ALL AMERICAN SEMICONDUCTOR INC
DEF 14A, 1997-06-12
ELECTRONIC PARTS & EQUIPMENT, NEC
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                            SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
                                (AMENDMENT NO. )

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ]      Preliminary Proxy Statement
[x]      Definitive Proxy Statement
[ ]      Definitive Additional Materials
[ ]      Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
[ ]      Confidential,  for Use of the  Commission  Only (as  permitted  by Rule
         14a-6(e)(2))

                        ALL AMERICAN SEMICONDUCTOR, INC.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)


- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x]      No fee required.
[ ]      Fee  computed on table below per  Exchange  Act Rules  14a-6(i)(4)  and
         0-11.

         (1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
         (2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
         (3) Per unit price or other  underlying  value of transaction  computed
             pursuant to  Exchange  Act Rule 0-11 (Set forth the amount on which
             the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
         (4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
         (5) Total Fee paid:
- --------------------------------------------------------------------------------
[ ]      Fee paid previously with preliminary materials.

[ ]      Check box if any part of the fee is offset as provided by Exchange  Act
Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was paid
previously.  Identify the previous filing by registration  statement  number, or
the Form or Schedule and the date of its filing.

         1)  Amount Previously Paid:
- --------------------------------------------------------------------------------
         2)  Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
         3)  Filing Party:
- --------------------------------------------------------------------------------
         4)  Date Filed:
- --------------------------------------------------------------------------------

<PAGE>


                        ALL AMERICAN SEMICONDUCTOR, INC.
                              --------------------

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                           TO BE HELD ON JULY 11, 1997
                              --------------------

To:  The shareholders of All American Semiconductor, Inc.

The annual meeting of the shareholders of All American Semiconductor,  Inc. (the
"Company"),  a Delaware  corporation,  will be held on Friday, July 11, 1997, at
10:00 A.M.,  Miami,  Florida  local time,  at Don Shula's Golf Club,  7601 Miami
Lakes Drive, Miami Lakes, Florida, for the following purposes:

1.       to elect two  directors  to serve on the Board of  Directors  until the
         2000 annual meeting of shareholders or until election and qualification
         of their respective successors;
2.       to ratify the selection of Lazar, Levine & Company LLP as the Company's
         independent  public  accountants for the year ending December 31, 1997;
         and
3.       to consider and act upon such other matters as may properly come before
         the  annual  meeting  or any  and  all  postponements  or  adjournments
         thereof.

Only  shareholders  of record at the close of business on Monday,  May 19, 1997,
will be entitled to notice of and to vote at the meeting or at any  adjournments
or postponements thereof.

                                      By Order of the Board of Directors,



                                      /s/ HOWARD L. FLANDERS
                                      -------------------------
                                      Howard L. Flanders,
                                      Corporate Secretary
June 12, 1997
Miami, Florida

THE FORM OF PROXY IS  ENCLOSED.  TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE
MEETING,  PLEASE  COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.



<PAGE>


                        ALL AMERICAN SEMICONDUCTOR, INC.
                             16115 N.W. 52ND AVENUE
                              MIAMI, FLORIDA 33014

                              --------------------

                                 PROXY STATEMENT

                         ANNUAL MEETING OF SHAREHOLDERS

                           TO BE HELD ON JULY 11, 1997

                              --------------------


                                  INTRODUCTION

General
- -------

The  enclosed  proxy is  solicited  by and on behalf  of the Board of  Directors
("Board") of All American  Semiconductor,  Inc. (the  "Company")  for use at the
Company's  annual meeting of shareholders  (the "Meeting") to be held on Friday,
July 11, 1997,  at 10:00 A.M.,  Miami,  Florida  local time, at Don Shula's Golf
Club, 7601 Miami Lakes Drive, Miami Lakes,  Florida,  and at any adjournments or
postponements thereof. The Company is first mailing this Proxy Statement and the
accompanying proxy to its shareholders on or about June 12, 1997.

Proxies in the form  enclosed,  if properly  executed  and  received in time for
voting,  and not  revoked,  will be voted as  directed  in  accordance  with the
instructions  thereon.  Any properly  executed and timely received proxy, not so
directing to the  contrary,  will be voted "FOR" each of the items listed on the
proxy.  Any person  signing and mailing the enclosed  proxy may revoke it at any
time  before it is voted by giving  written  notice of  revocation  to Howard L.
Flanders,  the  Corporate  Secretary of the  Company,  by  submission  of a duly
executed  proxy  bearing a later  date or by  voting  in person at the  Meeting.
Attendance at the Meeting will not in and of itself constitute a revocation of a
proxy. Any notice revoking a previously submitted proxy should be send to Howard
L. Flanders,  Corporate Secretary, All American Semiconductor,  Inc., 16115 N.W.
52nd Avenue,  Miami,  Florida 33014.  Revocations  will not be effective  unless
received  in writing by the  Corporate  Secretary  of the  Company  prior to the
Meeting.

