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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
COMMISSION FILE NUMBER: 0-16207
ALL AMERICAN SEMICONDUCTOR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-2814714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16115 N.W. 52ND AVENUE
MIAMI, FLORIDA 33014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 621-8282
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities Registered pursuant to Section 12(g) of the Act: COMMON STOCK
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 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. [X]
As of March 27, 1996, 19,863,895 shares (including 160,703 held by a
wholly-owned subsidiary of the Registrant) of the common stock of ALL AMERICAN
SEMICONDUCTOR, INC. were outstanding, and the aggregate market value of the
common stock held by non-affiliates was $41,350,000.
Documents incorporated by reference: NONE
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<PAGE>
Items 10, 11, 12 and 13 of Part III of the Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, of All American Semiconductor, Inc. (the
"Company" or the "Registrant") previously filed with the Securities and Exchange
Commission ("SEC") are hereby amended and restated in their entirety as follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME CLASS AGE POSITION
- ---- ----- --- --------
<S> <C> <C> <C>
Paul Goldberg(1)............. III 67 Chairman of the Board of Directors and Chief
Executive Officer
Bruce M. Goldberg(1)......... II 40 President and Chief Operating Officer and
Director
Howard L. Flanders........... II 38 Vice President, Secretary and Chief Financial
Officer and Director
Rick Gordon.................. III 42 Senior Vice President of Sales and Director
S. Cye Mandel(2)(3).......... I 67 Director
Sheldon Lieberbaum(2)(3)..... I 61 Director
<FN>
- ---------------
(1) member of the Executive Committee
(2) member of the Audit Committee
(3) member of the Compensation Committee
</FN>
</TABLE>
The Company's Certificate of Incorporation provides for a staggered Board of
Directors (the "Board"), consisting of three classes. The terms of office of
Class I, II and III directors expire in 1998, 1996 and 1997, respectively. The
Company's executive officers serve at the discretion of the Board; however, all
executive officers have employment agreements with the Company. See Item 11.
Executive Compensation -- Employment Agreements. The following is a brief resume
of the Company's executive officers and directors.
PAUL GOLDBERG, one of the co-founders of the Company and the father of Bruce M.
Goldberg, has been employed by the Company in various executive capacities since
its predecessor's formation in 1964, and has served as Chairman of the Board and
Chief Executive Officer since 1978. Mr. Goldberg was also President of the
Company until July 1994.
BRUCE M. GOLDBERG, the son of Paul Goldberg, joined the Company in October 1988
as Vice President, in 1990 became Executive Vice President and in July 1994
became President and Chief Operating Officer. Bruce M. Goldberg has served as a
Director of the Company since 1987. From 1981 until joining the Company, Bruce
M. Goldberg practiced law.
HOWARD L. FLANDERS joined the Company in February 1991 as its Vice President and
Chief Financial Officer, and in 1992 became a Director of the Company and
Secretary. Prior to joining the Company, Mr. Flanders, who is a CPA, was
Controller of Reliance Capital Group, Inc., a subsidiary of Reliance Group
Holdings, Inc., where he held various positions since 1982. Prior thereto, Mr.
Flanders was an accountant with the public accounting firm of Coopers & Lybrand
LLP.
RICK GORDON has been employed by the Company since January 1986. He was
originally the General Manager of the Company's Northern California office and
Northwest Regional Manager. In March 1990, Mr. Gordon became the Western
Regional Vice President and in 1992 Vice President of North American Sales and a
Director
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of the Company. In 1994, Mr. Gordon was appointed Senior Vice President of Sales
and Marketing for the Company and currently holds the title of Senior Vice
President of Sales. Before working for the Company, Mr. Gordon was Western
Regional Vice President for Diplomat Electronics, another electronic components
distributor, from 1975 until 1986.
S. CYE MANDEL is a prominent South Florida businessman who has been an executive
in the food service industry for the past 20 years. Mr. Mandel has been a
principal in the entity which acted from 1989 to 1993 as the manager of the
Miccosukee Indian bingo enterprise located in Miami, Florida. Mr. Mandel has
served as Director of the Company since 1987.
SHELDON LIEBERBAUM is director of corporate finance and a director and
shareholder of Lew Lieberbaum & Co., Inc. ("Lew Lieberbaum"), an investment
banking firm which was the underwriter of the Company's June 1995 public
offering of common stock (the "1995 Public Offering") and was one of the
underwriters of the Company's June 1992 public offering of common stock (the
"1992 Public Offering"). He was also an officer of the underwriter which took
the Company public in 1987. Mr. Lieberbaum has been in the brokerage business
for over 35 years. Mr. Lieberbaum became a Director of the Company in 1992 in
connection with an agreement of the Company with the underwriters of the 1992
Public Offering that until June 18, 1997, the Company would use its best efforts
to cause one individual designated by such underwriters to be elected to the
Board or to be an advisor to the Board. In connection with the 1995 Public
Offering, a similar agreement regarding the designation of a director of the
Company was entered into between the Company and Lew Lieberbaum which has a term
of three years from June 8, 1995, but is not operative until the expiration of
the existing agreement with the underwriters of the 1992 Public Offering so that
only one designee of either Lew Lieberbaum or the underwriters of the 1992
Public Offering will serve on the Board at any time. The National Association of
Securities Dealers, Inc. ("NASD") alleged that Lew Lieberbaum and others,
including Mr. Lieberbaum, in 1991 engaged in market manipulation, inaccurately
maintained books and records and failed to adequately supervise the activities
of the Underwriter's personnel in connection with the trading for the
Underwriter's account of warrants which were part of a public offering of units
of convertible preferred stock and warrants of a company for which Lew
Lieberbaum had acted in 1991 as managing underwriter. In order to expeditiously
resolve this matter and without admitting or denying these allegations, in
January 1995 Mr. Lieberbaum and others voluntarily entered into a Letter of
Acceptance, Waiver and Consent with the NASD pursuant to which Mr. Lieberbaum
was censured and fined by the NASD, agreed to pay with Lew Lieberbaum and others
restitution to customers and was suspended from associating with any NASD member
for a one month period.
