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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, 1997
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 20, 1998, 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 $30,800,000.
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, 1997, 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 and their ages and positions
with the Registrant as of April 15, 1998, are as follows:
<TABLE>
<CAPTION>
Name Class Age Position
- ---- ----- --- --------
<S> <C> <C> <C>
Paul Goldberg(1)...................... III 69 Chairman of the Board of Directors
Bruce M. Goldberg(1).................. II 42 President and Chief Executive Officer and
Director
Howard L. Flanders.................... II 40 Executive Vice President, Secretary and
Chief Financial Officer and Director
Rick Gordon........................... III 44 Senior Vice President of Sales and Director
John Jablansky........................ 40 Senior Vice President of Product
Management
S. Cye Mandel(2)(3)................... I 68 Director
Sheldon Lieberbaum(2)(3).............. I 63 Director
Daniel M. Robbin...................... 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 of
Directors (the "Board"), consisting of three classes. The terms of office of
Class I, II and III directors expire in 1998, 1999 and 2000, respectively. The
Company's executive officers serve at the discretion of the Board; however,
certain 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
since 1978. Paul Goldberg was also Chief Executive Officer of the Company until
1997 and President of the Company until 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 1994 became
President and Chief Operating Officer. In 1997, Bruce M. Goldberg was appointed
Chief Executive Officer of the Company. Bruce M. Goldberg has served
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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 1991 as its Vice President and Chief
Financial Officer, and in 1992 became a Director of the Company and Secretary.
In 1997, Mr. Flanders was appointed Executive Vice President of the Company.
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 1986. He was originally the
General Manager of the Company's Northern California office and Northwest
Regional Manager. In 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.
JOHN JABLANSKY has been employed by the Company since 1981. He was originally in
sales and since 1982 has worked in various capacities within the product
management department. In 1997, Mr. Jablansky was appointed Senior Vice
President of Product Management of the Company. Prior to joining the Company,
Mr. Jablansky was employed by Milgray Electronics, another electronic components
distributor.
S. CYE MANDEL is a prominent South Florida businessman who has been an executive
in the food service industry for over 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 was director of corporate finance and a director and
shareholder of Lew Lieberbaum & Co., Inc. ("Lew Lieberbaum") until retiring in
1997. Lew Lieberbaum, which is now known as First Asset Management, is 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"). Mr. Lieberbaum 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 did not become operative until the
expiration of the similar agreement for the 1992 Public Offering. 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
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.
DANIEL M. ROBBIN has been involved in electronics distribution for over 39
years. Mr. Robbin retired in 1994 from Avnet Corporation, one of the largest
distributors in the electronic components industry, where he spent
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34 years, most recently as Senior Vice President of Avnet, Inc. and Executive
Vice President of its subsidiary, Time Electronics. Mr. Robbin became a Director
of the Company in 1997. Mr. Robbin has been a consultant to the Company since
1995. See Item 13. Certain Relationships and Related Transactions.
BOARD COMMITTEES
EXECUTIVE COMMITTEE
The Executive Committee is comprised of Paul Goldberg and Bruce M. Goldberg.
During 1997, 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 currently 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 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 (now known as First
Asset Management) 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,
who recently retired as 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.
NOMINATING COMMITTEE
The Board does not have a Nominating Committee, such function being performed by
the Board as a whole.
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 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, 1997, all
Section 16(a) filing requirements applicable to its directors, executive
officers and greater than ten percent shareholders were satisfied.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the compensation
earned for services in all capacities during each of the fiscal years ended
December 31, 1997, 1996 and 1995 by the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company during the
fiscal year ended December 31, 1997, whose total annual salary and bonus
exceeded $100,000:
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long-term
Compensation
Awards
Annual Compensation Securities All Other
-------------------------- Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#) ($)(1)
- ----------------------------------------- ------- ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Paul Goldberg............................. 1997 254,000 152,000 200,000 (2) 10,000
Chairman 1996 243,000 -- -- 9,000
1995 223,000 111,000 250,000 11,000
Bruce M. Goldberg......................... 1997 321,000 167,000 175,000 (2) 25,000
President and Chief 1996 253,000 -- -- 26,000
Executive Officer 1995 225,000 141,000 450,000 27,000
Howard L. Flanders........................ 1997 182,000 101,000 13,000 (2) 17,000
Executive Vice President and 1996 157,000 -- -- 17,000
Chief Financial Officer 1995 156,000 84,000 150,000 18,000
Rick Gordon............................... 1997 188,000 101,000 123,000 (2) 15,000
Senior Vice President of 1996 163,000 -- -- 16,000
Sales 1995 162,000 89,000 150,000 16,000
John Jablansky............................ 1997 162,000 -- 25,000 (2) 23,000
Senior Vice President of 1996 153,000 -- -- 6,000
Product Management (3) 1995 177,000 -- -- 3,000
</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."