The expense of this  solicitation  will be borne by the Company.  In addition to
solicitation  by  mail,   arrangements  may  be  made  with  brokers  and  other
custodians, nominees and fiduciaries to send proxy materials to their principals
and the Company will,  upon request,  reimburse them for reasonable  expenses in
doing so. Solicitation of proxies from some shareholders may also be made by the
Company's  officers and regular employees by telephone,  telegram,  or in person
after the initial solicitation,  without additional compensation or remuneration
therefor.

A copy of the  Company's  annual  report for the fiscal year ended  December 31,
1996 (which has included therein audited  consolidated  financial statements for
the Company) is being mailed to the  Company's  shareholders  together with this
Proxy Statement.



<PAGE>


Voting Securities
- -----------------

All voting rights are vested  exclusively in the holders of the Company's common
stock,  $.01 par value per share (the "Common Stock"),  with each share entitled
to one vote. Only shareholders of record at the close of business on Monday, May
19,  1997 (the  "Record  Date"),  are  entitled  to notice of and to vote at the
Meeting or any  adjournments or postponements  thereof.  On the Record Date, the
Company had 20,343,894 shares of Common Stock outstanding (the "Shares"), all of
which (except  160,703 shares held by a  wholly-owned  subsidiary of the Company
and 19,592  treasury shares of the Company) are entitled to vote at the Meeting.
The presence at the Meeting, in person or by proxy, of the holders of a majority
of the Shares will constitute a quorum for the transaction of business.

Approximately 9.9% of the Shares are (and were on the Record Date) owned by Paul
Goldberg  and Bruce M.  Goldberg  and  members  of their  families  and  certain
affiliated  trusts   (collectively  the  "Goldberg   Group"),   in  addition  to
approximately 9.0% of the Shares as to which Paul Goldberg and Bruce M. Goldberg
act as voting trustees with respect to the election of directors of the Company.
See  "SECURITY  OWNERSHIP  OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT."  The
members of the Goldberg Group have informed the Company that they intend to vote
in favor of all proposals made by the Board in this Proxy Statement. The Company
also has the right to direct the vote of approximately 2.7% of the Shares, which
Shares will be voted in favor of all  proposals  made by the Board in this Proxy
Statement.  See  Note  (7)  to the  table  in  "SECURITY  OWNERSHIP  OF  CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT."

                 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 the Record Date by (i) each person
known to be the beneficial owner of more than five percent (5%) of the Company's
Common Stock,  (ii) each director or nominee for director,  (iii) each executive
officer of the  Company who was  serving as an  executive  officer at the end of
fiscal year 1996 (including the Chief Executive Officer), 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 
  NAME AND ADDRESS                           AMOUNT AND NATURE OF             OUTSTANDING
  OF BENEFICIAL OWNER (1)                    BENEFICIAL OWNERSHIP (2)         SHARES (2)
  -----------------------                    ------------------------         ----------
<S>                 <C>                               <C>                       <C>  
  Bruce M. Goldberg (3)(4) ................           2,893,879                 14.4%
  Paul Goldberg (3)(5) ....................           2,578,982                 12.8%
  S. Cye Mandel ...........................              25,625                    *
  Howard L. Flanders ......................              21,000                    *
  Rick Gordon .............................               1,000                    *
  Sheldon Lieberbaum (6) ..................                  --                   --
  All executive officers and directors
  as a group (6 persons)(3)(4)(5)(6) ......           4,232,863(7)              21.0%(7)
</TABLE>

- ---------------
* Less than 1%

                                       2
<PAGE>


(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  2,952,524 shares of the
        Company's  Common Stock, of which  2,736,813  options to purchase shares
        (including  the  aggregate  of  1,000,000  options  issued  to the  four
        executive  officers of the Company on June 8, 1995 (the "1995 Options"))
        were issued pursuant to the Company's Employees',  Officers', Directors'
        Stock  Option  Plan (as  previously  amended  and  restated  the "Option
        Plan"). Of these outstanding  options,  1,611,000 options (including the
        1995  Options) are held by the  executive  officers and directors of the
        Company as a group,  including 625,000 options  (including  450,000 1995
        Options) held by Bruce M. Goldberg,  450,000 options  (including 250,000
        1995 Options) held by Paul Goldberg,  263,000 options (including 150,000
        1995 Options) held by Howard L. Flanders and 273,000 options  (including
        150,000 1995 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 incentive stock options  covering
        an  additional  15,000  shares of the  Company's  Common  Stock.  If all
        options and warrants  outstanding  as of the Record Date were  exercised
        (which  includes the 1995 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 the Record Date
        14.4%,  12.4%,  1.2%,  1.1% and 24.0%,  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 1,837,622 shares of the
        Company's  Common  Stock that Paul  Goldberg and Bruce M.  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 two affiliated,  privately held
        companies (Added Value Electronics Distribution, Inc. and A.V.E.D.-Rocky
        Mountain,  Inc.)  acquired  by the Company in  December  1995,  who were
        issued such shares in connection with such acquisitions.