BOARD COMMITTEES
EXECUTIVE COMMITTEE
The Executive Committee is comprised of Paul Goldberg and Bruce M. Goldberg.
During 1995, the Executive Committee did not meet formally, however, its members
met on nearly a daily basis in connection with the operations of the Company.
The Executive Committee possesses substantially all of the powers of the Board
and acts as the Board between Board meetings.
AUDIT COMMITTEE
The Audit Committee is comprised of S. Cye Mandel and Sheldon Lieberbaum. The
Audit Committee is responsible for recommending the selection of the independent
auditors, reviewing the arrangements and scope of the independent audit,
reviewing internal accounting procedures and controls and reviewing the reports
and recommendations of the independent auditors with respect to internal
controls.
COMPENSATION COMMITTEE
The Compensation Committee consists of S. Cye Mandel and Sheldon Lieberbaum,
two independent non-employee directors of the Company. The Compensation
Committee is responsible for determining the
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compensation of all executive officers of the Company and acts as the stock
option committee of the Board, administering the Company's Option Plan (as
hereinafter defined). The senior management of the Company makes all decisions
with respect to the compensation (other than the granting of stock options) of
all employees other than the executive officers of the Company. Furthermore, in
connection with the 1995 Public Offering, the Company agreed with Lew Lieberbaum
that the Company will not increase or authorize an increase in the compensation
of its executive officers without the approval of the Compensation Committee for
a period of three years from June 8, 1995. In addition, the Company has agreed
that for the same three year period from June 8, 1995, it will use its best
efforts to cause one individual designee of the Lew Lieberbaum to be elected to
the Company's Board and that such designee will also serve as a member of the
Compensation Committee. Currently, Sheldon Lieberbaum, director of corporate
finance and a director and shareholder of Lew Lieberbaum, is a member of the
Board and the Compensation Committee. See "Executive Officers and Directors"
hereinabove and Item 13. Certain Relationships and Related Transactions.
NOMINATING COMMITTEE
The Board does not have a Nominating Committee, such function being performed by
the Board as a whole.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common
stock, and other equity securities of the Company. Directors, executive officers
and greater than ten percent shareholders are also required by the SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, during the fiscal year ended December 31, 1995, all
Section 16(a) filing requirements applicable to its directors, executive
officers and greater than ten percent shareholders were satisfied.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the compensation
earned during each of the fiscal years ended December 31, 1995, 1994 and 1993 by
the Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company whose total annual salary and bonus exceeded
$100,000:
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<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
----------
ANNUAL COMPENSATION SECURITIES ALL OTHER
--------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
- --------------------------- ---- --------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Paul Goldberg.......................... 1995 223,000 111,000 250,000 11,000
Chairman and Chief Executive 1994 184,000 -- -- 10,000
Officer 1993 178,000 113,000 100,000 8,000
Bruce M. Goldberg...................... 1995 225,000 141,000 450,000 27,000
President and Chief Operating 1994 150,000 -- -- 26,000
Officer 1993 135,000 98,000 100,000 14,000
Rick Gordon............................ 1995 162,000 89,000 150,000 16,000
Senior Vice President of Sales 1994 155,000 20,000 -- 16,000
1993 135,000 11,000 3,000 12,000
Howard L. Flanders..................... 1995 156,000 84,000 150,000 18,000
Vice President and Chief Financial 1994 130,000 -- -- 17,000
Officer 1993 105,000 11,000 103,000 14,000
<FN>
- ---------------
(1) All other compensation includes Company contributions to life insurance
policies, where the Company is not the beneficiary, to the Deferred
Compensation Plan and to the 401(k) Plan of the Company and the cost to the
Company of the nonbusiness use of Company automobiles used by executive
officers. See hereinbelow and "Deferred Compensation Plan for Executive
Officers and Key Employees" and "401(k) Plan."
</FN>
</TABLE>
The Company has a $1,000,000 key man term life insurance policy on the life of
Paul Goldberg with benefits payable to the Company. In addition, the Company
pays for a $550,000 universal life insurance policy on the life of Paul Goldberg
with benefits payable to his wife. The current annual premiums on the foregoing
policies insuring the life of Paul Goldberg are approximately $13,700 and $7,700
for the key man and universal life insurance policies, respectively. The Company
owns and is the beneficiary of a $1,000,000 term policy on the life of Bruce M.
Goldberg. The current annual premium on this policy is $1,580. Moreover, during
1994 the Company transferred ownership of a $1,000,000 whole life insurance
policy (the "Whole Life Policy") on the life of Bruce M. Goldberg to Bruce M.
Goldberg to fulfill an obligation under his 1992 employment arrangement. The
Company intends to make annual advances to Bruce M. Goldberg to cover the annual
premium of the Whole Life Policy currently in the amount of $22,995. Such annual
advances are secured by the cash surrender value of the Whole Life Policy. Since
more than two and one-half years had passed since the date of Bruce M.
