unanimous written consent during the year.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
Each Director who is neither an officer nor employee of the Company
receives a fee of $5,000 per year. In addition, such Directors are reimbursed
for attendance at meetings in an amount of $1,500 per meeting ($500 if
attendance by telephone) and, if not held in connection with a meeting of the
Board, $500 for attendance at committee meetings. The directors also are
reimbursed for out-of-pocket expenses incurred by them in attending Board or
committee meetings. Harry J. Diven, Jr. also received during the fiscal year
ended February 3,1996 an additional $1,000 per quarter as reimbursement for
quarterly visits to the Company. Pursuant to the 1993 Directors' Stock Option
Plan, non-employee directors are granted options to purchase
-10-
<PAGE>
1,000 shares of Common Stock, after each annual meeting of the Company, provided
that the Company recognized a net profit during the preceding fiscal year.
The Board of Directors of the Company held a total of six meetings
during the fiscal year ended February 3, 1996. The Board of Directors also took
action by unanimous written consent during the year. Each Director attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors and of the committees on which they serve except Jeremy Serwer and
Jorgen Petersen, who resigned in August 1996 and who were unable to attend two
of the Board meetings and one meeting of the committee on which each of them
served.
-11-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or
paid to each of the Company's Chief Executive Officer and the four most highly
compensated executive officers during fiscal 1996 other than the Chief Executive
Officer who were serving as executive officers at the end of fiscal 1996.
Information with respect to salary, bonus, other annual compensation, options
and LTIP Payouts is included for the 1994, 1995 and 1996 fiscal years for the
officers who were here during those years. The Company has not granted any stock
appreciation rights, nor paid compensation that would qualify as "All Other
Compensation."
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ---------------------------------
AWARDS PAYOUTS
OTHER ANNUAL RESTRICTED ------- ------------
SALARY BONUS COMPENSATION STOCK OPTIONS LTIP PAYOUTS
NAME AND PRINCIPAL POSITION FISCAL YEAR ($) ($)(1) ($)(2) AWARD(S)($) (#) ($)
- - --------------------------- ----------- --------- -------- ------------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
LEONARD LURIA 1996 $344,223 $-- $1,746 $-- -- $--
Chairman of the 1995 339,423 -- 2,310 -- -- --
Board(3) 1994 400,000 -- 2,249 -- -- --
GERALD NATHANSON(4) 1996 $23,077 $200,000 -- $-- 400,000 $--
Chief Executive 1995 -- -- -- -- -- --
Officer 1994 -- -- -- -- -- --
PETER P. LURIA 1996 $301,930 $-- $4,254 $-- 50,000 $--
President 1995 300,000 -- 4,443 -- 50,000 --
1994 282,692 75,000 2,249 -- -- --
CRAIG KURLANDER(5) 1996 $196,154 $-- $5,000 $22,500(6) 30,000 $--
Executive Vice 1995 -- -- -- -- -- --
President 1994 -- -- -- -- -- --
RICHARD LOEBL(7) 1996 $170,769 $-- -- $-- 15,000 $--
Senior Vice Present 1995 -- -- -- -- -- --
1994 -- -- -- -- -- --
<FN>
- - ----------
(1) Reflects bonus earned in the fiscal year.
(2) Represents the Company's matching contributions to the Tax Deferred
Savings Plan in equivalent shares of Common Stock. Does not include the
dollar value of personal benefits, such as the cost of automobiles and
health insurance, the aggregate value of which for each named executive
officer was less than 10% of such executive officer's salary and bonus.
(3) Mr. Luria currently serves as Chairman of the Board (Emeritus).
(4) Mr. Nathanson's employment with the Company commenced in January 1996.
(5) Mr. Kurlander's employment with the Company commenced in February 1995.
(6) Reflects the award of 5,000 shares of Common Stock under the Company's
Stock Bonus Plan. The value of the 5,000 shares is based on the closing
price of $4.50 of the Company's Common Stock on February 3, 1996.
(7) Mr. Loebl's employment with the Company commenced in February 1995.
</FN>
</TABLE>
-12-
<PAGE>
OPTION GRANTS TABLE
The following table sets forth certain information concerning grants of
stock options made during the 1996 fiscal year to the named executive officers.
All stock options granted to such persons during the 1996 fiscal year were
granted pursuant to the Company's 1992 Stock Option Plan except for the grant to
Gerald Nathanson which was granted pursuant to the Company's 1996 Stock Option
Plan.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1996 FISCAL YEAR(1)
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATE
OF STOCK PRICE
NUMBER OF SECURITIES APPRECIATION
UNDERLYING % OF TOTAL OPTIONS FOR OPTION TERM(3)
OPTIONS GRANTED GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION --------------------
(#) IN FISCAL YEAR 1996(2) PER SHARE DATE 5%($) 10%($)
------------------- ---------------------- ------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Leonard Luria 0 0.0% $0.00 N/A $0 $0
Gerald Nathanson 400,000 69.9 5.125 1/2/06 872,000 2,590,000
Peter P. Luria(4) 50,000 8.7 6.125 4/21/05 27,000 186,000
Craig Kurlander 15,000 2.6 8.125 2/6/00 0 0
15,000 2.6 6.50 6/5/00 0 5,000
Richard Loebl 15,000 2.6 7.625 2/27/00 0 0
<FN>
- - ----------
(1) No stock appreciation rights were granted.