(4)     Includes  69,496,  56,000,  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 53,425 shares of the
        Company's  Common  Stock held of record by an  unrelated  third party as
        trustee for Matthew  Goldberg  (31,575 shares) and Alec Goldberg (21,850
        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 159,698 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.

                                       3
<PAGE>


(6)     Does  not  include  the  warrants  to  purchase  523,250  shares  of the
        Company's  Common Stock at an exercise  price per share of $2.625 issued
        to Lew Lieberbaum & Co., Inc. in connection with the Company's June 1995
        public offering of Common Stock (the "1995 Public Offering").

(7)     Includes  549,999  shares of the  Company's  Common  Stock issued by the
        Company to the shareholders of Programming Plus Incorporated  ("PPI") in
        connection with the acquisition from them of all of the capital stock of
        PPI, 489,999 shares of which were retained in escrow by the Company,  as
        escrow agent,  to be released  annually if and based upon certain levels
        of pre-tax net income  being  attained by PPI for the years 1996 through
        2000. For 1996, the certain level of pre-tax net income was not attained
        and none of the 489,999  shares were  released  from  escrow.  If, as of
        December 31, 2000,  all of such 489,999  shares have not been  released,
        the  balance  held  in  escrow  will  be  cancelled.   The  PPI  selling
        shareholders  must vote all of the  549,999  shares as  directed  by the
        Company  with  respect to all  matters  upon which  shareholders  of the
        Company may vote or consent (including, without limitation, the election
        of  directors)  until the  escrow is  terminated.  The  Company  will be
        directing the PPI selling shareholders to vote in favor of all proposals
        made by the Board in this Proxy Statement.


                               BOARD OF DIRECTORS

The Company  currently has six directors  serving on its Board. The directors of
the  Company  and their ages and  positions  (if any) with the Company as of the
Record Date are as follows:
<TABLE>
<CAPTION>

NAME                                    CLASS         AGE     POSITION
- ----                                    -----         ---     --------

<S>                                     <C>           <C>    <C>
Paul Goldberg (1)                        III           68     Chairman of the Board and Chief Executive
                                                              Officer

Bruce M. Goldberg (1)                     II           41     Director, President and Chief Operating
                                                              Officer

Howard L. Flanders                        II           39     Director, Vice President, Corporate Secretary
                                                              and Chief Financial Officer

Rick Gordon                              III           43     Director and Senior Vice President of Sales

S. Cye Mandel (2)(3)                       I           67     Director

Sheldon Lieberbaum (2)(3)                  I           62     Director
</TABLE>

- ------------------
(1)     member of the Executive Committee
(2)     member of the Audit Committee
(3)     member of the Compensation Committee

The  Company's  Certificate  of  Incorporation  provides for a staggered  Board,
consisting  of  three  classes.  The  terms  of  office  of  Class I, II and III
directors expire in 1998, 1999 and 1997, respectively.

                                       4
<PAGE>

The following is a brief resume of the Company's 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
Corporate 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 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 30 years.  Mr.  Mandel was a principal in the
entity  which  developed  and  acted  from  1988 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 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  Lew   Lieberbaum's   personnel  in  connection  with  the  trading  for  Lew
Lieberbaum'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

                                       5
<PAGE>


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.

The Board formally met two times during the fiscal year ended December 31, 1996,
in addition to acting seven times during the year by unanimous  written consent.
All Board  members  attended the meetings  and  executed the  unanimous  written
consents.

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-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.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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
Securities  and Exchange  Commission  ("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, 1996, all
Section  16(a)  filing  requirements  applicable  to  its  directors,  executive
officers and greater than ten percent shareholders were satisfied.

                                BOARD COMMITTEES

EXECUTIVE COMMITTEE

The  Executive  Committee is comprised of Paul  Goldberg and Bruce M.  Goldberg.
During 1996, 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. During
the fiscal year ended  December 31,  1996,  the Audit  Committee  had one formal
meeting.  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.

                                       6
<PAGE>


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  compensation of all executive  officers of the
Company and acts as the stock option committee of the Board,  administering  the
Option Plan.  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 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  "BOARD OF  DIRECTORS."  During the
fiscal year ended  December 31, 1996, the  Compensation  Committee had no formal
meetings, but acted seven times during the year by unanimous written consent.

NOMINATING COMMITTEE

The Board does not have a Nominating Committee, such function being performed by
the Board as a whole.

                        EXECUTIVE OFFICERS OF THE COMPANY

The Company  currently has four executive  officers.  Each officer serves at the
discretion  of the  Board;  however,  all  executive  officers  have  employment
agreements with the Company. See "EXECUTIVE COMPENSATION-Employment Agreements."
The  executive  officers of the Company and their ages and  positions  as of the
Record Date are as follows:

NAME                         AGE        POSITION
- ----                         ---        --------

Paul Goldberg                 68        Chief Executive Officer

Bruce M. Goldberg             41        President and Chief Operating Officer

Howard L. Flanders            39        Vice President, Corporate Secretary and
                                        Chief Financial Officer

Rick Gordon                   43        Senior Vice President of Sales

For  a  brief  resume  of  the  Company's  executive  officers,  see  "BOARD  OF
DIRECTORS".

