SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended 06/30/96
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from N/A to N/A
Commission file number 0-16345
SOUTHERN ELECTRONICS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2715444
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
4916 North Royal Atlanta Drive, Tucker, Georgia 30085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 770/491-8962
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates
of the Registrant was $44,120,511 as of September 6, 1996 based upon
the closing price of such stock as reported by Nasdaq on that day.
There were 7,129,747 shares of common stock, $.01 par value,
outstanding at September 6, 1996.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Annual Report to Stockholders for the fiscal year
ended June 30, 1996 are incorporated by reference into Part II.
Part III incorporates information by reference from the Registrant's
definitive proxy statement for the 1996 annual meeting of
stockholders presently scheduled to be held on October 31, 1996,
which proxy statement will be filed no later than 120 days after the
close of the Registrant's fiscal year ended June 30, 1996.
Exhibit Index appears on pages ___ through ___. This document
contains ___ sequentially numbered pages, including exhibits.<PAGE>
<PAGE>
PART I
Item 1. BUSINESS
(a) General Development of Business
Southern Electronics Corporation, a Delaware corporation (the
"Registrant"), through its wholly-owned operating subsidiary,
Southern Electronics Distributors, Inc., a Delaware corporation
("SED"), is a distributor of microcomputers, computer peripheral
products and cellular telephone products. These products are sold
through a centralized telemarketing sales force to an active,
nonexclusive, nationwide customer base of over 9,000 value-added
resellers ("VARs") and dealers of microcomputer products located
primarily in the Southeastern United States and resellers of cellular
telephones.
The Registrant distributes from its distribution facilities in
Tucker, Georgia and Miami, Florida computer related products of
nationally recognized manufacturers such as Acer American Corporation,
AOC International (USA) Ltd., Epson America, Inc., Hewlett-Packard
Company, Maxtor Corporation, Mitsumi Electronics, Inc., Panasonic
Communications & Systems Company, Seagate Technology, Inc., and
U.S. Robotics, Inc. The Company also distributes cellular telephone
products from these facilities and is a direct distributor of NEC
America, Inc. and an indirect distributor of other nationally
recognized cellular telephone product manufacturers such as Motorola
Cellular Subscriber Group and Nokia Mobile Phones.
The Registrant and SED were organized in June 1986 and acquired
substantially all of the assets of Southern Electronics Distributors,
Inc., a Georgia corporation (the "Predecessor"), on July 2, 1986.
The Registrant, through SED, is conducting the business formerly
operated by the Predecessor. The Predecessor originally was engaged
in the business of wholesale distribution of consumer electronics
products primarily to independent retailers in small-to-medium-sized
markets in the Southeastern United States. In response to a
perceived consolidation in the retail consumer electronics market
resulting from increased competition, the Registrant began shifting
its product mix by the end of fiscal 1987 toward microcomputers and
computer peripheral products. The Registrant added sales of cellular
telephone products during fiscal 1988. The Registrant substantially
completed its strategic refocusing by the end of fiscal 1988.
On December 14, 1995, the Registrant acquired substantially all
of the assets and assumed certain liabilities of U.S. Computer of
North America, Inc. ("USC"), a distributor of, among other things,
Hewlett-Packard computer products in Latin America for consideration
of approximately $2,640,000 consisting of 275,000 shares of the
Registrant's common stock valued at $1,375,000 and cash of
$1,265,000. The purpose of making the acquisitio of USC was to allow
the Registrant to enhance its ability to service its growing base of
customers in Latin America by offering them an expanded range of
products.
On January 10, 1996, the Registrant amended the lease of its
sales and distribution facility, located in the Beacon Centre
Technology Park in Miami, Florida, in order to (i) relocate such
facility to another building within the Beacon Centre complex having
leased space of approximately 31,200 square feet and (ii) to provide
for a lease term of 61 months from March 1, 1996. On July 24,
1996, the Registrant further amended the lease pertaining to its
Miami sales and distribution facility in order to expand such
facility by approximately 30,000 square feet. See "Item 2,
Properties." The Registrant opened this facility in November 1993
and is utilizing it primarily to foster the Registrant's
relationships with exporters that ship to the Caribbean and to
Central and South America. The Registrant presently has no intention
to direct-export its products.
(b) Financial Information about Industry Segments
The Registrant operates in only one business segment.
<PAGE>
(c) Narrative Description of Business
1. Principal Products Distributed and Services Rendered
The Registrant offers a broad range of computer related hardware
products and cellular telephone products. Computer related hardware
products accounted for approximately 91.7% of net sales for fiscal
1996, and included sales of microcomputers, floppy and hard disk
drives, dot matrix and non-impact printers, monitors, add-on boards
and accessories. Approximately 8.3% of the Registrant's net sales
for fiscal 1996 consisted of cellular telephone products, such as
sales of mobile, transportable and portable cellular telephones and
related products. The Registrant continually evaluates its product
mix and inventory levels and maintains flexibility in its product
offerings by adding popular profitable items.
As a distributor, the Registrant plays a valued role in linking
manufacturers with customers that otherwise could not purchase
products directly from the manufacturers because of the inability or
unwillingness of manufacturers to deliver rapidly and handle
efficiently small orders and to verify smaller customers'
creditworthiness. The Registrant's position in the marketplace
enables it to take advantage of volume discounts, product promotions
and other buying opportunities from its vendors, which allow the
Registrant to market a wide variety of product offerings to its
customers at attractive prices.
2. Sales, Marketing and Credit Management
The Registrant is sales driven. Knowledgeable, motivated
salespeople are a key to the Registrant's success. The Registrant's
sales are generated by a centralized telemarketing sales force, which
consisted of approximately 133 persons on June 30, 1996. Members of
the sales staff are trained through intensive in-house sales training
programs, along with manufacturer-sponsored product seminars. This
training allows sales personnel to provide customers with product
information and to use their marketing expertise to answer customers'
questions about important new product considerations, such as
compatibility and capability, while offering advice on which products
meet specific performance and price criteria. The Registrant's
salespeople are able to analyze quickly the Registrant's extensive
inventory through a sophisticated management information system and
recommend the most appropriate cost-effective systems and hardware
for each customer -- whether a full-line retailer or an
industry-specific VAR.
Because the Registrant's salespersons' compensation is based
primarily on commissions, the salespeople are challenged to increase
their product knowledge and to establish long-term relationships with
existing and new customers. Customers can telephone their
salespersons on a toll-free number provided by the Registrant.
Salespeople initiate calls to introduce the Registrant's existing
customers to the Registrant's new products and to solicit orders. In
addition, salespeople conduct "cold-call" prospecting using mailing
lists and telephone directories of various cities to develop new
customer relationships.
The telemarketing salespersons are supported by other marketing
programs. Representatives of the Registrant generally attend at
least one trade show annually where they publicize the Registrant's
capabilities. In addition, the Registrant's in-house marketing staff
prepares catalogs listing available microcomputer and related
products and catalogs listing available cellular telephone products
for distribution to the Registrant's customers. It also publishes
other direct mail pieces promoting specials and new products.
<PAGE>
The Registrant's sales efforts for computer related products are
directed principally to its nationwide customer base of VARs and
dealers located primarily in the Southeastern United States. The
Registrant maintains a separate telemarketing salesforce for the sale
of cellular telephone products to retailers and cellular telephone
carriers and their authorized agents located throughout the United
States.
The Registrant sells its merchandise on a trade credit, COD,
prepaid or floor-plan basis. Under floor-plan arrangements, a lender
finances a customer's purchase of inventory from the Registrant. The
Registrant typically grants trade credit terms to its customers who
qualify. The Registrant has a number of systems in place to monitor
and manage trade credit extended to its customers, including its
participation in a national credit association in which credit rating
information on mutual customers is exchanged.
Generally, product orders are processed and shipped from the
Registrant's metropolitan Atlanta distribution facility on the same
day an order is received or, in the case of orders received after
6:00 p.m., on the next business day. The Registrant generally uses
United Parcel Service and Federal Express to deliver its merchandise
to its customers. Alternative shippers are, however, readily
available. Generally, the Registrant's inventory level of products
has been adequate to permit the Registrant to be responsive to its
customers' purchase requirements. From time to time, the Registrant
experiences temporary shortages with respect to certain products as
certain of its vendors experience increased demand or manufacturing
with respect to their products, resulting in smaller allocations of
such products for the Company.
3. Customers and Customer Support
The Registrant serves an active, nonexclusive, nationwide
customer base of over 9,000 VARs and dealers of microcomputer
products and resellers of cellular telephones. The Registrant
believes the multi-billion dollar microcomputer and cellular
telephone wholesale distribution industries are comprised primarily
of customers served on a nonexclusive basis, which provides the
Registrant with significant growth opportunities. During fiscal
1996, no customer accounted for more than 10% of the net sales of the
Registrant. The Registrant believes that most of its customers rely
on distributors as their principal source of computer and cellular
telephone products.
The Registrant's salespeople are trained to help customers
configure microcomputer products and to recommend the most
appropriate, cost-effective systems and hardware for each customer.
In addition, the Registrant's technical support department provides
technical advice by toll-free telephone and configures many of the
microcomputer products sold by the Registrant. If authorized by the
Registrant, a customer may return to the Registrant a product found
defective during the manufacturer's warranty period. Upon receipt of
the defective product from the customer, the Registrant generally
ships a replacement product to the customer and returns the defective
product to the manufacturer for credit or repair.
4. Vendors
Because of the growing number of relatively small VARs that
purchase low volumes of product from manufacturers, it is becoming
increasingly cost efficient for most manufacturers to rely on
distributors, such as the Registrant, rather than to incur the cost
of maintaining their own sales staff, warehouses and credit functions
to market, distribute, verify creditworthiness and collect
receivables from these customers. The Registrant's market position
and financial condition have enabled it to purchase large quantities
of products from many manufacturers at competitive prices. The
Registrant believes that the inability of certain smaller
distributors to control costs and finance their operations is causing
a consolidation in the microcomputer and cellular distribution
channel, making the Registrant an increasingly important resource to
its vendors.
<PAGE>
The Registrant, like most wholesale microcomputer and cellular
telephone distributors, sells products from manufacturers generally
on a nonexclusive basis without geographical restrictions. Although
most manufacturers seek geographical balance in their distributor
network, distributors generally are permitted to sell their products
throughout the United States and Canada. Management believes all of
the Registrant's vendor agreements are in forms customarily used by
its vendors. Except to take advantage of certain volume pricing
opportunities, the Registrant's vendor agreements do not contain any
minimum purchase requirements. The Registrant purchases goods from
more than 120 vendors; however, it has negotiated favorable terms
from certain manufacturers by purchasing a substantial portion of its
products from them. During fiscal 1996, the Registrant purchased
approximately 32% of its inventory from two vendors. No other vendor
accounted for more than 10% of the Registrant's purchases in fiscal
1996.
Management continually seeks to expand its list of vendors.
While the loss of a major vendor could have a material adverse effect
on the Registrant's business, the Registrant believes alternative
vendors for similar products are available. There can be no
assurance, however, that the addition of these alternative vendors
would place the Registrant in the same or as competitive a financial
position as it experienced immediately prior to the loss of the major
vendor. Generally, management believes that its relationship with
its vendors is good.
The Registrant receives vendor price protection for
substantially all of its inventory. In the event a vendor reduces
its prices for goods covered by this price protection arrangement
which have otherwise not been sold, the Registrant generally either
receives a credit on account from the vendor for the price
differential or returns the goods to the vendor for credit of the
purchase price.
5. Employees
As of June 30, 1996, the Registrant had 348 full-time employees,
133 of whom were engaged in telemarketing, and an additional
30 part-time employees. The salespeople are compensated primarily on
a commission basis. Management believes the Registrant's relations
with its employees are good, and the Registrant has never experienced
a strike or work stoppage. There is no collective bargaining
agreement covering any of the Registrant's employees.
6. Competition
The microcomputer and cellular telephone products markets are
extremely competitive. Competition within the industry is
principally based on price, product breadth and availability,
delivery terms, trade credit terms and various types of technical
support and service. Major competitors include Ingram Micro, Inc.,
Merisel, Inc., Tech Data Corporation and a variety of other smaller
regional competitors. The Registrant also competes with
manufacturers that sell directly to retailers and VARs. Although
many of the distributors with which the Registrant competes have
greater financial resources, the Registrant nevertheless believes
that its ability to provide competitive pricing, a broad range of
products and available inventory, rapid delivery and technical
support are important factors that enable it to compete effectively.
7. Seasonality
The Registrant's sales are not subject to material seasonal
fluctuations.
<PAGE>
Item 2. PROPERTIES
The Registrant maintains its executive, administrative and sales
office and principal distribution facility in the Atlanta
metropolitan area. The Registrant leases its executive,
administrative and sales office from Royal Park Company, a Georgia
general partnership comprised of certain minority stockholders of the
Registrant. The lease expires in October 1999 after an 8-year term
and supersedes the original 15-year lease entered into in 1984
between the Predecessor and Royal Park Company. The facility
consists of approximately 30,000 square feet, with an annual rental
of approximately $176,000 through October 1, 1999, subject to
increase based upon periodic changes in the Consumer Price Index.
The Registrant has a right of first refusal to purchase the facility
should it be offered for sale. The Registrant believes that the
lease is on terms no less favorable than those available from
unaffiliated parties.
The Registrant's distribution facility in Atlanta consists of
approximately 100,000 square feet subject to a lease expiring
January 31, 1999. The Registrant also leases additional warehouse
and sales office space near its executive, administrative and sales
office in Atlanta for future growth. The Registrant believes there
is available sufficient additional warehouse and sales office space
for lease at reasonable prices near its principal facility in the
event the Registrant's growth plans so require.
On January 10, 1996, the Registrant amended the lease pertaining
to its sales and distribution facility, located in the Beacon Centre
Technology Park in Miami, Florida to allow the Registrant to relocate
such facility to another building within the Beacon Centre complex
having a leased space of approximately 31,200 square feet (the
"Relocation Space"). The monthly rent for the Relocation Space is
approximately $17,000 and the term of the lease pertaining thereto
expires on March 31, 2001. On July 24, 1996, the Registrant
further amended the lease of the aforementioned sales and
distribution facility. This amendment to the lease allowed the
Registrant to further expand the space subject to the lease by
approximately 30,000 square feet to bring the total amount of space
subject to the lease to approximately 61,200 square feet (the
"Expansion Space"). The monthly rent for the Expansion Space is
approximately $17,000, making the aggregate monthly rent $34,000.
The lease pertaining to the Expansion Space also expires on March 31,
2001.
Item 3. LEGAL PROCEEDINGS
In the ordinary course of business, the Registrant, from time to
time, is involved in litigation with certain of its customers and
vendors regarding accounts receivable and accounts payable,
respectively. With respect to disputes with its vendors, the
Registrant typically withholds payment for the goods in controversy
until a resolution of the matter has been obtained. Although the
Registrant is not currently engaged in or threatened by any material
litigation, it is the policy of management to vigorously defend suits
brought against the Registrant.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE>
Item 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant and SED, their ages and
their present positions with the Registrant and SED are as follows:
Name Age Position
Gerald Diamond 58 Chairman of the Board, Chief Executive
Officer and Director of the Registrant and
SED
Ray D. Risner 51 President, Chief Operating Officer and
Director of the Registrant and SED
Larry G.Ayers 50 Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer of the
Registrant and SED
Mark Diamond 31 Executive Vice President of the Registrant
and SED
Jean Diamond 55 Vice President-Credit of SED<PAGE>
Gerald Diamond was elected President and Chairman of the Board
of the Registrant and SED in June 1986 and has served in two or more
capacities as Chairman of the Board, Chief Executive Officer and
President of the Registrant and SED since that date. Mr. Diamond, a
founder of the Predecessor, served as its President and Treasurer
from July 1980 through July 1986. Mr. Diamond has been in
electronics-related businesses for over 30 years. Mr. Diamond is the
brother of Barry Diamond and father of Mark Diamond.
Ray D. Risner was elected as a director of the Registrant in
November 1994 and was elected President and Chief Operating Officer
of the Registrant and SED in May 1995. Mr. Risner served as Vice
Chairman of RJM Group, Inc., a private investment advisory firm, from
1989 to 1994. From 1987 to 1989, he served as Vice President,
Financial Administration of RJR Nabisco, Inc. Mr. Risner is also a
trustee of The National Faculty and a member of the Board of American
Red Cross Blood Services, Atlanta, Georgia.
Larry G. Ayers was elected Vice President-Finance and Treasurer
of SED in June 1986, Secretary in August 1986 and Chief Financial
Officer in November 1989. He was also elected Vice President-Finance,
Secretary and Treasurer of the Registrant in August 1986 and
Chief Financial Officer in November 1989. Mr. Ayers served as Vice
President-Finance of the Predecessor from May 1986 through July 1986.
Mark Diamond has been nominated to stand for election as a
director at the 1996 Annual Meeting of Stockholders and has been
employed by SED on a full-time basis in the Sales Department since
January 1987. In February 1991, Mr. Diamond was elected Vice
President-Sales of SED and in May 1993, was elected Executive Vice
President-Marketing of SED. In February 1994, Mr. Diamond was
elected Executive Vice President-Sales of SED, and in July 1995, he
was elected Executive Vice President of the Registrant and in August
1995, he was elected Executive Vice President of SED. Mark Diamond
is the son of Gerald Diamond.
<PAGE>
Jean Diamond was elected Vice President - Credit of SED in
August 1994. From 1986 to August 1994, she served as Manager of
Credit of SED. Jean Diamond is the wife of Gerald Diamond and the
mother of Mark Diamond.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information regarding the range of high and low sales prices for
the common stock of the Registrant for each full quarterly period for
fiscal 1996 and 1995 as reported by the Nasdaq National Market
("Nasdaq") and the number of holders of common stock of the
Registrant (including individual participants in securities position
listings) is incorporated by reference to "Price Range of Common
Stock" on the inside back cover of the Registrant's 1996 Annual
Report to Stockholders.
The Registrant has not paid any cash dividends on its common
stock since its inception. The Registrant currently intends to
retain earnings to finance the growth and development of its business
and does not anticipate paying cash dividends in the foreseeable
future. Future policy with respect to payment of dividends on the
common stock will be determined by the Board of Directors based on
conditions then existing, including the Registrant's earnings and
financial condition, capital requirements and other relevant factors.
SED, the earnings of which would be the source of any dividend
payments, and the Registrant are parties to a revolving credit
agreement that contains certain financial covenants that may impact
the Registrant's ability to pay dividends, should it choose to do so.
Item 6. SELECTED FINANCIAL DATA
Selected financial information about the Registrant is
incorporated herein by reference to "Selected Income Statement Data"
and "Selected Balance Sheet Data" on page 1 of the Registrant's 1996
Annual Report to Stockholders.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information and a discussion regarding the Registrant's
financial condition and results of operations are incorporated herein
by reference to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 10 and 11 of the
Registrant's 1996 Annual Report to Stockholders.
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Registrant, notes
thereto, and independent auditors' report thereon are incorporated
herein by reference to pages 12 through 20 of the Registrant's 1996
Annual Report to Stockholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the Registrant's directors is incorporated
herein by reference to the section of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders scheduled for
October 31, 1996 (the "Proxy Statement") entitled "Proposal 1 -
Election of Directors."
Information regarding the Registrant's executive officers is
incorporated herein by reference to Item 4(A) of Part I of this
Report.
Item 11. EXECUTIVE COMPENSATION
Information regarding the Registrant's compensation of its
executive officers and directors is incorporated herein by reference
to the sections of the Proxy Statement entitled "Proposal 1 -
Election of Directors" and "Executive Compensation".
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information regarding the security ownership of certain
beneficial owners and management of the Registrant is incorporated by
reference to the section of the Proxy Statement entitled "Ownership
of Shares".
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related
transactions is incorporated herein by reference to the section of
the Proxy Statement entitled "Compensation Committee Interlocks and
Insider Participation."
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements. The Registrant's 1996 Annual
Report to Stockholders, a copy of which is filed with
this Form 10-K, contains the following financial
statements and the report of the Registrant's
independent auditors thereon, which are incorporated
herein by reference:
- Independent Auditors' Report
- Consolidated Balance Sheets at June 30, 1996 and
1995
- Consolidated Statements of Earnings for the years
ended June 30, 1996, 1995 and 1994
- Consolidated Statements of Stockholders' Equity
for the years ended June 30, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the
years ended June 30, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements
2. Financial Statement Schedules.
- Independent Auditors' Report
- Schedules:
Schedule Description
II Valuation and Qualifying Accounts
Schedule II and the report thereon appear
immediately preceding the signature pages to this
Report.
Schedules other than the Schedule presented are omitted
because the information required is not applicable or
the required information is shown in the consolidated
financial statements or notes thereto.
<PAGE>
3. Exhibits Incorporated by Reference or Filed with this
Report.
Exhibit
Number Description
3.1 Certificate of Incorporation, as amended, of the
Registrant.
3.2 Amended and Restated By-Laws of the Registrant.(1)
4.1 See Exhibits 3.1 and 3.2 for provisions of the Certificate
of Incorporation, as amended, and Amended and Restated
By-Laws of the Registrant defining rights of holders of
Common Stock of the Registrant.
10.1 Form of Lease Agreement dated as of January 1, 1991 between
Royal Park Company and Southern Electronics Distributors,
Inc. ("SED")(2)
10.2 Consulting and Financial Advisory Agreement dated July 2,
1986 between SED Acquisition Corp. and the ZS Fund L.P.(3),
as amended as of July 2, 1991.(2)*
10.3 Letter Agreement dated July 2, 1986 among SED, the
shareholders of SED, SED Acquisition Corp. and the
Registrant regarding tax liability indemnification and
ERISA matters.(4)*
10.4 Lease Agreement dated May 16, 1990 between The Equitable
Life Assurance Society of the United States and SED(5), as
amended March 20, 1992.(6)
10.5 Lease Agreement dated September 16, 1989 between Industrial
Distribution Group, Inc. and SED(7), as amended August 19,
1991.(3)
10.6 Lease Agreement dated January 15, 1992 between SED and RW
Building One Associates.(8)
10.7 Revolving Credit Agreement dated as of June 29, 1995 among
National City Bank, Columbus ("NCB"), Wachovia Bank of
Georgia, N.A. ("Wachovia"), the Registrant and SED.(28)
10.8 First Amendment to Revolving Credit Agreement dated as of
December 14, 1995 among NCB, Wachovia, the Registrant, SED
and USC Acquisition Corporation ("USC").(33)
10.9 Second Amendment to Revolving Credit Agreement dated as of
September 9, 1996 among NCB, Wachovia, the Registrant, SED
and USC.
10.10 Southern Electronics Corporation 1986 Stock Option
Plan dated September 3, 1986, together with related
forms of Incentive Stock Option Agreement and
Non-Qualified Stock Option Agreement.(9)*
10.11 Form of First Amendment dated September 14, 1989 to
Southern Electronics Corporation 1986 Stock Option
Plan.(10)*
<PAGE>
10.12 Second Amendment dated November 7, 1989 to Southern
Electronics Corporation 1986 Stock Option Plan.(11)*
10.13 Third Amendment dated July 17, 1992 to Southern
Electronics Corporation 1986 Stock Option Plan.(12)*
10.14 Southern Electronics Corporation 1988 Restricted Stock
Plan, together with related form of Restricted Stock
Agreement.(13)*
10.15 First Amendment dated November 7, 1989 to Southern
Electronics Corporation 1988 Restricted Stock
Plan.(14)*
10.16 Second Amendment dated July 17, 1992 to Southern
Electronics Corporation 1988 Restricted Stock
Plan.(15)*
10.17 Form of Southern Electronics Corporation 1991 Stock
Option Plan, together with related forms of Incentive
Stock Option Agreement and Non-Qualified Stock Option
Agreement.(16)*
10.18 First Amendment dated July 17, 1992 to Southern
Electronics Corporation 1991 Stock Option Plan.(17)*
10.19 Second Amendment dated August 30, 1996 to Southern
Electronics Corporation 1991 Stock Option Plan.(34)
10.20 Form of Non-Qualified Stock Option Agreement dated as
of August 28, 1992 between the Registrant and Cary
Rosenthal.(18)*
10.21 Form of Non-Qualified Stock Option Agreement dated as
of August 28, 1992 between the Registrant and G.
William Speer.(19)*
10.22 Employment Agreements dated November 7, 1989, between
the Registrant, SED and each of Gerald Diamond, Jean
Diamond, and Larry G. Ayers(20)*, each
as amended by form of Amendment No. 1 dated
September 24, 1991.(21)*
10.23 Second Amendment to Employment Agreement dated May 8,
1996 between the Registrant and Larry G. Ayers.*
10.24 Form of Employment Agreement dated September 24, 1991,
among the Registrant, SED and Mark Diamond.(22)*
10.25 Amendment to Employment Agreement dated May 8, 1996
among the Registrant, SED and Mark Diamond.*
<PAGE>
10.26 Form of Employment Agreement dated May 8, 1996 among
the Registrant, SED and Ray D. Risner.*
10.27 Southern Electronics Distributors, Inc. Savings Plan
effective as of January 1, 1991, together with Savings
Plan Trust and Savings Plan Adoption Agreement.(23)*
10.28 Form of Indemnification Agreement entered into with
each of the directors and officers of the Registrant
and SED.(24)*
10.29 Form of Indemnification Agreement entered into with
each of the directors and officers of the Registrant
and Southern Electronics Corporation.(29)
10.30 Lease Agreement dated November 1992 between
H.G. Pattillo and Elizabeth M. Pattillo and SED.(25)
10.31 Lease Agreement dated August 9, 1993 between New World
Partners Joint Venture and SED and Addendum 1 thereto
("NWPJV Lease").(26)
10.32 Second Addendum to NWPJV Lease dated January 10, 1996
among New World Partners Joint Venture, New World
Partners Joint Venture Number Two and SED.
10.33 Third Addendum to NWPJV Lease dated July 24, 1996
between New World Partners Joint Venture Number Two
and SED.
10.34 Amendment to Lease for 4775 N. Royal Atlanta
Drive.(30)
10.35 Form of Non-Qualified Stock Option Agreement dated as
of May 21, 1993 between the Registrant and
Cary Rosenthal (see form referenced herein as Exhibit
10.17).*
10.36 Form of Non-Qualified Stock Option Agreement dated as
of May 21, 1993 between the Registrant and G. William
Speer (see form referenced herein as Exhibit 10.18).*
10.37 Form of Non-Qualified Stock Option Agreement for
Directors.(31)
10.38 Subscription and Stockholders Agreement dated as of
July 2, 1986 by and among the Registrant, ZS SED L.P.,
ZS Southern L.P. and SED Associates.(32)
10.39 1995 Formula Stock Option Plan, together with related
form of Non-Qualified Stock Option Agreement.(35)
10.40 Agreement and Plan of Reorganization dated
December 14, 1995, among USC Acquisition Corporation,
U.S. Computer of North America, Inc. and David
Steiner.(36)
<PAGE>
10.41 Adoption Agreement for Swerdlin & Company Regional
Prototype Standardized 401(k) Profit Sharing Plan and
Trust, as amended.
