SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
MASTEC, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the 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:
[ ] 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:
[MASTEC LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1998
To our stockholders:
The 1998 Annual Meeting of Stockholders of MasTec, Inc. will be held on
Thursday, May 14, 1998, at 9:30 A.M., local time, at the offices of the
Company, 3155 N.W. 77th Avenue, Miami, Florida. At the Annual Meeting,
stockholders will be asked to vote on the following proposals:
/bullet/ The election of two Class III directors for terms expiring in
2001;
/bullet/ The reincorporation of the Company from Delaware to Florida; and
/bullet/ Such other business as may properly be brought before the Annual
Meeting.
Each of these proposals is discussed more fully in the Proxy Statement
accompanying this notice. Only stockholders of record at the close of business
on March 20, 1998 are entitled to vote at the Annual Meeting. Stockholders,
including those whose shares are held by a brokerage firm or in "street" name,
will be asked to verify their stockholder status as of the record date upon
entrance to the meeting. Accordingly, stockholders (or their legal
representatives) attending the Annual Meeting should bring some form of
identification to the meeting evidencing stockholder status as of the record
date and, in the case of a person attending the meeting on behalf of a
stockholder, the representative's right to represent the stockholder at the
meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure that your stock is represented at the meeting in
case you are not personally present, you are requested to mark, sign, date and
return the enclosed proxy card as promptly as possible in the envelope
provided. YOU MAY NOT VOTE YOUR SHARES OF STOCK AT THE ANNUAL MEETING UNLESS
YOU ARE PRESENT IN PERSON OR REPRESENTED BY PROXY. Stockholders attending the
Annual Meeting may vote in person even if they have previously returned a proxy
card.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ NANCY J. DAMON
----------------------------------
Nancy J. Damon
Corporate Secretary
Miami, Florida
April 14, 1998
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1998
----------------
GENERAL
The Board of Directors of MasTec, Inc. (the "Company") is furnishing this
Proxy Statement to solicit proxies for use at the 1998 Annual Meeting of
Stockholders of the Company to be held at the offices of the Company, 3155 N.W.
77th Avenue, Miami, Florida 33122-1205, on Thursday, May 14, 1998, at 9:30
A.M., local time.
At the Annual Meeting, stockholders will be requested to vote upon the
following matters, each of which is described in greater detail elsewhere in
this Proxy Statement:
/bullet/ The election of two Class III directors for terms expiring in
2001;
/bullet/ The reincorporation of the Company from Delaware to Florida; and
/bullet/ Such other business as may properly be brought before the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES
FOR ELECTION AS A CLASS III DIRECTOR SET FORTH IN THIS PROXY STATEMENT AND FOR
THE PROPOSAL TO REINCORPORATE THE COMPANY FROM DELAWARE TO FLORIDA.
It is anticipated that this Proxy Statement and accompanying proxy and
other materials will be mailed on or about April 14, 1998 to stockholders of
record on March 20, 1998. Only stockholders of record at the close of business
on March 20, 1998 are entitled to vote at the Annual Meeting. If you are not
present in person at the Annual Meeting, your shares can be voted only when
represented by proxy. The shares represented by your proxy will be voted in
accordance with your instructions only if you properly complete, sign, date and
return the accompanying proxy card to the Secretary of the Company prior to the
Annual Meeting. If no direction is given on a proxy, the shares represented by
the proxy will be voted for the election of all nominees for director, for the
proposal to reincorporate the Company from Delaware to Florida, and in the
discretion of the holder of the proxy on all other matters that may properly
come before the Annual Meeting. A proxy given pursuant to this solicitation may
be revoked at any time prior to its exercise by written notice delivered to the
Secretary of the Company, by executing and delivering to the Secretary a proxy
with a later date, or by attending the Annual Meeting and voting in person.
Attendance at the Annual Meeting will not, in itself, constitute revocation of
a proxy.
The Company's only class of voting securities is its Common Stock, $.10
par value ("Common Stock"). At March 20, 1998, there were 27,736,542 shares of
Common Stock outstanding, which is the
only class of capital stock of the Company outstanding, and 4,752 record
stockholders, which does not include stockholders whose shares are held by a
brokerage firm or otherwise in "street name." On February 28, 1997, the Company
paid a stock dividend of one share of Common Stock for every two shares of
Common Stock outstanding to stockholders of record on February 3, 1997. All
share amounts described in this Proxy Statement have been adjusted to account
for the stock dividend.
Each share of Common Stock entitles the holder to one vote on all matters
properly brought before the Annual Meeting. The presence, in person or by
proxy, of a majority of the shares entitled to vote is necessary to constitute
a quorum at the Annual Meeting. Directors are elected by a plurality of the
shares of Common Stock voting in person or by proxy at the Annual Meeting, with
the directors receiving the highest number of votes being elected to the Board
of Directors. The proposal to reincorporate the Company in Florida requires the
affirmative vote of a majority of all the issued and outstanding shares of
Common Stock.
Shares that are entitled to vote but that are not voted at the direction
of the beneficial owner ("abstentions"), shares represented by proxies or
ballots that are marked "withhold authority" with respect to the election of
any nominee for election as a director, and votes withheld by brokers in the
absence of instruction from beneficial holders ("broker nonvotes") will be
counted for the purpose of determining whether there is a quorum for the
transaction of business at the Annual Meeting. In determining whether a nominee
for director has received a plurality of the shares voted, withheld votes and
broker nonvotes will be disregarded and will have no effect on the outcome of
the vote. Because, however, the proposal to reincorporate the Company in
Florida requires the affirmative vote of all the issued and outstanding shares
of Common Stock, abstentions and broker nonvotes will have the same effect as a
vote against the proposal.
Jorge Mas, the Company's Chairman of the Board, President and Chief
Executive Officer, and members of his family, own in the aggregate more than
50% of the outstanding Common Stock of the Company. Jorge Mas has informed the
Company that he and his family members intend to vote their shares of Common
Stock in favor of the election of the nominees for election as Class III
directors and for the approval of the proposal to reincorporate in Florida,
thus assuring their election and passage.
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ELECTION OF DIRECTORS
The first matter that stockholders will be asked to vote upon at the
Annual Meeting is the election of two Class III directors for terms expiring at
the annual meeting of stockholders in the year 2001. The Board of Directors
currently is comprised of five directors elected in three classes, with two
Class I, one Class II, and two Class III directors. Directors in each class
hold office for three-year terms. The terms of the classes are staggered so
that the term of one class terminates each year. The terms of the current Class
III directors expire at the Annual Meeting; if elected, the nominees for Class
III directors will serve until the annual stockholders meeting in 2001. The
terms of the Class I directors expire at the annual stockholders meeting in
1999 and the terms of the Class II directors expire at the annual stockholders
meeting in 2000.
The following individuals have been nominated by the Nominating Committee
of the Board of Directors for election as the Class III directors to be elected
at the Annual Meeting:
/bullet/ Arthur B. Laffer, a member of the Board of Directors since 1994;
and
/bullet/ Jose S. Sorzano, a member of the Board of Directors since 1994.