                             EXECUTIVE COMPENSATION

The following table sets forth  information  regarding the  compensation  earned
during each of the fiscal years ended December 31, 1996,  1995, and 1994, 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:

                                       7
<PAGE>

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                      LONG-TERM
                                                                                    COMPENSATION
                                                                                       AWARDS
                                                                                     ----------
                                                                                     SECURITIES        ALL OTHER
                                                             ANNUAL COMPENSATION     UNDERLYING      COMPENSATION
         NAME AND PRINCIPAL POSITION                YEAR     SALARY($)   BONUS($)    OPTIONS(#)         ($)(1)
         ---------------------------                ----     ---------   --------    ----------         ------

<S>                                                 <C>       <C>        <C>          <C>              <C>  
         Paul Goldberg............................  1996      243,000         --            --           9,000
           Chairman and Chief Executive             1995      223,000    111,000       250,000          11,000
           Officer                                  1994      184,000         --            --          10,000

         Bruce M. Goldberg........................  1996      253,000         --            --          26,000
           President and Chief                      1995      225,000    141,000       450,000          27,000
           Operating Officer                        1994      150,000         --            --          26,000


         Rick Gordon..............................  1996      163,000         --            --          16,000
           Senior Vice President of Sales           1995      162,000     89,000       150,000          16,000
                                                    1994      155,000     20,000            --          16,000

         Howard L. Flanders.......................  1996      157,000         --            --          17,000
           Vice President and Chief                 1995      156,000     84,000       150,000          18,000
           Financial Officer                        1994      130,000         --            --          17,000
</TABLE>

- ---------------

(1)     All other compensation  includes Company contributions to life insurance
        policies,  where the  Company is not the  beneficiary,  to the  Deferred
        Compensation Plans 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 Plans for
        Executive Officers and Key Employees" and "401(k) Plan."

The Company pays for a $550,000  universal life insurance  policy on the life of
Paul Goldberg with benefits  payable to his wife, which had an annual premium in
1996 of $7,700.  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
agreement.  The Company makes 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  cancelled 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  cancelled  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

                                       8
<PAGE>

will be  released.  In addition,  beginning in 1993 the Company has funded,  and
intends to continue to 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 are 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  cancelled  and the
security released  thereafter ratably over a five year vesting period until such
time as all advances are deemed cancelled.

OPTION GRANTS IN LAST FISCAL YEAR

The  Company  did not grant any stock  options  during  its  fiscal  year  ended
December 31, 1996 to any executive officer of the Company.  The Company does not
have  a  plan  whereby  tandem  stock  appreciation  rights  are  granted.   See
"Employees', Officers' Directors' Stock Option Plan" herein below.

AGGREGATED  OPTION  EXERCISES IN LAST 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,  1996,  and the  value  of
unexercised stock options as of December 31, 1996, for the 0individual executive
officers named in the Summary Compensation Table:
<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..........................     --              --         160,000(E)               0(E)
                                                                                290,000(U)               0(U)
         Bruce M. Goldberg......................     --              --         135,000(E)               0(E)
                                                                                490,000(U)               0(U)
         Rick Gordon............................     --              --         121,800(E)           7,500(E)
                                                                                151,200(U)               0(U)
         Howard L. Flanders.....................     --              --         106,800(E)           5,625(E)
                                                                                176,200(U)               0(U)
</TABLE>

- ---------------

(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, 1996 (the  Company's  fiscal year
        end).

                                       9
<PAGE>


COMPENSATION COMMITTEE REPORT

The  Compensation  Committee is responsible  for  recommending  to the Board the
compensation of the executive officers, including annual base salaries, cash and
non-cash  bonuses,  stock ownership plans,  retirement plans and other benefits.
With respect to the compensation of the executive  officers other than the Chief
Executive Officer,  the Compensation  Committee makes its recommendations  after
consulting  with the Chief  Executive  Officer.  In addition,  the  Compensation
Committee  administers the Option Plan and the Company's  deferred  compensation
plans and will administer all future benefit plans of the Company.  The policies
of the Compensation  Committee and the Board with respect to the compensation of
the executive  officers is intended to establish  levels of annual  compensation
that are consistent with the Company's  annual and long-term goals and to reward
individuals  for corporate  performance as well as individual  achievements.  In
part, the  Compensation  Committee  believes in using  incentives such as annual
incentive cash bonuses and stock option grants and deferred  compensation  plans
as a means of motivating its executive officers to perform at the highest levels
possible  and to tie  directly  the  compensation  of  the  Company's  executive
officers to the operating performance of the Company. The Compensation Committee
also  takes  into  consideration  the  compensation  of  executive  officers  at
companies  similar in size to the Company and at other companies within the same
industry as the Company.