11.1 Statement regarding computation of per share earnings.
13 Form of Southern Electronics Corporation 1996 Annual
Report to Stockholders (only the portions incorporated
by reference into this report are deemed "filed" with
the Securities and Exchange Commission).
21 Subsidiaries of the Registrant.(27)
23 Independent Auditors' Consent.
24 Power of Attorney. See signature page to this
Registration Statement.
27 Financial Data Schedule.
Notes
*Management contract or compensatory plan or arrangement with one or
more directors or executive officers.
(1) Incorporated herein by reference to exhibit of same number to
Registrant's Registration Statement ("Registration Statement")
on Form S-1, filed September 5, 1986 (Reg. No. 33-8494).
(2) Incorporated herein by reference to exhibit of same number to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1991 (SEC File No. 0-16345) ("1991 Form 10-K").
(3) Incorporated herein by reference to exhibit 10.6 to Registrant's
Registration Statement.
(4) Incorporated herein by reference to exhibit 10.7 to Registrant's
Registration Statement.
(5) Incorporated herein by reference to exhibit 10.8 to Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30,
1990 (SEC File No. 0-16345) ("1990 Form 10-K").
(6) Incorporated herein by reference to exhibit 10.5 to Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30,
1992 (SEC File No. 0-16345) ("1992 Form 10-K").
(7) Incorporated herein by reference to exhibit 10.9 to Registrant's
1990 Form 10-K.
(8) Incorporated herein by reference to exhibit 10.7 to Registrant's
1992 Form 10-K.
<PAGE>
(9) Incorporated herein by reference to exhibit 10.12 to
Registrant's Registration Statement.
(10) Incorporated herein by reference to exhibit 10.22 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1988 (SEC File No. 0-16345).
(11) Incorporated herein by reference to exhibit 10.25 to
Registrant's 1990 Form 10-K.
(12) Incorporated herein by reference to exhibit 10.12 to
Registrant's 1992 Form 10-K.
(13) Incorporated herein by reference to exhibit 10.21 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1988 (SEC File No. 0-16345).
(14) Incorporated herein by reference to exhibit 10.26 to
Registrant's 1990 Form 10-K.
(15) Incorporated herein by reference to exhibit 10.15 to
Registrant's 1992 Form 10-K.
(16) Incorporated herein by reference to Annex A to Registrant's
definitive Supplemental Proxy Statement dated October 18, 1991
(SEC File No. 0-16345).
(17) Incorporated herein by reference to exhibit 10.17 to
Registrant's 1992 Form 10-K.
(18) Incorporated herein by reference to exhibit 10.18 to
Registrant's 1992 Form 10-K.
(19) Incorporated herein by reference to exhibit 10.19 to
Registrant's 1992 Form 10-K.
(20) Incorporated herein by reference to Exhibit 6(a) to
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1989 (SEC File No. 0-16345).
(21) Incorporated herein by reference to exhibit 10.13 to
Registrant's 1991 Form 10-K.
(22) Incorporated herein by reference to exhibit 10.14 to
Registrant's 1991 Form 10-K.
(23) Incorporated herein by reference to exhibit 10.15 to
Registrant's 1991 Form 10-K.
(24) Incorporated herein by reference to exhibit 10.16 to
Registrant's 1991 Form 10-K.
(25) Incorporated herein by reference to exhibit 10.24 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993 (SEC File No. 0-16345) ("1993 Form 10-K").
(26) Incorporated herein by reference to exhibit 10.25 to
Registrant's 1993 Form 10-K.
(27) Incorporated herein by reference to exhibit 21 to Registrant's
1993 Form 10-K.
(28) Incorporated herein by reference to exhibit 10.7 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994 (SEC File No. 0-16345) ("1995 Form 10-K").
(29) Incorporated herein by reference to exhibit 10.23 to
Registrant's 1995 Form 10-K.
<PAGE>
(30) Incorporated herein by reference to exhibit 10.26 to
Registrant's 1995 Form 10-K.
(31) Incorporated herein by reference to exhibit 10.29 to
Registrant's 1995 Form 10-K.
(32) Incorporated herein by reference to exhibit 10.30 to
Registrant's 1995 Form 10-K.
(33) Incorporated herein by reference to exhibit 10.31 to
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1995 (SEC File No. 0-16345).
(34) Incorporated herein by reference to Appendix A to Registrant's
Proxy Statement pertaining to Registrant's 1995 Annual Meeting
of Stockholders dated October 1, 1995 (SEC File No. 0-16345).
(35) Incorporated herein by reference to Appendix B to Registrant's
Proxy Statement pertaining to Registrant's 1995 Annual Meeting
of Stockholders dated October 1, 1995 (SEC File No. 0-16345).
(36) Incorporated herein by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed with the SEC on
December 28, 1995 (SEC File No. 0-16345).
(b) Reports on Form 8-K.
Current Report on Form 8-K filed with the SEC on December
28, 1995, (SEC File No. 0-16345) reporting the acquisition of U.S.
Computer of North America, Inc., as amended by Current Report on
Form 8-K/A filed with the SEC on February 26, 1996 (SEC File No.
0-16345).
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
Southern Electronics Corporation
We have audited the consolidated financial statements of Southern
Electronics Corporation and subsidiary as of June 30, 1996 and 1995,
and for each of the three years in the period ended June 30, 1996,
and have issued our report thereon dated August 9, 1996; such
consolidated financial statements and report are included in your 1996
Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement schedule
of Southern Electronics Corporation listed in Item 14. This financial
statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
August 9, 1996
<PAGE>
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
<TABLE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E Column F
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expenses Deductions(1) Accounts(2) of Period
<S> <C> <C> <C> <C> <C>
Year ended June 30, $ 845,000 $1,642,000 ($1,846,000) $ 500,000 $1,141,000
1996: Allowance for
doubtful accounts
Year ended June 30, 664,000 1,143,000 (962,000) -- 845,000
1995: Allowance for
doubtful accounts
Year ended June 30, 931,000 1,225,000 (1,492,000) -- 664,000
1994: Allowance for
doubtful accounts
</TABLE>
_____________________
(1) Deductions represent actual write-offs of specific accounts
receivable charged against the allowance account, net of amounts
recovered.
(2) Represents balances of acquired business.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SOUTHERN ELECTRONICS CORPORATION
Date: September __, 1996 By: /s/ Larry G. Ayers
Larry G. Ayers,
Vice President - Finance
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Gerald Diamond and Larry G.
Ayers and each of them as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign
any and all amendments to the Annual Report on Form 10-K of Southern
Electronics Corporation, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and other appropriate agencies,
granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his
substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated this
____ day of September, 1996.
/s/ Gerald Diamond
Gerald Diamond,
Chairman of the Board,
Chief Executive Officer
and Director
(principal executive officer)
<PAGE>
/s/ Larry G. Ayers
Larry G. Ayers,
Vice President - Finance and
Treasurer
(principal financial and
accounting officer)
/s/ Stewart I. Aaron
Stewart I. Aaron,
Director
/s/ Ray D. Risner
Ray D. Risner,
Director
/s/ Cary Rosenthal
Cary Rosenthal,
Director
/s/ G. William Speer
G. William Speer,
Director
PAGE
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
3.1 Certificate of Incorporation, as amended, of
the Registrant. N/A
3.2 Amended and Restated By-Laws of the
Registrant.(1) N/A
4.1 See Exhibits 3.1 and 3.2 for provisions of the
Certificate of Incorporation, as amended, and
Amended and Restated By-Laws of the Registrant
defining rights of holders of Common Stock of
the Registrant. N/A
10.1 Form of Lease Agreement dated as of January 1,
1991 between Royal Park Company and Southern
Electronics Distributors, Inc. ("SED").(2) N/A
10.2 Consulting and Financial Advisory Agreement
dated July 2, 1986 between SED Acquisition
Corp. and the ZS Fund L.P.(3), as amended as
of July 2, 1991.(2)* N/A
10.3 Letter Agreement dated July 2, 1986 among SED,
the shareholders of SED, SED Acquisition Corp.
and the Registrant regarding tax liability
indemnification and ERISA matters.(4)* N/A
10.4 Lease Agreement dated May 16, 1990 between The
Equitable Life Assurance Society of the United
States and SED(5), as amended March 20,
1992.(6) N/A
10.5 Lease Agreement dated September 16, 1989
between Industrial Distribution Group, Inc.
and SED(7), as amended August 19, 1991.(3) N/A
10.6 Lease Agreement dated January 15, 1992 between
SED and RW Building One Associates.(8) N/A
10.7 Revolving Credit Agreement dated as of
June 29, 1995 among National City Bank,
Columbus ("NCB"), Wachovia Bank of Georgia,
N.A. ("Wachovia"), the Registrant and SED.(27) N/A
10.8 First Amendment to Revolving Credit Agreement
dated as of December 14, 1995 among NCB,
Wachovia, the Registrant, SED and USC
Acquisition Corporation ("USC").(33) N/A
10.9 Second Amendment to Revolving Credit Agreement
dated as of September 9, 1996 among NCB,
Wachovia, the Registrant, SED and USC. ___
10.10 Southern Electronics Corporation 1986 Stock
Option Plan dated September 3, 1986, together
with related forms of Incentive Stock Option
Agreement and Non-Qualified Stock Option
Agreement.(9)* N/A
<PAGE>
10.11 Form of First Amendment dated September 14,
1989 to Southern Electronics Corporation 1986
Stock Option Plan.(10)* N/A
10.12 Second Amendment dated November 7, 1989 to
Southern Electronics Corporation 1986 Stock
Option Plan.(11)* N/A
10.13 Third Amendment dated July 17, 1992 to
Southern Electronics Corporation 1986 Stock
Option Plan.(12)* N/A
10.14 Southern Electronics Corporation 1988
Restricted Stock Plan, together with related
form of Restricted Stock Agreement.(13)* N/A
10.15 First Amendment dated November 7, 1989 to
Southern Electronics Corporation 1988
Restricted Stock Plan.(14)* N/A
10.16 Second Amendment dated July 17, 1992 to
Southern Electronics Corporation 1988
Restricted Stock Plan.(15)* N/A
10.17 Form of Southern Electronics Corporation 1991
Stock Option Plan, together with related forms
of Incentive Stock Option Agreement and Non-
Qualified Stock Option Agreement.(16)* N/A
10.18 First Amendment dated July 17, 1992 to
Southern Electronics Corporation 1991 Stock
Option Plan.(17)* N/A
10.19 Second Amendment dated August 30, 1996 to
Southern Electronics Corporation 1991 Stock
Option Plan.(34) N/A
10.20 Form of Non-Qualified Stock Option Agreement
dated as of August 28, 1992 between the
Registrant and Cary Rosenthal.(18)* N/A
10.21 Form of Non-Qualified Stock Option Agreement
dated as of August 28, 1992 between the
Registrant and G. William Speer.(19)* N/A
10.22 Employment Agreements dated November 7, 1989,
between the Registrant, SED and each of Gerald
Diamond, Jean Diamond, Barry Diamond and Larry
G. Ayers(20)*, each as amended by form of
Amendment No. 1 dated September 24, 1991.(21)*
N/A
10.23 Second Amendment to Employment Agreement
dated May 8, 1996 between the Registrant and
each of Larry G. Ayers.* ___
<PAGE>
10.24 Form of Employment Agreement dated
September 24, 1991, among the Registrant, SED
and Mark Diamond.(22)* N/A
10.25 Amendment to Employment Agreement dated May 8,
1996 among the Registrant, SED and Mark
Diamond.* ___
10.26 Form of Employment Agreement dated May 8, 1996
among the Registrant, SED and Ray D. Risner.* ___
10.27 Southern Electronics Distributors, Inc.
Savings Plan effective as of January 1, 1991,
together with Savings Plan Trust and Savings
Plan Adoption Agreement.(23)* N/A
10.28 Form of Indemnification Agreement entered into
with each of the directors and officers of the
Registrant and SED(24)* N/A
10.29 Form of Indemnification Agreement entered into
with each of the directors and officers of the
Registrant and Southern Electronics
Corporation.(29) N/A
10.30 Lease Agreement dated November 1992 between
H.G. Pattillo and Elizabeth M. Pattillo and
SED(25) N/A
10.31 Lease Agreement dated August 9, 1993 between
New World Partners Joint Venture and SED and
Addendum 1 thereto ("NWPJV Lease").(26) N/A
10.32 Second Addendum to NWPJV Lease dated
January 10, 1996 among New World Partners
Joint Venture, New World Partners Joint
Venture Number Two and SED. ___
10.33 Third Addendum to NWPJV Lease dated
July 24, 1996 between New World Partners
Joint Venture Number Two and SED. ___
10.34 Amendment to Lease for 4775 N. Royal Atlanta
Drive.(30) N/A
10.35 Form of Non-Qualified Stock Option Agreement
dated as of May 21, 1993 between the
Registrant and Cary Rosenthal (see form
referenced herein as Exhibit 10.17).* N/A
10.36 Form of Non-Qualified Stock Option Agreement
dated as of May 21, 1993 between the
Registrant and G. William Speer (see form
referenced herein as Exhibit 10.18).* N/A
<PAGE>
10.37 Form of Non-Qualified Stock Option Agreement
for Directors.(31) N/A
10.38 Subscription and Stockholders Agreement dated
as of July 2, 1986 by and among the
Registrant, ZS SED L.P., ZS Southern L.P. and
SED Associates.(32) N/A
10.39 1995 Formula Stock Option Plan, together with
related form of Non-Qualified Stock Option
Agreement.(35) N/A
10.40 Agreement and Plan of Reorganization dated
December 14, 1995, among USC Acquisition
Corporation, U.S. Computer of North America,
Inc. and David Steiner (SEC File No.
0-16345).(36) N/A
10.41 Adoption Agreement for Swerdlin & Company
Regional Prototype Standardized 401(k) Profit
Sharing Plan and Trust, as amended. ___
11.1 Statement regarding computation of per share
earnings. ___
13 Form of Southern Electronics Corporation 1996
Annual Report to Stockholders (only the
portions incorporated by reference into this
report are deemed "filed" with the Securities
and Exchange Commission). ___
21 Subsidiaries of the Registrant.(27) N/A
23 Independent Auditors' Consent. ___
24 Power of Attorney. See signature page to this
Registration Statement. N/A
27 Financial Data Schedule. ___
__________________
Notes
*Management contract or compensatory plan or arrangement with
one or more directors or executive officers.
(1) Incorporated herein by reference to exhibit of same number
to Registrant's Registration Statement ("Registration
Statement") on Form S-1, filed September 5, 1986 (Reg. No.
33-8494).
(2) Incorporated herein by reference to exhibit of same number
to Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1991 (SEC File No. 0-16345) ("1991
Form 10-K").
<PAGE>
(3) Incorporated herein by reference to exhibit 10.6 to
Registrant's Registration Statement.
(4) Incorporated herein by reference to exhibit 10.7 to
Registrant's Registration Statement.
(5) Incorporated herein by reference to exhibit 10.8 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1990 (SEC File No. 0-16345) ("1990
Form 10-K").
(6) Incorporated herein by reference to exhibit 10.5 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1992 (SEC File No. 0-16345) ("1992
Form 10-K").
(7) Incorporated herein by reference to exhibit 10.9 to
Registrant's 1990 Form 10-K.
(8) Incorporated herein by reference to exhibit 10.7 to
Registrant's 1992 Form 10-K.
(9) Incorporated herein by reference to exhibit 10.12 to
Registrant's Registration Statement.
(10) Incorporated herein by reference to exhibit 10.22 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1988 (SEC File No. 0-16345).
(11) Incorporated herein by reference to exhibit 10.25 to
Registrant's 1990 Form 10-K.
(12) Incorporated herein by reference to exhibit 10.12 to
Registrant's 1992 Form 10-K.
(13) Incorporated herein by reference to exhibit 10.21 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1988 (SEC File No. 0-16345).
(14) Incorporated herein by reference to exhibit 10.26 to
Registrant's 1990 Form 10-K.
(15) Incorporated herein by reference to exhibit 10.15 to
Registrant's 1992 Form 10-K.
(16) Incorporated herein by reference to Annex A to
Registrant's definitive Supplemental Proxy Statement dated
October 18, 1991 (SEC File No. 0-16345).
(17) Incorporated herein by reference to exhibit 10.17 to
Registrant's 1992 Form 10-K.
(18) Incorporated herein by reference to exhibit 10.18 to
Registrant's 1992 Form 10-K.
(19) Incorporated herein by reference to exhibit 10.19 to
Registrant's 1992 Form 10-K.
(20) Incorporated herein by reference to Exhibit 6(a) to
Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1989 (SEC File No.
0-16345).
(21) Incorporated herein by reference to exhibit 10.13 to
Registrant's 1991 Form 10-K.
(22) Incorporated herein by reference to exhibit 10.14 to
Registrant's 1991 Form 10-K.
(23) Incorporated herein by reference to exhibit 10.15 to
Registrant's 1991 Form 10-K.
<PAGE>
(24) Incorporated herein by reference to exhibit 10.16 to
Registrant's 1991 Form 10-K.
(25) Incorporated herein by reference to exhibit 10.24 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993 (SEC File No. 0-16345) ("1993
Form 10-K").
(26) Incorporated herein by reference to exhibit 10.25 to
Registrant's 1993 Form 10-K.
(27) Incorporated herein by reference to exhibit 21 to
Registrant's 1993 Form 10-K.
(28) Incorporated herein by reference to exhibit 10.7 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993 (SEC File No. 0-16345) ("1995
Form 10-K").
(29) Incorporated herein by reference to exhibit 10.23 to
Registrant's 1995 Form 10-K.
(30) Incorporated herein by reference to exhibit 10.26 to
Registrant's 1995 Form 10-K.
(31) Incorporated herein by reference to exhibit 10.29 to
Registrant's 1995 Form 10-K.
(32) Incorporated herein by reference to exhibit 10.30 to
Registrant's 1995 Form 10-K.
(33) Incorporated herein by reference to exhibit 10.31 to
Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1995 (SEC File No.
0-16345).
(34) Incorporated herein by reference to Appendix A to
Registrant's Proxy Statement pertaining to Registrant's
1996 Annual Meeting of Stockholders dated October 1, 1996
(SEC File No. 0-16345).
(35) Incorporated herein by reference to Appendix B to
Registrant's Proxy Statement pertaining to Registrant's
1996 Annual Meeting of Stockholders dated October 1, 1996
(SEC File No. 0-16345).
(36) Incorporated herein by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K filed with the SEC
on December 28, 1995 (SEC File No. 0-16345).
(37) Incorporated herein by reference to exhibit 3.1 to
Registrant's 1995 Form 10-K.
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDMENT, effective as of the Effective Date (as
defined in Paragraph 16), is by and among (A) Southern Electronics
Corporation, a Delaware corporation, and Southern Electronics
Distributors, Inc., a Delaware corporation (collectively, the
"Borrowers"), and (B) National City Bank of Columbus (formerly
named National City Bank, Columbus), a national banking association
("NCB"), and Wachovia Bank of Georgia, N.A., a national banking
association ("WB") (collectively, the "Banks"), amending the
Revolving Credit Agreement dated as of June 29, 1995 by and among
the Borrowers and the Banks (the "Original Credit Agreement"), as
amended by the First Amendment to Revolving Credit Agreement
effective as of December 14, 1995 (the "First Amendment") (the
Original Credit Agreement, as amended by the First Amendment,
collectively, the "Credit Agreement"). U.S. Computer of North
America, Inc. (formerly named USC Acquisition Corporation), a
Delaware corporation, became a party to the Credit Agreement and a
Borrower pursuant to the First Amendment. Subsequently, U.S.
Computer of North America, Inc. was merged with and into Southern
Electronics Distributors, Inc., and accordingly U.S. Computer of
North America, Inc. ceased to be a party to the Credit Agreement
with Southern Electronics Distributors, Inc. assuming all of its
obligations thereunder. Capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the
Credit Agreement.
The parties hereto hereby agree as follows:
1. The introductory paragraph of the Credit Agreement is
amended by changing the name "National City Bank, Columbus" to
"National City Bank of Columbus."
2. Subsection 1.01 of the Credit Agreement shall be and it
hereby is amended by modifying the definition of "Applicable
Margin" to read in its entirety as follows:
"Applicable Margin" means, with respect to any
Performance Pricing Determination Date, the percentage
set forth below as the Applicable Margin based upon the
L/TNW Ratio of the Borrowers set forth below, determined
pursuant to subsection 2.12(E).
<TABLE>
Applicable
L/TNW Ratio Margin
<S> <C>
Not more than .80 to 1 .75%
Greater than .80 to 1 but not more than 1 to 1 1.00%
Greater than 1 to 1 but not more than 1.33 to 1 1.25%
Greater than 1.33 to 1 but not more than 1.60 to 1 1.50%
Greater than 1.60 to 1 but not more than 2 to 1 1.75%
Greater than 2 to 1 but not more than 2.25 to 1 2.00%
Greater than 2.25 to 1 but not more than 2.50 to 1 2.25%
Greater than 2.50 to 1 2.75%
</TABLE>
3. Subsection 1.01 of the Credit Agreement shall be and it
hereby is also amended by adding the definition of "Capital Stock
Proceeds" to read in its entirety as follows:
<PAGE>
"Capital Stock Proceeds" means the aggregate net
proceeds from all sales of capital stock of the Borrowers
occurring on or after September 4, 1996.
4. Subsection 1.01 of the Credit Agreement shall be and it
hereby is additionally amended by modifying the definition of "Loan
Commitment" to read in its entirety as follows:
"Loan Commitment" means the sum of Thirty-Five
Million Dollars ($35,000,000) or such lesser amount as
shall hereafter be determined from time to time pursuant
to subsection 2.16. The outstanding amount of any
Authorized Approved Transaction Financing shall be given
effect in the calculation of and thereby reduce the
remaining Loan Commitment available for Loans and
issuance of Letters of Credit, with each Bank's Share of
the Commitment available for Loans and issuance of
Letters of Credit being reduced by such Bank's share of
such outstanding amount of the Authorized Approved
Transaction Financing determined by multiplying such
outstanding amount by the Bank's Percentage. In
computing the Commitment Fee payable under subsection
2.15(A), the unused portion of the Share of the
Commitment of each Bank shall not be reduced by a Bank's
share of such outstanding amount of the Authorized
Approved Transaction Financing.
5. Subsection 1.01 of the Credit Agreement shall be and it
hereby is further amended by modifying the definition of "Loan
Commitment Maturity Date" to read in its entirety as follows:
"Loan Commitment Maturity Date" means August 31,
1998, provided, however, that during the month of May in
each year prior to the year in which the then Loan
Commitment Maturity Date falls (thus, in May of 1997 when
the then Loan Commitment Maturity Date is August 31,
1998), the Borrowers may request in writing to the Banks
that the then Loan Commitment Maturity Date be extended
for an additional period of one (1) year and the Banks,
in their sole discretion, may elect to honor or not honor
such request. The Banks shall notify in writing the
Borrowers of the decision of the Banks, and in the event
an extension is agreed upon it shall be reflected in an
amendment to this Agreement which appropriately changes
this definition of Loan Commitment Maturity Date to
reflect the new such Loan Commitment Maturity Date.
6. Subsection 5.01(P) of the Credit Agreement shall be and
it hereby is amended to read in its entirety as follows:
(P) Southern Electronics Corporation has no
Subsidiaries, other than Southern Electronics
Distributors, Inc. and any other approved Subsidiaries
created in an Approved Transaction, and no Subsidiary has
any Subsidiaries; and
7. Subsection 6.01(F)(1) of the Credit Agreement shall be
and it hereby is amended to read in its entirety as follows:
(1) Maintain at all times Net Working Capital in
the minimum amount of Thirty-Five Million Dollars
($35,000,000).
8. Subsection 6.01(F)(2) of the Credit Agreement shall be
and it hereby is amended to read in its entirety as follows:
<PAGE>
(2) Maintain a ratio of Liabilities to Tangible Net
Worth (the "L/TNW Ratio") of not more than 2.85 to 1 at
all times through September 29, 1996, 2.75 to 1 at all
times from September 30, 1996 through December 30, 1996,
2.60 to 1 at all times from December 31, 1996 through
September 29, 1997, 2.30 to 1 at all times from September
30, 1997 through December 30, 1997, 2.20 to 1 at all
times from December 31, 1997 through March 30, 1998, 2.10
to 1 at all times from March 31, 1998 through June 29,
1998 and 2.00 to 1 at all times thereafter, provided
that, from and after such date as the Borrowers have
received Capital Stock Proceeds of $7,500,000 or more,
the Borrowers shall at all times maintain a L/TNW Ratio
of 2.00 to 1.
9. Subsection 9.05(A) of the Credit Agreement shall be and
it hereby is amended to read in its entirety as follows:
(A) If to the Borrowers: Southern Electronics
Corporation and
Southern Electronics
Distributors,Inc.
4916 North Royal Atlanta Drive
Tucker, Georgia 30085
Attention: Larry G. Ayers
Vice President-
Finance
Telecopier: 770-938-2814
Confirmation: 770-491-8962
10. Concurrently with the execution hereof, the Borrowers
shall deliver to the Banks the following:
(a) Executed Revolving Credit Notes in the form of the
Revolving Credit Notes attached hereto in exchange for and to
supersede and replace the existing Notes dated December 14, 1995
(the "Replacement Notes").
(b) A certified (as of the Effective Date) copy of
resolutions of the Borrowers' boards of directors authorizing the
execution, delivery and performance of this Second Amendment, the
Replacement Notes and each other document to be delivered pursuant
hereto;
(c) A certified (as of the Effective Date) copy of each
of the Borrowers' by-laws;
(d) A certificate (dated as of the Effective Date) of
each of the Borrowers' corporate secretary as to the incumbency and
signatures of the officers of such Borrower signing this Second
Amendment, the Replacement Notes and each other document to be
delivered pursuant hereto;
(e) A copy, certified as of the most recent date
practicable, by the Secretary of State of Delaware, of each of the
Borrowers' certificate of incorporation, together with a
certificate (dated as of the Effective Date) of each of the
Borrowers' corporate secretary to the effect that such certificate
of incorporation has not been amended since the date of the
aforesaid certification;
(f) Certificates, as of the most recent dates
practicable, of the aforesaid secretary of state, the secretary of
state of each state in which the Borrowers are qualified as a
foreign corporation and the department of revenue or taxation of
each of the foregoing states, as to the good standing or valid
existence of each of the Borrowers;
<PAGE>
(g) A written opinion of Messrs. Long, Aldridge &
Norman, the Borrowers' counsel, dated the Effective Date and
addressed to the Banks, in form and substance reasonably
satisfactory to the Banks and their counsel.