Additional background information regarding each of these nominees is
provided below. The Company has no reason to believe that any of these nominees
will refuse or be unable to serve as a director if elected; however, if any of
the nominees is not able to serve, each proxy that does not direct otherwise
will be voted for a substitute nominee designated by the Board of Directors.
The election of directors requires the affirmative vote of a plurality of
the shares of Common Stock voting in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES NAMED
ABOVE. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED
FOR THE ELECTION OF EACH OF THE NOMINEES FOR ELECTION AS A CLASS III DIRECTOR
NAMED ABOVE.
INFORMATION AS TO NOMINEES AND OTHER DIRECTORS
NOMINEES FOR CLASS III DIRECTOR
ARTHUR B. LAFFER, 57, has been a member of the Board of Directors since
March 1994. Mr. Laffer has been Chairman of the Board of Directors of Laffer
Associates, an economic research and financial consulting firm, since 1979;
Chief Executive Officer, Laffer Advisors Inc., an investment advisor and
broker-dealer, since 1981; and Chairman of the Board of Directors, Calport
Asset Management, a money management firm, since 1992. Mr. Laffer is a director
of U.S. Filter Corporation, Nicholas Applegate mutual funds, and Coinmach
Laundry Corporation.
JOSE S. SORZANO, 57, has been a member of the Board of Directors since
October 1994. Mr. Sorzano has been Chairman of the Board of Directors of The
Austin Group, Inc., an international corporate consulting firm, since 1989. Mr.
Sorzano was also Special Assistant to the President for National Security
Affairs from 1987 to 1988; Associate Professor of Government, Georgetown
University, from 1969 to 1987; President, Cuban American National Foundation,
from 1985 to 1987; and Ambassador and U.S. Deputy to the United Nations from
1983 to 1985.
CLASS I DIRECTORS
JORGE MAS, 35, has been President, Chief Executive Officer and a director
of the Company since March 1994 and was elected Chairman of the Board of
Directors in January 1998. Prior to that time, Mr. Mas was President and Chief
Executive Officer of Church & Tower, Inc., one of the Company's principal
operating subsidiaries. In addition, Mr. Mas is the Chairman of the Board of
Directors of Neff Corporation, an equipment sales and leasing company, Atlantic
Real Estate Holding Corp., a real estate holding company, U.S. Development
Corp., a real estate development company, and Santos Capital,
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Inc., a merchant banking firm, all private companies controlled by Mr. Mas, and
during all or a portion of the past five years, has served as the President and
Chief Executive Officer of these corporations.
JOEL-TOMAS CITRON, 35, was elected to the Board of Directors in January
1998. Mr. Citron has been the managing partner of Triscope Capital LLC, a
private investment partnership, since January 1998. In addition, Mr. Citron has
been Chairman of the United States subsidiary of Proventus AB, a privately held
investment company based in Stockholm, Sweden, since 1992.
CLASS II DIRECTOR
ELIOT C. ABBOTT, 48, has been a member of the Board of Directors since
March 1994. Since February 1, 1997, Mr. Abbott has been a partner in the Miami
law firm of Kluger Peretz Kaplan Berlin, P.A. From October 1, 1995 to January
31, 1997, Mr. Abbott was a member of the New York law firm of Kelley Drye &
Warren. From 1976 until September 30, 1995, Mr. Abbott was a stockholder in the
Miami law firm of Carlos & Abbott.
OTHER INFORMATION REGARDING THE BOARD OF DIRECTORS
BOARD AND COMMITTEE MEETINGS
During 1997, the Board of Directors met or acted by unanimous written
consent on 11 occasions. Each of the directors attended at least 75% of the
aggregate number of Board meetings and meetings of committees of which such
director is a member.
There are six standing committees of the Board of Directors: the Audit
Committee, the Executive Committee, the Compensation and Stock Option
Committee, the Nominating Committee, the Special Transactions Committee and the
Special Committee for the 1997 Annual Incentive Compensation Plan (the "Annual
Compensation Plan").
The Audit Committee is composed of Mr. Laffer, who serves as Chairman,
Messrs. Abbott and Sorzano, and Mr. Citron beginning in 1998. The Audit
Committee is charged, among other things, with:
/bullet/ Reviewing and recommending to the Board of Directors the independent
auditors to be selected to audit the financial statements of the
Company;
/bullet/ Reviewing the scope of the proposed annual audit for the current
year and the audit procedures to be applied, including approving the
annual audit fee proposal from the independent auditors;
/bullet/ Reviewing the completed audit, including any comments or
recommendations by the independent auditors, and monitoring the
implementation of any recommendations adopted by the committee;
/bullet/ Reviewing the adequacy and effectiveness of the Company's accounting
and financial controls;
/bullet/ Reviewing the internal audit function of the Company; and
/bullet/ Investigating any matter brought to its attention within the scope
of its duties, including retaining independent counsel, accountants
and others to assist it in its investigations.
During 1997, the Audit Committee met on four occasions.
The Executive Committee is composed of Jorge Mas, who serves as Chairman,
and Messrs. Abbott and Laffer. The principal function of the Executive
Committee is to act for the Board of Directors when action is required between
full Board meetings. During 1997, the Executive Committee acted by unanimous
written consent four times.
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The Compensation and Stock Option Committee (the "Compensation Committee")
is composed of Mr. Laffer, who serves as Chairman, Mr. Sorzano, and Mr. Citron
beginning in 1998. The Compensation Committee is charged with determining
compensation packages for the Chief Executive Officer and the Senior Vice
Presidents of the Company, establishing salaries, bonuses and other
compensation for the Company's other officers, administering the Company's
Annual Compensation Plan, 1997 Non-Qualified Employee Stock Purchase Plan, 1994
Stock Incentive Plan and 1994 Stock Option Plan for Non-Employee Directors
(collectively, the "Plans") and recommending to the Board of Directors changes
to the Plans. During 1997, the Compensation Committee met on four occasions.
The Nominating Committee is composed of Mr. Abbott, who serves as
Chairman, and Mr. Mas. The Nominating Committee, which met once during 1997,
recommends to the Board of Directors candidates for election to the Board of
Directors. The Nominating Committee considers candidates recommended by the
stockholders pursuant to written applications submitted to the Secretary.
Stockholder proposals for nominees should include biographical and other
information regarding the proposed nominee sufficient to comply with applicable
disclosure rules and a statement from the stockholder as to the qualifications
and willingness of the candidate to serve on the Company's Board of Directors.
The Special Transactions Committee is composed of Mr. Abbott, who serves
as Chairman, and Messrs. Laffer and Sorzano. The primary function of the
Special Transactions Committee, which acted once by unanimous written consent
during 1997, is to review related party transactions between the Company and
any officer, director or other affiliate of the Company. This committee was
disbanded in 1998. Future related party transactions between the Company and
any officer, director or other affiliate of the Company will be reviewed by the
non-employee directors or a separately constituted committee.
The Special Committee for the Annual Compensation Plan is composed of Mr.