Goldberg's 1992 employment agreement, fifty percent (50%) of the advances
through December 31, 1994, were canceled and the related security released on
January 1, 1995. The remainder of the existing advances and any future advances
made to pay premiums on the Whole Life Policy through May 31, 1997, will be
canceled and any remaining security will be released in accordance with a
vesting schedule by May 31, 1997, provided Bruce M. Goldberg continues
employment with the Company through the end of such period. Thereafter the
Company will continue, for the duration of Bruce M. Goldberg's employment, to
pay the annual premium to Bruce M. Goldberg for the Whole Life Policy. If Bruce
M. Goldberg is terminated by the Company for cause prior to May 31, 1997, he
will be entitled to pay off the nonvested advances owed to the Company and
obtain a release of any collateral assignment. If Bruce M. Goldberg is
terminated without cause or upon a change in control, any nonvested advances
owed to the Company will become immediately vested and any remaining security
will be released. In addition, beginning in 1993 the Company has funded, and
intends to continue to
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<PAGE>
fund, the premiums for $1,000,000 flexible premium life insurance policies owned
by each of Howard L. Flanders and Rick Gordon. The Company's advances will be
secured by a collateral assignment of the cash value and death benefit of each
of the policies. The current annual premium on each of these policies is
$11,500. The Company's obligations to make premium payments in connection with
Howard L. Flanders' and Rick Gordon's policies are expected to last for a
maximum of ten years. After Howard L. Flanders and Rick Gordon have been with
the Company for a period of five years from the year in which the policy was
acquired (1993) and provided they each remain in the employ of the Company or
they have become disabled or a change in control has occurred during the term of
their employment, the advances will be deemed canceled and the security released
thereafter ratably over a five year vesting period until such time as all
advances are deemed canceled.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the named executive officers
of the Company during the fiscal year ended December 31, 1995. Pursuant to SEC
rules, the table also shows the value of the options granted at the end of the
option terms (ten years) if the price of the Company's stock was to appreciate
annually by 5% and 10%, respectively. There is no assurance that such stock
price will appreciate at the rates shown in the table. All of the options set
forth in the table are stock options issued pursuant to the Option Plan. The
Company does not have a plan whereby tandem stock appreciation rights ("SARS")
are granted. See "Employees', Officers', Directors' Stock Option Plan"
hereinbelow.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR PRICE ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- ----------- --------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Paul Goldberg 250,000 23.7% 1.875 6/7/05 294,794 747,067
Bruce M. Goldberg 450,000 42.7% 1.875 6/7/05 530,630 1,344,720
Rick Gordon 150,000 14.2% 1.875 6/7/05 176,877 448,240
Howard L. Flanders 150,000 14.2% 1.875 6/7/05 176,877 448,240
</TABLE>
(1) See the discussion in "Employment Agreements - The Goldberg Agreements"
regarding the other material terms (including those related to vesting and
exercisability) of the aggregate of 1,000,000 stock options granted to the
named executive officers during the fiscal year ended December 31, 1995.
AGGREGATED OPTION EXERCISES IN LATEST FISCAL YEAR AND FISCAL YEAR-ENDED
OPTION VALUES
The following table sets forth information concerning the aggregate option
exercises in the fiscal year ended December 31, 1995, and the value of
unexercised stock options as of December 31, 1995 for the individual executive
officers named in the Summary Compensation Table:
5
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
----------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
Paul Goldberg........... -- -- 140,000(E) 140,750(E)
310,000(U) 128,125(U)
Bruce M. Goldberg....... -- -- 115,000(E) 108,688(E)
510,000(U) 215,625(U)
Rick Gordon............. -- -- 121,200(E) 165,338(E)
151,800(U) 66,131(U)
Howard L. Flanders...... -- -- 81,200(E) 92,213(E)
201,800(U) 113,006(U)
<FN>
- ---------------
(1) Value is based upon the difference between the exercise price of the
options and the last reported sale price of the Common Stock on the Nasdaq
Stock Market on December 31, 1995 (the Company's fiscal year end).
</FN>
</TABLE>
EMPLOYEES', OFFICERS', DIRECTORS' STOCK OPTION PLAN
In 1987, the Company established an Employees', Officers', Directors' Stock
Option Plan (as previously amended and restated the "Option Plan"). Unless
earlier terminated, the Option Plan will continue in effect through May 28,
2004, after which it will expire and no further options could thereafter be
granted under the Option Plan. The expiration of the Option Plan, or its
termination by the Board, will not affect any options previously granted and
then outstanding under the Option Plan. Such outstanding options would remain in
effect until they have been exercised, terminated or have expired. A maximum of
3,250,000 shares of the Company's Common Stock has been reserved for issuance
upon the exercise of options granted under the Option Plan. The Option Plan
provides for the granting to key employees of both "incentive stock options,"
within the meaning of Section 422 of the Code and "non-qualified stock options"
("non-qualified stock options" are options which do not comply with Section 422
of the Code) and for the granting to non-employee directors and independent
contractors associated with the Company of non-qualified stock options.
The Option Plan is administered by the Compensation Committee comprised of two
or more "disinterested" directors appointed by the Board from among its members.
Any member of the Compensation Committee may be removed at any time either with
or without cause by action of the Board and a vacancy on the Compensation
Committee due to any reason can be filled by the Board. The current members of
the Compensation Committee are the two independent, non-employee directors of
the Company, S. Cye Mandel and Sheldon Lieberbaum. Subject to the express
limitations of the Option Plan, the Compensation Committee has authority, in its
discretion, to interpret the Option Plan, to adopt, prescribe, amend and rescind
rules and regulations as it deems appropriate concerning the holding of its
meetings and administration of the Option Plan, to determine and recommend
persons to whom options should be granted, the date of each option grant, the
number of shares of Common Stock to be included in each option, any vesting
schedule, the option price and term (which in no event will be for a period more
than ten years from the date of grant) and the form and content of agreements
evidencing options to be issued under the Option Plan.