(2) Represents stock options granted in connection with the Company's stock
option repricing during 1997. The repriced options replaced options
that were canceled and are no longer exercisable. See Table in "Option
Grants in Last Fiscal Year" hereinbelow.
(3) Mr. Jablansky was appointed Senior Vice President of Product Management
in 1997.
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
1997 of $7,700. Pursuant to the terms of an employment agreement with Mr.
Goldberg, the Company made annual advances to Bruce M. Goldberg to cover the
annual premium of a $1,000,000 whole life insurance policy (the "Whole Life
Policy") on the life of
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Bruce M. Goldberg currently in the amount of $21,995. Consistent with such
agreement, fifty percent (50%) of the advances through December 31, 1994 were
canceled and the related security released on January 1, 1995 and, on May 31,
1997, the remainder of the advances previously made to pay premiums on the Whole
Life policy were canceled and any remaining security was released in accordance
with the previously agreed to vesting schedule. On and after June 1, 1997, the
Company is obligated to continue, for the duration of Bruce M. Goldberg's
employment, to pay the annual premium to Bruce M. Goldberg for the Whole Life
Policy. 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 $11,500. The Company's obligations to make premium payments in
connection with Howard L. Flanders' and Rick Gordon's policies are expected to
last for a maximum of ten years. After Howard L. Flanders and Rick Gordon have
been with the Company for a period of five years from the year in which the
policy was acquired (1993) and provided they each remain in the employ of the
Company or they have become disabled or a change in control has occurred during
the term of their employment, the advances will be deemed canceled and the
security released thereafter ratably over a five year vesting period until such
time as all advances are deemed canceled.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the named executive officers
of the Company during the fiscal year ended December 31, 1997. Pursuant to SEC
rules, the table also shows the value of the options granted at the end of the
option terms (as indicated below) if the price of the Company's stock was to
appreciate annually by 5% and 10%, respectively. There is no assurance that such
stock price will appreciate at the rates shown in the table. All of the options
set forth in the table are stock options issued pursuant to the Option Plan. The
Company does not have a plan whereby tandem stock appreciation rights ("SARS")
are granted. See "Employees', Officers', Directors' Stock Option Plan"
hereinbelow.
<TABLE>
<CAPTION>
Potential Realizable
Closing Value at Assumed
Number of % of Market Annual Rates of Stock
Securities Total Options Price on Price Appreciation
Underlying Granted to Exercise Date of for Option Term
Options Employees in Price Grant Expiration --------------------------
Name Granted (#) (1) Fiscal Year ($/Share) ($/Share) Date 0% ($) 5% ($) 10% ($)
- ------------------- --------------- ---------------- ---------- ---------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Paul Goldberg 100,000 6.4% 1.08 1.19 7/10/02 11,000 43,878 83,651
100,000 6.4% 1.24 1.34 7/30/03 10,000 55,573 113,389
Bruce M. Goldberg 75,000 4.8% 1.08 1.19 7/10/02 8,250 32,908 62,738
100,000 6.4% 1.24 1.34 7/30/03 10,000 55,573 113,389
Howard L. Flanders 10,000 .6% 1.08 1.19 7/10/02 1,100 4,388 8,365
3,000 .2% 1.24 1.34 7/30/03 300 1,667 3,402
Rick Gordon 120,000 7.7% 1.08 1.19 7/10/02 13,200 52,653 100,381
3,000 .2% 1.24 1.34 7/30/03 300 1,667 3,402
John Jablansky 12,500 .8% 1.08 1.19 7/10/02 1,375 5,485 10,456
12,500 .8% 1.24 1.34 7/30/03 1,250 6,947 14,174
</TABLE>
(1) Represents stock options granted in connection with the Company's stock
option repricing during 1997. The repriced options replaced options
that were canceled and are no longer exercisable.
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, 1997, and the value of
unexercised stock options as of December 31, 1997 for the individual executive
officers named in the Summary Compensation Table:
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<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............................... -- -- 35,000(E) 11,700(E)
415,000(U) 43,800(U)
Bruce M. Goldberg........................... -- -- 27,500(E) 9,000(E)
597,500(U) 37,500(U)
Howard L. Flanders.......................... 20,000 (2) 10,000 (2) 103,150(E) 7,400(E)
159,850(U) 3,100(U)
Rick Gordon................................. -- -- 36,150(E) 12,900(E)
236,850(U) 31,000(U)
John Jablansky.............................. -- -- 4,375(E) 1,500(E)
20,625(U) 5,500(U)
</TABLE>
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(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, 1997 (the Company's fiscal year
end).
(2) Stock options covering 20,000 shares of Common Stock at an exercise
price of $.75 per share were exercised by Howard L. Flanders during the
fiscal year ended December 31, 1997. The value realized per share is
based upon the difference between the closing sale price of the
Company's Common Stock on the Nasdaq Stock Market on the date of
exercise and the exercise price.
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 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. 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
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<PAGE>
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
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.