Laffer, who serves as Chairman, and Mr. Sorzano. The primary function of the
Special Committee, which acted once by unanimous written consent during 1997,
is to oversee the Annual Compensation Plan including the establishment of
performance goals and awards under the Plan.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of the Company or of any
subsidiary are paid an annual retainer of $20,000, payable in Common Stock. In
addition, under the 1994 Stock Option Plan for Non-Employee Directors,
non-employee directors are eligible to receive options to purchase up to 15,000
shares of Common Stock annually at an exercise price equal to the fair market
value of the Common Stock on the date of grant.
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PROPOSAL TO REINCORPORATE THE COMPANY
FROM DELAWARE TO FLORIDA
The second matter that stockholders will be asked to vote upon at the
Annual Meeting is the reincorporation of the Company from Delaware to Florida.
On March 19, 1998, the Board of Directors approved a Plan and Agreement of
Merger by which the Company will be merged into a wholly owned subsidiary
organized under Florida law (the "Subsidiary") with the Subsidiary becoming the
surviving corporation (the "Surviving Corporation"). Stockholders are being
requested at the Annual Meeting to consider and approve the Plan and Agreement
of Merger. The full text of the Plan and Agreement of Merger is attached as
Appendix "A". The description set forth below is a summary of the Plan and
Agreement of Merger, does not purport to be complete, and is subject to and
qualified in its entirety by reference to the text of the Plan and Agreement of
Merger itself. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote in person or by proxy at
the Annual Meeting is necessary for approval of the Plan and Agreement of
Merger.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PLAN AND
AGREEMENT OF MERGER. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY
WILL BE VOTED FOR THE PROPOSAL TO REINCORPORATE THE COMPANY FROM DELAWARE TO
FLORIDA.
REASON FOR PROPOSED MERGER
The Company is requesting stockholder approval of the Plan and Agreement
of Merger to effect the change of the Company's state of incorporation from
Delaware to Florida. The primary reason for the change in the state of
incorporation is to achieve cost savings to the Company. Under the Delaware
General Corporation Law (the "DGCL"), Delaware corporations are required to pay
a franchise tax. The annual franchise tax payable by the Company to Delaware
for 1998 absent the change of domicile will be approximately $150,000. By
contrast, corporations organized under the Florida Business Corporation Act
(the "FBCA") do not pay annual franchise taxes to the State of Florida but
instead pay a nominal fee of $200 in connection with the filing of annual
reports.
If the Plan and Agreement of Merger is approved and the Company is merged
with and into the Subsidiary, the Company will be required to pay the pro-rata
portion of the 1998 Delaware franchise tax applicable to the portion of 1998 in
which it existed as a Delaware corporation. The Company also will incur certain
one-time costs in connection with the implementation of the merger, which costs
are not expected to be material.
In addition to the proposed cost savings, the Board believes
reincorporation of the Company from Delaware to Florida is consistent with the
Company's philosophy of maintaining a positive corporate presence in Florida.
The Company maintains its principal executive and administrative offices as
well as the offices of several of its principal operating subsidiaries in
Miami, Florida.
The Board believes that the FBCA will meet the Company's business needs,
and that the DGCL does not offer corporate law advantages sufficient to warrant
payment of the franchise tax burden that results from maintaining a Delaware
domicile. The FBCA is a modern, comprehensive and flexible statute based on the
Revised Model Business Corporation Act. For the most part, it provides the
flexibility in management of a corporation and in the conduct of various
business transactions that is characteristic of the DGCL.
NO CHANGE IN NAME, BUSINESS OR PHYSICAL LOCATION
The proposed merger will effect a change in the legal domicile of the
Company and other changes of a legal nature, the most significant of which are
described in this Proxy Statement. However, the merger will not result in any
change in the name, business, management, location of the principal executive
officers, assets, liabilities or net worth of the Company (other than as a
result of the costs incident to the merger, which are immaterial). The
Company's employee benefit plans, including the
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Plans, will be continued after the merger by the Surviving Corporation upon the
same terms and conditions. The management of the Company, including all
directors and officers, will remain the same after the merger and will assume
identical positions with the Surviving Corporation. It also is anticipated that
trading in the Company's Common Stock will continue uninterrupted on the New
York Stock Exchange.
A vote for approval and adoption of the Plan and Agreement of Merger will
constitute approval of the assumption by the Surviving Corporation of the Plans
and outstanding stock option agreements thereunder, and the substitution of
shares of the Surviving Corporation's Common Stock as the security to be
received upon exercise of options, if any, granted or to be granted under the
Plans.
THE SUBSIDIARY
The Subsidiary is a corporation which was incorporated under the FBCA on
April 9, 1998, exclusively for the purpose of merging with the Company in
accordance with the Plan and Agreement of Merger. Prior to the merger, the
Subsidiary had no material assets or liabilities and did not carry on any
business.
The Subsidiary's Articles of Incorporation and Bylaws are substantially
identical to the Company's current Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws, except for statutory references
necessary to conform to the FBCA and other differences attributable to the
differences between the FBCA and the DGCL. A copy of the Subsidiary's Articles
of Incorporation is attached as Appendix "B".
THE PLAN AND AGREEMENT OF MERGER
The Plan and Agreement of Merger provides that the Company will merge into
and with the Subsidiary, with the Subsidiary then becoming the Surviving
Corporation. The Surviving Corporation will assume all assets and liabilities
of the Company, including contractual obligations and obligations under the
Company's outstanding indebtedness. The existing Board of Directors and
officers of the Company will become the Board of Directors and officers of the
Surviving Corporation for identical terms of office. The Subsidiary will also
assume the name of "MasTec, Inc." in the merger so that the Surviving
Corporation will operate under the same name as the Company.
Upon the effective date of the merger, each share of the Company's Common
Stock issued and outstanding will automatically be converted into one
fully-paid and nonassessable share of the Common Stock, $0.10 par value per
share, of the Surviving Corporation. In addition, each currently outstanding
stock option automatically will be converted into an option to purchase the
same number and series of Common Stock of the Surviving Corporation at the same
option exercise price per share and upon the same terms and subject to the same
conditions as set forth in the option. The Company does not intend to issue new
stock certificates to stockholders of record upon the effective date of the
merger. Instead, each certificate representing issued and outstanding shares of
Common Stock of the Company immediately prior to the effective date of the
merger will continue to evidence ownership of the shares of Common Stock of the
Surviving Corporation after the effective date of the merger. Each share of the
Company's Common Stock converted into one share of Common Stock of the
Surviving Corporation will be fully paid and nonassessable.
It is anticipated that the Common Stock of the Company will continue to be
listed on the New York Stock Exchange under its current symbol without
interruption and that delivery of existing stock certificates of the Company
will constitute "good delivery" of shares of the Surviving Corporation in
transactions on the New York Stock Exchange subsequent to the merger.
STOCKHOLDERS OF THE COMPANY NEED NOT EXCHANGE THEIR EXISTING STOCK
CERTIFICATES FOR STOCK CERTIFICATES OF THE SURVIVING CORPORATION. HOWEVER, ANY
STOCKHOLDERS DESIRING NEW STOCK CERTIFICATES
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REPRESENTING COMMON STOCK OF THE SURVIVING CORPORATION MAY SUBMIT THEIR
EXISTING STOCK CERTIFICATES REPRESENTING COMMON STOCK OF THE COMPANY TO FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, THE TRANSFER AGENT OF THE COMPANY AND
THE SURVIVING CORPORATION, AND OBTAIN NEW CERTIFICATES.