Options may be currently granted under the Option Plan to any key employee or
non-employee director or prospective key employee or non-employee director
(conditioned upon, and effective not earlier than, his or her becoming an
employee or director) of or independent contractors associated with the Company
or its
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<PAGE>
subsidiaries. However, as required by the Code, non-employee directors and
independent contractors are only eligible to receive non-qualified stock
options. In determining key employees to whom options will be granted, the
Compensation Committee takes into consideration the key employee's present and
potential contribution to the success and growth of the Company's business and
other such factors as the Compensation Committee may deem proper or relevant in
its discretion including whether such person performs important job functions or
makes important decisions for the Company, as well as the judgment, initiative,
leadership and continued efforts of eligible participants. Employees who are
also officers or directors of the Company or its subsidiaries will not by reason
of such offices be ineligible to receive options. However, no member of the
Compensation Committee is eligible to receive options under the Option Plan.
The exercise price for all options granted under the Option Plan shall not be
less than the fair market value of the Company's Common Stock on the date of
grant (or, in the case of incentive stock options, 110% of the fair market value
if the beneficiary of the grant beneficially owns 10% or more of the outstanding
shares of the Company's Common Stock). In addition, the aggregate fair market
value of the Company's Common Stock (determined at the date of the option grant)
for which an employee may be granted incentive stock options which first become
exercisable in any calendar year under the Option Plan may not exceed $100,000.
Options granted pursuant to the Option Plan are not transferable during an
optionee's lifetime.
The term of and any vesting schedule (whether the option will be exercisable
immediately, in stages or otherwise, or the vesting will be based upon any
condition such as the operating performance of the Company) for an option
granted under the Option Plan is established by the Compensation Committee, but
the term may not be more than ten years from the date of grant of the option,
except that, in the case of a person receiving an incentive stock option who at
such time owns the Company's Common Stock representing more than 10% of the
Company's Common Stock outstanding at the time the option is granted, the term
of such incentive stock option shall not exceed five years from the date of
grant of the option. In general, options will not be exercisable after the
expiration of their term. Furthermore, the Compensation Committee has the
authority and discretion to determine the time frame in which an optionee has to
exercise his options (subject to the 10 year limitation from date of grant) in
the event of his termination of employment due to death, disability, termination
without cause, retirement, voluntarily leaving the Company and change in
control.
To the extent incentive stock options are granted under the Option Plan, this
generally entitles an optionee who is an employee to defer recognition of income
or loss for federal tax purposes until the shares underlying the options are
sold. Under the Option Plan the Company does not obtain any federal tax
deductions except in unusual circumstances.
On February 11, 1994, the Company filed a registration statement on Form S-8
with the Commission in order to register 1,687,914 shares of Common Stock then
issuable under the Option Plan and 98,160 issuable to an employee of the Company
upon the exercise of a stock option granted outside of the Option Plan in
connection with an acquisition by the Company. So long as such registration
statement remains effective under the Act, shares of Common Stock issued upon
the exercise of outstanding options under the Option Plan will be immediately
and freely tradable without restriction under the Act, subject to applicable
volume limitations, if any, under Rule 144 and, in the case of executive
officers and directors of the Company, Section 16 of the Exchange Act. It is
contemplated that the Company will at the appropriate time file an amendment to
its registration statement on Form S-8 or an additional registration statement
in order to register any additional shares of Common Stock reserved for issuance
under the Option Plan.
As of March 31, 1996, a total of 2,593,190 options were granted and had not
expired or been forfeited, of which 156,627 were exercised and 2,436,563 options
were outstanding (of which 1,631,000 options were held by executive officers and
directors of the Company as a group, see "Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-Ended Option Values" and 699,640 options are
presently exercisable). These options, which are held by 113 persons, are
exercisable at prices ranging from $.75 per share to $2.63 per share and are
exercisable through various expiration dates from 1996 to 2006.
7
<PAGE>
DEFERRED COMPENSATION PLAN FOR EXECUTIVE OFFICERS AND KEY EMPLOYEES
Effective January 1, 1988, the Company established a deferred compensation plan
(the "Deferred Compensation Plan") for executive officers and key employees of
the Company. The employees eligible to participate in the Deferred Compensation
Plan (the "Participants") are chosen at the sole discretion of the Board, upon a
recommendation from the Compensation Committee. Pursuant to the Deferred
Compensation Plan, commencing on a Participant's retirement date, he or she will
receive an annuity for ten years. The amount of the annuity shall be computed at
30% of the Participant's salary, as defined. Any Participant with less than ten
years of service to the Company as of his or her retirement date will only
receive a pro rata portion of the annuity. Retirement benefits paid under the
Deferred Compensation Plan will be distributed monthly. The Company paid
benefits under this plan of approximately $16,000 during 1995, none of which was
paid to any executive officer. The maximum benefit payable to a Participant
(including each of the executive officers) under the Deferred Compensation Plan
is presently $22,500 per annum.
401(K) PLAN
The Company maintains a 401(k) Plan (the "401(k) Plan"), which is intended to
qualify under Section 401(k) of the Internal Revenue Code of 1986, as amended.