(2) Does not include options granted during the fiscal year which expired
prior to the end of the fiscal year.
(3) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Company's Common Stock over the term of the
options. These numbers do not take into account provisions providing for
termination of the option following termination of employment,
nontransferability or vesting or the potential exercise of options and
sale of the underlying shares prior to expiration of the term. The
calculations are not intended to forecast possible future appreciation,
if any, of the market price of the Common Stock.
(4) Mr. Luria's options were canceled in August 1996. See "-Employment
Contracts" regarding options granted to Mr. Luria in August 1996.
</FN>
</TABLE>
-13-
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning the
exercise of stock options and unexercised stock options held by the named
executive officers as of the end of the 1996 fiscal year. No stock appreciation
rights have been granted or are outstanding.
<TABLE>
<CAPTION>
OPTION EXERCISES AND OPTION VALUES DURING 1996 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT 1996 AT 1996
FISCAL YEAR END FISCAL YEAR END
SHARES ACQUIRED (#) ($)(1)
ON EXERCISE VALUE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- --------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Luria 0 $0.00 0 0 $0 $0
Gerald Nathanson 0 0.00 400,000 0 0 0
Peter P. Luria(2) 0 0.00 225,000 0 0 0
Craig Kurlander 0 0.00 0 30,000 0 0
Richard Loebl 0 0.00 0 15,000 0 0
<FN>
- - ----------
(1) The closing price for the Company's Common Stock as reported by the New
York Stock Exchange on February 3, 1996 was $4.50. All options shown on
this table have an exercise price in excess of $4.50.
(2) Mr. Luria's options were canceled in August 1996. See "-Employment Contracts"
regarding options granted to Mr. Luria in August 1996.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS
Effective January 2, 1996, the Company entered into an employment
agreement with Gerald Nathanson, with an initial term expiring April 30, 1998.
The employment agreement provides for Mr. Nathanson's employment as Chief
Executive Officer at a base salary of $300,000 per year, plus discretionary
bonuses if approved by the Board of Directors. Mr. Nathanson was paid a $200,000
signing bonus and was granted options to purchase 400,000 shares of Common Stock
on the effective date of the agreement (the "Options"). The employment agreement
also provides that Mr. Nathanson is eligible to receive a bonus (the "Trigger
Bonus") if the shareholders of the Company approve (i) a merger or consolidation
in which the Company does not survive, or (ii) the sale of all or substantially
all of the assets of the Company (in each case, a "Trigger Event"). The Trigger
Bonus will be $1 million if the Trigger Event occurs in calendar year 1996, and
$2 million if the Trigger Event occurs in calendar year 1997. The Trigger Bonus
is subject to reduction for gains realized or that could be realized upon the
exercise of the Options.
Effective August 9, 1996, the Company entered into an employment
agreement with Peter P. Luria, with an initial term expiring August 9, 1998. The
employment agreement provides for Mr. Luria's employment as President at a base
salary of $250,000 per year, plus discretionary bonuses if approved by the Board
of Directors. Mr. Luria was granted options to purchase 100,000 shares of Common
Stock on the effective date of the Agreement, 50,000 of which
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<PAGE>
became immediately exercisable on the effective date and 50,000 of which will
become exercisable on the one-year anniversary of the date of grant. The
employment agreement also provides that in the event of a change in control (as
defined therein), Mr. Luria may terminate his employment and will thereupon be
entitled to a lump sum payment equal to the sum of (x) his base salary through
the end of the initial term, and (y) a severance payment of $250,000. Mr. Luria
may also terminate his employment for Good Reason (as defined therein) and may
then be entitled to receive his base salary and any accrued but unpaid bonus
through the end of the initial term.
CERTAIN TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended February 3, 1996, the Company leased its
store facility at 980 S.W. 1st Street, Miami, Florida, from a partnership in
which Leonard Luria, an officer and Director of the Company, has a 60% interest.
During the fiscal year ended February 3, 1996, the Company paid basic rent under
the lease of $87,405. In addition, the Company is obligated to pay real estate
taxes, assessments and other governmental charges and insurance in connection
with the leased premises.
During the fiscal year ended February 3, 1996, the Company leased its
store facility located at 6411 Taft Street, Hollywood, Florida, from a
partnership in which Gloria Luria, an officer of the Company, has a 70%
interest. During the fiscal year ended February 3, 1996, the Company paid basic
rent under the leases of $117,102. In addition, the Company is obligated to pay
real estate taxes, assessments and other governmental charges and insurance in
connection with the leased premises.
The Company believes that the rent charged and to be charged under each
lease described above is at a rate that is comparable to that paid under leases
of similar properties in the same general location as the properties described
and that the terms of each such lease are at least as favorable to the Company
as could be obtained from an unaffiliated party.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Officers, directors and greater than 10 percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended February 3, 1996 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except that one report was filed
late by Thomas Floerchinger.
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