COMPARISON OF THE RIGHTS OF HOLDERS OF THE COMPANY'S COMMON STOCK AND THE
SURVIVING CORPORATION'S COMMON STOCK
The Company is incorporated in the State of Delaware, and the Surviving
Corporation is incorporated in the State of Florida. Stockholders of the
Company, whose rights are currently governed by the DGCL and the Certificate of
Incorporation and Bylaws of the Company will, upon consummation of the Plan and
Agreement of Merger, become shareholders of the Surviving Corporation and their
rights will be governed by the FBCA and the Articles of Incorporation and
Bylaws of the Surviving Corporation.
Although it is not practical to compare all of the differences between (a)
Delaware law and the Certificate of Incorporation and Bylaws of the Company and
(b) Florida law and the Articles of Incorporation and Bylaws of the Surviving
Corporation, the following is a summary of certain of those differences which
may significantly affect the rights of the Company's stockholders. This summary
is not intended to be relied upon as an exhaustive list of all such differences
or a complete description of the provisions discussed, and is qualified in its
entirety by reference to the DGCL, the FBCA and the forms of the Articles of
Incorporation and Bylaws of the Surviving Corporation.
DIVIDENDS AND REPURCHASES. Under the FBCA, a corporation may make
distributions to stockholders (subject to any restrictions contained in the
corporation's articles of incorporation) as long as, after giving effect to the
distribution, (a) the corporation will be able to pay its debts as they become
due in the usual course of business and (b) the corporation's total assets will
not be less than the sum of its total liabilities plus (unless the articles of
incorporation permit otherwise) the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distribution. A Florida corporation
may purchase its own shares and, unless otherwise provided in the articles of
incorporation, shares repurchased remain authorized but unissued. However,
pursuant to the FBCA, a corporation's redemption of its own capital stock is
deemed to be a distribution. The Surviving Corporation's articles of
incorporation do not alter these provisions of Florida law.
A Delaware corporation may pay dividends out of "surplus" or, if there is
no surplus, out of net profits for the fiscal year in which the dividend is
declared or for the preceding fiscal year. Surplus is defined as the net assets
of the corporation over the corporation's capital. Under the DGCL, a
corporation may repurchase or redeem its shares only if the capital of the
corporation is not impaired and such repurchase does not impair the
corporation's capital.
SPECIAL MEETINGS. Under Florida law, special meetings of the shareholders
may be called by the Board of Directors or by such persons as may be authorized
by the articles of incorporation or the bylaws. In addition, Florida law
permits the holders of not less than 10% of all votes entitled to be cast on
any issue to be considered at the special meeting (unless a greater percentage,
not to exceed 50%, is specified in the Articles of Incorporation) to call a
special meeting. Under Delaware law, special meetings of the stockholders may
be called by the Board of Directors or by such persons as may be authorized by
the certificate of incorporation or the bylaws. The Company's and the Surviving
Corporation's Bylaws each provide that special meetings may be called by the
Board of Directors or by the President, and must be called by the President or
the Secretary upon the request in writing of the holders of record of at least
25% of the issued and outstanding shares of stock entitled to vote at such
meeting.
QUORUM FOR SHAREHOLDER MEETINGS. Under the FBCA, unless otherwise provided
in a corporation's articles of incorporation (but not its bylaws), a majority
of shares entitled to vote on a matter
8
constitutes a quorum at a meeting of shareholders, but in no event may a quorum
consist of less than one-third of the shares entitled to vote on such matter.
The Surviving Corporation's Articles of Incorporation do not include a
provision altering the shareholder quorum requirement.
The DGCL is similar to the FBCA, except that under the DGCL a
corporation's certificate of incorporation or bylaws may specify the percentage
of votes which constitutes a quorum at a meeting of stockholders, but in no
event may a quorum consist of less than one-third of the shares entitled to
vote. The Company's Bylaws provide that a quorum exists if a majority of the
voting power entitled to vote is present in person or by proxy at a meeting.
SHAREHOLDER VOTING REQUIREMENTS. Under both the FBCA and the DGCL,
directors are generally elected by a plurality of the votes cast by the
shareholders entitled to vote at a shareholders' meeting at which a quorum is
present. With respect to matters other than the election of directors, unless a
greater number of affirmative votes is required by the FBCA or a Florida
corporation's articles of incorporation (but not its bylaws), if a quorum
exists, action on any matter generally is approved by the shareholders if the
votes cast by the holders of the shares represented at the meeting and entitled
to vote on the matter favoring the action exceed the votes cast opposing the
action. In the case of a merger, consolidation, or a sale, lease or exchange of
all or substantially all of the assets of a Florida corporation, except in
limited circumstances in which no shareholder vote is required, the affirmative
vote of the holders of a majority of the issued and outstanding shares entitled
to vote is required under the FBCA. The Surviving Corporation's Articles of
Incorporation do not include a provision requiring a greater vote on any matter
than required by the FBCA, except upon mergers, consolidations and certain
other corporate transactions and upon amendments or alterations to the
Surviving Corporation's Articles of Incorporation and its Bylaws, as discussed
below.
Under the DGCL, and unless otherwise provided by the DGCL or a Delaware
corporation's certificate of incorporation or bylaws, if a quorum exists,
action on a matter is approved by the affirmative vote of a majority of the
shares represented at a meeting and entitled to vote on the matter. In the case
of a merger, the affirmative vote of the holders of a majority of the issued
and outstanding shares entitled to vote is required by the DGCL. Accordingly,
under the DGCL abstentions have the same effect as votes against a matter. The
Company's Certificate of Incorporation and its Bylaws do not contain a
provision requiring a greater vote on any matter than required by the DGCL,
except upon mergers, consolidations and certain other corporate transactions
and upon amendments or alterations to the Company's Certificate of
Incorporation and its Bylaws, as discussed below.
MERGER, CONSOLIDATION AND SALES OF ASSETS. The FBCA and the DGCL each
provide that a merger, consolidation or sale of all or substantially all of the
assets of a corporation requires (a) approval by the Board of Directors and (b)
the affirmative vote of a majority of the outstanding stock of the corporation
entitled to vote thereon. The FBCA allows the Board of Directors or the
articles of incorporation and the DGCL allows the certificate of incorporation
or bylaws to establish a higher vote requirement. The Surviving Corporation's
Articles of Incorporation and the Company's Certificate of Incorporation each
provide that, with certain exceptions, the affirmative vote or consent of the
holders of at least 80% of the shares of such company's stock entitled to vote
for the election of directors is required to approve a merger, consolidation,
or a sale, lease or exchange of all or substantially all of the assets of such
company to any person who, on the record date for the determination of
stockholders entitled to vote thereon, is the beneficial owner of 10% or more
of such company's outstanding shares of stock entitled to vote for the election
of directors. This super-majority voting requirement does not apply to (a) any
merger or consolidation in which the Board of Directors of such company has by
resolution approved a memorandum of understanding with such other corporation
with respect to and substantially consistent with such transaction prior to the
time such other person became the beneficial owner of more than 10% of the
outstanding shares of the company's stock entitled to vote for the election of
directors or (b) any merger, consolidation with or sale or exchange of all or
substantially all of the assets of such company to any corporation where the
majority of the outstanding shares of all classes of stock entitled to vote for
the election of directors is owned of record or beneficially by such company
and/or any one or more of its subsidiaries.