In May  1995,  the  Compensation  Committee,  in  conjunction  with  the  Board,
authorized  new  employment  agreements for each of the Company's four executive
officers,  which employment agreements include a combination of annual incentive
cash  bonuses  and the  issuance  of the 1995  Options as part of the  incentive
compensation  program that the Compensation  Committee  believed  appropriate in
order to establish a mechanism to tie the operating  performance  of the Company
and the return on investment  made by the Company's  shareholders  over the next
several  years to such  executive  officers'  annual  compensation  during  such
period.  In  particular,  a potentially  significant  portion of each  executive
officers' annual cash compensation is in the form of an annual bonus arrangement
based on a percentage  of the pretax  income of the Company and the 1995 Options
granted to each of the executive  officers vest based upon the Company attaining
certain  levels  of net  earnings  per  share  on a  primary  basis.  As part of
determining the compensation  packages set forth in such employment  agreements,
the  Compensation  Committee  considered  the  backgrounds,  the  tenure and the
experience  of the executive  officers as well as the results of operations  for
1993 and 1994 and projected  results for 1995 and thereafter.  The  Compensation
Committee also took into consideration the fact that the compensation  levels of
all executive officers were modest to low for such executives at other companies
similar in size to the Company and other  companies  within the same industry as
the Company. See "Employment Agreements" and "Employees',  Officers', Directors'
Stock Option Plan" hereinbelow.

                           SHELDON LIEBERBAUM, member
                              S. CYE MANDEL, member

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

                                       10
<PAGE>


provides for the granting to key employees of both  "incentive  stock  options,"
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended (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  non-employee  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.  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 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

                                       11
<PAGE>

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 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 additional  registration  statement on Form
S-8 in order to register  the  additional  shares of Common  Stock  reserved for
issuance under the Option Plan.

As of the Record  Date,  a total of  2,918,440  options were granted and had not
expired or been forfeited, of which 181,627 were exercised and 2,736,813 options
were outstanding (of which 1,611,000 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  503,600  options  are
presently  exercisable).  These  options,  which  are  held by 80  persons,  are
exercisable  at prices  ranging  from $1.00 per share to $2.63 per share and are
exercisable through various expiration dates from 1997 to 2006.

DEFERRED COMPENSATION PLANS FOR EXECUTIVE OFFICERS AND KEY EMPLOYEES

Effective January 1, 1988, the Company established a deferred  compensation plan
(the "1988 Deferred Compensation Plan") for executive officers and key employees
of the Company.  The  employees  eligible to  participate  in the 1988  Deferred
Compensation Plan (the  "Participants") are chosen at the sole discretion of the
Board, upon a recommendation  from the Compensation  Committee.  Pursuant to the
1988 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 1988  Deferred  Compensation  Plan will be  distributed  monthly.  The
Company paid benefits under this plan of approximately $16,000 during 1996, none
of which was paid to any executive  officer.  The maximum  benefit  payable to a
Participant  (including each of the executive  officers) under the 1988 Deferred
Compensation Plan is presently $22,500 per annum.

During 1996, the Company  established a second deferred  compensation  plan (the
"1996 Deferred Compensation Plan") for executives of the Company. The executives
eligible to participate in the 1996 Deferred Compensation Plan are chosen at the
sole  discretion  of the  Board  upon a  recommendation  from  the  Compensation
Committee.  The Company may make  contributions each year in its sole discretion
and is under no obligation to make a  contribution  in any given year.  For 1996

                                       12
<PAGE>

the Company committed to contribute $63,000 under this plan. Participants in the
plan will vest in their plan benefits over a ten-year period commencing  January
1, 1996. If the participant's  employment terminates due to death, disability or
a change in  control  of  management,  he or she will vest 100% in all  benefits
under  the  plan.   Retirement  benefits  will  be  paid,  as  selected  by  the
participant,  based on the sum of the contributions made and any additions based
on investment  gains. No executive officer of the Company has been (or currently
is intended to be) chosen as a  participant  in the 1996  Deferred  Compensation
Plan.

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 Code. 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 $9,500 in 1996. The Company makes matching  contributions and in 1996
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  (collectively the
"Goldberg  Agreements").  The Goldberg  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.  In  December  1996,  the
Goldberg  Agreement  for Paul  Goldberg  was amended  resulting  in, among other
changes  (see  below),  a reduction  in his base salary of $25,000 per annum for
calendar  year 1997 and each  calender  year  thereafter  during the term of his
employment. The Goldberg 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 Goldberg  Agreement.  Under the Goldberg
Agreements,  as amended in December 1996 as to Paul Goldberg,  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. Messrs.  Goldberg,  as well as the
other  executive  officers  of  the  Company  (Messrs.   Flanders  and  Gordon),
voluntarily  took a reduction in their  respective  base salaries for the second
half of 1996 (the  "Salary  Reductions").  The  aggregate  amount of the  Salary
Reductions  for all four  executive  officers  was  approximately  $76,000.  The
Compensation Committee of the Board has authorized that the Salary Reductions be
paid as  additional  base  salary  in 1997  and,  if  necessary,  in 1998 out of
available pre-tax earnings of the Company.

