-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UxmeWSK8dJqyvQuhx20o5SMDPg8UAn2Qy8rn7hFlH5jj/UrqDCmqMiobDrOTEV77 PUovEluWksJ3nYdhl9LAhg== 0000922408-99-000011.txt : 19990427 0000922408-99-000011.hdr.sgml : 19990427 ACCESSION NUMBER: 0000922408-99-000011 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN DRUG CO CENTRAL INDEX KEY: 0000922408 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 133729186 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-25869 FILM NUMBER: 99601044 BUSINESS ADDRESS: STREET 1: 1760 RHODE ISLAND AVENUE NW CITY: WASHINGTON STATE: DC ZIP: 20036 BUSINESS PHONE: 2028339223 MAIL ADDRESS: STREET 1: 9 WEST 57 STREET STREET 2: SUITE 4170 CITY: NEW YORK STATE: NY ZIP: 10019 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 /X/ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1998 OR / /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 033-78252 AMERICAN DRUG COMPANY (Exact name of registrant as specified in its charter) Delaware 13-3729186 (State of Incorporation) (I.R.S. Employer identification No.) 9 West 57th Street, New York, NY 10019 (Address of principle executive offices) (Zip code) Registrant's telephone number, including area code: (212) 826-8976 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 Par Value ---------------------------- (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers 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 15, 1999, the aggregate market value of the outstanding shares of the Registrant's Common Stock, par value $.01 per share, held by non-affiliates was approximately $2,365,473 based on the closing price of the Common Stock on the OTC Bulletin Board, which is operated by the NASDAQ Stock Market on March 15, 1999. Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. Class Outstanding at March 15, 1999 - ----- ----------------------------- Common Stock, par value $.01 per share 13,020,155 shares DOCUMENTS INCORPORATED BY REFERENCE: None Item 10. Directors and Executive Officers of the Registrant is Hereby Amended and Restated in its Entirety as Follows: The following table sets forth certain information concerning the directors and officers of the Company: Name Age Position Jerome I. Feldman 70 Chairman of the Board Richard T. Grad 61 President, Chief Executive Officer and Director Charles Dawson 43 Vice President and Director Bruce Sherman 46 Vice President and Director Steven Schilit 52 Vice President and Director Joseph Leven 46 Vice President Cindy Krugman 38 Vice President and Controller Martin M. Pollak 71 Director Scott N. Greenberg 42 Director Jerome I. Feldman has been Chairman of the Board of the Company since 1994. He is founder of, and since 1959, has been President and Chief Executive Officer and a director of GP Strategies Corporation ("GPS"), a global provider of performance improvement services and products. He has been a director of GSE Systems, Inc., ("GSE") since 1994 and Chairman of the Board of GSE since 1997. Mr. Feldman is also a Trustee of the New England Colleges Fund. Richard T. Grad has been President and Chief Executive Officer and a director of the Company since September 1998 and President of Five Star Group, Inc., a wholly-owned subsidiary of the Company ("Five Star") since 1985. Charles Dawson has been Vice President and a director of the Company since September 1998, Vice President of Merchandising of Five Star since 1993 and Merchandising Manager from 1992. Bruce Sherman has been Vice President and a director of the Company since September 1998 and Vice President of Sales of Five Star since 1993. He is a member of the New York and New Jersey Paint and Decorating Association. Steven Schilit has been Vice President and a director of the Company since September 1998 and since 1981 has held several executive positions with Five Star. He has been a director of United Paint Sundry Distributors, a buying group, since 1996. Martin M. Pollak has been a director of the Company since 1994 and President and Chief Executive Officer from 1994 to September 1998. He is founder of, and since 1959, has been Executive Vice President and Treasurer and a director of GPS and a director of GSE from 1994 to March 1999. Mr. Pollak is the former Chairman of the Czech and Slovak United States Economic Council and a trustee of the Board of Trustees of the Worcester Foundation for Experimental Biology. Scott N. Greenberg has been a director of the Company since September 1998, a director of GPS since 1987 and Executive Vice President and Chief Financial Officer since June 1998 and since 1985 has held several executive positions. Mr. Greenberg is a nominee for director of GSE. Joseph Leven has been Vice President of the Company since September 1998; Vice President of Operations of Five Star since 1995 and since 1976 has held various managerial positions with Five Star. Mr. Leven is the nephew of Mr. Grad. Cindy Krugman has been Vice President and Controller of the Company since September 1998, and Controller of Five Star since 1985. Ms. Krugman is the daughter of Mr. Grad. At each annual meeting of stockholders, directors are elected to serve for a term of office to expire at the next annual meeting of stockholders after their election. Under the Company's bylaws, the number of directors constituting the entire Board of Directors shall be fixed, from time to time, by the directors then in office, who may decrease or increase the number of directors by majority action without soliciting stockholder approval. The Company does not currently pay compensation to directors for service in that capacity. Item 1. Executive Compensation is Hereby Amended and Restated in its Entirety as Follows: Executive Compensation The following table sets forth the aggregate compensation paid or accrued to the Company's executive officer for the services rendered in 1998. SUMMARY COMPENSATION TABLE
Long-Term Compensation Awards Annual Compensation Stock All Other Salary Bonus Options Compensation Name and Principal Position Year ($) ($) (#) ($) - --------------------------- ---- ------- ----- ------------ ------------ Richard T. Grad 1998 47,594(1) -0- - 1,943(2) President, Chief Executive Officer - ------------------