9
AFFILIATED TRANSACTIONS AND CONTROL SHARE ACQUISITIONS. The FBCA provides
that an "affiliated transaction" (as defined in the FBCA) with an "interested
shareholder" must generally be approved by the affirmative vote of the holders
of two-thirds of the voting shares, other than the shares owned by the
interested shareholder. The transactions covered by the statute include, with
certain exceptions, (a) mergers and consolidations to which the corporation and
the interested shareholder are parties, (b) sales or other dispositions of
substantial amounts of the corporation's assets to the interested shareholder,
(c) issuances by the corporation of substantial amounts of its securities to
the interested shareholder, (d) the adoption of any plan for the liquidation or
dissolution of the corporation proposed by or pursuant to an arrangement with
the interested shareholder, (e) any reclassification of the corporation's
securities which has the effect of substantially increasing the percentage of
the outstanding voting shares of the corporation beneficially owned by the
interested shareholder, and (f) the receipt by the interested shareholder of
certain loans or other financial assistance from the corporation. An interested
shareholder is any person who is the beneficial owner of 10% or more of the
outstanding voting stock of the corporation. The two-thirds approval
requirement does not apply if, among other things: (a) the transaction has been
approved by a majority of the corporation's disinterested directors (as defined
in the statute), (b) the interested shareholder has been the beneficial owner
of at least 80% of the corporation's outstanding voting shares for at least
five years preceding the transaction, (c) the interested shareholder is the
beneficial owner of at least 90% of the outstanding voting shares, (d) the
corporation has not had more than 300 shareholders of record at any time during
the preceding three years, or (e) certain fair price and procedural
requirements are satisfied. These restrictions do not apply if a corporation's
articles of incorporation or an amendment to its articles of incorporation or
bylaws approved by the affirmative vote of the holders of a majority of the
outstanding voting shares of the corporation (other than those held by the
interested shareholder) contain a provision expressly electing not to be
governed by these rules.
Under the DGCL, a corporation may not engage in any "business combination"
(as defined in the DGCL) with an "interested stockholder" for three years after
such stockholder becomes an interested stockholder. An interested stockholder
is any person who is the beneficial owner of 15% or more of the outstanding
voting stock of the corporation. These business combinations are substantially
the same as the "affiliated transactions" described above with respect to the
FBCA. A corporation may enter into a business combination with an interested
stockholder if (a) the Board of Directors approves either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder before the date on which the stockholder becomes an
interested stockholder, (b) upon consummation of the transaction resulting in
the stockholder reaching the 15% threshold, the stockholder owned 85% of the
outstanding voting shares at the time the transaction commenced, excluding
those shares held by directors who are also officers or employee stock plans in
which the participants do not have the right to determine confidentially
whether shares subject to the plan will be tendered in a tender or exchange
offer, or (c) on or subsequent to becoming an interested stockholder, the
business combination is approved by the Board of Directors and is authorized at
a meeting by the affirmative vote of at least two-thirds of the outstanding
voting stock not owned by the interested stockholder. These restrictions do not
apply if the corporation's original certificate of incorporation or an
amendment to its certificate of incorporation or bylaws approved by a majority
of the shares entitled to vote thereon contains a provision expressly electing
not to be governed by these rules, or if the corporation does not have a class
of stock (a) listed on a national securities exchange, (b) authorized for
quotation on the Nasdaq Stock Market, or (c) held of record by more than 2,000
stockholders unless any of the foregoing results from the actions of the
interested stockholder.
Neither the Company's Certificate of Incorporation or the Surviving
Corporation's Articles of Incorporation contain provisions electing to be
exempt from these provisions. However, because the definition of "disinterested
director" under the FBCA affiliated transaction statute could be interpreted in
a manner that would result in a finding that none of the Surviving
Corporation's directors would be deemed disinterested directors under the
statute, the Surviving Corporation has, as permitted by the FBCA, specified
that a "disinterested director" for purposes of the statute is any member of
the Board of Directors of the Surviving Corporation on the date of the merger
(other than any member who is an "interested shareholder" ) and any member of
the Board of Directors of the Surviving Corporation who
10
was recommended for election by, or was elected to fill a vacancy and received
the affirmative vote of, a majority of the disinterested directors then on the
Board.
The FBCA also contains a control share acquisition statute which provides
that a person who acquires shares in an issuing public corporation in excess of
certain specified thresholds will generally not have any voting rights with
respect to such shares unless such voting rights are approved by a majority of
the shares entitled to vote, excluding interested shares. The thresholds
specified in the FBCA are the acquisition of a number of shares representing:
(a) 20% or more, but less than 33% of all voting power of the corporation, (b)
33% or more but less than a majority of all voting power of the corporation or
(c) a majority or more of all voting power of the corporation. This statute
does not apply if, among other things, the acquisition (a) is approved by the
corporation's board of directors, (b) is pursuant to a pledge or other security
interest created in good faith and not for the purpose of circumventing the
statute, (c) pursuant to the laws of interstate succession or pursuant to gift
or testamentary transfer, or (d) pursuant to a statutory merger or share
exchange to which the corporation is a party. This statute also does not apply
to acquisitions of shares of a corporation if, prior to the pertinent
acquisition of shares, the corporation's articles of incorporation or bylaws
provide that the corporation shall not be governed by the statute. The
Surviving Corporation's Articles of Incorporation and Bylaws do not opt-out of
this statute. This statute also permits a corporation to adopt a provision in
its articles of incorporation or bylaws providing for the redemption by the
corporation of such acquired shares in certain circumstances. The Surviving
Corporation's Articles of Incorporation and Bylaws do not contain such a
provision. Unless otherwise provided in the corporation's articles of
incorporation or bylaws prior to the pertinent acquisition of shares, in the
event that such shares are accorded full voting rights by the shareholders of
the corporation and the acquiring shareholder acquires a majority of the voting
power of the corporation, all shareholders who did not vote in favor of
according voting rights to such acquired shares are entitled to dissenters'
rights.
Delaware does not have any comparable statutory provision to Florida's
control share acquisition statute.
OTHER CONSTITUENCIES. The FBCA provides that directors of a Florida
corporation, in discharging their fiduciary duties to the corporation, may
consider the social, economic, legal or other effects of corporate action on
the employees, suppliers and customers of the corporation or its subsidiaries
and the communities in which the corporation and its subsidiaries operate, in
addition to the effect on shareholders. Delaware does not have a comparable
statutory provision
REMOVAL OF DIRECTORS. The FBCA provides that the shareholders may remove
one or more directors with or without cause unless the articles of
incorporation provide otherwise. The Surviving Corporation's Articles of
Incorporation provide that a director may only be removed for cause at a
meeting of shareholders and provided the notice of the meeting states that one
of the purposes of the meeting is the removal of the directors. The Surviving
Corporation's Articles further provide that a director may only be removed if
the number of votes cast to remove the director exceed a majority of the shares
entitled to vote for the election of directors.