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<PAGE>
As of March 31, 1998, a total of 3,099,940 options were granted and had not
expired or been forfeited, of which 191,627 were exercised and 2,908,313 options
were outstanding (of which 1,671,000 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 210,675 options are
presently exercisable). These options, which are held by 94 persons, are
exercisable at prices ranging from $1.00 per share to $2.53 per share and are
exercisable through various expiration dates from 1998 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 1997, 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 1997
the Company committed to contribute $160,000 under this plan. Participants in
the plan will vest in their plan benefits over a ten-year period. If the
participant terminates due to death, disability or due to 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. One executive
officer of the Company has been 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 1997. The Company makes matching contributions and in 1997
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, then its Chief Executive Officer, and Bruce M. Goldberg, its
President and then 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
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in the cost of living. In December 1996, the Goldberg Agreement for Paul
Goldberg was amended resulting in, among other changes (see below), a $25,000
reduction in his base salary for calendar year 1997 and each calendar 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. 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. 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 authorized at such time 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. As a result of the attainment
of certain levels of pre-tax earnings, the Salary Reductions were paid in full
in 1997.
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
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 $1.875 per share. The 1995 Options granted to each of the
executive officers will vest in no event later than 9 years from the date of
grant, subject to earlier vesting in the following percentage increments based
upon the Company attaining net earnings per share on a primary ("basic") basis
in any year from 1995 through 2000, inclusive, in at least the following
amounts:
Percentage of Net Earnings
Options Vested (%) Per Share ($)
------------------ -------------
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 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
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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."
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 of 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.
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 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 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, then its Vice President, 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. Such annual
cash bonus compensation is limited in any year to an amount no greater than such
executive's base salary for the applicable 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
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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.
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.
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. Since January 1, 1997 to the date of this report,
neither member of the Compensation Committee had any relationship with the
Company requiring disclosure under Item 404 of Regulation S-K.
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, 1998, 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 1997 (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.
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<TABLE>
<CAPTION>
Percent of
Amount and Nature of Outstanding
Name and Address of Beneficial Owner (1) Beneficial Ownership (2) Shares (2)
- ---------------------------------------- ------------------------------ -------------
<S> <C> <C>
Bruce M. Goldberg (3)(4)................................ 2,883,879 14.7%
Paul Goldberg(3)(5)..................................... 2,568,982 13.1%
John Jablansky.......................................... 56,250 *
S. Cye Mandel........................................... 40,625 *
Howard L. Flanders...................................... 21,000 *
Daniel M. Robbin........................................ 10,000 *
Rick Gordon............................................. 1,000 *
Sheldon Lieberbaum(6)................................... -- --
All executive officers and directors as a
group (8 persons)(3)(4)(5)(6)......................... 3,754,114 19.1%
</TABLE>
- ---------------
* Less than 1%
(1) The address of each of Paul Goldberg, Bruce M. Goldberg, Howard L.
Flanders, Rick Gordon and John Jablansky 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; Sheldon Lieberbaum
is 220 East 72nd Street, Apt. 28E, New York, New York 10021; and Daniel
M. Robbin is 4697 Carlton Golf Drive, Lake Worth, Florida 33467.
(2) Excludes outstanding stock options to purchase 3,025,864 shares of the
Company's Common Stock, of which 2,908,313 options to purchase shares
(including the 1995 Options) were issued pursuant to the Option Plan.
Of these outstanding options, 1,671,000 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, 273,000 options (including
150,000 1995 Options) held by Rick Gordon, 25,000 options held by John
Jablansky and 35,000 options held by Daniel M. Robbin. Further excludes
currently outstanding warrants to purchase 1,083,125 shares of the
Company's Common Stock. If all options and warrants outstanding as of
March 31, 1998, were exercised (which includes the 1995 Options), Bruce
M. Goldberg, Paul Goldberg, Howard L. Flanders, Rick Gordon, John
Jablansky, Daniel M. Robbin, S. Cye Mandel and all executive officers
and directors of the Company as a group would own as of March 31, 1998,
14.7%, 12.7%, 1.2%, 1.2%, .3%, .2%, .2% and 22.8%, 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 1,827,622 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 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 excluded securities.
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<PAGE>
(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.
(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 (now known as First Asset Management) in connection
with the 1995 Public Offering.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, Daniel M. Robbin, a director of the Company, performed consulting
services on behalf of the Company for which he received an aggregate of $26,000
and 10,000 stock options. These options are exercisable at $1.067 and vest over
five years. In addition, Mr. Robbin was granted 25,000 stock options in
connection with the Company's stock option repricing during 1997. These repriced
options, which have an exercise price of $1.08 and vest over five years,
replaced options that were canceled and are no longer exercisable.
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
(Duly Authorized Officer)
By: /s/ HOWARD L. FLANDERS
-----------------------------------------------
Howard L. Flanders, Executive Vice President,
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
Dated: April 30, 1998
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