All full-time employees of the Company over the age of 21 are eligible to
participate in the 401(k) Plan after completing 90 days of employment. Each
eligible employee may elect to contribute to the 401(k) Plan, through payroll
deductions, up to 15% of his or her salary, limited to $9,240 in 1995. The
Company makes matching contributions and in 1995 its contributions were in the
amount of 25% on the first 6% contributed of each participating employee's
salary.
EMPLOYMENT AGREEMENTS
THE GOLDBERG AGREEMENTS
In May 1995, the Company entered into new employment agreements with each of
Paul Goldberg, its Chief Executive Officer, and Bruce M. Goldberg, its President
and Chief Operating Officer, to take effect on June 1, 1995, as of the
expiration of their respective three-year employment agreements expiring on May
31, 1995 (collectively the "1995 Agreements"). The 1995 Agreement for Paul
Goldberg extends the term of his employment until December 31, 2000, subject to
earlier termination as a result of his retirement as hereinafter described, and
provides for a base salary effective as of June 1, 1995, of $250,000 per annum,
subject to an annual increase commencing as of January 1, 1996 (which increase
shall be prorated for the period between June 1, 1995 and December 31, 1995)
equal to the greater of 4% per annum or the increase in the cost of living. The
1995 Agreement for Bruce M. Goldberg extends the term of his employment until
December 31, 2000, and provides for a base salary effective as of June 1, 1995,
of $275,000 per annum, subject to the same annual increase formula as for Paul
Goldberg under his 1995 Agreement. Under the 1995 Agreements, Paul Goldberg and
Bruce M. Goldberg are each entitled to receive an annual cash bonus equal to 3%
of the Company's pre-tax income, before nonrecurring and extraordinary charges,
in excess of $1,000,000 in any calendar year. Such annual bonus compensation for
each of Paul Goldberg and Bruce M. Goldberg is limited in any year to an amount
no greater than two times his respective base salary for the applicable year. In
addition, Bruce M. Goldberg received, with respect to fiscal 1995, an additional
one time bonus in the amount of $30,000 in January 1996 as a result of the
Company's net sales for calendar year 1995 exceeding $135,000,000.
The 1995 Agreements, together with the new employment agreements between the
Company and each of Howard L. Flanders and Rick Gordon described below, provided
for the granting of an aggregate of 1,000,000 stock options pursuant to the
Option Plan as additional incentive compensation for such four executive
officers (collectively, the "New Options"). The 1995 Agreements provided for
Paul Goldberg and Bruce M. Goldberg to be granted New Options covering 250,000
and 450,000 shares of the Company's Common Stock, respectively, out of the
aggregate of 1,000,000 New Options. Each of Messrs. Flanders and Gordon were
granted New Options covering 150,000 shares of the Company's Common Stock under
his respective employment agreement. All of the New Options were to be granted
on the earlier to occur of the date that the registration
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<PAGE>
statement for the 1995 Public Offering became effective, or June 15, 1995. Since
such registration statement became effective June 8, 1995, the New Options were
granted on such date. The New Options are immediately exercisable over a 10 year
period from the date of grant (until June 7, 2005), subject to the vesting
schedule set forth below and, in the case of Messrs. Flanders and Gordon,
subject to an exercise installment schedule through 2002 (10% in 1996; up to 20%
in the aggregate in 1997; up to 30% in the aggregate in 1998; up to 40% in the
aggregate in 1999; up to 50% in the aggregate in 2000; up to 75% in the
aggregate in 2001; and 100% in the aggregate in 2002) and further subject to
generally attempting to maintain at least through 2002 as many of the New
Options as possible as incentive stock options. Each of the New Options were to
have an exercise price equal to 100% of the fair market value of a share of the
Company's Common Stock on the date of grant. The 1995 Agreements, as well as
Messrs. Flanders' and Gordon's respective employment agreements, contemplated
that, if the date of grant was the effective date of the registration statement
for the 1995 Public Offering, the exercise price would be the public offering
price per share of the Company's Common Stock offered pursuant to the offering.
Since the date of grant was such effective date, the exercise price per share of
the New Options is equal to the $1.875 public offering price per share. The New
Options granted to each of the executive officers will vest in no event later
than 9 years from the date of grant, subject to earlier vesting in the following
percentage increments based upon the Company attaining net earnings per share on
a primary basis in any year from 1995 through 2000, inclusive, in at least the
following amounts:
PERCENTAGE OF NET EARNINGS
OPTIONS VESTED(%) PER SHARE($)
----------------- ------------
25%........................................ $.18
50......................................... .22
75......................................... .28
100......................................... .38
In addition, in the event that the employment of Paul Goldberg or Bruce M.
Goldberg with the Company is terminated without cause (as defined in each of
such executive officer's employment agreement) by the Company, the New Options
held by such terminated executive officer shall become immediately 100% vested.
Furthermore, if there is a change in control (as defined in the employment
agreement of each of the four executive officers, including Messrs. Flanders and
Gordon) of the Company, the New Options held by each of the four executive
officers shall become immediately 100% vested. Upon any of the four executive
officer's termination of employment due to certain events, to the extent any or
all of the New Options granted to him have vested or otherwise vest within the
time frames hereinafter described for exercise after termination, the vested New
Options are immediately exercisable within the permitted time frames described
below. Generally, an executive officer has at least two (2) years from the date
of termination or cessation of his employment with the Company as a result of
death, disability, voluntary resignation within 180 days after a change in
control or retirement (which, for purposes of exercisability of a New Option, is
resigning as an employee after reaching age 65) to exercise his vested New
Options. In the event of an executive officer's termination or cessation of
employment with the Company (i) as a result of his voluntary resignation (other
than within 180 days after a change in control or as a result of retirement), he
will have three months to exercise any of his vested New Options (provided,
that, if he shall die during such three month period, the time of termination of
the unexpired portion of his vested New Options will be 18 months following
issuance of letters testamentary or letters of administration for his estate,
but in no event later than two years after his death) and (ii) for cause, all of
the New Options terminate immediately. No early vesting has yet occurred as a
result of the Company's net earnings per share or otherwise.