(h) A certificate, dated the Effective Date, signed by
the president or a vice president of each of the Borrowers to the
effect that:
(1) The representations and warranties
set forth in subsection 5.01 of the Credit
Agreement as amended hereby are true in all
material respects as of the Effective Date;
and
(2) No Event of Default under the Credit
Agreement as amended hereby, and no event
which, with the giving of notice or passage of
time or both, would become an Event of Default
under the Credit Agreement as amended hereby,
has occurred as of the Effective Date.
For purposes of the certifications provided for in (c), (d), (e)
and (f) above, the Borrowers shall be required to provide such
certifications with respect to the Borrowers only if there have
been changes therein from those last delivered at the Closings
under the Original Credit Agreement or the First Amendment;
otherwise, such certifications with respect to the Borrowers
delivered at such Closings shall be deemed reissued and redelivered
by the Borrowers as of the Effective Date.
11. The Banks hereby confirm their prior consent and approval
to Restricted Payments by Southern Electronics Corporation in the
aggregate amount of $1,325,000 for the repurchase on August 6, 1996
of 200,000 shares of the outstanding capital stock of Southern
Electronics Corporation.
12. Concurrently with the execution and delivery of this
Second Amendment, the Borrowers shall pay to the Banks an amendment
fee of Twenty Thousand Dollars ($20,000) for this amendment of the
Credit Agreement and related matters, which amendment fee shall be
shared equally by the Banks. Further, Borrower shall, on demand,
reimburse the Banks for all expenses, including the reasonable fees
and expenses of legal counsel for the Banks, incurred by the Banks
in connection with this Second Amendment and related matters.
13. This Second Amendment represents the entire understanding
of the parties with respect to the subject matter hereof, and
supersedes any prior oral or written understandings with respect to
the subject matter hereof.
14. Except as set forth expressly herein, all terms of the
Credit Agreement and the other related loan documents shall be and
remain in full force and effect, and shall constitute the legal,
valid, binding and enforceable obligations of the Borrowers. The
Borrowers hereby restate, ratify and reaffirm each and every term,
covenant and condition set forth in the Credit Agreement and the
other related loan documents effective as of the Effective Date, as
hereby amended. This Second Amendment shall be governed by, and
construed and interpreted in accordance with, the laws of the State
of Georgia.
15. This Second Amendment may be executed by one or more of
the parties in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and
<PAGE>
the same instrument. The Borrowers agree to take such further
actions as the Banks shall reasonably request in connection
herewith to evidence the agreements herein contained.
16. This Second Amendment shall be effective on the date set
forth below as the Effective Date (the "Effective Date").
IN WITNESS WHEREOF, the parties have caused this Second
Amendment to be duly executed and delivered by their proper and
duly authorized officers effective as of the Effective Date.
Effective Date: September 9, 1996
SOUTHERN ELECTRONICS SOUTHERN ELECTRONICS
CORPORATION DISTRIBUTORS, INC.
By: By:
Name: Larry G. Ayers Name: Larry G. Ayers
Title: Vice President-Finance Title: Vice President-Finance
NATIONAL CITY BANK OF COLUMBUS WACHOVIA BANK OF GEORGIA, N.A.
By: By:
Name: Brian T. Strayton Name: Kevin B.Harrison
Title: Vice President Title: Vice President
<PAGE>
REVOLVING CREDIT NOTE
$17,500,000.00 Columbus, Ohio
September 9, 1996
FOR VALUE RECEIVED, the undersigned, SOUTHERN ELECTRONICS
CORPORATION ("SEC") and SOUTHERN ELECTRONICS DISTRIBUTORS, INC.
("SED") (SEC and SED referred to collectively as the "Borrowers"),
jointly and severally hereby unconditionally promise to pay on the
Loan Termination Date, to the order of NATIONAL CITY BANK OF
COLUMBUS, formerly named National City Bank, Columbus (the
"Lender"), at the office of the Administrative Bank located at 191
Peachtree Street, 30th Floor, Mail Code 212, Corporate Banking,
Atlanta, Georgia 30303-1757, Attn: Kevin B. Harrison, Vice
President, in lawful money of the United States of America and in
immediately available funds, the principal amount of the lesser of
(a) SEVENTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($17,500,000.00) and (b) the aggregate unpaid principal amount of
all loans made by the Lender to the Borrowers and the aggregate
amount of all advances made by the Lender pursuant to letters of
credit issued by the Banks in favor of the Borrowers pursuant to
the Revolving Credit Agreement, dated as of June 29, 1995, as
amended, between the Borrowers and the Banks (the "Credit
Agreement"). Capitalized terms used herein shall have the same
meanings as set forth in the Credit Agreement, unless otherwise
defined herein.
The Borrowers further agree to pay interest in like money at
such office on the unpaid principal amount hereof from time to time
from the date hereof until such amount shall become due and payable
(whether at the stated maturity, by acceleration or otherwise) on
the dates and at the applicable rate per annum as provided in
subsection 2.12 of the Credit Agreement.
The holder of this Note is authorized to endorse the date and
amount of each loan pursuant to the Credit Agreement, the date and
amount of each payment or prepayment of principal thereof and the
unpaid principal amount under this Note on the schedule annexed
hereto and made a part hereof or on a continuation thereof, which
endorsement shall constitute prima facie evidence of the accuracy
of the information endorsed.
If any payment on this Note becomes due and payable on a day
other than a business day, the maturity thereof shall be extended
to the next succeeding business day and, with respect to payments
of principal, interest thereon shall be payable at the then
applicable rate during such extension.
This Note is one of the Notes referred to in the Credit
Agreement and is entitled to the benefits thereof and is subject to
<PAGE>
optional and mandatory prepayment in whole or in part as provided
therein.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable all as provided therein.
<PAGE>
This Note shall be governed by and construed in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, this Note is executed by the Borrowers as
of the date first set forth above amending and restating the
Revolving Credit Note given to the Lender currently in effect under
the Credit Agreement.
SOUTHERN ELECTRONICS
CORPORATION
By:
Name: Larry G. Ayers
Title: Vice President-Finance
SOUTHERN ELECTRONICS
DISTRIBUTORS, INC.
By:
Name: Larry G. Ayers
Title: Vice President-Finance
<PAGE>
<TABLE>
Schedule to Revolving Credit Note
Amount
Amount of Unpaid
of Principal Principal
Date Loan Payments Balance
<S> <C> <C> <C>
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
___________ $_______________ $_____________ $_________________
</TABLE>
EXHIBIT 10.22
SECOND AMENDMENT TO EMPLOYMENT AGREEMENTS WITH
BARRY DIAMOND AND LARRY G. AYERS
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT is made as of
the 8th day of May, 1996, between SOUTHERN ELECTRONICS
DISTRIBUTORS, INC., a Delaware corporation (the "Subsidiary") and
wholly-owned subsidiary of SOUTHERN ELECTRONICS CORPORATION, a
Delaware corporation, and Barry Diamond, an individual resident
of the State of Georgia (the "Employee").
W I T N E S S E T H:
WHEREAS, on December 27, 1989, Employee and the Subsidiary
entered into an Employment Agreement, as subsequently amended on
September 24, 1991, (the "Agreement") setting forth the terms and
conditions of Employee's employment with the Subsidiary;
WHEREAS, the term of the Agreement extends from its
effective date, July 1, 1989, through June 30, 1996 unless the
Agreement and Employee's employment thereunder are sooner
terminated in accordance with the terms of the Agreement;
WHEREAS, the Agreement restricts extensions of its term to
successive one-year periods; and
WHEREAS, the Subsidiary and Employee wish to extend the term
of the Agreement and Employee's employment thereunder through
June 30, 1997;
NOW, THEREFORE, in consideration of the foregoing, the
continued employment of the Employee and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Amendment to Section 4(a) of the Agreement. Pursuant to
Section 15(d) of the Agreement, the first sentence of
Section 4(a) of the Agreement is hereby deleted in its entirety
and replaced by the following sentence:
(a) The term of this Agreement and of
Employee's employment hereunder shall
commence as of the effective date hereof and
shall continue for a period of eight (8)
years (the "Initial Term") unless earlier
terminated as provided in Section 4(b) of
this Agreement.
2. Amendment to Section 3 of the Agreement. Section 3(b)
of the Agreement is hereby deleted in its entirety. The
remaining subsections of Section 3 are not affected by this
Amendment.
3. Other Provisions of the Agreement. Other than as
specifically set forth herein, all provisions of the Agreement
shall remain in full force and effect and Employee's employment
thereunder shall continue on the terms described therein
throughout the term of the Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Second Amendment to Employment Agreement as of the
day and year first indicated above.
SOUTHERN ELECTRONICS DISTRIBUTORS, INC.
By:_____________________________________
Name:______________________________
Title:_____________________________
__________________________________(SEAL)
Employee's Signature
<PAGE>
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT is made as of
the 8th day of May, 1996, between SOUTHERN ELECTRONICS
DISTRIBUTORS, INC., a Delaware corporation (the "Subsidiary") and
wholly-owned subsidiary of SOUTHERN ELECTRONICS CORPORATION, a
Delaware corporation, and Larry G. Ayers, an individual resident
of the State of Georgia (the "Employee").
W I T N E S S E T H:
WHEREAS, on December 27, 1989, Employee and the Subsidiary
entered into an Employment Agreement, as subsequently amended on
September 24, 1991, (the "Agreement") setting forth the terms and
conditions of Employee's employment with the Subsidiary;
WHEREAS, the term of the Agreement extends from its
effective date, July 1, 1989, through June 30, 1996 unless the
Agreement and Employee's employment thereunder are sooner
terminated in accordance with the terms of the Agreement;
WHEREAS, the Agreement restricts extensions of its term to
successive one-year periods; and
WHEREAS, the Subsidiary and Employee wish to extend the term
of the Agreement and Employee's employment thereunder through
June 30, 1997;
NOW, THEREFORE, in consideration of the foregoing, the
continued employment of the Employee and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Amendment to Section 4(a) of the Agreement. Pursuant
to Section 15(d) of the Agreement, the first sentence of
Section 4(a) of the Agreement is hereby deleted in its entirety
and replaced by the following sentence:
(a) The term of this Agreement and of
Employee's employment hereunder shall
commence as of the effective date hereof and
shall continue for a period of eight (8)
years (the "Initial Term") unless earlier
terminated as provided in Section 4(b) of
this Agreement.
2. Amendment to Section 3 of the Agreement. Section 3(b)
of the Agreement is hereby deleted in its entirety. The
remaining subsections of Section 3 are not affected by this
Amendment.
3. Other Provisions of the Agreement. Other than as
specifically set forth herein, all provisions of the Agreement
shall remain in full force and effect and Employee's employment
thereunder shall continue on the terms described therein
throughout the term of the Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Second Amendment to Employment Agreement as of the
day and year first indicated above.
SOUTHERN ELECTRONICS DISTRIBUTORS, INC.
By:_____________________________________
Name:______________________________
Title:_____________________________
__________________________________(SEAL)
Employee's Signature
EXHIBIT 10.25
AMENDMENT TO EMPLOYMENT AGREEMENT WITH MARK DIAMOND
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is made as of the 8th
day of May, 1996, between SOUTHERN ELECTRONICS DISTRIBUTORS,
INC., a Delaware corporation (the "Subsidiary") and wholly-owned
subsidiary of SOUTHERN ELECTRONICS CORPORATION, a Delaware
corporation, and Mark Diamond, an individual resident of the
State of Georgia (the "Employee").
W I T N E S S E T H:
WHEREAS, effective July 1, 1991, Employee and the Subsidiary
entered into an Employment Agreement (the "Agreement") setting
forth the terms and conditions of Employee's employment with the
Subsidiary;
WHEREAS, the term of the Agreement extends from its
effective date, July 1, 1991, through June 30, 1996 unless the
Agreement and Employee's employment thereunder are sooner
terminated in accordance with the terms of the Agreement;
WHEREAS, the Agreement restricts extensions of its term to
successive one-year periods; and
WHEREAS, the Subsidiary and Employee wish to extend the term
of the Agreement and Employee's employment thereunder through
June 30, 1997;
NOW, THEREFORE, in consideration of the foregoing, the
continued employment of the Employee and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Amendment to Section 4(a) of the Agreement. Pursuant to
Section 15(d) of the Agreement, the first sentence of
Section 4(a) of the Agreement is hereby deleted in its entirety
and replaced by the following sentence:
(a) The term of this Agreement and of
Employee's employment hereunder shall
commence as of the effective date hereof and
shall continue for a period of six (6) years
(the "Initial Term") unless earlier
terminated as provided in Section 4(b) of
this Agreement.
2. Amendment to Section 3 of the Agreement. Section 3(b)
of the Agreement is hereby deleted in its entirety. The
remaining subsections of Section 3 are not affected by this
Amendment.
3. Other Provisions of the Agreement. Other than as
specifically set forth herein, all provisions of the Agreement
shall remain in full force and effect and Employee's employment
thereunder shall continue on the terms described therein
throughout the term of the Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Second Amendment to Employment Agreement as of the
day and year first indicated above.
SOUTHERN ELECTRONICS DISTRIBUTORS, INC.
By:____________________________________
Name:_____________________________
Title:____________________________
__________________________________(SEAL)
Employee's Signature
EXHIBIT 10.26
EMPLOYMENT AGREEMENT WITH RAY RISNER
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 8th day
of May, 1996 between SOUTHERN ELECTRONICS DISTRIBUTORS, INC., a
Delaware corporation (the "Subsidiary") and wholly-owned
subsidiary of SOUTHERN ELECTRONICS CORPORATION, a Delaware
corporation ("SEC") and Ray D. Risner, an individual resident of
the State of Georgia (the "Employee").
W I T N E S S E T H:
WHEREAS, SEC, through the Subsidiary, is engaged in and
throughout the Area in the Business; and
WHEREAS, the Employee has served as the President and Chief
Operating Officer of the Subsidiary; and
WHEREAS, in the course of his employment, the Employee has
gained and will continue to gain knowledge of the business,
affairs, finances, management, marketing programs and philosophy,
customers and methods of operation of the Subsidiary; and
WHEREAS, the Subsidiary would suffer irreparable harm if the
Employee were to use such knowledge in competition with the
Subsidiary or SEC; and
<PAGE>
WHEREAS, the Subsidiary desires to continue the employment
of the Employee and the Employee desires to accept such continued
employment on the terms and conditions hereinafter set forth; and
WHEREAS, the Subsidiary recognizes the important
contributions made by the Employee to the Subsidiary in the past
and to assure that the Subsidiary will continue to have the
Employee's services available to it, also desires to provide the
Employee with monetary benefits upon certain contingencies in
addition to the Employee's annual compensation payable hereunder;
NOW, THEREFORE, in consideration of the foregoing, the
continued employment of the Employee, and the mutual covenants
and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) "Affiliate" or "Affiliated" means any person,
firm, corporation, partnership, association or entity, either
directly or indirectly, that controls, is controlled by, or is
under common control with a specified person, firm, corporation,
partnership, association or entity.
<PAGE>
(b) "Associate" means (1) any corporation, partnership
or other entity of which a specified person is an officer or
partner, or is, directly or indirectly, the beneficial owner of
ten percent (10%) or more of any class of equity securities
thereof, (2) any trust or estate in which the specified person
has a substantial beneficial interest or as to which the
specified person serves as trustee or in a similar fiduciary
capacity, (3) any relative or spouse of such specified person, or
any relative of such spouse, who has the same home as such
specified person, and (4) any person who is a trustee, officer or
partner of such specified person or of any corporation,
partnership or other entity that is an Affiliate of such
specified person.
(c) "Applicable Period" means one (1) year following
the last day on which Employee provides his services to the
Subsidiary following the giving of any notice of termination or
resignation of Employee's employment.
(d) "Area" means the states of Alabama, Florida,
Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina and Tennessee, the collective geographic area where a
substantial portion of the Business has been and will be
conducted. This definition of Area shall be amended in writing
promptly after the Subsidiary determines that the Business is
<PAGE>
conducted in any area not encompassed within the definition of
Area, as may be amended, to include such additional area.
(e) "Atlanta, Georgia Metropolitan Area" means the
counties of Clayton, Cobb, DeKalb, Fulton and Gwinnett, Georgia.
(f) "Beneficial Owner" shall be defined by reference
to Rule 13d-3 under the Exchange Act as such Rule is in effect on
the date hereof; provided, however, that any individual,
corporation, partnership, Group, association or other person or
entity which, directly or indirectly, owns or has the right to
acquire any of SEC's or the Subsidiary's outstanding securities
entitled to vote generally in the election of directors at any
time in the future, whether such right is contingent, absolute,
direct or indirect, pursuant to any agreement, arrangement or
understanding or upon exercise of conversion rights, warrants or
options or otherwise, shall be deemed the Beneficial Owner of
such securities.
(g) "Business" means the wholesale distribution
business of the Subsidiary, including, without limitation, the
business of selling computer products and peripherals and
cellular telephone products wholesale to retailers and other
distributors, or any successor business of the Subsidiary.
(h) "Cause means conduct of the Employee amounting to
fraud, dishonesty, gross or willful neglect of duties, a
<PAGE>
conviction of any federal, state or local laws involving a
felony, or crime involving fraud or moral turpitude (other than
pursuant to actions taken at the direction or with the approval
of the President or Board of Directors of the Subsidiary), or
engaging in activities prohibited by Sections 5, 6, 7, 8, 9 and
10 hereof.
(i) "Change of Control" shall be deemed to have
occurred if and when (1) any individual, corporation,
partnership, Group, association or other person or entity,
together with his, its or their Affiliates or Associates (other
than a trustee or other fiduciary holding securities under an
employee benefit plan of SEC) hereafter becomes the Beneficial
Owner of securities of SEC representing thirty percent (30%) or
more of the combined voting power of SEC's then outstanding
securities entitled to vote generally in the election of
directors; (2) the Continuing Directors of SEC shall at any time
fail to constitute a majority of the members of the Board of
Directors of SEC; (3) all or substantially all of the assets of
SEC are sold, conveyed, transferred or otherwise disposed of,
whether through one event or a series of related events, without
being Duly Approved by the Continuing Directors of SEC; (4) any
individual, corporation, partnership, Group, association or other
person or entity, together with his, its or their Affiliates or
Associates, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Subsidiary,
<PAGE>
becomes the Beneficial Owner of securities of the Subsidiary
representing thirty percent (30%) or more of the combined voting
power of the Subsidiary's then outstanding securities entitled to
vote generally in the election of directors; or (5) all or
substantially all of the assets of the Subsidiary are sold,
conveyed, transferred or otherwise disposed of, whether through
one event or a series of related events, without being Duly
Approved by the Continuing Directors of the Subsidiary.
(j) "Code" means the Internal Revenue Code of 1986, as
amended.
(k) "Competing Business" means any business or
enterprise which is engaged in a business that is the same or
essentially the same as the Business.
(l) "Continuing Director" means a director who either
was a member of the Board of Directors of either SEC or the
Subsidiary, as the case may be, on the date hereof, or who
becomes a member of the Board of Directors of either SEC or the
Subsidiary, as the case may be, subsequent to such date and whose
election or nomination for election by the Board of Directors of
that company was Duly Approved by the Continuing Directors of
that company at the time of such election or nomination, either
by a specific vote or by approval of the proxy statement issued
<PAGE>
by that company on behalf of the Board of Directors of that
company in which such person is named as a nominee for director.
(m) "Disability" or "Disabled" means the inability of
the Employee to perform substantially and continuously those
duties of his employment hereunder for a period in excess of 120
consecutive days (vacation days excepted) out of any consecutive
twelve (12) month period because of physical or emotional
incapacity or illness. The determination of Disability shall be
made by unanimous vote of the Board of Directors of the
subsidiary and SEC.
(n) "Duly Approved by the Continuing Directors" means
an action approved by the vote of at least a majority of the
Continuing Directors then on the Board of Directors of either SEC
or the Subsidiary, as the case may be; provided, however, if the
votes of such Continuing Directors in favor of such action would
be insufficient to constitute an act of the entire Board of
Directors of that company as if a vote by all of its members had
been taken, or it the number of persons constituting the
Continuing Directors of that company shall be equal to or less
than three, then the term Duly Approved by the Continuing
Directors shall mean an action approved by the unanimous vote of
the Continuing Directors then on the Board of Directors of that
company.
<PAGE>
(o) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(p) "Group" means persons who act in concert as
described in Section 13(d)(3) of the Exchange Act as in effect on
the date hereof.
(q) "Proprietary Information" means information
related to the Subsidiary or SEC that (a) derives economic value,
actual or potential, from not being generally known to other
persons who can obtain economic value from its disclosure or use;
and (b) is the subject of efforts by the Subsidiary or SEC that
are reasonable under the circumstances to maintain its secrecy,
including without limitation (i) with respect to information
which has been reduced to tangible form, marking such information
clearlY and conspicuously with a legend identifying its
confidential or proprietary nature; (ii) with respect to any oral
presentation or communication, denominating such information as
confidential immediately before, during or after such oral
presentation or communication; or (iii) otherwise treating such
information as confidential. Assuming these two criteria are
met, Proprietary Information includes, without limitation,
technical and nontechnical data related to the formulas,
patterns, designs, compilations, programs, Inventions, methods,
techniques, drawings, processes, finances, actual or potential
customers and suppliers, research, development, existing and
<PAGE>
future products, and employees of the Subsidiary and SEC.
Proprietary Information includes (x) information that has been
disclosed to the Subsidiary or SEC by a third party, which the
Subsidiary or SEC is obligated to treat as confidential, and (y)
information which is proprietary to an Affiliate of the
Subsidiary or SEC.
2. Terms and Conditions of Employment.
(a) The Subsidiary employs the Employee as President
and Chief Operating Officer (or such other and comparable titles
and positions as shall be given the Employee by the Subsidiary's
Board of Directors), and the Employee accepts such employment
with the Subsidiary in that capacity, subject to the terms and
conditions hereof. As such officer, Employee shall faithfully
perform for the Subsidiary the duties of said office and shall
perform such other duties of an executive, managerial or
administrative nature as are from time to time assigned or
delegated to the Employee by the President or Board of Directors
of the Subsidiary.
(b) Throughout his employment hereunder, the Employee
shall devote substantially all of his time, energy and skill to
perform the duties of his employment (vacations as provided
hereunder and reasonable absences because of illness excepted),
shall faithfully and industriously perform such duties, and shall
<PAGE>
use his best efforts to follow and implement all management
policies and decisions of the Subsidiary. The Employee shall not
become personally involved in the management of any other
company, partnership, proprietorship or other entity, other than
any Affiliate of the Subsidiary, without the consent of the Board
of Directors of the Subsidiary; provided, however, that so long
as it does not interfere with the Employee's employment
hereunder, the Employee may serve as a director in a company that
does not compete with the Business of the Subsidiary or any
Affiliate, and serve as an officer, director or otherwise
participate in educational, welfare, social, religious or civic
organizations. The executive offices of the Subsidiary shall,
during the term of this Agreement, be located in the Atlanta,
Georgia Metropolitan Area and in any event no farther than 35
miles from the present location of the executive offices. The
Employee shall not be required to relocate from the Atlanta,
Georgia Metropolitan Area in connection with the performance of
his duties hereunder.
3. Compensation.
(a) For his services hereunder, the Subsidiary shall
pay to the Employee an annual salary of ONE-HUNDRED TWENTY-ONE
THOUSAND FIVE HUNDRED FORTY-NINE AND 92/100 DOLLARS
($121,549.92). Such salary shall be paid in accordance with the
normal payroll payment practices of the Subsidiary and shall be
<PAGE>
subject to such deductions and withholdings as are required by
law or by policies of the Subsidiary, from time to time in
effect.
(b) [Subsection 3(b) omitted.]
(c) In addition to the annual salary payable to the
Employee hereunder, the Employee shall be permitted during the
term of this Agreement to participate or to continue to
participate in any bonus programs designed for the Employee and
any present or future group life, health and hospitalization or
disability insurance plans, pension or retirement plans or
similar benefits as are available to management employees of the
Subsidiary, on the same terms as such other employees, in each
case to the extent that the Employee is eligible under the terms
of such plans or programs. The Employee shall also be entitled
to receive a paid vacation of two (2) weeks per fiscal year.
During the terms of this Agreement, (i) the Employee may purchase
Disability insurance naming himself or any other person of
Employee's choice as the beneficiary thereof and the Subsidiary
shall reimburse the Employee for the premiums expended in
procuring that insurance; provided, however, the terms of such
insurance, including the premiums therefor, are acceptable to the
subsidiary, which acceptance shall not unreasonably be withheld;
and provided further, however, that the aggregate coverage
provided by such Disability insurance shall not exceed fifty
<PAGE>
percent (50%) of Employee's annualized salary in effect
immediately prior to the occurrence of such Disability for each
year of such Disability; and (ii) the Subsidiary shall use all
reasonable efforts to procure, at its expense, $200,000 aggregate
face amount term life insurance coverage on the life of the
Employee the proceeds of which shall be payable to a beneficiary
named by the Employee, and the Employee shall cooperate in all
reasonable respects with the Subsidiary in connection with the
procurement of that term life insurance; provided, however, that
the premiums for such insurance shall be commercially reasonable.
(d) The Employee shall be reimbursed in accordance
with the policies of the Subsidiary, as adopted and amended from
time to time, for all reasonable and appropriate expenses
incurred by him in connection with the performance of his duties
of employment hereunder; provided, however, Employee shall as a
condition of such reimbursement, submit verification of the
nature and amount of such expenses in accordance with the
reimbursement policies from time to time adopted by the
Subsidiary.
(e) The Employee shall not be entitled to receive any
compensation in addition to that set forth in this Section 3 for
any services provided by him in any capacity to SEC or the
Subsidiary, including, without limitation, as an officer of SEC,
<PAGE>
unless agreed to in writing by the Board of Directors of the
Subsidiary.
(f) If a Change of Control occurs while the Employee
is employed by the Subsidiary and if, within twelve (12) months
after the date of a Change of Control, the Employee's employment
is terminated involuntarily, or voluntarily by the Employee based
on (i) material changes in the nature or scope of the Employee's
duties or employment, (ii) a reduction in compensation of the
Employee made without the Employer's consent, (iii) a relocation
of the Subsidiary's executive offices other than in compliance
with the provisions of Section 2(b) of this Agreement, or (iv) a
good faith determination made by the Employee, upon consultation
with the Board of Directors of the Subsidiary, that it is
necessary or appropriate for the Employee to relocate from the
Atlanta, Georgia Metropolitan Area to enable Employee to perform
his duties hereunder, the Employee may, in his sole discretion,
give written notice within thirty (30) days after the date of
termination of employment to the Secretary of the Subsidiary that
he is exercising his rights hereunder and requests payment of the
amounts provided for under this subsection (f) (the "Notice of
Exercise").