The Goldberg  Agreements,  as amended,  together with the 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  "1995  Options").  Pursuant  to  their
respective  employment  agreements,  Paul  Goldberg and Bruce M.  Goldberg  were
granted 1995 Options covering 250,000 and 450,000 shares of the Company's Common

                                       13
<PAGE>

Stock,  respectively,  and each of  Messrs.  Flanders  and Gordon  were  granted
150,000  shares.  The 1995 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 and further subject to
generally  attempting  to  maintain  at least  through  2002 as many of the 1995
Options as possible as incentive stock options.  Each of the 1995 Options has an
exercise  price of $1.875 per  share.  The 1995  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 1995 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 1995 Options, as well as all other unvested options,
held by each of the four executive officers shall become immediately 100% vested
and exercisable.  No early vesting has yet occurred as a result of the Company's
net earnings per share or otherwise.

Under the Goldberg Agreement for Paul Goldberg,  as amended in December 1996, he
is able to elect, in his sole discretion, to retire at any time (the "Retirement
Election").  Upon the  earlier  to occur of the  Retirement  Election  or at the
expiration of the term of his Goldberg Agreement,  as amended,  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  insurance
benefits  as was  provided  prior  to his  retirement  and  continue  to pay the
premiums on the life  insurance  policy  insuring  his life as  described  under
"Summary Compensation Table" above.

The Goldberg Agreements, as amended, also provide certain additional benefits to
each of Paul  Goldberg and Bruce M.  Goldberg,  including  participation  in the
Company  benefit plans and  continuance  in the event of disability of all their
respective  compensation  and other  benefits in the case of Paul Goldberg until
January 1, 1999  (subject  thereafter  to providing  the  retirement  and health
benefits described above) and in the case of Bruce M. Goldberg for two years. In
connection  with  the  amendment  in 1996 to the  Goldberg  Agreement  for  Paul
Goldberg, the Company is no longer obligated to advance the annual premium for a
$1,000,000 face value  insurance  policy on Paul Goldberg's or his spouse's life
nor the annual  premium  for a  $1,000,000  face value  second to die  insurance
policy  on the  lives of Paul  Goldberg  and his  spouse.  Neither  of these two
insurance policies had been obtained prior to the December 1996 amendment to his
Goldberg Agreement.

                                       14
<PAGE>

The Goldberg Agreements,  as amended,  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 Goldberg
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 Goldberg Agreement,  as amended) 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  Goldberg  Agreement,  as
amended,  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 his  death,  the
premiums on the life  insurance  policy  insuring  his life as  described  under
"Summary Compensation Table." Similarly,  under the Goldberg Agreement for Bruce
M.  Goldberg,  in the  event of a change  in  control  and  Bruce M.  Goldberg's
election to terminate  his Goldberg  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  Goldberg
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  Goldberg
Agreement.

THE FLANDERS/GORDON AGREEMENTS

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"),  and Rick Gordon, its Senior Vice President of Sales
(the  "Gordon  Agreement"  and  collectively  with the Flanders  Agreement,  the
"Flanders/Gordon Agreements"). The Flanders/Gordon Agreements each will continue
through December 31, 1998, and provides for a base salary, effective as of March
1, 1995,  of $157,500 per annum for Mr.  Flanders and $163,000 per annum for Mr.
Gordon, 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 and subject to
their  respective   Salary   Reduction  for  1996.  Under  the   Flanders/Gordon
Agreements,  Messrs.  Gordon and Flanders are 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. Pursuant to
the Flanders/Gordon Agreements, each of Messrs. Gordon and Flanders were granted
150,000 of the 1995 Options.  The  Flanders/Gordon  Agreements  also provide for
certain  additional  benefits,  including  participation  in the Company benefit
plans and continuance of all their  respective  compensation  and other benefits
for two years in the event of disability. Further, if Mr. Gordon or 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 applicable Flanders/Gordon  Agreement.  Additionally,
under the Flanders/Gordon Agreements, the Company will pay premiums under a life
insurance policy for each of Messrs. Gordon and Flanders with the beneficiary to
be as designated by Mr. Gordon or Mr. Flanders, respectively, as described under
"Summary Compensation Table" above. The Flanders/Gordon Agreements also provides
that,  in the event of a change in control (as defined) of the Company,  each of
Mr.  Gordon  and Mr.  Flanders  will have the option in his sole  discretion  to
terminate the applicable Flanders/Gordon Agreement. In such event, Mr. Gordon or
Mr.  Flanders,  at his option  would be  entitled to elect to receive a lump-sum
payment equal to his respective compensation due through the later of the end of
the term of the  applicable  Flanders/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 such Flanders/Gordon Agreement.

                                       15
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The  Compensation  Committee of the Board consists of Sheldon  Lieberbaum and S.
Cye Mandel, both being independent,  non-employee  Directors of the Company. See
"BOARD  COMMITTEES - Compensation  Committee." Since January 1, 1996 to the date
hereof,  neither member of the Compensation  Committee had any relationship with
the Company requiring disclosure under item 404 of Regulation S-K.