The DGCL provides that in the case of a corporation, such as the Company,
with a classified board of directors, and unless the corporation's certificate
of incorporation otherwise provides, which the Company's does not, stockholders
may remove any director or the entire board of directors only for cause. Such a
removal may only be effected by a majority vote of the shares entitled to vote
for the election of directors.
DISSENTERS' RIGHTS. Under the FBCA, dissenting shareholders who follow
prescribed statutory procedures are, in certain circumstances, entitled to
appraisal rights in the case of (a) a merger or consolidation; (b) a sale or
exchange of all of substantially all the assets of a corporation; (c)
amendments to the articles of incorporation that adversely affect the rights or
preferences of shareholders; (d) consummation of a plan of share exchange if
the shareholder is entitled to vote on the plan; and (e) the approval of a
control share acquisition pursuant to Florida law. Such rights are not
11
provided when (a) such shareholders are shareholders of a corporation surviving
a merger or consolidation where no vote of the shareholders is required for the
merger or consolidation; or (b) shares of the corporation are listed on a
national securities exchange, designated as a national market security by the
Nasdaq Stock Market or held of record by more than 2,000 shareholders.
Under the DGCL, dissenters' rights are afforded to stockholders who follow
prescribed statutory procedures in connection with a merger or consolidation
(subject to restrictions similar to those provided by the FBCA). Under the
DGCL, there are no appraisal rights in connection with sales of substantially
all the assets of a corporation, reclassifications of stock or other amendments
to the certificate of incorporation which adversely affect a class of stock,
unless specifically provided in the certificate of incorporation. The Company's
Certificate of Incorporation does not provide for dissenters' rights in these
circumstances. Similar to the FBCA , dissenters' rights do not apply to a
stockholder of a Delaware corporation if the stockholder's shares were (a)
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Security Dealers, Inc. or (b) held of record by more than 2,000
stockholders. Notwithstanding the foregoing, however, under the DGCL, a
stockholder does have dissenters' rights with respect to such shares if the
stockholder is required by the terms of the agreement of merger or
consolidation to accept anything for his shares other than (a) shares of stock
of the corporation surviving or resulting from the merger or consolidation, (b)
shares of stock of any other corporation which is so listed or designated or
held of record by more than 2,000 stockholders, (c) cash in lieu of fractional
shares, or (d) any combination of the foregoing.
AMENDMENT TO ARTICLES OR CERTIFICATE. The FBCA and the DGCL generally
provide that an amendment to the articles of incorporation or certificate of
incorporation, as the case may be, must be approved by the Board of Directors
and by the corporation's stockholders. Unless the FBCA, a Florida corporation's
articles of incorporation or the Board of Directors requires a greater vote, an
amendment to a Florida corporation's articles of incorporation generally
requires that the votes cast in favor of the amendment exceed the votes cast
against the amendment. The DGCL provides that a vote to amend the corporation's
certificate of incorporation requires the approval of a majority of the
outstanding stock entitled to vote. The Company's Certificate of Incorporation
and the Surviving Corporation's Articles of Incorporation each provide that the
affirmative vote of the holders of at least 80% of the shares of such company's
stock entitled to vote for the election of directors is required to amend the
provision of the Company's Certificate of Incorporation or the Surviving
Corporation's Articles of Incorporation (as applicable) relating to the removal
of directors and the super-majority voting requirements relating to mergers,
consolidation or other corporate transactions discussed above and the
provisions establishing the foregoing super-majority voting requirement for the
amendment of the Company's Certificate of Incorporation or the Surviving
Corporation's Articles of Incorporation.
AMENDMENTS TO BYLAWS. The FBCA provides that the shareholders, as well as
the directors, may amend the bylaws, unless such power is reserved to the
shareholders by the articles of incorporation or by specific action of the
shareholders. The DGCL provides that the stockholders and, if provided in the
certificate of incorporation, the Board of Directors, are entitled to amend the
bylaws. The Surviving Corporation's Articles of Incorporation will permit the
Board of Directors to amend the bylaws, as is currently permitted under the
Company's Certificate of Incorporation. However, the Company's Certificate of
Incorporation and the Surviving Corporation's Articles of Incorporation each
provide that the affirmative vote of the holders of at least 80% of the shares
of such company's stock entitled to vote for the election of directors is
required to amend the provisions of such company's bylaws relating to the
number, quorum, term, vacancies and removal of members of the Board of
Directors.
LIABILITY OF DIRECTORS. Under the FBCA, a director is not personally
liable for monetary damages to the corporation or any other person for any
statement, vote, decision or failure to act, regarding corporate management or
policy, by a director unless the director breached or failed to perform his
duties as a director and such breach or failure constitutes: (a) a violation of
criminal law unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful, (b)
a transaction from which the director derived an improper personal
12
benefit, (c) a circumstance resulting in an unlawful distribution, (d) in a
proceeding by or in the right of the corporation to procure a judgment in its
favor or by or in the right of a shareholder, conscious disregard for the best
interests of the corporation or willful misconduct, or (e) in a proceeding by
or in the right of one other than the corporation or a shareholder,
recklessness or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety, or property.
The DGCL permits a Delaware corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breaches of fiduciary duty, including conduct which could be characterized as
negligence or gross negligence. The DGCL expressly provides, however, that the
liability for (a) breaches of the director's duty of loyalty, (b) acts or
omissions not in good faith or involving intentional misconduct or knowing
violation of the law, (c) an unlawful distribution, or (d) the receipt of
improper personal benefits cannot be eliminated or limited in this manner. The
DGCL further provides that no such provision will eliminate or limit the
liability of a director for any act or omission occurring prior to the date
when such provision becomes effective. The Company's Certificate of
Incorporation includes a provision eliminating director liability for monetary
damages for breaches of fiduciary duty to the extent permitted by the DGCL.
INDEMNIFICATION. Under both the FBCA and the DGCL, a corporation may
generally indemnify its officers, directors, employees and agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement of any proceedings (other than derivative actions), if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in derivative actions, except that
indemnification may be made only for (a) expenses (including attorneys' fees)
and certain amounts paid in settlement and (b) in the event the person seeking
indemnification has been adjudicated liable, amounts deemed proper, fair and
reasonable by the appropriate court upon application thereto. The FBCA and the
DGCL each provide that to the extent that such persons have been successful in
defense of any proceeding, they must be indemnified by the corporation against
expenses actually and reasonably incurred in connection therewith. The FBCA
also provides that, unless a corporation's articles of incorporation provide
otherwise, if a corporation does not so indemnify such persons, they may seek,
and a court may order, indemnification under certain circumstances even if the
board of directors or shareholders of the corporation have determined that the
persons are not entitled to indemnification.
The Bylaws of the Company and the Bylaws of the Surviving Corporation each
provide that directors and officers and former directors and officers will be
indemnified to the fullest extent permitted by the DGCL or the FBCA, as the
case may be.