If the employee gives a Notice of Exercise to receive
the payments provided for hereunder, the Subsidiary shall pay to
or for the benefit of the Employee, within thirty (30) days after
<PAGE>
the Subsidiary's receipt of the Notice of Exercise, a single cash
payment for damages suffered by the Employee by reason of a
Change in Control causing the Subsidiary's breach of this
Agreement (the "Executive Payment") in an amount equal to the
aggregate present value (as determined in accordance with Section
280G(d)(4) of the Code) of all annual salary, bonuses and other
benefits owing to Employee for the period from Employee's date of
termination hereunder through the remainder of the Initial Term
of this Agreement, as may be extended; provided, however, in the
event the period from the date of Employee's termination
hereunder through the remainder of the Initial Term of this
Agreement, as may be extended, is less than twelve (12) months,
then the Employee shall receive an Executive Payment equal to the
sum of the present value (as determined in accordance with
Section 280G(d)(4) of the Code) of (i) the current annual salary
and the value of all other benefits payable to the Employee
annualized for a twelve (12) month period, and (ii) an amount
equal to any bonus that would have been paid for such period of
less than twelve (12) months in accordance with the terms of any
such bonus arrangement between the Employee and the Subsidiary.
The Executive Payment shall be in addition to and shall not
be offset or reduced by (i) any other amounts that have been
earned or accrued or that have otherwise become payable or will
become payable to the Employee or his beneficiaries, but have not
been paid by the Subsidiary at the time the Employee gives the
<PAGE>
Notice of Exercise including, without limitation, salary,
bonuses, severance pay, consulting fees, disability benefits,
termination benefits, retirement benefits, life and health
insurance benefits or any other compensation or benefit payment
that is part of any previous, current or future contract, plan or
agreement, written or oral, and (ii) any indemnification payments
that may have accrued but not paid or that may thereafter become
payable to the Employee pursuant to the provisions of SEC's and
the Subsidiary's Certificates of Incorporation, Bylaws or similar
policies, plans or agreements relating to indemnification of
directors and officers of SEC and the Subsidiary under certain
circumstances. Notwithstanding the foregoing, all amounts
received by the Employee and constituting an Executive Payment
shall be reduced by mitigation to the extent of the Employee's
earned income within the meaning of Section 911(d)(2)(A) of the
Code) during the remainder of the period in which this Agreement
would have been in effect had the Employee's employment hereunder
not been terminated by reason of a Change in Control. Any earned
income received by Employee during the remainder of the period in
which this Agreement would have been in effect had the Employee's
employment hereunder not been terminated by reason of a Change in
Control shall promptly be forwarded to the Subsidiary to mitigate
the amount of the Executive Payment so paid to the Employee until
the earlier of (i) the Executive Payment is repaid in full, or
(ii) the expiration of the term of this Agreement had it so
remained in effect.
<PAGE>
In the event the Employee dies during the term of this
Agreement, the Employee's legal representative shall be entitled
to receive the Executive Payment, provided that the Notice of
Exercise has been or is given either by the Employee or his legal
representative, as the case may be.
4. Term and Termination of this Agreement.
(a) The term of this Agreement and of Employee's
employment hereunder shall commence as of the effective date
hereof and shall continue for a period from May 8, 1996 through
June 30, 1997 (the "Initial Term") unless earlier terminated as
provided in Section 4(b) of this Agreement. The Initial Term of
this Agreement and of Employee's employment hereunder may be
extended for additional one (1) year periods following the end of
the Initial Term or any previously extended term upon mutual
written agreement between the Employee and the Subsidiary.
(b) This Agreement and Employee's employment hereunder
may only be terminated (i) by mutual agreement of the Employee
and the Subsidiary; (ii) by the Subsidiary immediately for Cause;
(iii) by the Subsidiary upon the Disability of the Employee; or
(iv) upon the death of Employee.
(c) Upon the termination of this Agreement and
Employee's employment hereunder as provided in Section 4(b)
<PAGE>
hereof, unless otherwise agreed to by the Employee and the
Subsidiary pursuant to Section 4(b)(i), the Subsidiary shall have
no further obligation to the Employee or, in the event of his
death, to his estate or beneficiaries thereof, other than (i) for
payment of salary, bonuses and other benefits earned or accrued
pursuant to Section 3 hereof (including insurance benefits owing
upon the Disability or death of the Employee) and unpaid at the
effective date of such termination, and (ii) for any
indemnification payment that may become payable to the Employee
pursuant to the provisions of SEC's and the Subsidiary's
Certificates of Incorporation, Bylaws or similar policies, plans
or agreements relating to indemnification of directors and
officers of SEC and the Subsidiary under certain circumstances
("Indemnification Payments"); provided, however, that nothing in
this subsection (c) shall limit the Subsidiary's obligations
under Section 3(f) of this Agreement for which notice has been
properly given by the Employee or, in the event of his death, by
his estate or beneficiaries thereof.
(d) Subject to the provisions of Sections 3(f) and
4(e) hereof, a breach of this Agreement by the Subsidiary,
including without limitation, the occurrence of any of the events
described in clauses (i) through (iv) of Section 3(f) hereof, if
not cured within thirty (30) days after the giving of notice
thereof by Employee to the President of the Subsidiary, shall
entitle Employee to terminate voluntarily Employee's employment
<PAGE>
under this Agreement and recover all damages for such breach by
the Subsidiary as permitted hereunder and by law.
(e) In the event this Agreement and Employee's
employment hereunder should be terminated by the Subsidiary
without Cause, the Employee, in his sole discretion, may elect
(1) to receive from the Subsidiary a lump sum payment equal to
(x) all salary, bonuses and other benefits earned or accrued
pursuant to Section 3 hereof and unpaid at the effective date of
such termination, and (y) the aggregate present value (as
determined in accordance with Section 280G(d)(4) of the Code) of
all annual salary, bonuses and other benefits owing to the
Employee for the period from Employee's date of termination
hereunder through the remainder of the Initial Term of this
Agreement, as may be extended, and to receive any Indemnification
Payments that may become payable to the Employee; or (2) to
receive from the Subsidiary a lump sum payment equal to all
salary, bonuses and other benefits earned or accrued pursuant to
Section 3 hereof and unpaid at the effective date of such
termination, and to receive any Indemnification Payments that may
become payable to the Employee. In the event the Employee elects
to receive the benefit described in clause (1) of this subsection
(e) then the Employee shall remain subject to and bound by (xx)
the covenants contained in Sections 5, 6 and 7 hereof for a
period of one year following the Initial Term of this Agreement,
as may be extended, and (yy) the covenants, representations and
<PAGE>
agreements contained in Sections 8, 9, 10, 11 and 12 hereof for
so long as said covenants, representations and agreements shall
survive. In the event the Employee elects to be bound by the
provisions of clause (2) of this subsection (e), (xx) the
Subsidiary shall concurrently release the Employee from and the
Employee shall no longer be subject to and bound by, the
covenants contained in Section 5 and 6 hereof, (yy) the Employee
shall remain subject to and bound by the covenants contained in
Section 7 hereof for a period of one year following the effective
date of such termination, and (zz) the Employee shall remain
subject to and bound by the covenants, representations and
agreements contained in Sections 8, 9, 10, 11 and 12 hereof for
so long as said covenants, representations and agreements shall
survive.
(f) The covenants of the Employee contained in
Sections 5, 6, 7, 8, 9, 10, 11 and 12 shall survive the
termination of this Agreement and the Employee's employment under
this Agreement and shall not be extinguished thereby. The
covenants of the Subsidiary contained in this Agreement shall
survive the termination of this Agreement and the Employee's
employment hereunder and shall not be extinguished thereby.
<PAGE>
5. Agreement Not to Compete.
The Employee agrees that during his employment hereunder and
for the Applicable Period following the termination of such
employment or for such other period as may be described in
Section 4(e) hereof, as applicable, he will not, without the
prior written consent of the Subsidiary, (i) within the Area,
either directly or indirectly, on his own behalf or in the
service or on behalf of others as an officer, trustee,
consultant, or executive or managerial employee, engage in or be
employed by any Competing Business in which the Employee is
expected to perform duties and activities similar to those
performed by the Employee for the Subsidiary prior to his
termination of employment with the Subsidiary, or (ii) acquire
beneficial ownership of any securities of any Competing Business
conducting business within the Area; provided, however, the
Employee may acquire beneficial ownership of securities of a
Competing Business whose securities are traded on any national
securities exchange or quoted by the National Association of
Securities Dealers, Inc. automated quotation system if the
Employee (A) is not a controlling person of, or a member of a
group that controls, the Competing Business and (B) does not,
directly or indirectly, own five percent (5%) or more of any
class of securities of the Competing Business.
<PAGE>
6. Agreement Not to Solicit Customers.
She Employee agrees that during his employment hereunder and
for the Applicable Period following the termination of such
employment or for such other period as may be described in
Section 4(e) hereof, as applicable, he will not, without the
prior written consent of the Subsidiary, within the Area, either
directly or indirectly, on his own behalf or in the service or on
behalf of others, solicit, divert or appropriate, or attempt to
solicit, divert or appropriate, to any Competing Business as a
customer any person or entity whose account with the Subsidiary
was sold or serviced by or under the supervision of the Employee
during the period of twelve (12) months or any portion thereof
prior to the date of Employee's termination of employment with
the Subsidiary.
7. Agreement Not to Solicit Employees.
Employee agrees that during his employment hereunder
and for the Applicable Period following the termination of such
employment or for such other period as may be described in
Section 4(e) hereof, as applicable, he will not, either directly
or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert or hire away, or attempt to solicit,
divert or hire away, to any Competing Business any person
employed by SEC or the Subsidiary, whether or not such employee
<PAGE>
is a full-time employee or a temporary employee of SEC or the
Subsidiary, whether or not such employment is pursuant to written
agreement, and whether or not such employment is for a determined
period or is at will.
8. Ownership and Protection of Proprietary Information.
(a) All Proprietary Information and all physical
embodiments thereof are confidential to and are and will remain
the sole and exclusive property of the Subsidiary. The Employee
must: (1) immediately disclose to the Subsidiary all Proprietary
Information developed in whole or in part by the Employee during
the term of his employment with the Subsidiary, (2) assign to the
Subsidiary any right, title or interest the Employee may have in
such Proprietary Information, and (3) at the request and expense
of the Subsidiary, do all things and sign all documents or
instruments reasonably necessary in the opinion of the Subsidiary
to eliminate any ambiguity as to the ownership by and rights of
the Subsidiary in such Proprietary Information including, without
limitation, providing to the Subsidiary the Employee's full
cooperation in any litigation or other proceeding to establish or
protect such rights.
(b) Except to the extent necessary to perform the
services to be provided hereunder, the Employee will not
reproduce, use, distribute, disclose or otherwise disseminate the
<PAGE>
Proprietary Information or any physical embodiments thereof and
will in no event take any action causing, or fail to take the
action necessary in order to prevent, any Proprietary Information
disclosed to or developed by the Employee to lose its character
or cease to qualify as Proprietary Information. Each
reproduction of any of the Proprietary Information must
prominently contain a legend identifying its confidential or
proprietary nature.
(c) The Employee represents and warrants that any
information disclosed by the Employee to the Subsidiary is not
confidential or proprietary to the Employee or to any third
party. Accordingly, no obligation of any kind is assumed by or
to be implied against the Subsidiary by virtue of any information
received, in whatever form or whenever received, from the
Employee relating to the subject matter hereof, and the
Subsidiary will be free to reproduce, use and disclose to others
such information without limitation.
(d) Upon request by the Subsidiary, and in any event
upon termination of the employment of the Employee with the
Subsidiary for any reason, as a prior condition to receiving any
final compensation, including bonuses, hereunder, the Employee
will promptly deliver to the Subsidiary all property belonging to
the Subsidiary, including, without limitation, all Proprietary
<PAGE>
Information and all embodiments thereof then in his custody,
control or possession.
(e) The covenants of confidentiality set forth herein
will apply on and after the date hereof to any Proprietary
Information disclosed by the Subsidiary to or developed by the
Employee prior to or after the date hereof and will continue and
be maintained by the Employee (1) with respect to the Proprietary
Information consisting of technical or scientific information, at
any and all times following the termination of Employee's
employment hereunder for any reason whatsoever, and (2) with
respect to all other Proprietary Information, for the Applicable
Period following such termination of employment, unless a longer
period of protection is provided by law.
9. Inventions and Patents.
(a) The Employee agrees that all processes,
technologies and inventions (collectively, the "Inventions"),
including new contributions, improvements, ideas and discoveries,
whether patentable, copyrightable, registrable or not, conceived,
developed, invented or made by him during his employment by the
Subsidiary shall belong to the Subsidiary; provided that such
Inventions grew out of the Employee's work with the Subsidiary or
in conjunction with any employees thereof, are related in any
manner, commercial or experimental, to the Business, or are
<PAGE>
conceived or made on the Subsidiary's time or with the use of the
Subsidiary's facilities or materials. The Employee shall
further: (i) promptly disclose such Inventions to the Subsidiary;
(ii) assign to the Subsidiary, without additional compensation,
all patent, copyright, trademark or other rights to such
Inventions; (iii) execute all documents necessary or desirable to
carry out the foregoing; (iv) assist the Subsidiary in obtaining
and enforcing any patents, copyright, trademarks or other rights
relating to the Inventions; and (v) take such other action as the
Subsidiary shall reasonably request.
(b) If any Invention is described in a patent,
copyright or trademark application or is disclosed to third
parties, directly or indirectly, by the Employee within the
Applicable Period following termination of Employee's employment,
it is to be presumed that the Invention was conceived, developed,
invented or made during the term of the Employee's employment
hereunder.
(c) The Employee agrees that he will not assert any
rights to any Invention as having been conceived, developed,
invented, made or acquired by him prior to the date of this
Agreement, except for Inventions, if any, disclosed to the
Subsidiary in writing prior to the date hereof.
10. Intellectual Property.
<PAGE>
The Subsidiary shall be the sole owner of all the products
and proceeds of the Employee's services hereunder, including, but
not limited to, all materials, ideas, concepts, formats,
suggestions, developments, arrangements, packages, programs and
other intellectual properties that the Employee may acquire,
obtain, develop or create in connection with, and during the term
of, the Employee's employment hereunder, free and clear of any
claims by the Employee or anyone claiming under the Employee of
any kind or character whatsoever, other than the Employee's right
to receive payments hereunder. The Employee shall, at the
reasonable request of the Subsidiary, execute such assignments,
certificates or other instrument as the Subsidiary from time to
time shall deem necessary or desirable to evidence, establish,
maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
11. Rights and Remedies upon Breach.
(a) Employee agrees that the covenants, representa-
tions and agreements contained in Sections 5, 6, 7, 8, 9 and 10
of this Agreement are of the essence of this Agreement; that each
of such covenants, representations and agreements is reasonable
and necessary to protect and preserve the interest, properties
and Business of the Subsidiary; that the Subsidiary is engaged in
and throughout the Area in the Business; that irreparable loss
and damage will be suffered by the Subsidiary should Employee
<PAGE>
breach any of such covenants, representations and agreements;
that each of such covenants, representations and agreements is
separate, distinct and severable not only from the other of such
covenants, representations and agreements but also from the other
provisions of this Agreement; and that the unenforceability of
any covenant, representation or agreement shall not affect the
validity or enforceability of any other covenant, representation
or agreement or any other provision of this Agreement.
(b) It the Employee breaches, or threatens to commit a
breach of, any of the covenants, representations or agreements
contained in Sections 5, 6, 7, 8, 9 or 10 of this Agreement, the
Subsidiary shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and
severally enforceable, and all of which shall be in addition to,
and not in lieu of, any other rights and remedies available to
the Subsidiary under law or in equity:
(1) the right and remedy to have the covenants,
representations or agreements specifically enforced by any court
having equity jurisdiction, including, without limitation, the
right to an entry against the Employee of restraining orders and
injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not then
continuing, of such covenants, representations or agreements, it
being acknowledged and agreed that any such breach or threatened
<PAGE>
breach will cause irreparable injury to the Subsidiary and that
money damages will not provide an adequate remedy to the
Subsidiary; and
(2) the right and remedy to require the Employee
to account for and pay over to the Subsidiary all compensation,
profits, monies, accruals, increments or other benefits derived
or received by him primarily as a result of any transactions
constituting breach of the covenants, representations or
agreements, and the Employee shall account for and pay over such
compensation, profits, monies, accruals, increments or other
benefits to the Subsidiary.
(c) In the event that the Employee shall breach any of
the covenants, representations or agreements contained in
Sections 5, 6, 7, 8, 9 or 10 hereof, the running of the period of
the restrictions set forth in any such Section shall be tolled
during the continuation of any such breach by the Employee, and
the running of the period of such restrictions shall commence
only upon compliance by the Employee with the terms of the
applicable Section.
(d) In the event the Subsidiary should seek an
injunction under this Section 11, Employee hereby waives any
requirement that the Subsidiary submit proof of the economic
value of any Proprietary Information or that the Subsidiary post
<PAGE>
a bond or any other security. In the event of any litigation
between the parties hereto arising out of or relating to this
Section 11, the prevailing party therein shall be allowed all
reasonable attorneys' fees expended or incurred in such
litigation to be recovered as part of the costs therein.
12. No Set-Off by Employee.
The existence of any claim, demand, action or cause of
action by the Employee against SEC or the Subsidiary, whether
predicated upon this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Subsidiary of any of its
rights hereunder.
13. Employee's Expenses.
All costs and expenses, including reasonable legal,
accounting and other advisory fees, incurred by the Employee to
(a) contest any determinations made by the Subsidiary concerning
the amounts payable by the Subsidiary to the Employee under this
Agreement, or (b) prepare responses to an Internal Revenue
Service audit of, and otherwise defend, his personal income tax
return for any year that is the subject of any such audit or an
adverse determination, administrative proceeding or civil
litigation arising therefrom that is occasioned by, or related
to, an audit by the Internal Revenue Service of SEC's
<PAGE>
consolidated income tax returns are, upon written demand by the
Employee explaining the basis for the request for such
reimbursement or advancement, to be promptly advanced or
reimbursed to the Employee or paid directly, on a current basis,
by the Subsidiary or its successors.
Except aa otherwise provided in Section 11(d) of this
Agreement, if at any time during the term of this Agreement or
afterwards there should arise any litigation, hearing or
arbitration as to the interpretation or application of any term
or condition of this Agreement, the Subsidiary agrees, upon
written demand by the Employee (and the Employee shall be
entitled upon application to any court of competent jurisdiction,
to the entry of a mandatory injunction, without the necessity of
posting any bond with respect thereto, compelling the Subsidiary)
promptly to provide sums sufficient to pay on a current basis,
either directly or by reimbursing the Employee, the Employee's
costs and reasonable attorneys' fees, including, without
limitation, expenses of investigation and disbursements for the
fees and expenses of experts, incurred by the Employee in
connection with any such litigation, hearing or arbitration
regardless of whether the Employee is the prevailing party in
such litigation, hearing or arbitration; provided, however, if a
court of competent Jurisdiction finally determines with respect
to this obligation, upon application by the Subsidiary made in
good faith, that the Employee initiated such litigation
<PAGE>
frivolously, then the Subsidiary shall not be obligated to pay or
reimburse the Employee for such costs and reasonable attorneys'
fees incurred by the Employee in connection with such litigation,
hearing or arbitration, and Employee shall be obligated to pay or
reimburse the Subsidiary for its costs and reasonable attorneys'
fees, including, without limitation, expenses of investigation
and disbursements for the fees and expenses of experts (other
than Affiliates), incurred by the Subsidiary in connection with
any such litigation, hearing or arbitration. Except as provided
in the immediately preceding sentence, under no circumstances
shall the Employee be obligated to pay or reimburse SEC or the
Subsidiary for any attorneys' fees, costs or expenses incurred by
SEC or the Subsidiary.
14. Notices.
All notices, requests, demands and other communications
permitted or required hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or by
courier or if mailed, by United States certified or registered
mail, postage prepaid, to the party to which the same is directed
at the following addresses, or at such other addresses as shall
be given in writing by the parties to one another:
<PAGE>
If to SEC or
the Subsidiary: Southern Electronics Corporation
Southern Electronics Distributors, Inc.
4916 North Royal Atlanta Drive
Tucker, Georgia 30084
Attention: President
With a copy to: Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: G. William Speer, Esq.
If to the Employee: Ray D. Risner
c/o Southern Electronics Distributors,
Inc.
4916 N. Royal Atlanta Drive
Tucker, Georgia 30085
Notices delivered other than by mail shall be effective on the
date of delivery. Notices delivered by mail as aforesaid shall
be effective upon the earlier of receipt or the third calendar
day subsequent to the postmark date thereof.
15. Miscellaneous Provisions.
(a) Severability. In case any one or more of the
provisions of this Agreement shall, for any reason, be held or
found by final judgment of a court of competent jurisdiction to
be invalid, illegal or unenforceable in any respect, (1) such
invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, (2) this Agreement shall be
construed as if such invalid, illegal or unenforceable provision
had never been contained herein, and (3) if the effect of a
holding or finding that any such provision is either invalid,
<PAGE>
illegal or unenforceable is to modify to the Employee's
detriment, reduce or eliminate any compensation, reimbursement,
payment, allowance or other benefit to the Employee intended by
the Subsidiary and the Employee in entering into this Agreement,
the Subsidiary shall promptly negotiate in good faith and enter
into an agreement with the Employee containing alternative
provisions reasonably acceptable to the Employee that will
restore to the Employee, to the extent legally permissible,
substantially the same economic, substantive and tax benefits the
Employee would have enjoyed had any such provision of this
Agreement been upheld as legal, valid and enforceable. Failure
to insist upon strict compliance with any provision of this
Agreement shall not be deemed a waiver of such provision or of
any other provision of this Agreement. Notwithstanding anything
to the contrary contained herein, Employee, the Subsidiary and
SEC each covenant and agree that he or it, as appropriate, shall
not challenge in any manner, before any person, panel,
proceeding, hearing, court or other entity, the validity or
enforceability of this Agreement, and that the covenant and
agreement set forth in this sentence shall survive the expiration
or termination of this Agreement.
(b) Entire Agreement. The Employee acknowledges
receipt of copy of this Agreement, together with any attachments
hereto, which has been executed in duplicate and agrees that,
with respect to the subject matter hereof, this Agreement is the
<PAGE>
entire agreement with the Subsidiary. Any other oral or written
representations, understandings or agreements with the Subsidiary
and its directors, officers or representatives covering the same
subject matter that are in conflict with this Agreement are
hereby merged into and superseded by the provisions of this
Agreement.
(c) No Set-Off. The Subsidiary shall have no right of
set-off or counterclaim in respect of any debt or other
obligation of the Employee to SEC or the Subsidiary against
payment or other obligation of the Subsidiary or SEC to the
Employee provided for in this Agreement.
(d) Modification and Waiver. No provision of this
Agreement may be amended, modified or waived unless such
amendment, modification or waiver shall be agreed to in writing
and signed by the Employee and by a person duly authorized by the
Board of Directors of the Subsidiary.
(e) No Assignment of Compensation. Except as
otherwise provided in this Agreement, no right to or interest in
any compensation or reimbursement payable hereunder shall be
assignable or divisible by the Employee; provided, however, that
this provision shall not preclude the Employee from designating
one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude his executor or
<PAGE>
administrator from assigning any right hereunder to the person or
persons entitled thereto.
(f) No Attachment. Except as required by law, no
right to receive payments under this Agreement shall be subject
to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation, or to execution,
attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to affect any
such action shall be null, void and of no force and effect.
(g) Headings. The headings of Sections and
subsections hereof are included solely for convenience of
reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
(h) Governing Law. This Agreement has been executed
and delivered in the State of Georgia and shall be construed in
accordance with and governed for all purposes by the laws of the
State of Georgia.
(i) No Assignment of Agreement. This Agreement may
not be assigned, partitioned, subdivided, pledged, or
hypothecated in whole or in part without the express prior
written consent of the Employee and the Subsidiary. This
Agreement shall not be terminated either by the voluntary or
<PAGE>
involuntary dissolution or the winding up of the affairs of SEC
or the Subsidiary, or by any merger or consolidation involving
SEC wherein SEC is not the surviving entity, or involving the
Subsidiary wherein the Subsidiary is not the surviving entity, or
by any transfer of all or substantially all of the assets on a
consolidated basis of SEC or the assets of the Subsidiary. In
the event of any such merger, consolidation or transfer of
assets, the provisions of this Agreement shall be binding upon
the surviving entity or to the entity to which such assets shall
be transferred.
(j) Interest on Amounts Payable. If any amounts that
are required or determined to be paid or payable or reimbursed or
reimbursable to the Employee under this Agreement (or after a
Change of Control, under any other plan, agreement, policy or
arrangement with SEC or the Subsidiary) are not paid promptly at
the times provided herein or therein, such amounts shall accrue
interest at an annual percentage rate equal to the "prime rate"
as then published in The Wall Street Journal plus two percent
(2%) from the date such amounts were required or determined to
have been paid or payable or reimbursed or reimbursable to the
Employee until such amounts and any interest accrued thereon are
finally and fully paid; provided, however, that in no event shall
the amount of interest contracted for, charged or received
hereunder exceed the maximum non-usurious amount of interest
allowed by applicable law.
<PAGE>
(k) Federal Income Tax Withholding. The Subsidiary
may withhold from any benefits payable under this Agreement all
federal, state, city or other taxes, other than excise taxes, as
shall be required pursuant to any law or governmental regulation
or ruling.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Employment Agreement as of the day and year first
indicated above.
SOUTHERN ELECTRONICS
DISTRIBUTORS, INC.
By:________________________________
Name:_________________________
Title:________________________
_____________________________(SEAL)
(Employee's Signature)
The undersigned acknowledges and agrees to be bound by and
subject to the provisions of Section 14 and Sections 15(a) and
(j) of this Agreement as if the undersigned were a party to this
Agreement.
Dated as of May 8, 1996.