Under Paul Goldberg's 1995 Agreement, he will be able to elect, in his sole
discretion, to retire at any time on or after January 1, 1999 (the "Retirement
Election"). Upon the earlier to occur of the Retirement Election or at the
expiration of the term of the 1995 Agreement, the Company will be obligated to
pay Paul Goldberg (in addition to any other compensation he may be entitled to
upon termination), and his spouse upon his death, a retirement benefit of
$100,000 per annum until the later of the death of Paul Goldberg or his spouse,
provide him and his spouse, without cost, until the later of their respective
deaths, at least the same level of medical and health
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<PAGE>
insurance benefits as was provided prior to his retirement and continue to pay
the premiums on the life insurance policies covering his and his spouse's lives
as described hereinbelow and under "Summary Compensation Table" above.
The 1995 Agreements also provide certain additional benefits to each of Paul
Goldberg and Bruce M. Goldberg, including participation in the Company benefit
plans, including the Deferred Compensation Plan and the 401(k) Plan, and the
continued use of a Company automobile. See "Summary Compensation Table." In
addition, in the event of the disability of Paul Goldberg, the Company will be
obligated to continue all compensation and other benefits due under his 1995
Agreement for the shorter of two years or until January 1, 1999, and to
thereafter provide the retirement and health benefits described above. In the
event of the disability of Bruce M. Goldberg, the Company will be obligated to
continue all compensation and other benefits due under his 1995 Agreement for
two years thereafter. Furthermore, in addition to the life insurance policies
covering the life of Paul Goldberg and Bruce M. Goldberg described under
"Summary Compensation Table" being funded by the Company, the Company has agreed
to advance the Paul Goldberg Family Insurance Trust or such other person
designated by Paul Goldberg (i) each year until the insured's death the amount
of the annual premium for a new $1,000,000 face value insurance policy on Paul
Goldberg's or his spouse's life and (ii) each year until the later to die of
Paul Goldberg or his spouse the amount of the annual premium for a $1,000,000
face value second to die insurance policy on the lives of Paul Goldberg and his
spouse. Such annual advances (together with interest to accrue thereon at the
rate of 5% per annum) for each policy will be secured by the respective
insurance policy and the higher of the advances (together with the interest
accrued thereon) for and the cash surrender value of the respective policy will
be repaid to the Company upon the death of Paul Goldberg, the death of his
spouse or the death of Paul Goldberg and his spouse (as applicable) out of the
proceeds thereof. As of this date, these two additional insurance policies have
not as yet been obtained.
The 1995 Agreements also provide that, in the event of change in control (as
defined) of the Company, each of Paul Goldberg and Bruce M. Goldberg shall have
the option in his sole discretion to terminate his 1995 Agreement. In such
event, Paul Goldberg would be entitled to elect (in lieu of electing to continue
to receive some or all of the compensation, payments and benefits as and when
due under the 1995 Agreement) to receive a lump sum payment equal to the sum of
(i) Paul Goldberg's compensation due through the greater of the end of the term
of the 1995 Agreement or three years after the change in control, (ii) the
present value (assuming a certain discount rate and life expectancy) of the
retirement payments payable to Paul Goldberg commencing from the later of the
end of the term or three years after the change in control until his death,
(iii) an amount sufficient to pay, until the later of his or his spouse's death,
the premium for at least the same level of health insurance benefits as was
provided before the change in control and (iv) an amount sufficient to pay,
until the later of his or his spouse's death (as applicable), the premiums on
the life insurance policies insuring his or his spouse's lives as described in
the previous paragraph. Similarly, under Bruce M. Goldberg's 1995 Agreement, in
the event of a change in control and Bruce M. Goldberg's election to terminate
his 1995 Employment Agreement, Bruce M. Goldberg at his option will be entitled
to elect to receive a lump sum payment equal to his compensation due through the
later of the end of the term of his 1995 Agreement or three years after the
change in control or for such period to continue to receive such compensation as
and when due under the 1995 Agreement. In addition, in the event of a change in
control, all unvested options held by Paul Goldberg or Bruce M. Goldberg, as
well as any other executive officer, would vest and become immediately
exercisable.
THE FLANDERS AGREEMENT
In May 1995, the Company entered into an employment agreement with Howard L.