                          STOCK PRICE PERFORMANCE CHART

The following  graph  compares the five-year  cumulative  total  returns* of the
Company's Common Stock with the NASDAQ Market Index and the Electronic Parts and
Equipment Peer Group Index (SIC Code 5065).  The stock price  performance  shown
below is not necessarily indicative of future price performance.

              COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
                      THE COMPANY, NASDAQ MARKET INDEX AND
               THE ELECTRONIC PARTS AND EQUIPMENT PEER GROUP INDEX

                         FISCAL YEARS ENDED DECEMBER 31


                               [PERFORMANCE GRAPH]



         The following  table presents in tabular form the data set forth in the
performance graph to be included in the Proxy Statement:
<TABLE>
<CAPTION>

                                            FISCAL YEARS ENDED DECEMBER 31

INDEX DESCRIPTION              1991*      1992       1993     1994      1995     1996
- -----------------              ----       ----       ----     ----      ----     ----
                                                       (In Dollars)

<S>                           <C>        <C>        <C>      <C>       <C>       <C>
The Company                    100.00     100.00     175.00   125.00    154.17    66.67

Electronic Parts and           100.00     136.73     159.84   148.58    177.83   205.70
Equipment Peer Group Index
(SIC Code 5065)

NASDAQ Market Index            100.00     100.98     121.13   127.17    164.96   204.98
</TABLE>


- ---------------

  *  Assumes  the  investment  of $100 on  January 1, 1992 and  reinvestment  of
     dividends (no dividends were declared on the Company's  Common Stock during
     the period).

                                       16
<PAGE>


                                    PROPOSALS

ITEM 1.      ELECTION OF DIRECTORS

It is intended  that the votes will be cast pursuant to the  accompanying  proxy
for the nominees named below, unless otherwise directed. The Board has no reason
to believe that such nominees  will become  unavailable;  however,  in the event
that such nominees should be unavailable, proxies solicited by the Board will be
voted for the election of substitute nominees designated by the Board.

Paul Goldberg has been a member of the Board since 1978 and Rick Gordon became a
director of the  Company in 1992.  The names of the  nominees  and the terms and
class are set forth below. For biographical and other information regarding such
nominees, see "BOARD OF DIRECTORS."

NOMINEE                             TERM                    CLASS
- -------                             ----                    -----

Paul Goldberg                       3 years                  III

Rick Gordon                         3 years                  III

Proxies  cannot be voted for a greater  number of persons  than the two nominees
named above.

The  nominees  for  directors  who receive a plurality  of the votes cast by the
holders of the Shares  will be  elected.  Abstention  (withheld  authority)  and
broker or nominee  non-votes are not counted in determining the number of shares
voted for or against any nominee for director.

THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE NOMINEES FOR ELECTION TO THE BOARD.

ITEM 2.      RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

It is intended  that the votes will be cast pursuant to the  accompanying  proxy
for the ratification of Lazar, Levine & Company LLP as the Company's independent
public  accountants  for the  fiscal  year  ending  December  31,  1997,  unless
otherwise directed.

The firm of Lazar,  Levine & Company LLP  certified  the accounts of the Company
for the fiscal years ended December 31, 1988 and  thereafter.  No member of such
firm or any associate  thereof has any financial  interest in the Company or its
subsidiaries.  A  member  of such  firm is not  expected  to be  present  at the
Meeting.

Shareholder  approval of the Company's  auditors is not required  under Delaware
law.  Consistent with past  practices,  the Board is submitting its selection of
Lazar,  Levine & Company LLP to its  shareholders  for  ratification in order to
determine whether the shareholders  generally approve of the Company's auditors.
If the  selection  of  Lazar,  Levine  &  Company  LLP is  not  approved  by the
shareholders, the Board will reconsider its selection.

The  affirmative  vote of a majority  of the Shares  represented  at the Meeting
which cast a vote on this proposal is required to approve this proposal.  Broker
or nominee  non-votes are not counted in determining  the number of shares voted
for or against this proposal.

THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.

                                       17
<PAGE>


                 SHAREHOLDER'S PROPOSALS FOR 1998 ANNUAL MEETING

Any shareholder of the Company who wishes to present a proposal to be considered
at the 1998 annual meeting of shareholders  and who wishes to have such proposal
receive  consideration  for inclusion in the Company's  proxy statement for such
meeting must deliver such  proposal in writing to the Company at 16115 N.W. 52nd
Avenue,  Miami,  Florida  33014,  not later than  February  11,  1998.  Any such
shareholder proposal must comply with the requirements of Rule 14a-8 promulgated
under the Securities Exchange Act of 1934.

                                  OTHER MATTERS

The Board  has no  knowledge  of any other  matters  which may come  before  the
Meeting and does not intend to present any other matters.  However, if any other
matters  shall   properly  come  before  the  Meeting  or  any   adjournment  or
postponements  thereof,  the persons  named as proxies  will have  discretionary
authority to vote the shares represented by the accompanying proxy in accordance
with their best judgment.