SOUTHERN ELECTRONICS CORPORATION
By:_______________________________
Name:_________________________
Title:_______________________
EXHIBIT 10.32
SECOND ADDENDUM TO NQPJV LEASE
SECOND ADDENDUM TO LEASE
THIS SECOND ADDENDUM TO LEASE (the "Second Addendum") is
made and entered into as of the 10th day of January, 1996, by and
between NEW WORLD PARTNERS JOINT VENTURE, a Florida general
partnership ("NWPJV"), NEW WORLD PARTNERS JOINT VENTURE NUMBER
TWO, a Florida general partnership ("Number Two") (NWPJV and
Number Two are sometimes collectively referred to as the
"Landlord"), and SOUTHERN ELECTRONICS DISTRIBUTORS, INC., a
Delaware corporation (the "Tenant").
W I T N E S S E T H
WHEREAS, NWPJV and Tenant entered into that certain
Lease-Industrial Commercial, dated August 9, 1993, as amended by
that certain Addendum to Lease of even date therewith
(collectively, the "Lease"), whereby NWPJV leased to Tenant, and
Tenant leased from NWPJV, the Premises, as defined in the Lease,
for approximately 15,420 rentable square feet in Building 6 of
Beacon Centre, Miami, Florida; and
WHEREAS, Landlord and Tenant desire to amend and modify the
Lease in order to relocate the Premises to that certain
industrial space located ln Building 2 of Beacon Centre,
consisting of approximately thirty-one thousand two hundred
fifty-two (31,252) rentable square feet (the "Relocation Space"),
which Relocation Space and Building 2 are more particularly
described in Exhibit "A," attached hereto and made a part hereof,
on the terms and conditions hereinafter set forth; and
WHEREAS, Landlord and Tenant desire to renew the Term of the
Lease for sixty-one (61) months, commencing on the Relocation
Space Commencement Date, as hereinafter defined, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and in consideration of Ten and No/100 ($10.00)
Dollars and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Landlord and
Tenant hereby agree as follows.
1. Incorporation of Recitals. The above recitals are true
and correct and are incorporated herein as if set forth in full.
2. General Provisions. All defined terms in this Second
Addendum shall have the same meaning as in the Lease, except as
otherwise noted. Except as amended and modified by this Second
Addendum, all of the terms, covenants, conditions, and agreements
of the Lease shall remain in full force and effect. In the event
of any conflict between the provisions of the Lease and the
provisions of this Second Addendum, this Second Addendum shall
control. For purposes of this Second Addendum, the 15,420 square
feet in Building 6 from which Tenant is relocating is hereinafter
referred to the "Original Premises."
3. Landlord; Grant. The landlord of Building 2 is Number
Two. Therefore, pursuant to the terms and conditions contained
in the Lease, as modified by this Second Addendum, Number Two
hereby leases to Tenant, and Tenant hereby leases from Number
Two, the Relocation Space. In addition, as of the Relocation
Space Commencement Date, NWPJV hereby assigns to Number Two all
of NWPJV's right, title, and interest in and to the Lease. As of
the Relocation Space Commencement Date, Number Two does hereby
assume and agree to perform all of the Landlord's obligations
under the Lease accruing from and after the Relocation Space
Commencement Date. Number Two shall be responsible to prepare
the Relocation Space for Tenant's occupancy as described below.
4. Relocation Space Commencement Date. The Original
Premises shall be deemed to be relocated to the Relocation Space
as of the date that Number Two completes that portion of the
improvements to the Relocation Space relating to the construction
of a demising wall and separation of electrical service to the
Relocation Space, as more particularly described in Exhibit "B,"
attached hereto and made a part hereof (the "Relocation Space
Commencement Date"). Upon such Relocation Space Commencement
Date, Tenant's obligations to pay Minimum Rent, Tenant's
proportionate share of Increased Operating Coats, and any other
sums with respect to the Relocation Space shall thereupon
commence (and will be prorated for a partial month, if the
Relocation Space Commencement Date is not the first day of a
month) and the Relocation Space shall thereupon be deemed to be
the Premises for all purposes of the Lease, as modified by this
Second Addendum.
<PAGE>
5. Term; Completion of Improvements.
(a) The term of the Lease is hereby renewed and
extended commencing on the Relocation Space Commencement Date
and, unless earlier terminated in accordance with the Lease,
terminating sixty-one (61) months after the Relocation Space
Commencement Date (the "Renewal Term").
(b) Number Two will provide certain improvements to
the Relocation Space pursuant to the terms and conditions set
forth in Exhibit "B" hereto.
6. Surrender of Original Premises. As of the Relocation
Space Commencement Date, Tenant shall surrender and vacate the
Original Premises, such surrender and vacation to be in
accordance with the applicable provisions of the Lease,
including, but not limited to, section 5.2.
7. Release of Liability. As of the Relocation Space
Commencement Date, provided that Tenant has surrendered and
vacated the Original Premises to NWPJV as set forth above and has
taken occupancy of the Relocation Space, NWPJV and Tenant hereby
release each other from any and all obligations and liabilities
arising out of, with respect to, or in any way pertaining to the
Original Premises from which Tenant is relocating, except for any
obligations and liabilities which arise after the date of this
Second Addendum which are not fully satisfied as of the
Relocation Space Commencement Date, including, without
limitation, any (a) liability, damages, expenses, costs, and the
like incurred by NWPJV (including, without limitation, reasonable
attorneys' fees at all levels, including appeals) with respect to
the surrender and vacation of the Original Premises by Tenant,
and (b) Tenant's share of Increased Operating Costs applicable to
the Original Premises through the Relocation Space Commencement
Date, even though such charges may not be billed until after the
Relocation Space Commencement Date, and (c) any environmental
liability of Tenant pursuant to section 3.4 of the Lease.
8. Rent During Construction. From the date of this Second
Addendum through the date that Tenant has surrendered and vacated
the Original Premises to NWPJV as set forth above and has taken
occupancy of the Relocation Space, Tenant shall continue to pay
to NWPJV Minimum Rent, Tenant's proportionate share of Increased
Operating Costs, and any other sums in accordance with the Lease
with respect to the Original Premises in accordance with the
terms of the Lease.
9. Minimum Rent. Commencing on the Relocation Space
Commencement Date, the Minimum Rent with respect to the
Relocation Space (payable ln the manner set forth in the Lease
for payments of Minimum Rent) shall be as follows:
ANNUAL MINIMUM RENT MONTHLY PAYMENT
LEASE YEAR RATE PER SQUARE FOOT (PLUS SALES TAX)
1 $6.50 $16,928.17*
2 $6.70 $17,449.03
3 $6.90 $17,969.90
4 $7.10 $18,490.77
5 (plus last month) $7.32 $19,063.72
*Notwithstanding the foregoing, Minimum Rent shall be abated
for the first thirty (30) days of the Term, commencing on the
Relocation Space Commencement Date.
10. Increased Operating Costs. During the Renewal Term, the
payments with respect to Increased Operating Costs for the
Relocation Space shall be determined as provided in the Leases;
provided, however, that (a) the Base Year for Increased Operating
Costs for the Relocation Space shall be the calendar year 1996,
and (b) because Building 2 consists of 114,682 square feet,
Tenant's proportionate share for purposes of Increased Operating
Costs shall be 27.25%, and any other matter under the Lease that
is a function of rentable area shall be adjusted accordingly.
11. Parking. During the Renewal Term, Tenant shall have the
right to use forty-one (41) unassigned parking spaces in the
parking area for Building 2, on the terms and conditions set
forth ln the Lease, including, without limitation, section 11.1.
<PAGE>
12. Prepaid Rents Security Deposit. The Minimum Rent
payable for the second (2nd) month of the Renewal Term (which is
in the amount of Eighteen Thousand Twenty-Eight and 50/100
($18,028.50) Dollars (which includes sales tax)), shall be paid
by Tenant simultaneously with its execution of this Second
Addendum.
Pursuant to this Second Addendum, Tenant shall post a
security deposit in the amount of Thirty-Three Thousand Eight
Hundred Fifty-Six and 34/100 ($33,856.34) Dollars (which excludes
sales tax), payable as follows: Twenty-One Thousand Six and
34/100 ($21,006.34) Dollars shall be paid by Tenant
simultaneously with its execution of this Second Addendum, and
the existing security deposit of Twelve Thousand Eight Hundred
Fifty and No/100 ($12,850.00) Dollars shall be applied by
Landlord to the security deposit due under this Second Addendum
and shall continue to be held by Landlord as security for
Tenant's obligations under the Lease, pursuant to the terms and
conditions of the Lease with respect thereto. In addition, the
parties acknowledge and agree that paragraph 4 of the Addendum to
Lease referenced above is void and of no force or effect.
13. Option to Renew. Nothing contained in this Second
Addendum shall be deemed to modify Tenant's option to renew the
Lease for one (1) additional term of twenty-four (24) months
pursuant to the terms and conditions set forth in Rider Number 1
to the Lease.
14. Right of First Offer. The parties acknowledge and agree
that section 13.14 of the Lease is hereby deleted in its entirety
and is of no further force or effect.
15. Relocation by Tenant. Because this Second Addendum
constitutes the relocation of Tenant pursuant to section 13.15 of
the Lease, such section 13.15 is hereby deleted in its entirety
and is of no further force or effect.
16. Brokers. Landlord and Tenant each represent and warrant
one to the other that except as hereinafter set forth, neither of
them has employed any broker in connection with the negotiations
of the terms of this Second Addendum or the execution hereof.
Landlord and Tenant hereby agree to indemnify and to hold each
other harmless against any loss, expense, or liability with
respect to any claims for commissions or brokerage fees arising
from or out of any breach of the foregoing representation and
warranty. Landlord recognizes Codina Bush Klein.Oncor
International and The Keyes Company as the sole brokers with whom
Landlord has dealt in this transaction and Landlord shall pay any
commissions payable to such brokers pursuant to separate
agreements. Tenant acknowledges that Codina Bush Klein.Oncor
International, Inc. represents solely the Landlord with respect
to this Second Addendum.
17. Entire Agreements; No Set-Off. The Lease, as modified
by this Second Addendum, sets forth the entire agreement between
the Landlord and Tenant and there are no other agreements or
understandings between them. Tenant certificates and affirms
that, as of the date hereof, there are no claims, offsets, or
breaches of the Lease, or any action or causes of action against
Landlord directly or indirectly relating to the Lease.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Second Addendum as of the day and year first above written.
WITNESSES: LANDLORD:
NEW WORLD PARTNERS JOINT VENTURE,
a Florida general partnership
By: Codina/Tradewind, Ltd., a
Florida limited partnership,
as general partner
By: Codina West Dade
Development Corp., as
general partner
By:___________________
Armando Codina,
President
NEW WORLD PARTNERS JOINT VENTURE
NUMBER TWO, a Florida general
partnership
By: Codina/Tradewind, Ltd., a
Florida limited partnership,
as general partner
By: Codina West Dade
Development Corp., as
general partner
By:____________________
Armando Codina,
President
TENANT:
SOUTHERN ELECTRONICS DISTRIBUTORS,
INC., a Delaware corporation
By:______________________________
Name:____________________________
Title:__________________________
<PAGE>
EXHIBIT "A"
BUILDING NO. 2
A PARCEL OF LAND LYING IN SECTION 34,
TOWNSHIP 53 SOUTH, RANGE 40 EAST, BEING A
PORTION OF TRACT "AA" OF BEACON CENTRE PHASE
1 FIRST ADDITION, ACCORDING TO THE PLAT
THEREOF, AS RECORDED IN PLAT BOOK 141 AT PAGE
31 OF THE PUBLIC RECORDS OF DADE COUNTY,
FLORIDA AND BEING MORE PARTICULARLY DESCRIBED
AS FOLLOWS:
COMMENCE AT THE POINT OF INTERSECTION OF THE
CENTER LINE OF N.W. 21ST STREET WITH THE EAST
LINE OF SAID TRACT "AA", THENCE RUN S01 14
09E ALONG SAID EAST LINE OF TRACT "AA" FOR
594.01 FEET TO THE POINT OF BEGINNING OF THE
HEREINAFTER DESCRIBED PARCEL OF LAND; THENCE
CONTINUE S01 14 09E ALONG SAID EAST OF TRACT
"AA" FOR 681.78 FEET TO A POINT OF
INTERSECTION WITH THE WEST LINE OF SAID TRACT
"AA"; THENCE CONTINUE ___ 45 51W FOR 344.00
FEET TO A POINT OF INTERSECTION WITH THE WEST
LINE OF SAID TRACT "AA"; THENCE RUN N01 14
09W ALONG SAID WEST OF TRACT "AA" FOR 681.78
FEET TO A POINT; THENCE RUN ________ FOR
344.00 FEET TO THE POINT OF BEGINNING.
SAID PARCEL CONTAINS 5.38 ACRES, MORE OR LESS
AND IS SUBJECT TO ZONING, DEDICATIONS,
RESTRICTIONS, EASEMENTS AND RESERVATION OF
RECORD.
<PAGE>
EXHIBIT "B"
IMPROVEMENTS
Tenant acknowledges and agrees that Landlord has afforded
Tenant the opportunity for full and complete investigation,
examination, and inspection of the Relocation Space prior to
executing the Second Addendum and that, except as otherwise
expressly set forth below, Tenant is accepting possession thereof
in "as is" condition and Landlord shall have no obligation
whatsoever to furnish, render, or supply any money, work, labor,
material, fixture, decoration, or equipment with respect to the
Relocation Space. Any and all improvements to the Relocation
Space will be at Tenant's expense (including, without limitation,
any impact fees payable ln connection with any improvements made
by Tenant) and are subject to the provisions of the Lease
applicable to alterations.
Notwithstanding the foregoing, Landlord, at its expense,
will provide the following improvements to the Relocation Space,
all using Landlord's Building-standard methods and materials:
(a) Construct a demising wall in order to separate the
Relocation Space from the remaining adjacent space in Building 2.
(b) Separate the electrical service currently serving both
the Relocation Space and the remaining adjacent space.
(c) Repaint the existing painted walls in the front office,
customer pick-up, lunch room, and warehouse office area (color to
be selected by Tenant from Building-standard).
(d) Shampoo the carpeted areas of the Relocation Space.
(e) Replace any damaged, sagging, discolored, or missing
ceiling tiles in all office areas.
(f) Service the HVAC unit(s) serving the Relocation Space
to confirm it is in working order.
(g) Clean warehouse floor to a reasonable standard.
(h) Test and confirm that the warehouse sprinkler system is
operational and in compliance with local building code.
Landlord shall complete items (a) and (b) above prior to the
Relocation Space Commencement Date. Landlord will use its best
reasonable efforts to complete items (a) and (b) within thirty
(30) days after the date of the Second Addendum. Landlord will
use commercially reasonable efforts to complete the other items
prior to the Relocation Space Commencement Date, but failure to
complete the other items prior to the Relocation Space
Commencement Date shall not be deemed to be a default by Landlord
or entitle Tenant to any abatement or diminution of rent. In any
case, Landlord will use commercially reasonable efforts to
complete the other items as soon as reasonably practicable after
the Relocation Space Commencement Date.
Tenant may begin to install its furniture, trade fixtures,
and equipment in the Relocation Space at any reasonable times
prior to Landlord's completion of the improvements described
above, provided, however, that no such pre-completion
installation shall in any way delay or interfere with Landlord's
work pursuant to this Exhibit and Tenant shall arrange a meeting
to coordinate with Landlord prior to any such pre-completion
installation. Any such pre-completion installation of furniture,
fixtures, and equipment shall be at Tenant's sole risk, and
Landlord shall not be liable in any way for any injury, loss,
damage, or delay which may be caused by or arise from such entry
by Tenant, its employees, or contractors, and Tenant agrees to
indemnify and hold harmless Landlord, its agents, and employees
from and against any and all costs, expenses, damage, loss, or
liability, including, but not limited to, reasonable attorneys'
fees and costs, which arise out of, is occasioned by, or is in
any way attributable to the any work being performed by Tenant or
its employees, or contractors.
EXHIBIT 10.33
THIRD ADDENDUM TO NWPJV LEASE
THIRD ADDENDUM TO LEASE
THIS THIRD ADDENDUM TO LEASE (the "Third Addendum") is made
and entered into as of the _____ day of __________, 1996, by and
between NEW WORLD PARTNERS JOINT VENTURE NUMBER TWO, a Florida
general partnership (the"Landlord"), and SOUTHERN ELECTRONICS
DISTRIBUTORS, INC., a Delaware corporation (the "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into that certain
Lease-Industrial Commercial dated August 9, 1993, as amended by
that certain Addendum to Lease, of even date therewith, whereby
Landlord leased to Tenant, and Tenant leased from Landlord, the
Premises, as defined in the Lease, for approximately 15,420
rentable square feet in Building 6 of Beacon Centre, Miami,
Florida; and
WHEREAS, the Lease-Industrial Commercial was further amended
by that certain Second Addendum to Lease, dated January 10, 1996,
whereby the Premises was relocated to that certain space in
Building 2 of Beacon Centre consisting of approximately
thirty-one thousand two hundred fifty-two (31,252) rentable
square feet (the Lease-Industrial Commercial, the Addendum to
Lease, and the Second Addendum to Lease are hereinafter
collectively referred to as the "Lease"): and
WHEREAS, Landlord and Tenant desire to amend and modify the
Lease in order for Tenant to lease from Landlord additional
premises in Building 2, consisting of approximately twenty-nine
thousand seven hundred sixty (29,760) rentable square feet
adjacent to the Premises (the"Expansion Space"), which Expansion
Space is more particularly described in Exhibit "A," attached
hereto and made a part hereof, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and in consideration of Ten and No/100 ($10.00)
Dollars and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Landlord and
Tenant hereby agree as follows:
1. Incorporation of Recitals. The above recitals are true
and correct and are incorporated herein as if set forth in full.
2. General Provisions. All defined terms in this Third
Addendum shall have the same meaning as in the Lease, except as
otherwise noted. Except as amended and modified by this Third
Addendum, all of the terms, covenants, conditions, and agreements
of the Lease shall remain in full force and effect. In the event
of any conflict between the provisions of the Lease and the
provisions of this Third Addendum, this Third Addendum shall
control.
3. Relocation Space Commencement Date. The parties
acknowledge and agree that the Relocation Space Commencement Date
pursuant to the Second Addendum to Lease referenced above is
March 1, 1996. Therefore, the Expiration Date of the Term is
March 31, 2001.
4. Expansion Space Commencement Date. The Premises shall
be deemed to include the Expansion Space as of the date that
Landlord completes the Improvements, as hereinafter defined, to
the Expansion Space (the "Expansion Space Commencement Date").
Upon such Expansion Space Commencement Date, Tenant's obligations
to pay Minimum Rent, Tenant's proportionate share of Increased
Operating Costs, and any other amounts with respect to the
Expansion Space shall thereupon commence and the Expansion Space
shall thereupon become part of the Premises for all purposes of
the Lease, as modified by this Third Addendum. As of the
Expansion Space Commencement Date, the square footage of the
Premises shall be sixty-one thousand twelve (61,012) square feet.
<PAGE>
5. Term; Completion of Improvements.
(a) Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the Expansion Space. The Term with
respect to the Expansion Space shall commence on the Expansion
Space Commencement Date and, unless earlier terminated in
accordance with the Lease, shall expire on March 31, 2001.
(b) Tenant acknowledges and agrees that Landlord has
afforded Tenant the opportunity for full and complete
investigation, examination, and inspection of the Expansion Space
prior to executing this Third Addendum and that, except as
otherwise expressly set forth below, Tenant is accepting
possession of the Expansion Space in "as is" condition and
Landlord shall have no obligation whatsoever to furnish, render,
or supply any money, work, labor, material, fixture, decoration,
or equipment with respect to the Expansion Space.
Notwithstanding the foregoing, prior to the Expansion
Space Commencement Date, Landlord, at its expense, will cause the
following improvements to be made to the Expansion Space (the
"Improvements"), all using Landlord's Building-standard methods
and materials: (i) install an electrical panel to provide
electrical service to the Expansion Space; (ii) paint the
demising wall on the side which has not been painted in
connection with Tenant's leasing of the Premises; (iii) install
plywood along the demising wall to match the plywood installed on
the opposite demising wall; (iv) create an opening in the
demising wall 12' wide x 14' high; (v) repair (or replace if
necessary) any light fixtures which are not in working order; and
(vi) provide the minimum number of bathrooms in the Expansion
Space in order to comply with code. Landlord estimates that the
Improvements will be completed within fourteen (14) days after
the date of this Third Addendum.
Any and all other improvements to the Expansion Space will
be at Tenant's expense (including, without limitation, any impact
fees) and are subject to the provisions of the Lease applicable
to alterations, including, without limitation, that the plans and
specifications for any alterations are subject to the prior
written approval of Landlord.
6. Minimum Rent. Commencing on the Expansion Space
Commencement Date, the Minimum Rent for the Expansion Space
(payable in the manner set forth in the Lease for payments of
Minimum Rent) shall be as follows:
ANNUAL MINIMUM RENT MONTHLY PAYMENT
LEASE YEAR RATE PER SQUARE FOOT (PLUS SALES TAX)
Expansion Space
Commencement Date
- 2/28/97 $0.00 $ 0.00
3/1/97 - 2/28/98 $6.70 $16,616.00*
3/1/98 - 2/28/99 $6.90 $17,112.00
3/1/99 - 2/29/00 $7.10 $17,608.00
3/1/00 - 3/31/01 $7.32 $18,153.60
*Notwithstanding the foregoing, if Landlord does not complete the
Improvements within fourteen (14) days after the date of this
Third Addendum (subject to delays caused by Tenant and subject to
force majeure), then Tenant shall receive a credit against the
Minimum Rent due commencing on March 1, 1997 with respect to the
Expansion Space, such credit to be equal to one (1) days' Minimum
Rent for each day between the fifteenth (15th) day after the date
of this Third Addendum and the date that Landlord completes the
Improvements.
Nothing contained herein shall be construed to alter
Tenant's obligations to pay Minimum Rent, Tenant's proportionate
share of Increased Operating Costs, and any
<PAGE>
other amounts with respect to the original Premises in accordance
with the terms of the Lease.
7. Operating Costs. The payments with respect to Tenant's
proportionate share of Increased Operating Costs for the
Expansion Space shall be determined as provided in the Lease,
including, without limitation, that the Base Year for the
Expansion Space shall be the calendar year 1996. Commencing on
the Expansion Space Commencement Date, with the addition of the
square footage of the Expansion Space to the square footage of
the original Premises, Tenant's proportionate share for purposes
of Increased Operating Costs shall be increased to 53.2%, and any
other matter under the Lease that is a function of square footage
shall be adjusted accordingly.
8. Prepaid Rent; Security Deposit. The Minimum Rent
payable for the first (1st) month that Minimum Rent is due with
respect to the Expansion Space (which is in the amount of
Seventeen Thousand Six Hundred Ninety-Six and 04/100 ($17,696.04)
Dollars (which includes sales tax)), shall be paid by Tenant
simultaneously with its execution of this Third Addendum. In
addition, Tenant shall post an additional security deposit in the
amount of Thirty-Three Thousand Two Hundred Thirty-Two and No/100
($33,232.00) Dollars (which excludes sales tax), and which shall
be paid by Tenant simultaneously with its execution of this Third
Addendum. Therefore, with the addition of the $33,232.00
security deposit to the existing $33,856.34 security deposit, the
total security deposit being held by Landlord equals $67,088.34,
which shall be held by Landlord as security for Tenant's
obligations under the Lease, pursuant to the terms and conditions
of the Lease with respect thereto.
9. Parking. In consideration of Tenant's leasing of the
Expansion Space pursuant to this Third Addendum, Tenant shall
have the right to use thirty-nine (39) additional unassigned
parking spaces in the parking area for the Building (which equals
a total of eighty (80) unassigned parking spaces), on the terms
and conditions set forth in the Lease, including, without
limitation., section 11.1.
10. Brokerage. Landlord and Tenant each represent and
warrant one to the other that except as may be hereinafter set
forth, neither of them has employed any broker in connection with
the negotiations of the terms of this Third Addendum or the
execution hereof. Landlord and Tenant hereby agree to indemnify
and to hold each other harmless against any loss, expense, or
liability with respect to any claims for commissions or brokerage
fees arising from or out of any breach of the foregoing
representation and warranty. Landlord recognizes Codina Bush
Klein.Oncor International and The Keyes Company as the sole
brokers with whom Landlord has dealt in this transaction and
Landlord shall pay any commissions payable to such brokers
pursuant to separate agreements. Tenant acknowledges that Codina
Bush Klein.Oncor International represents solely the Landlord
with respect to this Third Addendum.
11. Entire Agreement; No Set-Off. The Lease, as modified
by this Third Addendum, sets forth the entire agreement between
the Landlord and Tenant concerning the Premises and Tenant's use
and occupancy thereof and there are no other agreements or
understandings between them. Tenant certifies and affirms that,
as of the date hereof, there are no claims, offsets, or breaches
of the Lease, or any action or causes of action against Landlord
directly or indirectly relating to the Lease.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Third Addendum as of the day and year first above written.
WITNESSES: LANDLORD:
NEW WORLD PARTNERS JOINT VENTURE
NUMBER TWO, a Florida general
partnership
By: Codina/Tradewind, Ltd., a
Florida limited partnership,
as general partner
By: Codina West Dade
Development Corp., as
general partner
By:___________________
Armando Codina,
President
TENANT:
SOUTHERN ELECTRONICS DISTRIBUTORS,
INC., a Delaware corporation
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT 10.41
ADOPTION AGREEMENT FOR
SWERDLIN & COMPANY REGIONAL PROTOTYPE
STANDARDIZED 401(K) PROFIT SHARING
PLAN AND TRUST
(WITH PAIRING PROVISIONS)
The undersigned Employer adopts the Swerdlin & Company
Standardized 401(k) Profit Sharing Plan for those Employees who
shall qualify as Participants hereunder, to be known as
the
A1 Southern Electronics Distributors, Inc. 401(k) Plan
It shall be effective as of the date specified below. The
Employer hereby selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption
Agreement may result in disqualification of the Plan.
EMPLOYER INFORMATION
B1 Name of Employer Southern Electronic Distributors, Inc.
B2 Address 4916 North Royal Atlanta Dr.
Atlanta , GA 30084
City State Zip
Telephone 404-491-8962
B3 Employer Identification Number 22 - 2715445
B4 Date Business Commenced
B5 TYPE OF ENTITY
a. ( ) S Corporation
b. ( ) Professional Service Corporation
c. (X) Corporation
d. ( ) Sole Proprietorship
e. ( ) Partnership
f. ( ) Other
<PAGE>
AND, is the Employer a member of...
g. a controlled group? ( ) Yes (X) No
h. an affiliated service group? ( ) Yes (X) No
Copyright 1991-R Swerdlin & Company
<PAGE>
B6 NAME(S) OF TRUSTEE(S) a. Peter Ducoffe
b. Ray Risner
c. Larry Ayers
B7 TRUSTEES' ADDRESS a. (X) Use Employer Address
b. ( ) ___________________________________________________
Street
_______________________________,____________ ______
City State Zip
B8 LOCATION OF EMPLOYER'S PRINCIPAL OFFICE:
a. (X) State b. ( ) Commonwealth of c. Georgia and
this Plan and Trust shall be governed under the same.