Flanders, its Vice President, Corporate Secretary and Chief Financial Officer
(the "Flanders Agreement"). The Flanders Agreement will continue through
December 31, 1998, and provides for a base salary, effective as of March 1,
1995, of $157,500 per annum, subject to an annual increase commencing as of
January 1, 1996, equal to the greater of 5% per annum or the increase in the
cost of living. Under the Flanders Agreement, Mr. Flanders is entitled to
receive an annual cash bonus equal to 2% of the Company's pre-tax income, before
nonrecurring and extraordinary charges, in excess of $1,000,000 in any calendar
year. Such annual cash bonus compensation will be limited in any year to an
amount no greater than Mr. Flanders' base salary for the applicable year. With
respect to fiscal
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<PAGE>
1995, pursuant to an amendment to the Flanders Agreement, Howard Flanders also
received an additional one-time bonus in the amount of $50,000 in January 1996;
provided, however, that $40,000 of such one-time bonus was applied as a credit
against and reduce the annual cash bonus otherwise payable to Mr. Flanders based
upon the 1995 pre-tax income of the Company. The Flanders Agreement also
provides for Mr. Flanders to be granted the 150,000 New Options. In addition,
the Flanders Agreement provides for certain additional benefits, including
participation in the Company benefit plans, including the Deferred Compensation
Plan and the 401(k) Plan, payment to Mr. Flanders upon his disability of his
compensation and other benefits for two years thereafter and the continued use
of a Company automobile. The Flanders Agreement prohibits Mr. Flanders from
competing with the Company for two years after any voluntary termination of
employment or termination for cause. Further, if Mr. Flanders were to be
terminated without cause, he will be entitled to receive severance benefits
equal to the greater of two-years compensation or the remainder of the
compensation due under the Flanders Agreement. Additionally, under the Flanders
Agreement, the Company will pay premiums under a life insurance policy with the
beneficiary to be as designated by Mr. Flanders as described under "Summary
Compensation Table" above. The Flanders Agreement also provides that, in the
event of a change in control (as defined) of the Company, Mr. Flanders will have
the option in his sole discretion to terminate the Flanders Agreement. In such
event, Mr. Flanders at his option would be entitled to elect to receive a
lump-sum payment equal to Mr. Flanders' compensation due through the later of
the end of the term of the Flanders Agreement or two years after the change in
control or for such period to continue to receive such compensation as and when
due under the Flanders Agreement.
THE GORDON AGREEMENT
In May 1995, the Company entered into an employment agreement with Rick Gordon,
its Senior Vice President of Sales (the "Gordon Agreement"). The Gordon
Agreement will continue through December 31, 1998, and provides for a base
salary, effective as of March 1, 1995, of $163,000 per annum, subject to an
annual increase commencing as of January 1, 1996, equal to the greater of 5% per
annum or the increase in the cost of living. Under the Gordon Agreement, Rick
Gordon is entitled to receive an annual cash bonus equal to 2% of the Company's
pre-tax income, before nonrecurring and extraordinary charges, in excess of
$1,000,000 in any calendar year. Such annual cash bonus compensation will be
limited in any year to an amount no greater than Mr. Gordon's base salary for
the applicable year. With respect to fiscal 1995, Rick Gordon also received an
additional one time bonus in the amount of $15,000 in January 1996 as a result
of the Company's net sales for calendar year 1995 exceeded $135,000,000. The
Gordon Agreement also provides for Mr. Gordon to be granted the 150,000 New
Options. In addition, the Gordon Agreement provides for certain additional
benefits, including participation in the Company benefit plans, including the
Deferred Compensation Plan and the 401(k) Plan, payment to Mr. Gordon upon his
disability of his compensation and other benefits for two years thereafter and
the continued use of a Company automobile. The Gordon Agreement prohibits Mr.
Gordon from competing with the Company for two years after any voluntary
termination of employment or termination for cause. Further, if Mr. Gordon were
to be terminated without cause, he will be entitled to receive severance
benefits equal to the greater of two-years compensation or the remainder of the
compensation due under the Gordon Agreement. Additionally, under the Gordon
Agreement, the Company will pay premiums under a life insurance policy with the
beneficiary to be as designated by Mr. Gordon as described under "Summary
Compensation Table" above. The Gordon Agreement also provides that, in the event
of a change in control (as defined) of the Company, Mr. Gordon will have the
option in his sole discretion to terminate the Gordon Agreement. In such event,
Mr. Gordon at his option would be entitled to elect to receive a lump-sum
payment equal to Mr. Gordon's compensation due through the later of the end of
the term of the Gordon Agreement or two years after the change in control or for
such period to continue to receive such compensation as and when due under the
Gordon Agreement.
BOARD COMPENSATION
The members of the Board do not currently receive compensation from the Company
for acting in their capacity as directors of the Company nor has the Company
adopted any standard arrangement for compensating non-
11
<PAGE>
employee directors of the Company. The Company may decide in the future to
compensate directors and/or to establish a standard compensation arrangement for
non-employee directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board consists of S. Cye Mandel and Sheldon
Lieberbaum, both being independent, non-employee Directors of the Company. See
Item 10. Directors and Executive Officers of the Registrant - Board Committees -
Compensation Committee. Sheldon Lieberbaum is the director of corporate finance
and a director and shareholder of Lew Lieberbaum & Co., which acted as the
underwriter of the 1995 Public Offering and received the compensation in
connection therewith described in Item 13. Certain Relationships and Related
Transactions.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1996, by: (i) each
person known by the Company to be the beneficial owner of more than five percent
(5%) of the Company's Common Stock, (ii) each director of the Company, (iii)
each executive officer of the Company who was serving as an executive officer at
the end of fiscal year 1995 and (iv) all executive officers and directors of the
Company as a group. Except as indicated in the notes to the following table, the
persons named in the table have sole voting and investment power with respect to
all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF OUTSTANDING
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP SHARES(2)
- --------------------------- -------------------- -----------
<S> <C> <C>
Bruce M. Goldberg(3)(4).................................... 3,010,542 15.2%
Paul Goldberg(3)(5)........................................ 2,830,877 14.3%
S. Cye Mandel.............................................. 5,625 *
Howard L. Flanders......................................... 1,000 *
Rick Gordon................................................ 1,000 *
Sheldon Lieberbaum(6)...................................... -- --
All executive officers and directors as a
group (6 persons)(3)(4)(5)(6)............................ 3,835,643 19.3%
</TABLE>
- ---------------
* Less than 1%
(1) The address of each of Paul Goldberg, Bruce M. Goldberg, Howard L.