(1) Mr. Grad became the Chief Executive Officer of the Company effective Septmember 30, 1998 and the above compensation relates to the period September 30, 1998 through December 31, 1998. (2) Includes $911 as a matching contribution made by the Company to the 401(k) Savings Plan and $1,032 for Group Term Life Insurance paid by the Company for the period September 30, 1998 though December 31, 1998. Option Grants in 1998 No options were granted in 1998 to the named executive officer pursuant to the 1994 Stock Option Plan of the Company. Item 12. Security Ownership of Certain Beneficial Owners and Management is Hereby Amended and Restated in its Entirety as Follows: PRINCIPAL STOCKHOLDERS The following table sets forth certain information as of April 15, 1999, with respect to shares of Common Stock which are beneficially owned by (a) each person who owns more than 5% of the Company's Common Stock, (b) each director of the Company, (c) each of the persons named in the Summary Compensation Table and (d) all officers and directors of the Company as a group. Beneficial Ownership Number of Percentage Name and Address Common Shares of Class GP Strategies Corporation 4,830,104(1) 37% 9 West 57th Street New York, NY 10019 Jerome I. Feldman 5,424,740(2) 41 Richard T. Grad 224,883(3) 1.7 Charles Dawson 207,308(3) 1.6 Bruce Sherman 207,308(3) 1.6 Steven Schilit 207,838(3) 1.6 Martin M. Pollak 592,953(4) 4.4 Scott N. Greenberg 129,150(3) * All directors and officers as a group (9persons) 2,457,777(3) 17.6 - -------------- * The number of shares owned is less than one percent of the outstanding shares of Common Stock. (1) GP Strategies has entered into a Voting Agreement which limits its ability, to a certain degree, to control the affairs of the Company. See "Certain Relationships and Related Transactions - GP Strategies' Capital Stock Interest." (2) Includes (i) 4,830,104 shares of Common Stock beneficially owned by GP Strategies, (ii) 93,463 shares of Common Stock held by Mr. Feldman (iii), 1,173 shares of Common Stock which are held by certain members of Mr. Feldman's family and (iv) 500,000 shares of Common Stock issuable upon exercise of currently exercisable stock options held by Mr. Feldman. Mr. Feldman disclaims beneficial ownership of the shares owned by GP Strategies and his family. (3) Includes (i) 194,883 and 4,150 shares of Common Stock held by Messrs. Grad and Greenberg, respectively, 192,308 shares of Common Stock held by each of Messrs. Dawson, Sherman, and Schilit and 1,223,855 shares for all executives and officers as a group, (ii) 30,000 and 125,000 shares of Common Stock issuable upon exercise of currently exercisable stock options held by Messrs. Grad and Greenberg, respectively, 15,000 shares of Common Stock issuable upon exercise of currently exercisable stock options held by each of Messrs. Dawson, Sherman , Schilit and (iii) 975,000 shares for all executives and officers as a group. (4) Includes (i) 85,204 shares of Common Stock held by Mr. Pollak (ii), 6,132 shares of Common Stock which are held by Mr. Pollak's wife, (iii) 1,617 shares of Common Stock which are held by a foundation in which Mr. Pollak is a Trustee and (iv) 500,000 shares of Common Stock issuable upon exercise of currently exercisable stock options held by Mr. Pollak. Mr. Pollak disclaims beneficial ownership of the shares owned by his wife and the foundation. Item 13. Certain Relationships and Related Transactions is Hereby Amended and Restated in its Entirety as follows: Transactions with GP Strategies On September 30, 1998, a newly formed wholly owned subsidiary of the Company, Five Star purchased from JL Distributors, Inc. ("JL"), a wholly owned subsidiary of GPS, substantially all of the operating assets of JL. The assets were purchased for approximately $16,476,000 in cash and a $5,000,000 unsecured senior note. The unsecured senior note payable to GPS bears interest at the rate of 8% payable quarterly, with the principal due on September 30, 2003. As of January 1, 1994, the Company and GPS entered into a three-year Management Services Agreement pursuant to which certain direct and indirect services will be provided to the Company by GPS. The services to be provided by GPS include legal, tax, accounting, insurance and employee benefit administration services. The Company pays GPS a fee of $10,000 per month during the term of the agreement. The Agreement is automatically renewable for successive one-year terms. The Agreement was renewed for 1998 and 1999. Five Star leases 250,000 square feet in New Jersey and 110,000 square feet in Connecticut. Five Star's operating lease for the New Jersey facility expires in March 2007 and the annual rent is $885,731. Five Star's lease for the Connecticut facility expires in February 2001 and its annual rent is $379,780. The Company's New York office space is provided by GP Strategies pursuant to the Management Services Agreement. GPS has guaranteed the leases for two of the Five Star's warehouses in New Jersey and Connecticut totaling approximately $886,000 and $380,000 per year through 2007 and 2001, respectively. GPS holds approximately shares of Common Stock, representing approximately 37% of the Common Stock issued and outstanding on April 15, 1999 (without taking into account outstanding options and warrants). The Company's by-laws do not provide for cumulative voting. GPS has entered into a Voting Agreement pursuant to which it has agreed that, for a period of three years from August 31, 1998 it will vote its shares of Common Stock (i) such that not more than 50% of the Company's directors will be officers or directors of GPS; and (ii) on all matters presented to a vote of stockholders, other than the election of directors, in the same manner and in the same proportion as the remaining stockholders of the Company vote. GPS. See "Principal Stockholders." SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN DRUG COMPANY Richard T. Grad President and Chief Executive Officer Dated: April 26, 1999 -----END PRIVACY-ENHANCED MESSAGE-----