B9 EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Commencing on a. July 1 (e.g., January 1st) and
month day
ending on b. June 30
month day
<PAGE>
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement of the Swerdlin & Company
Standardized 401(k) Profit Sharing Plan and Trust shall:
a. ( ) establish a new Plan and Trust effective as of
______________________ (hereinafter called the
"Effective Date").
b. (X) constitute an amendment and restatement in its
entirety of a previously established qualified
Plan and Trust of the Employer which was effective
January 1, 1991(hereinafter called the "Effective
Date"). Except as specifically provided in the
Plan, the effective date of this amendment
and restatement is January 1, 1995(For TRA '86
amendments, enter the first day of the first Plan
Year beginning in 1989).
C2 PLAN YEAR means the 12 consecutive month period:
Commencing on a. January 1 (e.g., January 1st)
and ending on b. December 31 .
IS THERE A SHORT PLAN YEAR?
c. (X) No
d. ( ) Yes, beginning
and ending .
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date)
a. December 31
month day
C4 PLAN NUMBER assigned by the Employer (select one)
a.(X) 001 b.( ) 002 c.( ) 003 d.( ) Other
<PAGE>
C5 NAME OF PLAN ADMINISTRATOR (Document provides for the
Employer to appoint an Administrator. If none is named, the
Employer will become the Administrator.)
a. (X) Employer (Use Employer Address)
b. ( ) Name_____________________________________________
Address__________________________________________
__________________________ ,____________ ________
City State Zip
Telephone ___________________________
Administrator's I.D. Number _______ - ___________
C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS
a. (X) Employer (Use Employer Address)
b. ( ) Name_____________________________________________
Address__________________________________________
__________________________ , ______________ _____
City State Zip
<PAGE>
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean all
Employees who have satisfied the eligibility requirements
except those checked below:
a. ( ) N/A. No exclusions.
b. ( ) Employees whose employment is governed by a
collective bargaining agreement between the
Employer and "employee representatives" under
which retirement benefits were the subject of good
faith bargaining. For this purpose, the term
"employee representatives" does not include any
organization more than half of whose members are
employees who are owners, officers, or executives
of the Employer.
c. (X) Employees who are nonresident aliens who received
no earned income (within the meaning of Code
Section 911(d)(2)) from the Employer
which constitutes income from sources within the
United States (within the meaning of Code Section
861(a)(3)).
NOTE: For purposes of this section, the term Employee
shall include all Employees of this Employer, any
Affiliated Employer, and any leased employees
deemed to be Employees under Code Section 414(n)
or 414(o).
<PAGE>
D2 HOURS OF SERVICE (Plan Section 1.31) will be determined on
the basis of the method selected below. Only one method may
be selected. The method selected will be applied to all
Employees covered under the Plan.
a. (X) On the basis of actual hours for which an Employee
is paid or entitled to payment.
b. ( ) On the basis of days worked. An Employee will be
credited with ten (10) Hours of Service if under
the Plan such Employee would be credited with at
least one (1) Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be
credited forty-five (45) Hours of Service if under
the Plan such Employee would be credited with at
least one (1) Hour of Service during the week.
d. ( ) On the basis of semi-monthly payroll periods. An
Employee will be credited with ninety-five (95)
Hours of Service if under the Plan such Employee
would be credited with at least one (1) Hour of
Service during the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be
credited with one hundred ninety (190) Hours of
Service if under the Plan such Employee would be
credited with at least one (1) Hour of Service
during the month.
<PAGE>
D3 CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
(Check either a OR b and c, and if applicable, d)
Any Eligible Employee will be eligible to participate in the
Plan if such Eligible Employee has satisfied the service and
age requirements, if any, specified below:
a. ( ) NO AGE OR SERVICE REQUIRED.
b. (X) SERVICE REQUIREMENT. (may not exceed 1 year)
1. ( ) None
2. ( ) 1/2 Year of Service
3. (X) 1 Year of Service
4. ( ) Other ___________________
NOTE: If the Year(s) of Service selected is or includes
a fractional year, an Employee will not be
required to complete any specified number of
Hours of Service to receive credit for such
fractional year. If expressed in Months of
Service, an Employee will not be required to
complete any specified number of Hours of Service
in a particular month.
c. (X) AGE REQUIREMENT (may not exceed 21)
1. ( ) N/A - No Age Requirement.
2. ( ) 20 1/2
3. (X) 21
4. ( ) Other ___________________
d. ( ) FOR NEW PLANS ONLY - Regardless of any of the
above age or service requirements, any Eligible
Employee who was employed on the Effective Date of
the Plan shall be eligible to participate
hereunder and shall enter the Plan as of such
date.
<PAGE>
D4 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee shall become a Participant as of:
a. ( ) the first day of the Plan Year in which he met the
requirements.
b. ( ) the first day of the Plan Year in which he met the
requirements, if he met the requirements in the
first 6 months of the Plan Year, or as of the
first day of the next succeeding Plan Year if he
met the requirements in the last 6 months of the
Plan Year.
c. (X) the earlier of the first day of the seventh month
or the first day of the Plan Year coinciding with
or next following the date on which he met
the requirements.
d. ( ) the first day of the Plan Year next following the
date on which he met the requirements.
(Eligibility must be 1/2 Year of Service or less
and age 20 1/2 or less.)
e. ( ) the first day of the month coinciding with or next
following the date on which he met the
requirements.
f. ( ) Other: __________________________________________,
provided that an Employee who has satisfied the
maximum age and service requirements that are
permissible in Section D3 above and who is
otherwise entitled to participate, shall commence
participation no later than the earlier of (a) 6
months after such requirements are satisfied, or
(b) the first day of the first Plan Year after
such requirements are satisfied, unless the
Employee separates from service before such
participation date.
<PAGE>
D5 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
The vesting schedule, based on number of Years of Service,
shall be as follows:
a. ( ) 100% upon entering Plan. (Required if eligibility
requirement is greater than one (1) Year of
Service.)
b. ( ) 0-2 years 0% c.( )0-4 years 0%
3 years 100% 5 years 100%
d. (X) 0-1 year 0% e.( )1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g.( )0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. ( ) Other - Must be at least as liberal as either c or
g above.
Years of Service Percentage
_________________ __________
_________________ __________
_________________ __________
_________________ __________
_________________ __________
_________________ __________
<PAGE>
D6 FOR AMENDED PLANS (Plan Section 6.4(f)) If the vesting
schedule has been amended to a less favorable schedule,
enter the pre-amended schedule below:
a. (X) Vesting schedule has not been amended or amended
schedule is more favorable in all years.
b. ( ) Years of Service Percentage
_________________ __________
_________________ __________
_________________ __________
_________________ __________
_________________ __________
_________________ __________
<PAGE>
D7 TOP HEAVY VESTING (Plan Section 6.4(c)) If this Plan becomes
a Top Heavy Plan, the following vesting schedule, based on
number of Years of Service, for such Plan Year and each
succeeding Plan Year, whether or not the Plan is a Top Heavy
Plan,shall apply and shall be treated as a Plan amendment
pursuant to this Plan. Once effective, this schedule shall
also apply to any contributions made prior to the effective
date of Code Section 416 and/or before the Plan became a Top
Heavy Plan.
a. (X) N/A (D5a, b, d, e or f was selected)
b. ( ) 0-1 years 0% c.( )0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
NOTE: This section does not apply to the Account
balances of any Participant who does not have an
Hour of Service after the Plan has initially
become top heavy. Such Participant's Account
balance attributable to Employer contributions and
Forfeitures will be determined without regard to
this section.
<PAGE>
D8 VESTING (Plan Section 6.4(h)) In determining Years of
Service for vesting purposes, Years of Service attributable
to the following shall be EXCLUDED:
a. (X) Service prior to the Effective Date of the Plan or
a predecessor plan. b.( ) N/A.
c. ( ) Service prior to the time an Employee attained age
18. d. (X) N/A.
D9 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER
a. (X) No.
b. ( ) Yes: Years of Service with
_________________________________________ shall be
recognized for the purpose of this Plan.
NOTE: If the predecessor Employer maintained this
qualified Plan, then Years of Service with such
predecessor Employer shall be recognized pursuant
to Section 1.74 and b. must be marked.
D10 NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.42) means:
a. (X) the date a Participant attains his 65 birthday.
(not to exceed 65th)
b. ( ) the later of the date a Participant attains his
________ birthday (not to exceed 65th) or the c.
________ (not to exceed 5th) anniversary of the
first day of the Plan Year in which participation
in the Plan commenced.
D11 NORMAL RETIREMENT DATE (Plan Section 1.43) shall commence:
a. (X) as of the Participant's "NRA".
OR (must select b. or c. AND 1. or 2.)
b. ( ) as of the first day of the month...
c. ( ) as of the Anniversary Date...
1. ( ) coinciding with or next following the
Participant's "NRA".
2. ( ) nearest the Participant's "NRA".
<PAGE>
D12 EARLY RETIREMENT DATE (Plan Section 1.12) means the:
a. (X) No Early Retirement provision provided.
b. ( ) date on which a Participant...
c. ( ) first day of the month coinciding with or next
following the date on which a Participant...
d. ( ) Anniversary Date coinciding with or next following
the date on which a Participant...
AND, if b, c or d was selected...
1. ( ) attains his _______ birthday and has
2. ( ) completed at least _______ Years of Service.
<PAGE>
CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.9) with respect to any
Participant means:
1. (X) "415 Compensation."
2. ( ) Compensation reportable as wages on Form W-2.
b. COMPENSATION shall be
1. (X) actually paid (must be selected if Plan is
integrated)
2. ( ) accrued
c. FOR PURPOSES OF THIS SECTION E1, Compensation shall be
based on:
1. (X) the Plan Year.
2. ( ) the Fiscal Year coinciding with or ending
within the Plan Year.
3. ( ) the Calendar Year coinciding with or ending
within the Plan Year.
NOTE: The Limitation Year shall be the same as the year
on which Compensation is based.
d. HOWEVER, for an Employee's first year of participation,
Compensation shall be recognized as of:
1. ( ) the first day of the Plan Year.
2. (X) the date the Participant entered the Plan.
e. IN ADDITION, COMPENSATION and "414(s) Compensation"
1. (X) shall 2. ( ) shall not include compensation
which is not currently includible in the Participant's
gross income by reason of the application of Code
Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b).
<PAGE>
E2 SALARY REDUCTION ARRANGEMENT - ELECTIVE CONTRIBUTION
(Plan Section 11.2) Each Employee may elect to have his
Compensation reduced by:
a. ( ) ________%
b. ( ) up to ________%
c. (X) from 1 % to 15 %
d. ( ) up to the maximum percentage allowable not to
exceed the limits of Code Sections 401(k), 404 and
415.
AND...
e. (X) A Participant may elect to commence salary
reductions as of January 1 & July 1 (ENTER AT
LEAST ONE DATE OR PERIOD). A Participant
may modify the amount of salary reductions as of
January 1 & July 1 (ENTER AT LEAST ONE DATE OR
PERIOD).
AND...
Shall cash bonuses paid within 2 1/2 months after the
end of the Plan Year be subject to the salary reduction
election?
f. ( ) Yes
g. (X) No
<PAGE>
E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION
(Plan Section 11.1(b))
a. ( ) N/A. There shall be no matching contributions.
b. (X) The Employer shall make matching contributions
equal to 25 % (e.g. 50%) of the Participant's
salary reductions.
c. ( ) The Employer may make matching contributions equal
to a discretionary percentage, to be determined by
the Employer, of the Participant's salary
reductions.
d. ( ) The Employer shall make matching contributions
equal to the sum of _____% of the portion of the
Participant's salary reduction which does
not exceed _____% of the Participant's
Compensation plus _____% of the portion of the
Participant's salary reduction which exceeds
_____% of the Participant's Compensation, but does
not exceed _____% of the Participant's
Compensation.
e. ( ) The Employer shall make matching contributions
equal to the percentage determined under the
following schedule:
Participant's Total Matching Percentage
Years of Service
_____ _____
_____ _____
_____ _____
<PAGE>
FOR PLANS WITH MATCHING CONTRIBUTIONS
f. (X) Matching contributions g. ( ) shall h. (X)
shall not be used in satisfying the deferral
percentage tests. (If used, full vesting and
restrictions on withdrawals will apply and the
match will be deemed to be an Elective
Contribution).
i. (NA) For Plan Years beginning prior to 1990, a Year of
Service ( ) shall j. ( ) shall not be required
in order to share in the matching contributions.
For Plan Years beginning after 1989, a Year of
Service shall not be required in order to share in
the matching contributions.
k. (X) In determining matching contributions, only salary
reductions up to 10% of a Participant's
Compensation will be matched. l. ( ) N/A
m. ( ) The matching contribution made on behalf of a
Participant for any Plan Year shall not exceed
$_________________. n. ( ) N/A
o. (X) Matching contributions shall be made on behalf of
1. (X) all Participants.
2. ( ) only Non-Highly Compensated Employees.
<PAGE>
E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED
(OTHER THAN A DISCRETIONARY MATCHING OR QUALIFIED NON-
ELECTIVE CONTRIBUTION) (Plan Section 11.1(c))?
a. ( ) No.
b. ( ) Yes, the Employer may make a discretionary
contribution out of its current or accumulated Net
Profit.
c. (X) Yes, the Employer may make a discretionary
contribution which is not limited to its current
or accumulated Net Profit.
IF YES (b. or c. is selected above), the Employer's
discretionary contribution shall be allocated as follows:
d. (X) FOR A NON-INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year
shall be allocated in the same ratio as each Participant's
Compensation bears to the total of such Compensation
of all Participants.
e. ( ) FOR AN INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year
shall be allocated in accordance with Plan Section 4.3(b)(2)
based on a Participant's Compensation in excess of:
f. ( ) The Taxable Wage Base.
g. ( ) The greater of $10,000 or 20% of the Taxable
Wage Base.
h. ( ) ______% of the Taxable Wage Base. (See Note
below)
i. ( ) $_______________. (see Note below)
NOTE: The integration percentage of 5.7% shall be
reduced to:
1. 4.3% if h. or i. above is more than 20% and
less than or equal to 80% of the Taxable Wage
Base.
2. 5.4% if h. or i. above is less than 100% and
more than 80% of the Taxable Wage Base.
<PAGE>
E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1(d))
a. (X) N/A. There shall be no Qualified Non-Elective
Contributions except as
provided in Section 11.5(b) and 11.7(h).
b. ( ) The Employer shall make a Qualified Non-Elective
Contribution equal to ___% of the total
Compensation of all Participants eligible to share
in the allocations.
c. ( ) The Employer may make a Qualified Non-Elective
Contribution in an amount to be determined by the
Employer.
E6 FORFEITURES (Plan Section 4.3(e))
a. Forfeitures of contributions other than matching
contributions shall be...
1. ( ) added to the Employer's contribution under
the Plan.
2. (X) allocated to all Participants eligible to
share in the allocations in
the same proportion that each Participant's
Compensation for the year bears to the
Compensation of all Participants for such
year.
b. Forfeitures of matching contributions shall be...
1. ( ) N/A. No matching contributions or match is
fully vested.
2. (X) used to reduce the Employer's matching
contribution.
3. ( ) allocated to all Participant's eligible to
share in the allocations in
proportion to each such Participant's
Compensation for the year.
4. ( ) allocated to all Non-Highly Compensated
Employee's eligible to share in the
allocations in proportion to each such
Participant's Compensation for the year.
<PAGE>
E7 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4.3(k))
Any Participant who terminated employment during the Plan
Year for reasons other than death, Total and Permanent
Disability or retirement:
a. With respect to the allocation of Employer Non-Elective
Contributions (other than matching), Qualified
Non-Elective Contributions, and Forfeitures for Plan
Years beginning prior to 1990:
1. (X) N/A
2. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
3. ( ) shall not share in such allocations
regardless of Hours of Service.
NOTE: The Plan provides that for Plan Years beginning
after 1989, a terminated Participant shall share
in such allocations provided such Participant
completed more than 500 Hours of Service.
b. With respect to the allocation of Employer Matching
Contributions, a Participant:
1. For Plan Years beginning after 1989,
i. ( ) N/A, Plan does not provide for matching
contributions.
ii. (X) shall share in the allocations,
regardless of Hours of Service.
iii. ( ) shall share in the allocations provided
such Participant completed more than 500
Hours of Service.
2. For Plan Years beginning before 1990,
i. (X) N/A, new Plan, or same as Plan Years
beginning after 1989.
ii. ( ) shall share in the allocations,
regardless of Hours of Service.
iii. ( ) shall share in the allocations provided
such Participant completed a Year of
Service.
<PAGE>
E8 ALLOCATIONS OF EARNINGS (Plan Section 4.3(c))
Allocations of earnings with respect to amounts contributed
to the Plan after the previous Anniversary Date or other
valuation date shall be determined...
a. ( ) by using a weighted average.
b. ( ) by treating one-half of all such contributions as
being a part of the Participant's nonsegregated
account balance as of the previous Anniversary
Date or valuation date.
c. ( ) by using the method specified in Section 4.3(c).
d. (X) other According to investment contracts with
investment manager.
<PAGE>
E9 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Participant is or was covered under another
qualified defined contribution plan maintained by the
Employer, or if the Employer maintains a welfare
benefit fund, as defined in Code Section 419(e), or an
individual medical account, as defined in Code Section
415(l)(2), under which amounts are treated as Annual
Additions with respect to any Participant in this Plan:
1. (X) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan
will apply.
3. ( ) Provide the method under which the Plans will
limit total Annual Additions to the Maximum
Permissible Amount, and will properly reduce
any Excess Amounts, in a manner that
precludes Employer discretion.
<PAGE>
b. If any Participant is or ever has been a Participant in
a defined benefit plan maintained by the Employer:
1. (X) N/A.
2. ( ) In any Limitation Year, the Annual Additions
credited to the Participant under this Plan
may not cause the sum of the Defined Benefit
Plan Fraction and the Defined Contribution
Fraction to exceed 1.0. If the Employer's
contribution that would otherwise be made on
the Participant's behalf during the
limitation year would cause the 1.0
limitation to be exceeded, the rate of
contribution under this Plan will be reduced
so that the sum of the fractions equals 1.0.
If the 1.0 limitation is exceeded because
of an Excess Amount, such Excess Amount will
be reduced in accordance with Section
4.4(a)(4) of the Plan.
3. ( ) Provide the method under which the Plans
involved will satisfy the 1.0 limitation in a
manner that precludes Employer discretion.
<PAGE>
E10 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h))
Distributions upon the death of a Participant prior to
receiving any benefits shall...
a. (X) be made pursuant to the election of the Participant or
beneficiary.
b. ( ) begin within 1 year of death for a designated
beneficiary and be payable over the life (or over a
period not exceeding the life expectancy) of such
beneficiary, except that if the beneficiary is the
Participant's spouse, begin within the time the
Participant would have attained age 70 1/2.
c. ( ) be made within 5 years of death for all beneficiaries.
d. ( ) other ____________________________________________
E11 LIFE EXPECTANCIES (Plan Section 6.5(f)) for minimum
distributions required pursuant to Code Section 401(a)(9)
shall...
a. (X) be recalculated at the Participant's election.
b. ( ) be recalculated.
c. ( ) not be recalculated.
E12 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION
Distributions upon termination of employment pursuant to
Section 6.4(a) of the Plan shall not be made unless the following
conditions have been satisfied:
a. (X) N/A. Immediate Distributions may be made at
Participant's election.
b. ( ) The Participant has incurred _____ 1-Year Break(s) in
Service.
c. ( ) The Participant has reached his or her Early or Normal
Retirement Age.
d. ( ) Distributions may be made at the Participant's election
on or after the Anniversary Date following termination
of employment.
e. ( ) Other ____________________________________________
PAGE
<PAGE>
E13 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6)
Distributions under the Plan may be made...
a. 1. (X) in lump sums.
2. ( ) in lump sums or installments.
b. AND, pursuant to Plan Section 6.13,
1. (X) no annuities are allowed (avoids Joint and
Survivor rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall not
apply).
NOTE: b.1. above may not be elected if this is an
amendment to a plan which permitted annuities as a form
of distribution or if this Plan has accepted
a plan to plan transfer of assets from a plan
which permitted annuities as a form of distribution.
c. AND may be made in...
1. (X) cash only (except for insurance or annuity
contracts).
2. ( ) cash or property.
<PAGE>
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS (Plan Section 4.3(i)): When a Non-Key
Employee is a Participant in this Plan and a Defined Benefit Plan
maintained by the Employer, indicate which method shall be
utilized to avoid duplication Of top heavy minimum benefits.
a. (X) The Employer does not maintain a Defined Benefit Plan.
b. ( ) A minimum, non-integrated contribution of 5% of each
Non-Key Employee's total Compensation shall be provided
in this Plan, as specified in Section 4.3(i). (The
Defined Benefit and Defined Contribution Fractions will
be computed using 100% if this choice is selected.)
c. ( ) A minimum, non-integrated contribution of 7 1/2% of
each Non-Key Employee's total Compensation shall be
provided in this Plan, as specified in Section 4.3(i).
(If this choice is selected, the Defined Benefit
and Defined Contribution Fractions will be computed
using 125% for all Plan Years in which the Plan is Top
Heavy, but not Super Top Heavy.)
d. ( ) Specify the method under which the Plans will provide
top heavy minimum benefits for Non-Key Employees that
will preclude Employer discretion and avoid inadvertent
omissions, including any adjustments required under
Code Section 415(e).
<PAGE>
F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for Top
Heavy purposes where the Employer maintains a Defined Benefit
Plan in addition to this Plan, shall be based on...
a. (X) N/A. The Employer does not maintain a defined benefit
plan.
b. ( ) Interest Rate: ______________________________________
Mortality Table:_____________________________________
F3 TOP HEAVY DUPLICATIONS: Employer maintaining two (2) or more
Defined Contribution Plans (other than paired plans).
a. (X) N/A.
b. ( ) A minimum, non-integrated contribution of 3% of each
Non-Key Employee's total Compensation shall be provided
in the Money Purchase Plan (or other plan subject to
Code Section 412), where the Employer maintains two (2)
or more non-paired Defined Contribution Plans.
c. ( ) Specify the method under which the Plans will provide
top heavy minimum benefits for Non-Key Employees that
will preclude Employer discretion and avoid inadvertent
omissions, including any adjustments required under
Code Section 415(e).
F4 IS THIS A PAIRED PLAN?
a. ( ) Yes. Name the Plan(s) with which this is paired.
b. (X) No or N/A.
<PAGE>
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.4)
a. ( ) Yes, loans may be made up to $50,000 or 1/2 Vested
interest.
b. (X) No, loans may not be made.
If YES, (check all that apply)...
c. ( ) loans shall be treated as a Directed Investment.
d. ( ) loans shall only be made for hardship or financial
necessity.
e. ( ) the minimum loan shall be $1,000.
f. ( ) $10,000 de minimis loans may be made regardless of
Vested interest. (If selected, plan may need security
in addition to Vested interest)
NOTE: Department of Labor Regulations require the adoption of
a separate written loan program setting forth the
requirements outlined in Plan Section 7.4.
G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are
permitted for the interest in any one or more accounts.
a. (X) Yes, regardless of the Participant's Vested interest in
the Plan.
b. ( ) Yes, but only with respect to the Participant's Vested
interest in the Plan.
c. ( ) Yes, but only with respect to those accounts which are
100% Vested.
d. ( ) No directed investments are permitted.
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6)
a. (X) Yes, transfers from qualified plans (and rollovers)
will be allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will
not be allowed.
AND, transfers shall be permitted...
c. ( ) from any Employee, even if not a Participant.
d. (X) from Participants only.
<PAGE>
G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7)
a. ( ) Yes, Voluntary Contributions are allowed subject to the
limits of Section 4.10.
b. (X) No, Voluntary Contributions will not be allowed.
NOTE: TRA '86 subjects voluntary contributions to strict
discrimination rules.
G5 HARDSHIP DISTRIBUTIONS (Plan Section 6.11 and 11.8)
a. (X) Yes, from any accounts which are 100% Vested.
b. ( ) Yes, from Participant's Elective Account only.
c. ( ) Yes, but limited to the Participant's Account only.
d. ( ) No.
NOTE: Distributions from a Participant's Elective Account are
limited to the portion of such account attributable to
such Participant's Deferred Compensation and earnings
attributable thereto up to December 31, 1988. Also
hardship distributions are not permitted from a
Participant's Qualified Non-Elective Account.
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
a. ( ) If a Participant has reached the age of ______,
distributions may be made, at the Participant's
election, from any accounts which are 100%
Vested without requiring the Participant to terminate
employment.
b. (X) No pre-retirement distribution may be made.
NOTE: Distributions from a Participant's Elective Account and
Qualified Non-Elective Account are not permitted prior
to age 59 1/2.
G7 LIFE INSURANCE (Plan Section 7.2(d)) may be purchased with
Plan contributions.
a. (X) No life insurance may be purchased.
b. ( ) Yes, at the option of the Administrator.
c. ( ) Yes, at the option of the Participant.
<PAGE>
AND, the purchase of initial or additional life insurance
shall be subject to the following limitations: (select all that
apply)
d. (X) N/A, no limitations.
e. ( ) each initial Contract shall have a minimum face amount
of $__________.
f. ( ) each additional Contract shall have a minimum face
amount of $__________.
g. ( ) the Participant has completed _____ Years of Service.
h. ( ) the Participant has completed _____ Years of Service
while a Participant in the Plan.
i. ( ) the Participant is under age _____ on the Contract
issue date.
j. ( ) the maximum amount of all Contracts on behalf of a
Participant shall not exceed $__________.
k. ( ) the maximum face amount of life insurance shall be
$__________.
<PAGE>
An Employer who has ever maintained or who later adopts any plan
in addition to this Plan (including a welfare benefit fund, as defined
in Code Section 419(e), which provides post-retirement medical
benefits allocated to separate accounts for Key Employees, as defined
in Code Section 419A(d)(3) or an individual medical account, as
defined in Code Section 415(l)(2)) (other than paired plan #01-002,
#01-004, #01-008) may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Code Section 401. If the Employer who adopts
or maintains multiple plans wishes to obtain reliance that the
Employer's plan(s) are qualified, application for a determination
letter should be made to the appropriate key district director of
Internal Revenue.
This Adoption Agreement may be used only in conjunction with
basic Plan document #01. This Adoption Agreement and the basic Plan
document shall together be known as Swerdlin & Company Standardized
401(k) Profit Sharing Plan #01-006.