Flanders and Rick Gordon is the Company, 16115 N.W. 52nd Avenue, Miami,
Florida 33014; S. Cye Mandel is 1800 Northeast 114th Street, Apt. 2305,
North Miami, Florida 33181; and Sheldon Lieberbaum is 600 Old Country
Road, Suite 518, Garden City, New York 11530.
(2) Excludes outstanding stock options to purchase 2,652,274 shares of the
Company's Common Stock, of which 2,436,563 options to purchase shares
(including the New Options) were issued pursuant to the Option Plan. Of
these outstanding options, 1,631,000 options (including the New Options)
are held by the executive officers and directors of the Company as a
group, including 625,000 options (including 450,000 New Options) held by
Bruce M. Goldberg, 450,000 options (including 250,000 New Options) held by
Paul Goldberg, 283,000 options (including 150,000 New Options) held by
Howard L. Flanders and 273,000 options (including 150,000 New Options)
held by Rick Gordon. Further excludes currently outstanding warrants to
purchase 1,243,125 shares of the Company's Common Stock, and obligations
of the Company upon the happening of certain events and conditions to
issue 1,000 shares of the Company's Common Stock and incentive stock
options covering an additional 95,000 shares. If
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<PAGE>
all options and warrants outstanding as of March 31, 1996, were exercised
(which includes the New Options), Bruce M. Goldberg, Paul Goldberg, Howard
L. Flanders, Rick Gordon and all executive officers and directors of the
Company as a group would beneficially own as of March 31, 1996, 15.2%,
13.8%, 1.2%, 1.1% and 22.9%, respectively, of the Company's Common Stock.
(3) Includes for each of Bruce M. Goldberg and Paul Goldberg and all executive
officers and directors as a group the 2,013,401 shares of the Company's
Common Stock that Paul Goldberg and Bruce Goldberg, as trustees, have the
right to vote for up to a period of six years with respect to the election
of directors of the Company pursuant and subject to a voting trust
agreement, dated as of December 29, 1995, among the trustees and the
former stockholders of the Added Value Companies who were issued such
shares in connection with the Added Value Acquisitions. See Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Acquisitions.
(4) Includes 53,380, 26,000, 69,496, 69,496 and 69,496 shares of the Company's
Common Stock held of record by Bruce M. Goldberg as trustee for his sons,
Matthew Goldberg and Alec Goldberg, and for his nieces and nephews,
Kimberly Phelan, Tiffany Phelan and Patrick Phelan, respectively. For
federal securities law purposes only, Bruce M. Goldberg is deemed to be
the beneficial owner of these securities. Does not include 7,500 shares of
the Company's Common Stock held of record by Jayne Goldberg, the wife of
Bruce M. Goldberg, and 36,425 shares of the Company's Common Stock held of
record by an unrelated third party as trustee for Matthew Goldberg (23,075
shares) and Alec Goldberg (13,350 shares). Bruce M. Goldberg disclaims
beneficial ownership over all such securities.
(5) Includes 319,218 shares of the Company's Common Stock owned of record by
Paul Goldberg's wife, Lola Goldberg, and 1,250 and 1,250 shares of the
Company's Common Stock held of record by Paul Goldberg as custodian for
grandchildren, Kimberly Phelan and Tiffany Phelan, respectively. For
federal securities law purposes only, Paul Goldberg is deemed to be the
beneficial owner of these securities. Does not include 192,898 shares of
the Company's Common Stock held of record by Robin Phelan, the daughter of
Paul and Lola Goldberg, over which securities Paul and Lola Goldberg
disclaim beneficial ownership.
(6) Does not include the 1995 Underwriter's Warrants issued to Lew Lieberbaum
in connection with the 1995 Public Offering. See Item 13. Certain
Relationships and Related Transactions.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sheldon Lieberbaum, a director of the Company, is director of corporate finance
and a director and shareholder of Lew Lieberbaum. In connection with the 1995
Public Offering, Lew Lieberbaum received compensation, including a selling
commission and discount equal to 9% of the gross proceeds of the 1995 Public
Offering (approximately $883,000), a non-accountable expense allowance equal to
3% of the gross proceeds of the 1995 Public Offering (approximately $294,000), a
consulting fee equal to $66,000, reimbursement of certain accountable expenses
aggregating approximately $64,000 and warrants to purchase (collectively, the
"1995 Underwriter's Warrants") 523,250 shares of the Company's Common Stock (the
number of shares of the Company's Common Stock equal to 10% of the Company's
Common Stock sold in the 1995 Public Offering) at an exercise price per share of
$2.625 per share (140% of the public offering price of the Company's Common
Stock sold in the 1995 Public Offering). The 1995 Underwriter's Warrants are
exercisable for a period of four years commencing on June 8, 1996.
13
<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 Amendment No. 1 to Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.
ALL AMERICAN SEMICONDUCTOR, INC.
(Registrant)
By: /s/ PAUL GOLDBERG
--------------------------------------
Paul Goldberg, Chairman of the Board,
Chief Executive Officer and Director
(Duly Authorized Officer)
By: /s/ HOWARD L. FLANDERS
--------------------------------------
Howard L. Flanders, Vice President,
Chief Financial Officer and Director
(Principal Financial and Accounting
Officer)
Dated: April 29, 1996
14