SHAREHOLDER INSPECTION OF BOOKS AND RECORDS. Under the FBCA a shareholder
is entitled to inspect and copy the articles of incorporation, bylaws, certain
board and shareholder resolutions, certain written communications to
shareholders, a list of the names and business addresses of the corporation's
directors and officers, and the corporation's most recent annual report during
regular business hours if the shareholder gives at least five business days'
prior written notice to the corporation. In addition, a shareholder of a
Florida corporation is entitled to inspect and copy other books and records of
the corporation during regular business hours if the shareholder gives at least
five business days' prior written notice to the corporation and (a) the
shareholder's demand is made in good faith and for a proper purpose, (b) the
demand describes with particularity its purpose and the records to be inspected
or copied and (c) the requested records are directly connected with such
purpose. The FBCA also provides that a corporation may deny any demand for
inspection if the demand was made for an improper purpose or if the demanding
shareholder has, within two years preceding such demand, sold or offered for
sale any list of shareholders of the corporation or any other corporation, has
aided or abetted any person in procuring a list of shareholders for such
purpose or has improperly used any information secured through any prior
examination of the records of the corporation or any other corporation.
13
The provisions of the DGCL governing the inspection and copying of a
corporation's books and records are generally less restrictive than those of
the FBCA. Specifically, the DGCL permits any stockholder the right, during
usual business hours, to inspect and copy the corporation's stock ledger,
stockholders list and other books and records for any proper purpose upon
written demand under oath stating the purpose thereof.
TREASURY STOCK. A Delaware corporation may reacquire its own issued and
outstanding capital stock, and such capital stock is deemed treasury stock
which is issued but not outstanding. A Florida corporation may also reacquire
its own issued and outstanding capital stock. Under the FBCA, however, all
capital stock reacquired by a Florida corporation is automatically returned to
the status of authorized but not issued or outstanding, and is not deemed
treasury stock.
POSSIBLE DISADVANTAGES OF A CHANGE IN DOMICILE
Despite the belief of the Board of Directors that the proposed merger and
change in domicile is in the best interests of the Company and its
stockholders, stockholders should be aware that Florida corporation law is not
as well developed as Delaware corporation law. The State of Delaware has long
been the leader in adopting, construing and implementing comprehensive,
flexible corporation laws that are conducive to the operational needs of
corporations domiciled in that state. The corporation law of Delaware also is
widely regarded as the most extensive and well-defined body of corporate law in
the United States. Both the legislature and the courts of Delaware have
demonstrated an ability and a willingness to act quickly and effectively to
meet changing business needs. The Delaware judiciary has acquired considerable
expertise in dealing with complex corporate issues and has repeatedly shown its
willingness to accelerate the resolution of such complex corporate legal issues
within the very limited time available to meet the needs of parties engaged in
corporate litigation. It is anticipated that the DGCL will continue to be
interpreted and construed in significant court decisions, thereby lending
predictability to corporate legal affairs.
Florida corporate law, by contrast, is not as well developed and many of
the provisions of the FBCA have not yet received as extensive scrutiny and
interpretation as the DGCL. However, Florida courts often rely on Delaware
decisions to establish their own corporate doctrines, although Delaware
decisions are not binding on Florida courts.
TAX CONSEQUENCES OF THE MERGER
The merger and resulting reincorporation of the Company from Delaware to
Florida will constitute a tax-free reorganization within the meaning of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended. Accordingly, for
federal income tax purposes, no gain or loss will be recognized by stockholders
upon the conversion of the Company's Common Stock into the Surviving
Corporation's Common Stock. Each stockholder whose shares are converted from
the Company's Common Stock into the Surviving Corporation's Common Stock will
have the same basis in his or her Common Stock of the Surviving Corporation as
he or she had in his or her Common Stock of the Company immediately prior to
the effective date of the merger and his or her holding period of the Surviving
Corporation's Common Stock will include the period during which he or she held
the corresponding shares of the Company's Common Stock, provided such
corresponding shares of the Company's Common Stock were held as a capital asset
on the effective date of the merger.
No gain or loss will be recognized by the Company or by the Surviving
Corporation as a result of the merger and reincorporation, and the Surviving
Corporation generally will succeed, without adjustment, to the tax attributes
of the Company. Because the Company is based in Florida, it already is
qualified to transact business in Florida and pays Florida corporate income
tax. Changing the state of incorporation of the Company will not affect the
amount of corporate income and other taxes payable, other than eliminating
liability for the Delaware franchise tax.
NO INFORMATION IS PROVIDED IN THIS PROXY STATEMENT REGARDING THE TAX
CONSEQUENCES, IF ANY, UNDER APPLICABLE STATE, LOCAL OR FOREIGN LAWS,
14
AND EACH STOCKHOLDER IS ADVISED TO CONSULT HIS OR HER PERSONAL ATTORNEY OR TAX
ADVISOR AS TO THE FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE
PROPOSED REINCORPORATION IN VIEW OF THE STOCKHOLDER'S INDIVIDUAL CIRCUMSTANCES.
STOCKHOLDER APPRAISAL RIGHTS
Section 262 of the DGCL provides that any stockholder of a Delaware
corporation who satisfies the requirements of the section and files with the
corporation a written demand for appraisal of his or her shares prior to the
taking of a vote on a proposed merger and who does not vote in favor of the
proposed merger is entitled to an appraisal by the Delaware Court of Chancery
of the fair value of his or her shares of common stock. Section 262, however,
excepts from appraisal rights shares of any class or series of stock that were
listed on the New York Stock Exchange at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger. Because the Company's Common
Stock was so listed, stockholders will not be entitled to appraisal rights
under Section 262.
VOTE REQUIRED
The Plan and Agreement of Merger must be approved by the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote at the Annual Meeting.
EFFECTIVE DATE
The merger will become effective as soon as practicable after stockholder
approval is obtained and all other conditions to the merger are satisfied. The
merger may be abandoned at any time prior to its effectiveness if the Board of
Directors determines, in its discretion, that consummation of the merger is no
longer advisable.
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership as of March 20,
1998 of Common Stock by (a) each person known to the Company to beneficially
own more than 5% thereof, (b) each director of the Company and each Named
Executive Officer (as defined under the caption "Executive Compensation"
below), and (c) all executive officers and directors of the Company as a group.
Unless otherwise indicated, each named stockholder has sole voting and
investment power with respect to the shares beneficially owned by the
stockholder.
PERCENT OF
AMOUNT OF COMMON STOCK
NAME COMMON STOCK OUTSTANDING
- ---- ------------ ------------
Eliot C. Abbott ....................... 15,250(1) *
Joel-Tomas Citron ..................... 0 --
Edwin D. Johnson ...................... 26,884(1) *
Arthur B. Laffer ...................... 120,000(1) *
Jorge Mas ............................. 6,169,985(2) 22%
Ismael Perera ......................... 78,633(1) *
Ubiratan Simoes Rezende ............... 0 *
Jose S. Sorzano ....................... 12,000(1) *
Carlos A. Valdes ...................... 63,257(1) *
Jorge L. Mas Canosa
Holding I Limited Partnership ......... 7,675,000(3) 28%
All executive officers and directors
as a group (10 persons) .............. 6,515,337(1) 24%
- ----------------
(1) The amounts shown include shares covered by options exercisable within 60
days of March 20, 1998 as follows: Eliot C. Abbott, 15,250 shares; Edwin
D. Johnson, 7,500 shares; Arthur B. Laffer, 30,000 shares; Ismael Perera,
46,600 shares; Jose S. Sorzano, 12,000 shares; and Carlos A. Valdes,
27,830 shares.