The adoption of this Plan, its qualification by the IRS, and the
related tax consequences are the responsibility of the Employer and
its independent tax and legal advisors.
Swerdlin & Company will notify the Employer of any amendments
made to the Plan or of the discontinuance or abandonment of the Plan
provided this Plan has been acknowledged by Swerdlin & Company or its
authorized representative. Furthermore, in order to be eligible to
receive such notification, we agree to notify Swerdlin & Company
of any change in address.
<PAGE>
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this
Plan to be executed on this _____ day of ___________, 19__.
Furthermore, this Plan may not be used unless acknowledged by Swerdlin
& Company or its authorized representative.
EMPLOYER:
______________________________ ___________________________
Southern Electronics Distributors Peter Ducoffe,TRUSTEE
Inc.
By: __________________________ ___________________________
Ray Risner, TRUSTEE
PARTICIPATING EMPLOYER: ___________________________
Larry Ayers, TRUSTEE
______________________________
(enter name)
By: __________________________
This Plan may not be used, and shall not be deemed to be a
Regional Prototype Plan, unless an authorized representative of
Swerdlin & Company has acknowledged the use of the Plan. Such
acknowledgment is for administerial purposes only. It acknowledges
that the Employer is using the Plan but does not represent that this
Plan, including the choices selected on the Adoption Agreement, has
been reviewed by a representative of the sponsor or constitutes a
qualified retirement plan.
Swerdlin & Company
By:______________________
<PAGE>
AMENDMENT TO
SOUTHERN ELECTRONICS DISTRIBUTORS, INC.
401(k) PLAN
WHEREAS, Southern Electronics Distributors, Inc., hereinafter
referred to as the Employer, has previously adopted a 401(k) Plan; and
WHEREAS, Article VIII, Section 8.1, of the Plan and Trust
reserves the right of the Employer to amend this Plan and Adoption
Agreement; and
WHEREAS, the Employer desires to amend the Plan and Trust;
NOW, THEREFORE, the employer hereby amends said Plan and Trust,
effective February 1, 1996, as follows:
The Adoption Agreement, item E3, Formula for Determining
Employer's Matching Contribution, shall be amended by the
deletion of option b., The Employer shall make a matching
contribution equal to 25% of the Participant's salary reductions,
and replaced with option c. as follows:
The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of
the Participant's salary reductions.
Executed at Atlanta, Georgia, this _____________day of
_______________, 1996.
____________________________________ By: _______________________
Witness Ray D. Risner, Trustee
________________________
Peter Ducoffe, Trustee
_________________________
Larry G. Ayers, Trustee
EXHIBIT 11.1
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
<TABLE>
COMPUTATION OF EARNINGS PER SHARE
Year Ended June 30,
1996 1995 1994
<S> <C> <C> <C>
EARNINGS PER SHARE (based on weighted
average shares outstanding):
Average outstanding shares 7,176,929 6,961,518 6,985,468
Net earnings for per-share computation(A) $5,550,000 $5,222,000 $5,944.000
Net earnings per common share $.77 $.75 $.85
PRIMARY EARNINGS PER SHARE:
Average outstanding shares, including common
stock equivalents (1)(B) 7,279,599 7,068,512 7,354,858
Net earnings per common share (A B) $.76 $.74 $.81
FULLY DILUTED EARNINGS PER SHARE:
Average outstanding shares, including common
stock equivalents (1)(C) 7,288,968 7,070,182 7,361,578
Net earnings per common share (A C) $.76 $.74 $.81
</TABLE>
(1) Average shares outstanding include stock options as common
stock equivalents. The dilutive effect of stock options
was determined using the treasury stock method. Under that
method of calculation, stock options are valued at average
market prices for the primary calculation, and at average
or month-end market prices (whichever are higher) for the
fully diluted calculation.
Cover: Graphic -- picture of lap top computer with company name
appearing on screen.
<PAGE>
Cover foldout
<TABLE>
SELECTED INCOME STATEMENT DATA
YEAR ENDED JUNE 30, (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net sales $468,298 $398,753 $296,173 $249,472 $178,666
Cost of sales, including buying
and occupancy expenses 438,837 370,548 271,982 223,122 158,957
Gross profit 29,461 28,205 24,191 26,350 19,709
Selling, general and
administrative expenses 19,493 18,652 14,448 13,015 10,919
Special charge -- 452 -- -- --
Earnings from operations 9,968 9,101 9,743 13,335 8,790
Interest expense (income)-net 902 688 193 20
(35)
Earnings before
income taxes 9,066 8,413 9,550 13,315 8,825
Income taxes 3,516 3,191 3,606 4,929 3,960
Net earnings $ 5,550 $ 5,222 $ 5,944 $ 8,386 $ 4,865
Net earnings per common share $ .76 $ .74 $ .81 $ 1.13 $ .71
Weighted average number of
common and common equivalent
shares outstanding 7,280 7,069 7,355 7,427 6,804
</TABLE>
<TABLE>
SELECTED BALANCE SHEET DATA
JUNE 30, (IN THOUSANDS) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Working capital $ 40,496 $41,355 $25,489 $20,099 $12,818
Total assets 131,305 87,375 65,572 59,690 42,504
Long-term obligations
less current portion 10,610 11,500 -- -- --
Total stockholders' equity 41,650 34,633 29,348 23,281 14,500
</TABLE>
<PAGE>
1996 FINANCIAL ANALYSIS
BAR GRAPH: NET SALES
MILLIONS OF DOLLARS
92 178.7
249.5
296.2
398.8
96 468.3
BAR GRAPH: NET EARNINGS
MILLIONS OF DOLLARS
92 4.9
8.4
5.9
5.2
96 5.6
BAR GRAPH: EARNINGS PER SHARE
DOLLARS
92 .71
1.13
.81
.74
96 .76
CORPORATE PROFILE
Southern Electronics Corporation distributes microcomputers, computer
peripheral products and cellular telephone products to VARs
and dealers. Headquartered in Tucker, Georgia, Southern Electronics
Corporation had 348 employees as of June 30, 1996. The Company's
shares are traded on the Nasdaq National Market under the symbol SECX.
BAR GRAPH: WORKING CAPITAL
MILLIONS OF DOLLARS
92 12.8
20.1
25.5
41.4
96 40.5
BAR GRAPH: TOTAL ASSETS
MILLIONS OF DOLLARS
92 42.5
59.7
65.6
87.4
96 131.3
BAR GRAPH: STOCKHOLDERS' EQUITY
MILLIONS OF DOLLARS
92 14.5
23.3
29.3
34.6
96 41.7
<PAGE>
LETTER TO OUR STOCKHOLDERS -- THIS APPEARS ON RIGHT SIDE OF PAGE
[ARROW RIGHT] Fiscal 1996 was a good year for Southern
Electronics Corporation. Net sales for the year reached an all-time
high of $468.3 million and net income was $5.6 million, exceeding the
prior year's $5.2 million. What is even more telling, however, is the
sequential quarterly pattern of results. After a first quarter with
earnings per share of $.14, business improved for the balance of the
year resulting in earnings per share of $.19, $.20 and $.23 for the
second, third and fourth quarters, respectively. In addition, in the
fourth quarter Southern Electronics Corporation was able to show
higher earnings per share year over year -- $.23 vs. $.17 -- for the
first time during this fiscal year. Your management believes that
significant profit improvement has occurred, as demonstrated by the
quarterly progress in fiscal 1996.
The year was one of many accomplishments. In September, we went "live"
on a Unix-based computer system that fully integrates all aspects of
sales and operations, thus eliminating most paperwork throughout the
Company. This system, which provides real-time data, has aided sales
in immediately identifying product availability, helped purchasing in
providing greater detail on key rate-of-sale information, and further
automated the distribution operation -- where proper implementation is
so important to the success of Southern Electronics Corporation. The
system is expandable and has capacity to allow the Company to achieve
significant future sales growth targets.
In December 1995, the Company acquired the operating assets of U.S.
Computer of North America. This acquisition brought with it the Latin
America Hewlett-Packard line, as well as a new base of customers. We
are pleased to report that since the date of acquisition, sales and
profits derived from this new venture have exceeded expectations and
are up sharply from a year ago. Our Latin American customers now see
Southern Electronics Distributors as a full-line distributor who is a
single-source supplier for all their needs. The success of this first
acquisition by your Company paves the way for other acquisitions that
we may consider in the future.
To support the increased business in Latin America, Southern
Electronics has relocated within Miami's Beacon Centre to a much
larger and more spacious sales and distribution complex. We plan to
triple the size of our selling staff and have already added new sales
people since the opening in early June. In addition, our coverage for
the Latin American customer has been enhanced by having specialized
buyers in place in Miami to cater specifically to the export market.
Accordingly, we are now buying out of two different locations in
recognition of the differences in the markets that Southern
Electronics Corporation is now serving.
CONTENTS
INSIDE FRONT COVER
Letter to Stockholders
2 Southern Electronics Corporation
10 Management's Discussion
and Analysis of Financial
Condition and Results of
Operations
12 Consolidated Financial
Statements
16 Notes to Consolidated
Financial Statements
20 Independent Auditors'
Report
INSIDE BACK COVER
Directors and Officers;
Stockholder Information
THE NAMES OF THE VARIOUS COMPANIES APPEARING ON THE COVER OF THIS
REPORT AND IN THE HEADERS ON PAGES TWO THROUGH FIVE HEREOF ARE NAMES
AND/OR TRADEMARKS OF COMPANIES OR OTHER ENTITIES NOT AFFILIATED
WITH THE COMPANY.
<PAGE>
As previously reported, the Company has been active in signing on new
vendors to provide the impetus for our future growth. In fiscal 1996,
these lines included: Acer, Apple Computer, Canon Computer Systems,
Inc., Epson Latin America, Motorola Modems, Newcom Multimedia, Number
Nine Visual Technologies, Sceptre Technologies, Inc., and ViewSonic.
Southern Electronics Corporation considers a low cost of doing
business to be one of its core competencies. One useful measure of
this cost is S,G&A as a percentage of sales. In this regard, the trend
has been very favorable. For the first, second, third and fourth
quarters of fiscal 1996, S,G&A as a percentage of sales was 4.3%,
4.4%, 4.1% and 3.9%, respectively. We expect to continue to tightly
run the business and to reduce costs whenever possible. One very
strong component in reducing S,G&A has been the superb collection
efforts and low loss results in our credit department. Credit losses
in fiscal 1996 were below the prior year on a percentage basis. This
was accomplished despite the addition of a new customer base with its
distinct and different business conditions. Inventory management
continues to help grow the business and has increased inventory turns
during the year.
The outlook for fiscal 1997 is encouraging. The Company is
accelerating the hiring process and has increased by 20% new sales
people in Atlanta, which should propel sales growth throughout the
year. The sales force has been reorganized into sales teams to improve
customer service, as well as provide training and guidance for our
newer sales people. The balance sheet remains strong, with little
debt. The Company expects to fully participate in future industry
growth.
/s/ Gerald Diamond /s/ Ray D. Risner
GERALD DIAMOND RAY D. RISNER
CHAIRMAN AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER
[PICTURE OF GERALD DIAMOND AND RAY D. RISNER]
[CAPTION] GERALD DIAMOND RAY D. RISNER
1 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
FROM STRENGTH TO STRENGTH
[ARROW RIGHT] In a year that saw a number of competitors
restructure and re-engineer their operations to offset the impact of
market forces, Southern Electronics Corporation has gone from strength
to strength, expanding operations both domestically and
internationally and upgrading our infrastructure to dramatically
enhance customer service |
Our far-sighted growth strategy has enabled us to once again
achieve record revenues -- $468.3 million in fiscal 1996 versus $398.8
million in fiscal 1995 | SG&A has been further reduced as a percentage
of sales, making us a more cost-effective provider of products and
services to both manufacturers and customers |
By remaining aggressive in the market while enhancing
cost-competitiveness, we have been able to capture market share | Our
strengthened market position has allowed us, in turn, to become more
selective in our vendor relationships | We have focused on only
the most productive relationships, and our growth plan calls for
adding strategic vendor partners in the future |
[GRAPHIC HERE: COMPUTER PRODUCTS -- SPREADS ACROSS PAGES 2 & 3]
<PAGE>
THE PAST YEAR WAS MARKED BY A NUMBER OF SIGNIFICANT
MILESTONES, INCLUDING:
[BULLET] The acquisition of the operating assets of U.S. Computer of
North America, Inc., and the growth of our market presence in Latin
America
[BULLET] A vastly expanded Miami facility for Latin American
operations
[BULLET] A steady stream of new product lines
[BULLET] The implementation of our new computer system, which has
improved both operations and control
[BULLET] Extensive staff expansion to build sales, enhance
communications and provide for future growth
3 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
[GRAPHIC AND PICTURE HERE: GRAPHIC OF PHONE HAND SET. PICTURE OF SALES
FORCE]
SIDEBAR:[ARROW RIGHT] A contributing factor to the dynamics of our
sales department is the huge open area where team sales managers can
rapidly communicate with their individual sales people.
[ARROW RIGHT] Our acquisition of the operating assets of U.S.
Computer of North America, Inc., in December 1995, gives us a stronger
sales presence in Latin America, positioning us to benefit accordingly
from the dramatic growth predicted for that region |
The Latin America information technology market experienced a
16.6% compound annual growth rate in 1993-94, and growth of 13.4% is
projected for 1994-99, according to Miami-based International Data
Corp., a leading industry analyst | This makes it one of the two
fastest growing markets in the world (along with Asia). With new
product offerings and excellent existing customer relationships, we
are poised for leadership in that market | By comparison, growth in
the U.S. is projected at significantly less than 10% by IDC, but SED
will grow by taking market share away from competitors |
Through U.S. Computer, we acquired the Latin American
distribution rights to Hewlett-Packard products -- an industry leader
| Authorized products include inkjet and laser printers, Vectra PCs,
calculators, plotters, scanners and consumables |
SED Latin America, which now includes the fully
integrated U.S. Computer operations, has also reached agreement with
Epson Latin America, Inc., to distribute the full line of Epson
products to this all-important market -- including inkjet printers,
dot matrix printers, laser printers, Photo PC cameras, scanners and
desktop and notebook computers | Epson will clearly be a premier
vendor for us in Latin America |
POISED FOR LEADERSHIP IN LATIN AMERICA
<PAGE>
In addition, we have signed an agreement with Apple Computer,
Inc., to distribute their full line of computers, notebooks, printers
and peripherals throughout Latin America and the Caribbean |
With these and other entries into this growth market, Latin
America has the potential to account for a growing portion of our
overall revenues in the near term | This not only means
significant additional revenue, but increased bottom-line profits.
A LARGER BASE IN MIAMI
In order to accommodate both the acquisition and the future
growth of our Latin American operations, SED Latin America/U.S.
Computer has moved its Miami headquarters to a distribution facility
triple the size of its previous facilities while remaining in Beacon
Centre Technology Park, Miami's central address for the Latin American
computer industry |
This larger, better-equipped facility has enabled us to
significantly expand our sales staff and carry more inventory | It
also features several new conference rooms and vendor rooms and an
expanded will-call area | Distribution is also better organized,
allowing for quicker service |
This is an extremely meaningful expansion, the effects of which
will be felt in enhanced customer service and improved order
processing and pickup | In terms of the marketplace, this modern,
efficient facility reflects SED's market position as a first-class
distributor |
PICTURE HERE OF MIAMI'S BEACON CENTRE ALSO GRAPHIC OF CD
CAPTION:
Centrally [ARROWN LEFT]
located within
Miami's Beacon
Centre, SED
Latin America
enjoys prominent
visibility.
PICTURE HERE OF LATIN AMERICA SALES PERSON
CAPTION:
[ARROW DOWN]
Targeting Latin America for accelerated sales growth has already
demonstrated the vitality of this market.
5 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
PICTURE HERE OF LATIN AMERICA FACILITY
CAPTION:
[ARROW RIGHT] The new SED Latin America facility includes a showroom
for customers to view the wide assortment of products available.
A STEADY STREAM OF NEW PRODUCT LINES
GRAPHIC OF END OF COMPUTER CORD HERE
[ARROW RIGHT] The Epson and Apple Latin American
distribution agreements were part of a steady stream of new product
line additions in fiscal 1996, which provide our customers with a
wider, more improved product selection |
Earlier in the year, we signed an agreement with Sceptre
Technologies, Inc., a privately owned manufacturer of notebook
computers |
We also finalized a distribution agreement with Number Nine
Visual Technologies, a leader in graphic accelerator products, to
carry their complete line of award-winning video accelerator cards and
high-end graphics cards |
Another well-known monitor line recently
authorized to Southern Electronics Corporation is ViewSonic |
Earlier in the year we completed an agreement with Acer Corporation to
distribute monitors, CD-Rom drives, add-on cards, and keyboards |
More recently we received agreements to carry Acer Entra base systems,
Acer Power complete systems, and the Acer Note line of notebook
computers |
These product line acquisitions represent significant
progress toward our goal of becoming a "One-Stop Shop" for computers
and computer-related products | A string of new product lines also has
a snowball effect in the vendor community; like all business people,
vendors like to associate themselves with success | It is
our belief that this will ultimately translate into enhanced
shareholder value, as well.
<PAGE>
6 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
GRAPHIC HERE OF COMPUTER CORD
[ARROW RIGHT] Significant
upgrades in computerization have had a dramatic impact on our
day-to-day operations. In September 1995, our Unix-based Data
General computer system went on-line |
For our salespeople, this means real-time knowledge of inventory and
order status |
While we are justifiably proud of this system, we are equally
proud of how smoothly the implementation of the new system has
occurred | We have made these changes without business interruption |
Our sales department computer infrastructure has likewise been
upgraded | We have installed all new Pentium-based Hewlett-Packard
workstations operating under Windows 95 | These new workstations,
utilizing state-of-the-art software combined with a contact manager,
provide our sales force with leading-edge sales tools |
Future plans call for linking the contact manager with our
phone system and "Caller ID" technology, which will dramatically
improve customer service and lower telephone expenses | When a call
comes into our center, the caller will be immediately identified and
routed to the appropriate sales person; a screen will pop up on the
sales person's workstation displaying vital customer information
before the phone even rings |
PAGE TITLE APPEARS 90 DEGREES ON RIGHT SIDE OF PAGE: COMPUTER SYSTEM
IMPROVES EFFICIENCY AND SERVICE
PICTURE CAPTION:
Our "hands on" management [ARROW LEFT]
philosophy distinguishes us
from a number of other
significant companies in
our industry.
Picking up merchandise [ARROW LEFT]
for export keeps the "will
call" department in Miami
continuously busy.
PICTURE OF FOUR MANAGERS HERE CAPTION ABOVE
PICTURE OF WILL CALL DEPT. IN MIAMI CAPTION ABOVE
<PAGE>
[ARROW RIGHT] These technical innovations will serve an
appreciably larger headquarters sales staff | The sales floor has been
reorganized into sales teams, which will greatly improve customer
service, keeping our customers current on all new product offerings
and promotional opportunities |
We have also made a significant investment in sales
training, to enhance the knowledge and communication skills of our
sales staff | In our new training room, sales staff meet regularly
with representatives from vendors and manufacturers so they can remain
current with the latest industry trends |
PAGE TITLE: SALES TEAMS SPEARHEAD FUTURE DOMESTIC GROWTH -- APPEARS IN
CENTER OF PAGE. GRAPHIC OF COMPUTER KEYBOARD APPEARS TOP RIGHT CORNER
OF PAGE
In short, we aim to make it easier to do business with
Southern Electronics Corporation, and we plan to grow domestic sales
dramatically through these sales teams | Our enhanced training
program, combined with our new contact manager software and upgraded
PCs, will result in quicker response time, better throughput and ease
of finding information --all of which translate into improved
communications and heightened customer and vendor satisfaction |
PICTURE CAPTION:
To keep abreast in an ever-changing industry, training sessions are
conducted regularly with both seasoned and new sales personnel.
[ARROW UP]
PICTURE OF TRAINING SESSION HERE
8 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
GRAPHIC OF REST OF COMPUTER KEYBOARD TOP LEFT CORNER OF PAGE
HEADER OF PAGE: A MULTI-FACETED ORGANIZATION
PICTURE CAPTION RAGGED RIGHT UNDER GRAPHIC OF KEYBOARD TO FOLLOW
As part of our major
internal computer expansion,
each salesperson is provided
with a PC that includes
contact manager software
to help meet customer
needs instantly.
[ARROW UP]
PICTURE OF GIRL AT COMPUTER HERE
[ARROW RIGHT] As we continue to grow, Southern Electronics
Corporation is evolving in several distinct, definable areas -- each,
in essence, a separate business entity. They are: cellular, domestic,
export, retail U.S. business, and VARS.
In one segment alone, we are pursuing several different
outlets. We have initiated an aggressive retail program, which will
enable us to sell directly to some of the major retailers in the U.S.,
in conjunction with selected vendors. We are staffing appropriately to
penetrate that market, with the addition of individuals with extensive
retail experience. Our plan is to target superstores, mail order and
catalog operations.
In addition to computers and computer-related products,
Southern Electronics also represents a broad selection of cellular
products and accessories. It is our goal to supply a one-stop cellular
solution to the retail trade. We believe the cellular busine
ss is shifting from a smaller, agent-oriented base to national
retailers, and we are positioning ourselves to take full advantage of
this shift. In the years to come, this industry will be dominated by
wireless communications, and we see a tremendous opportunity for
distributors in end-user fulfillment. We are also well-positioned to
take a leadership position in this growth field.
In 1996, Southern Electronics Corporation has continued to
thrive as a result of its diversified growth strategy and hands-on
management in every phase of the business. Executive management is
continually focusing on industry trends and considering new approaches
to stay ahead of the competition. This thought process in enhanced by
the active involvement and input of our staff.
We believe that this hands-on management style, our winning
strategy and our ongoing commitment to customer service and
satisfaction will ensure a bright future for Southern Electronics
Corporation.
PICTURE OF 2 CELLULAR PHONE SALES PERSONS APPEARS BOTTOM RIGHT
CAPTION:
[ARROW DOWN]
Cellular phone sales
continue to grow under
the umbrella of technology
products sold throughout
the U.S. and Latin
America.
9 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth, for the years indicated, the
percentage of net sales represented by selected items from the
Company's Consolidated Statements of Earnings.
<TABLE>
YEAR ENDED JUNE 30, 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales, including buying and
occupancy expenses 93.7 92.9 91.8 89.4 89.0
Gross profit 6.3 7.1 8.2 10.6 11.0
Selling, general and
administrative expenses 4.2 4.7 4.9 5.2 6.1
Special charge -- .1 -- -- --
Interest expense-net .2 .2 .1 -- --
Earnings before income taxes 1.9 2.1 3.2 5.4 4.9
Income taxes .7 .8 1.2 2.0 2.2
Net earnings 1.2% 1.3% 2.0% 3.4% 2.7%
</TABLE>
Any trends that may be derived from the above table are not
necessarily indicative of the Company's future operations.
CONSOLIDATED RESULTS OF OPERATIONS
FISCAL 1996 COMPARED WITH FISCAL 1995
Net sales for the year ended June 30, 1996 increased by 17.4% compared
to the year ended June 30, 1995. This growth resulted primarily from
the increase in sales to customers for export into Latin America.
Sales of microcomputers and computer peripheral products represented
approximately 91.7% of the Company's net sales for the year ended June
30, 1996 compared to 91.0% in the prior year. Sales of cellular
telephone products accounted for approximately 8.3% of the net sales
for the year ended June 30, 1996 as compared to 9.0% for the prior
year.
Gross profit as a percentage of net sales was 6.3% for year
ended June 30, 1996 as compared to 7.1% for the year-earlier period.
This decrease is primarily attributable to more competitive pricing in
fiscal 1996 compared to fiscal 1995.
Selling, general and administrative expenses as a percentage
of net sales decreased to 4.2% for the year ended June 30, 1996
compared with 4.7% for the year ended June 30, 1995. This decrease is
due primarily to greater revenue coverage of expenses and the
Company's efforts to contain expense increases.
Income tax expense was recorded in the year ended June 30,
1996 at an effective annual rate of 38.8% as compared to 37.9% in the
year ended June 30, 1995.
FISCAL 1995 COMPARED WITH FISCAL 1994
Net sales for the year ended June 30, 1995 increased by 34.6% compared
to the year ended June 30, 1994. Because the cost of the Company's
products typically decreased during 1995, the increase was primarily
due to an increased volume of sales to value-added resellers (VARs)
and dealers served by the Company. Sales of microcomputers and
computer peripheral products represented approximately 91% of the
Company's net sales for the years ended June 30, 1995 and 1994. Sales
of cellular telephone products accounted for approximately 9% of the
net sales for the years ended June 30, 1995 and 1994.
Gross profit as a percentage of net sales was 7.1% for year
ended June 30, 1995 as compared to 8.2% for the year-earlier period.
This decrease is primarily attributable to more competitive pricing in
fiscal 1995 compared to fiscal 1994.
Selling, general and administrative expenses as a percentage
of net sales decreased to 4.7% for the year ended June 30, 1995
compared with 4.9% for the year ended June 30, 1994. This decrease is
due primarily to greater revenue coverage of expenses and the
Company's efforts to contain expense increases.
10 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
The Company incurred $452,000 of expenses in fiscal 1995 in
connection with an attempted merger. These expenses were recorded as a
special charge when the related merger discussions were terminated.
Income tax expense was recorded in the year ended June 30,
1995 at an effective annual rate of 37.9% as compared to 37.8% in the
year ended June 30, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company and its wholly owned operating subsidiary, Southern
Electronics Distributors, Inc. ("SED"), are parties to a revolving
credit loan agreement (the "Revolving Credit Agreement") with National
City Bank, Columbus, Ohio, and Wachovia Bank of Georgia, N.A. which,
as amended, provides for an unsecured line of credit of $35,000,000.
The Company may borrow at the prime rate offered by Wachovia Bank of
Georgia, N.A., 8.25% at June 30, 1996, or the Company may fix the
interest rate for periods of 30 to 180 days under various interest
rate options. The Revolving Credit Agreement requires a commitment fee
of 1/4% of the unused commitment.
The Revolving Credit Agreement requires maintenance of certain
minimum working capital and other financial ratios and has certain
dividend restrictions. This agreement expires on August 31, 1998. At
June 30, 1996, the Company had borrowings of $10,610,000 under the
Revolving Credit Agreement.
The Company's liquidity requirements arise primarily from the
funding of working capital needs, including inventories and trade
accounts receivable. The Company funded its increases in accounts
receivable and inventories with internally generated funds and, at
times, borrowings under its Revolving Credit Agreement.