A COPY OF THE  COMPANY'S  ANNUAL  REPORT  TO  SHAREHOLDERS  FOR THE  YEAR  ENDED
DECEMBER 31, 1996 IS BEING PROVIDED TO SHAREHOLDERS  WITH THIS PROXY  STATEMENT.
THE COMPANY WILL FURNISH TO EACH PERSON  SOLICITED  HEREUNDER,  WITHOUT  CHARGE,
COPIES OF ITS ANNUAL REPORT ON FORM 10-K (INCLUDING  EXHIBITS) FOR THE COMPANY'S
YEAR  ENDED  DECEMBER  31,  1996,  AS FILED  WITH THE  SECURITIES  AND  EXCHANGE
COMMISSION,  UPON  RECEIPT BY THE COMPANY OF A WRITTEN  REQUEST BY SUCH  PERSON.
SUCH  WRITTEN  REQUEST  SHOULD  BE SENT TO THE  COMPANY,  ATTENTION:  HOWARD  L.
FLANDERS,  VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,  AT THE COMPANY'S ADDRESS
STATED HEREINABOVE.

                                        By Order of the Board of Directors,



                                        /s/ HOWARD L. FLANDERS
                                        -------------------------
                                        Howard L. Flanders,
                                        Corporate Secretary

June 12, 1997
Miami, Florida
<PAGE>
PROXY
                        ALL AMERICAN SEMICONDUCTOR, INC.
                  ANNUAL MEETING OF SHAREHOLDERS-July 11, 1997
           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned  hereby constitutes and appoints Paul Goldberg and Bruce M.
Goldberg, and each of them, as proxies, with full power of substitution to each,
for and in the name,  place and stead of the  undersigned  to vote all shares of
Common Stock of All  American  Semiconductor,  Inc.  (the  "Company")  which the
undersigned  would be entitled to vote at the Annual Meeting of  Shareholders of
the Company to be held on Friday,  July 11, 1997, at 10:00 a.m., Miami,  Florida
local time,  at Don Shula's  Golf Club,  7601 Miami Lakes  Drive,  Miami  Lakes,
Florida, and at any and all postponements and adjournments thereof. The Board of
Directors recommends a vote "FOR" Proposals 1 and 2 on reverse side.

     THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE  UNDERSIGNED  SHAREHOLDER.  WHERE A VOTE IS NOT SPECIFIED,  THE PROXIES WILL
VOTE THE SHARES  REPRESENTED  BY THE PROXY  "FOR" EACH OF  PROPOSALS  1 AND 2 ON
REVERSE SIDE.

     A  MAJORITY  OF SAID  PROXIES  PRESENT  AND  ACTING  IN  PERSON OR BY THEIR
SUBSTITUTES  (OR IF ONLY ONE IS PRESENT AND ACTING,  THEN THAT ONE) MAY EXERCISE
ALL OF THE POWER CONFERRED HEREBY.  DISCRETIONARY  AUTHORITY IS CONFERRED HEREBY
AS TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. PLEASE
SIGN EXACTLY AS YOUR NAME  APPEARS IN THE RECORDS OF THE COMPANY.  IF THE SHARES
ARE HELD IN THE  NAMES OF TWO OR MORE  PERSONS,  EACH  SHOULD  SIGN.  EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS, ATTORNEYS AND CORPORATE OFFICERS SHOULD ADD
THEIR TITLES.

     Receipt  of the  Company's  1996  Annual  Report  and the  Notice of Annual
Meeting  of  Shareholders  and  Proxy  Statement   relating  thereto  is  hereby
acknowledged.
                                                                   -------------
                                                                   SEE REVERSE
                                                                       SIDE
                                                                   -------------
<PAGE>

- ----------
           PLEASE MARK YOUR
    X      VOTES AS IN THIS
           EXAMPLE
- ----------
<TABLE>
<CAPTION>

                     FOR    WITHHELD                                                                 FOR   AGAINST   ABSTAIN

                    -----    -----                                                                  -----   -----    ----- 
<S><C>              <C>      <C>  <C>                         <C>                                   <C>     <C>      <C>
1. Election of                     NOMINEES: Paul Goldberg     2. Ratification of the selection 
   Directors:                      and Rick Gordon                of Lazar, Levine & Company LLP as
                                   INSTRUCTIONS: To               the Company's independent public  -----   -----    ----- 
                    -----    ----- withhold authority to          accountants for the year
                                   vote for any individual        ending December 31, 1997.
                                   nominee, write that         3. Upon such other matters as may
                                   nominee's name in the          properly come before the Annual
                                   space provided below.          Meeting or any and all
                                                                  postponements or
                                                                  adjournments thereof.
                                                                  



For, except vote withheld from the following nominee(s):


- -------------------------------------------------------------





SIGNATURE(s)                                                       DATED:                       1997
            ------------------------------------------------------       ----------------------
                 RETURN THIS PROXY IN THE ENCLOSED ENVELOPE

(NOTE:  Please complete, date and sign exactly as your name appears hereon. When
        signing as attorney,  executor, guardian, trustee or corporate official,
        please add your title.  If shares are held  jointly,  each holder should
        sign.)
</TABLE>



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