Management continually evaluates the Company's product mix and
the needs of its customers in order to minimize inventory obsolescence
and carrying costs. The Company's rapid delivery terms are available
to all of its customers, and the Company seeks to pass through its
shipping and handling costs to its customers. The Company also
provides trade credit to certain of its customers, typically net 10
days. Based on past experience, management does not believe that its
policies of offering a broad range of products, rapid delivery and
providing trade credit to certain of its customers will have a
material adverse effect on the Company's liquidity or results of
operations.
On August 6, 1996, the Company repurchased 200,000 shares of
its stock for approximately $1.3 million in an open market transaction
under a stock buy-back program previously authorized by the Board of
Directors.
Management believes that the Revolving Credit Agreement,
together with vendor lines of credit and internally generated funds,
will be sufficient to satisfy its working capital needs during fiscal
1997.
INFLATION AND PRICE LEVELS
Management believes that inflation has not had a significant impact on
the Company's business because of the typically decreasing cost of
products sold by the Company. The Company also receives vendor price
protection for a significant portion of its inventory. In the event a
vendor reduces its prices for goods purchased by the Company prior to
the Company's sale of such goods, the Company generally has been able
either to receive a credit from the vendor for the price differential
or to return the goods to the vendor for a credit against the purchase
price. At this time, management does not expect that inflation will
have a material impact on its business in the immediate future.
FORWARD-LOOKING INFORMATION
The matters discussed in this annual report and, in particular,
information regarding future revenues and Southern Electronics
Corporation's future business plans, consist of forward-looking
information under the Private Securities Litigation Reform Act of
1995, and are subject to and involve risks and uncertainties which
could cause actual results to differ materially from the
forward-looking information. These risks and uncertainties include,
but are not limited to, general economic conditions, industry trends,
the dependence upon and/or loss of key suppliers or customers, the
loss of strategic product shipping relationships, customer demand,
product availability, competition (including pricing and
availability), concentrations of credit risk, distribution
efficiencies, capacity constraints, technological difficulties, risk
of international operations including exchange rate fluctuations and
the regulatory and trade environment (both domestic and foreign).
11 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
CONSOLIDATED
BALANCE SHEETS
<TABLE>
JUNE 30, 1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 662,000 $ 790,000
Trade accounts receivable, less allowance for doubtful
accounts of $1,141,000 (1996) and $845,000 (1995) 44,621,000 26,459,000
Inventories 72,501,000 53,688,000
Deferred income taxes 1,230,000 910,000
Prepaid income taxes -- 479,000
Other current assets 527,000 271,000
Total current assets 119,541,000 82,597,000
Property and equipment - net 4,341,000 4,452,000
Intangibles - net 7,423,000 326,000
Total assets $131,305,000 $87,375,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 75,508,000 $37,922,000
Income taxes payable 695,000 --
Accrued and other current liabilities 2,842,000 3,320,000
Total current liabilities 79,045,000 41,242,000
Revolving bank debt 10,610,000 11,500,000
Commitments
Stockholders' equity:
Preferred stock;
129,500 shares authorized, none issued
Common stock, $.01 par value;
25,000,000 shares authorized, 7,319,122 (1996) and
7,121,492 (1995) shares issued 74,000 71,000
Additional paid-in capital 12,204,000 10,579,000
Retained earnings 31,190,000 25,640,000
Treasury stock at cost, 125,590 shares (1,390,000)
(1,390,000)
Prepaid compensation - stock awards (428,000)
(267,000)
Total stockholders' equity 41,650,000 34,633,000
Total liabilities and stockholders' equity $131,305,000 $87,375,000
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
12 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
CONSOLIDATED
STATEMENTS OF EARNINGS
<TABLE>
YEAR ENDED JUNE 30, 1996 1995 1994
<S> <C> <C> <C>
Net sales $468,298,000 $398,753,000 $296,173,000
Cost of sales, including buying and
occupancy expenses 438,837,000 370,548,000 271,982,000
29,461,000 28,205,000 24,191,000
Other costs and expenses (income):
Selling, general and administrative 19,493,000 18,652,000 14,448,000
Special charge -- 452,000 --
Interest expense, net 902,000 688,000 193,000
20,395,000 19,792,000 14,641,000
Earnings before income taxes 9,066,000 8,413,000 9,550,000
Income taxes 3,516,000 3,191,000 3,606,000
Net earnings $ 5,550,000 $ 5,222,000 $ 5,944,000
Net earnings per common share $ .76 $ .74 $ .81
Weighted average number of
common and common equivalent
shares outstanding 7,280,000 7,069,000 7,355,000
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
13 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
Common Stock Additional Prepaid
Par Paid-In Retained Treasury Stock Compensation-
Shares Value Capital Earnings Shares Cost Stock Awards
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1993 7,047,072 $70,000 $ 9,121,000 $14,474,000 21,804 $ (346,000) $ (38,000)
Amortization of stock
awards 34,000
Stock options
exercised 18,450 1,000 88,000
Tax benefits of stock
awards and options 922,000
Stock awards
cancelled (1,575) (4,000) 4,000
Treasury stock purchased 83,500 (922,000)
Net earnings 5,944,000
BALANCE, JUNE 30, 1994 7,063,947 71,000 10,127,000 20,418,000 105,304 (1,268,000) --
Stock awards issued to
employees 54,500 294,000 (294,000)
Amortization of stock
awards 23,000
Stock options
exercised 4,045
Tax benefits of stock
awards and options 162,000
Stock awards
cancelled (1,000) (4,000) 4,000
Treasury stock purchased 20,286 (122,000)
Net earnings 5,222,000
BALANCE, JUNE 30, 1995 7,121,492 71,000 10,579,000 25,640,000 125,590 (1,390,000) (267,000)
Stock awards issued to
employees 47,500 261,000 (261,000)
Amortization of stock
awards 95,000
Stock awards
cancelled (3,500) (18,000) 5,000
Stock options
exercised 4,220 2,000
Tax benefits of stock
awards and options 8,000
Stock issued in
acquisition 275,000 3,000 1,372,000
Net earnings 5,550,000
BALANCE, JUNE 30, 1996 7,444,712 $74,000 $12,204,000 $31,190,000 125,590 $(1,390,000) $ (428,000)
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
14 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
CONSOLIDATED
STATEMENTS OF CASH FLOWS
<TABLE>
YEAR ENDED JUNE 30, 1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 5,550,000 $ 5,222,000 $ 5,944,000
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,168,000 569,000 484,000
Compensation-stock awards 95,000 23,000 34,000
Provision for losses on accounts receivable 1,642,000 1,143,000 1,225,000
Tax benefit from stock awards and options 8,000 162,000 922,000
Changes in assets and liabilities net of effects of
acquired business
Trade accounts receivable (15,923,000) (7,709,000) (2,780,000)
Inventories (17,840,000) (14,716,000) (3,339,000)
Deferred income taxes (86,000) 492,000 (114,000)
Other current assets 16,000 (108,000) (23,000)
Trade accounts payable 27,389,000 4,482,000 10,612,000
Accrued and other current liabilities (1,012,000) 536,000 (133,000)
Income taxes payable 1,174,000 63,000 (1,948,000)
Net cash provided by (used in) operating activities. 2,181,000 (9,841,000) 10,884,000
INVESTING ACTIVITIES
Purchase of equipment (1,398,000) (1,488,000) (1,161,000)
Purchase of business, net of cash acquired (21,000) -- --
Net cash used in investing activities (1,419,000) (1,488,000) (1,161,000)
FINANCING ACTIVITIES
Revolving bank debt net proceeds (payments) (890,000) 11,500,000 (9,258,000)
Proceeds from issuance of common stock -- -- 89,000
Purchase of treasury stock -- (122,000) (922,000)
Net cash provided by (used in) financing activities (890,000) 11,378,000 (8,247,000)
Increase (decrease) in cash and cash equivalents (128,000) 49,000 (368,000)
Cash and cash equivalents, beginning of year 790,000 741,000 1,109,000
Cash and cash equivalents, end of year $ 662,000 $ 790,000 $ 741,000
Supplemental disclosures of
cash flow information
Cash paid during the year for:
Interest $ 881,000 $ 688,000 $ 207,000
Income taxes 2,770,000 2,473,000 4,685,000
Liabilities assumed in acquisition 11,250,000
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
15 SOUTHERN ELECTRONICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Consolidation -- The consolidated financial
statements include the accounts of Southern Electronics
Corporation (the "Company") and its wholly owned subsidiary,
Southern Electronics Distributors, Inc. ("SED"). Intercompany
accounts and transactions have been eliminated.
b. Description of Business -- SED is a wholesale distributor of
microcomputers, computer peripheral products and cellular
telephone products, serving value-added resellers and dealers.
c. Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
d. Cash Equivalents -- Cash equivalents are short-term investments
purchased with a maturity of three months or less.
e. Inventories -- Inventories are stated at the lower of cost
(first-in, first-out method) or market and include in-transit
inventory of $34,500,000 at June 30, 1996 and $16,900,000 at June
30, 1995.
f. Property and Equipment -- Property and equipment are recorded at
cost. Depreciation is computed principally by the straight-line
method over the estimated useful lives, five to seven years, of
the related assets or the lease term, whichever is shorter.
g. Intangible Assets -- Intangible assets consist primarily of
goodwill and noncompete agreements. Goodwill represents the
excess of the cost of acquired businesses over the fair value of
net identifiable assets acquired and is amortized using the
straight-line method over 30 to 40 years. Noncompete agreements
are amortized using the straight-line method over five years. The
Company periodically assesses the recoverability of intangible
assets based on judgments as to the future undiscounted cash
flows from related operations. Amortization expense was $188,000,
$12,000 and $12,000 in 1996, 1995 and 1994 respectively. The
accumulated amortization of goodwill and non-compete agreements
is approximately $320,000 and $132,000 at June 30, 1996 and 1995,
respectively.
h. Newly Issued Accounting Standards -- In March 1995, SFASNo. 121,
"Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets To Be Disposed Of," was issued. This Statement
requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment when events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable, with any impairment losses being reported in
the period in which the recognition criteria are first applied
based on the fair value of the asset. Long-lived assets and
certain intangibles to be disposed of are required to be reported
at the lower of carrying amount or fair value less cost to sell.
The Company will adopt SFAS No. 121 in the first quarter of
fiscal 1997. The effect on the financial statements upon adoption
of SFASNo. 121 has not been determined; however, management does
not expect the initial adoption of this Statement to have a
material near-term impact on the Company's results of operations.
In October 1995, SFAS No. 123, "Accounting for Stock-Based
Compensation," was issued. The adoption of the new recognition
provisions for stock-based compensation expense included in
SFASNo. 123 is optional; however, the pro forma effects on net
income had the new recognition provisions been elected is
required in financial statements. The Company will continue to
follow the requirements of APBNo. 25, "Accounting for Stock
Issued to Employees," in its accounting for employee stock
options; therefore, no impact on the Company's financial position
and results of operations is expected. The Company will adopt the
new disclosure requirements under SFASNo. 123 in fiscal 1997.
i. Earnings Per Common Share -- Earnings per common share have been
calculated based on the weighted average number of common shares
and common share equivalents outstanding during each period using
the treasury stock method.
j. Reclassifications -- Certain prior year amounts have been
reclassified for comparative purposes.
2. ACQUISITION
On December 14, 1995, the Company acquired substantially all of the
assets and assumed certain liabilities of U.S. Computer of North
America, Inc., a distributor of Hewlett-Packard computer products in
Latin America for approximately $2,640,000, (including $368,000in
expenses) consisting of 275,000 shares of common stock valued at
$1,375,000 and cash of $1,265,000. This acquisition has been accounted
for using the purchase method of accounting. Goodwill arising from
this acquisition is being amortized using the straight-line method
over 30 years. The operating results of the acquired business are
included in the Company's Consolidated Statements of Earnings from the
date of acquisition.
The following unaudited pro forma consolidated financial
information gives effect to the acquisition as if the transaction had
occurred as of July 1, 1994. The pro forma consolidated information is
not necessarily indicative of the results that would have been
reported had the acquisition occurred on such date, nor is it
indicative of the Company's future operations.
16 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
<TABLE>
YEAR ENDED JUNE 30, 1996 1995
<S> <C> <C>
Net sales $494,227,000 $449,972,000
Net earnings 5,864,000 3,036,000
Net earnings
per common share $ .79 $ .41
</TABLE>
3. PROPERTY AND EQUIPMENT
As of June 30, 1996 and 1995, property and equipment was comprised of
the following:
<TABLE>
JUNE 30, 1996 1995
<S> <C> <C>
Furniture and equipment $5,587,000 $ 4,972,000
Leasehold improvements 1,154,000 902,000
Other 216,000 216,000
6,957,000 6,090,000
Less accumulated
depreciation (2,616,000) (1,638,000)
$4,341,000 $4,452,000
</TABLE>
4. REVOLVING BANK DEBT
The Company and SED have a revolving credit loan agreement with two
banks which, as amended, provides for an unsecured line of credit of
$35,000,000. At June 30, 1996, SED had borrowings of $10,610,000 under
the line, leaving $24,390,000 available under the borrowing
commitment. The Company may borrow at the prime rate offered by
Wachovia Bank of Georgia, N.A., 8.25% at June 30, 1996, or the Company
may fix the interest rate for periods of 30 to 180 days under various
interest rate options. The Company pays a commitment fee of 1/4% of
the unused loan commitment. The loan agreement requires maintenance of
certain minimum working capital and other financial ratios and
has certain dividend restrictions.The Company was in compliance with
such covenants at June 30, 1996. This agreement expires on August 31,
1998.
The carrying value of revolving bank debt at June 30, 1996
approximates fair value based on interest rates that are believed to
be available to the Company for debt with similar provisions provided
for in the existing debt agreements.
5. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The tax effects of significant items comprising the
Company's current deferred tax assets are as follows:
<TABLE>
JUNE 30, 1996 1995
<S> <C> <C>
Reserves not currently
deductible $ 573,000 $415,000
Inventory valuation 438,000 242,000
Depreciation 48,000 179,000
Other 171,000 74,000
$1,230,000 $910,000
</TABLE>
Components of income tax expense are as follows:
<TABLE>
<S> <C> <C> <C>
YEAR ENDED JUNE 30, 1996 1995 1994
Current:
Federal $2,801,000 $2,281,000 $3,179,000
State 395,000 418,000 541,000
3,196,000 2,699,000 3,720,000
Deferred (Benefit):
Federal 280,000 426,000 (104,000)
State 40,000 66,000 (10,000)
320,000 492,000 (114,000)
$3,516,000 $3,191,000 $3,606,000
</TABLE>
Income tax benefits relating to the exercise of employee stock awards
and options reduces taxes currently payable and is credited to
additional paid-in capital. Such amounts approximated $8,000, $162,000
and $922,000 for fiscal 1996, 1995 and 1994, respectively.
The Company's effective tax rates for the years ended June 30, 1996,
1995 and 1994 differ from statutory rates as follows:
<TABLE>
YEAR ENDED JUNE 30, 1996 1995 1994
<S> <C> <C> <C>
Statutory federal rate 34.0% 34.0% 34.0%
State income taxes net of
federal income tax benefit 3.7 3.6 3.3
Non-deductible goodwill
amortization 1.5 0.1 0.1
Other (0.4) 0.2 0.4
38.8% 37.9% 37.8%
</TABLE>
17 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LEASE OBLIGATIONS
SED leases its main office facility under an operating lease with a
partnership comprised of certain minority stockholders of the Company.
The lease currently provides for an annual rent of $176,000 through
October 1, 1999, subject to increase based upon periodic increases in
the Consumer Price Index.
The Company leases additional distribution center and sales
office space under operating leases. Rent expense under all operating
leases for the years ended June 30, 1996, 1995 and 1994 was $663,000,
$565,000 and $486,000, respectively.
As of June 30, 1996, the future minimum rental commitments
under noncancelable operating leases were:
YEAR ENDING JUNE 30,
1997 $ 858,000
1998 878,000
1999 773,000
2000 446,000
2001 296,000
$3,251,000
7. COMMON STOCK
The Company maintains stock option plans under which incentive and
non-qualified stock options may be granted to officers and key
employees to purchase up to 1,118,910 shares of common stock of the
Company. Incentive stock options must be granted at not less than the
fair market value of the common stock at the date of grant and expire
10 years from the date of grant. Non-qualified stock options may be
granted at a price of not less than 85% of the fair market value of
the common stock at the date of grant and expire 10 years from the
date of grant.
Stock option activity and related information under these
plans was as follows:
<TABLE>
YEAR ENDED JUNE 30, 1996 1995 1994
<S> <C> <C> <C>
Shares under options at
beginning of year 869,595 835,765 882,365
Options granted 346,450 117,450 16,850
Options exercised (4,220) (4,045) (18,450)
Options cancelled (49,725) (79,575) (45,000)
Shares under options
at end of year 1,162,100 869,595 835,765
Average price of
options exercised $ .54 $ .55 $ 4.78
</TABLE>
<TABLE>
At June 30:
Price range of
outstanding options
<S> <C> <C> <C>
From $ .54 $ .54 $ .54
To $ 6.00 $ 6.00 $ 5.75
Options exercisable 565,830 420,555 294,095
</TABLE>
Options granted under the plans are exercisable in installments
ranging from 20% to 33.3% per year. Upon the occurrence of a "change
of control" (as defined), all outstanding options become immediately
exercisable in full and remain exercisable for the remaining term of
the option. During fiscal 1996, the Company granted 77,900 stock
options subject to stockholder approval at a meeting to be held on
October 31, 1996 of an amendment to increase by 500,000 the number of
shares available for issuance.
Since 1992, the Board of Directors has authorized and granted
non-qualified options to purchase 97,000 shares of common stock to
certain directors of the Company at exercise prices ranging from $5.00
to $6.00. All options granted to directors of the Company are
currently exercisable and expireten years from the date of grant. No
options have been exercised under such grants to directors.
8. RESTRICTED STOCK
In February 1988, the Company's Board of Directors approved a
restricted stock plan which permits the granting of 337,500 shares of
restricted stock awards to directors, officers and key employees. Such
persons have shares issued in their names which are restricted as to
the right of resale and other disposition until certain predetermined
employment time requirements are met. The individual awards become
vested after periods ranging from three to five years.
Restricted stock activity was as follows:
<TABLE>
YEAR ENDED JUNE 30, 1996 1995 1994
<S> <C> <C> <C>
Shares of restricted stock
at beginning of year 53,500 69,634 71,209
Issued 47,500 54,500 --
Vested -- (69,634) --
Cancelled (3,500) (1,000) (1,575)
Shares of restricted stock
at end of year 97,500 53,500 69,634
</TABLE>
18 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
The value of restricted stock awards is determined using the price of
the Company's common stock on the grant date, and is amortized over
the vesting period. The unamortized portion of such awards is deducted
from stockholders' equity.
9. 401(K) PLAN
The Company has a voluntary retirement program, the Southern
Electronics Distributors, Inc. 401(k) Plan. All employees of SED who
have attained the age of 21 are eligible to participate after
completing one year of service. SED matches a portion of employee
contributions to the Plan. Employees are immediately vested in their
own contributions. Vesting in SED's matching contributions are based
on years of continuous service. SED's matching contribution expense
for the years ended June 30, 1996, 1995 and 1994 was $76,000, $79,000
and $55,000, respectively.
10. SIGNIFICANT VENDORS AND EXPORT SALES
During the year ended June 30, 1996, SED purchased approximately 32%
of its inventory from two vendors. During the year ended June 30,
1995, SED purchased approximately 15% of its inventory from one
vendor. During the year ended June 30, 1994, no vendor represented 10%
or more of SED's inventory purchases.
For the years ended June 30, 1996 and 1995 approximately 37%
and 21%, respectively, of the Company's sales were to customers for
export principally into Latin America. For the year ended June 30,
1994, such sales were less than 10% of the Company's total sales.
11. SPECIAL CHARGE
During the year ended June 30, 1995, the Company incurred $452,000 of
expenses in connection with an attempted merger. These expenses were
recorded as a special charge when the related merger discussions were
terminated.
12. SUBSEQUENT EVENT
On August 6, 1996, the Company repurchased 200,000 shares of its
common stock for approximately $1.3 million in an open market
transaction under a stock buy-back program previously authorized by
the Board of Directors.
13. UNAUDITED INTERIM FINANCIAL INFORMATION
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Fiscal 1996:
Net sales $109,993,000 $101,865,000 $117,261,000 $139,179,000
Gross profit 6,608,000 6,859,000 7,440,000 8,554,000
Net earnings 1,010,000 1,354,000 1,469,000 1,717,000
Net earnings
per common share $ .14 $ .19 $ .20 $ .23
Fiscal 1995:
Net sales $ 90,642,000 $100,783,000 $101,132,000 $106,196,000
Gross profit 6,699,000 7,260,000 6,963,000 7,283,000
Net earnings 1,266,000 1,323,000 1,418,0000 1,215,000
Net earnings
per common share $ .18 $ .19 $ .20 $ .17
Fiscal 1994:
Net sales $ 75,371,000 $ 74,818,000 $ 75,776,000 $ 70,208,000
Gross profit 6,396,000 6,147,000 6,183,000 5,465,000
Net earnings 1,867,000 1,640,000 1,536,000 901,000
Net earnings
per common share $ .25 $ .22 $ .21 $ .13
</TABLE>
19 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
Southern Electronics Corporation
We have audited the accompanying consolidated balance sheets of
Southern Electronics Corporation and subsidiary as of June 30, 1996
and 1995, and the related statements of earnings, stockholders' equity
and cash flows for each of the three years in the period ended June
30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the consolidated financial position of Southern
Electronics Corporation and subsidiary as of June 30, 1996 and 1995
and the results of their operations and their cash flows for each of
the three years in the period ended June 30, 1996 in conformity with
generally accepted accounting principles.
/s/DELOTTE & TOUCHE LLP
Atlanta, Georgia
August 9, 1996
20 SOUTHERN ELECTRONICS CORPORATION
<PAGE>
INSIDE BACK COVER:
DIRECTORS
AND OFFICERS
GERALD DIAMOND
Chairman of the Board and Chief Executive Officer, Director of the
Company
RAY D. RISNER
President, Chief Operating Officer and Director of the Company
STEWART I. AARON
Director of the Company;
President of LABS, Inc.
LARRY G. AYERS
Vice President - Finance, Chief Financial Officer, Secretary and
Treasurer of the Company
MARK DIAMOND
Executive Vice President of the Company
CARY ROSENTHAL
Director of the Company; President of Phoenix Communications, Inc.
G. WILLIAM SPEER
Director of the Company; Partner with Powell, Goldstein, Frazer &
Murphy
STOCKHOLDER
INFORMATION
CORPORATE ADDRESS
Southern Electronics Corporation
4916 North Royal Atlanta Drive
Tucker, Georgia 30085
(770) 491-8962
REGISTRAR AND TRANSFER AGENT
National City Bank
Cleveland, Ohio
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Atlanta, Georgia
CORPORATE COUNSEL
Powell, Goldstein, Frazer & Murphy
Atlanta, Georgia
FORM 10-K
Southern Electronics' Annual Report on Form 10-K for fiscal 1996
(without exhibits) as filed with the Securities and Exchange
Commission is available to stockholders without charge upon written
request to Larry G. Ayers, Vice President - Finance, Southern
Electronics Corporation, 4916 North Royal Atlanta Drive, Tucker,
Georgia 30085.
NASDAQ-NMS SYMBOL
The Company's common stock is traded on the Nasdaq National Market
under the symbol SECX.
MARKET MAKERS
The following firms make a market in the common shares of Southern
Electronics Corporation:
A. G. Edwards & Sons, Inc.
Bear, Stearns & Co., Inc.
Herzog, Heine, Geduld, Inc.
Mayer & Schweitzer, Inc.
Nash Weiss/Division of Shatkin Inv.
Paragon Capital Corp.
Starr Securities, Inc.
Sterne, Agee & Leach
Sherwood Securities Corp.
Troster Singer Corp.
ANNUAL MEETING
The annual meeting of stockholders of Southern Electronics Corporation
will be held at 12:00 p.m. local time on October31, 1996, at the
Company's corporate offices located at 4916 North Royal Atlanta Drive,
Tucker, Georgia. Stockholders of record at the close of business on
September 6, 1996 will be entitled to vote at this meeting.
PRICE RANGE OF COMMON STOCK
The following table sets forth the high and low sales prices for
Southern Electronics Corporation's common shares as reported for each
quarter of fiscal 1996 and 1995. The quotations are inter-dealer
prices without retail mark-ups, mark-downs or commissions
and may not represent actual transactions.
<TABLE>
1996 FISCAL QUARTER High Low
<S> <C> <C>
First $6.50 $5.00
Second $6.25 $4.63
Third $6.25 $4.75
Fourth $6.88 $5.00
1995 Fiscal Quarter High Low
First $6.88 $4.75
Second $6.88 $4.75
Third $7.50 $4.50
Fourth $6.50 $4.88
</TABLE>
There were 7,129,747 shares of common stock outstanding and
approximately 5,000 holders of common stock of the Company (including
individual participants in securities position listings) as of
September 6, 1996. The Company did not pay any cash dividends to its
stockholders during the periods presented. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" for a description of
certain restrictions on the Company's payment of dividends.
<PAGE>
BACK COVER
SOUTHERN
ELECTRONICS
CORPORATION
4916 NORTH ROYAL ATLANTA DRIVE,
TUCKER, GEORGIA 30085
770-491-8962
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 333-05043 of Southern Electronics Corporation on
Form S-3 and Registration Statement Nos. 33-64133, 33-64135,
33-55730 and 33-33882 of Southern Electronics Corporation on Form
S-8 of our reports dated August 9, 1996, appearing in and
incorporated by reference in the Annual Report on Form 10-K of
Southern Electronics Corporation for the year ended June 30,
1996.
Atlanta, Georgia
September 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SOUTHERN
ELECTRONICS CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS AS OF AND FOR THE PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 662,000
<SECURITIES> 0
<RECEIVABLES> 44,621,000
<ALLOWANCES> 1,141,000
<INVENTORY> 72,501,000
<CURRENT-ASSETS> 119,541,000
<PP&E> 4,341,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 131,305,000
<CURRENT-LIABILITIES> 79,045,000
<BONDS> 0
0
0
<COMMON> 74,000
<OTHER-SE> 43,394,000
<TOTAL-LIABILITY-AND-EQUITY> 131,305,000
<SALES> 468,298,000
<TOTAL-REVENUES> 468,298,000
<CGS> 438,837,000
<TOTAL-COSTS> 438,837,000
<OTHER-EXPENSES> 19,493,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 902,000
<INCOME-PRETAX> 9,066,000
<INCOME-TAX> 3,516,000
<INCOME-CONTINUING> 5,550,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,550,000
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