(2) Includes 5,587,381 shares owned of record by Jorge Mas Holding I Limited
Partnership, a Texas limited partnership ("Jorge Mas Holdings"), 388,447
shares owned of record by the Mas Family Foundation, a Florida
not-for-profit corporation (the "Family Foundation" ), 94,000 shares
covered by options exercisable within 60 days of March 20, 1998, and
100,157 shares owned of record individually. The sole general partner of
Jorge Mas Holdings is Jorge Mas Holdings Corporation, a Texas corporation
that is wholly-owned by Mr. Mas. Mr. Mas disclaims beneficial ownership of
the shares owned by the Family Foundation.
(3) The sole general partner of Jorge L. Mas Canosa Holding I Limited
Partnership, is Jorge L. Mas Holdings Corporation, a Texas corporation
that is wholly-owned by the estate of Jorge L. Mas. Jorge Mas is the sole
officer and director of Jorge L. Mas Canosa Holdings Corporation and is
the executor of the estate of Jorge L. Mas. Mr. Mas disclaims beneficial
ownership of the shares owned by the partnership.
* Less than 1%
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that, during the year ended December 31, 1997,
all filing requirements under Section 16(a) of the Securities Exchange Act of
1934 applicable to its officers, directors and greater than 10% beneficial
owners were complied with on a timely basis, except that Mr. Mas filed a Report
on Form 4 on September 3, 1997 which reported the grant of 15,814 shares of
Common Stock in March 1997, Mr. Perera filed a Report on Form 4 on September 3,
1997 which reported the grant of 2,057 shares of Common Stock in March 1997,
Mr. Valdes filed a Report on Form 4 on September 3, 1997 which reported the
grant of 634 shares of Common Stock in March 1997, Mr. Johnson filed a Report
on Form 4 on September 3, 1997 which reported the grant of 634 shares of Common
Stock in March 1997, Jose M. Sariego, the Company's Senior Vice President and
General Counsel, filed a Report on Form 4 on
16
September 3, 1997 which reported the grant of 475 shares of Common Stock in
March 1997, and Mr. Rezende filed a Report on Form 4 on September 3, 1997 which
reported the grant of 475 shares of Common Stock in March 1997. Additionally,
each of Messrs. Mas, Perera, Johnson, Rezende, Valdes and Sariego filed a
Report on Form 4 on April 9, 1998 which reported the repricing of their 1997
options in December 1997. See "Executive Compensation--Ten Year Option
Repricings" and "Compensation Committee Report on Executive Compensation."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing and administering the policies for the Company's compensation
program and for approving the compensation levels of the executive officers of
the Company, including its Chief Executive Officer. The Compensation Committee
also reviews with the Chief Executive Officer guidelines for salaries and
aggregate bonus awards applicable to the Company's employees other than its
executive officers. During 1997, the Compensation Committee was composed of
Arthur B. Laffer and Jose S. Sorzano, both of whom are non-employee directors
of the Company and "disinterested directors" for purposes of Section 162(m) of
the Internal Revenue Code of 1986.
STATEMENT OF PHILOSOPHY OF EXECUTIVE COMPENSATION
The compensation program of the Company is designed to (a) provide base
compensation reasonably comparable to that offered by other leading companies
to their executive officers so as to attract and retain talented executives,
(b) motivate executive officers to achieve the strategic goals set by the
Company by linking an officer's incentive compensation to the performance of
the Company and applicable business units, as well as to individual
performance, and (c) align the interests of its executives with the long-term
interests of the Company's stockholders through the award of stock options and
other stock-related programs. To implement this philosophy, the Company offers
its executive officers compensation packages that include a mix of salary,
incentive bonus awards, and stock options. Incentive bonus awards for all of
the Company's senior executives the past two years have been partly or entirely
in the form of Company Common Stock.
In determining the level and form of executive compensation to be paid or
awarded, the Compensation Committee relies primarily on an assessment of the
Company's overall performance in light of its strategic objectives rather than
on any single quantitative or qualitative measure of performance. The
Compensation Committee considered the following factors in establishing 1997
compensation:
(a) A substantial increase in revenue and income from continuing operations
in comparison to prior years.
(b) The continued strengthening and expansion of the Company's core
telecommunications and other utilities construction business into new
and existing markets and with new and existing customers.
(c) The continued diversification of the Company's core business through
strategic acquisitions and investments.
(d) The continued divestiture of non-core assets to concentrate resources
on the Company's core business.
SALARY AND INCENTIVE BONUS
The base salary of executive officers is determined initially by analyzing
and evaluating the responsibilities of the position and comparing the proposed
base salary with that of officers in
17
comparable positions in other companies. For 1997 performance, the Compensation
Committee did not increase the base salary of any of the executive officers of
the Company.
In addition to paying a base salary, the Company awards incentive bonuses
as a component of overall compensation. Bonus awards are made after considering
the performance of the executive officer's area of responsibility or the
operating unit under his control, if any, and the financial performance of the
Company. The Compensation Committee in 1998 recommended the award of bonuses to
certain of the Company's executive officers, including the Named Executive
Officers, for 1997 performance. All of the bonuses were paid in Company Common
Stock.
STOCK INCENTIVE PLAN
Long-term incentive compensation for executives consists of stock-based
awards made under the Company's Stock Incentive Plan. The Stock Incentive Plan
provides for the granting of options to purchase Common Stock to key employees
at exercise prices equal to the fair market value on the date of grant. The
Compensation Committee believes that the use of stock options reinforces the
Compensation Committee's philosophy that management compensation should be
clearly linked to stockholder value. The Compensation Committee awards options
to key employees, including executive officers, based on current performance,
anticipated future contribution based on such performance, and ability to
materially impact the Company's financial results. In 1997, the Compensation
Committee granted stock options under the Stock Incentive Plan to the Company's
executive officers, including the Named Executive Officers.
CEO COMPENSATION
In setting the incentive compensation for Jorge Mas, the Company's
Chairman, President and Chief Executive Officer, the Compensation Committee
reviewed the Company's financial performance in 1997 with respect to revenue,
income from continuing operations and income per share compared to the
performance of other companies in its industry and the Company's prior
performance, as well as the other factors described above. Based on its review
of this information, the Compensation Committee decided not to recommend an
increase in salary for Mr. Mas but awarded an incentive bonus of 10,000 shares
of Company Common Stock for 1997 performance. The Compensation Committee also
awarded Mr. Mas stock options to purchase 100,000 shares of Common Stock for
1997 performance to further link his compensation to the performance of the
Common Stock of the Company.
REPRICING OF 1997 OPTIONS
Because the market value of the Company's Common Stock in 1997 fell
significantly below the exercise price of options granted during the year, the
Compensation Committee believed that the value of the options granted in 1997
as a means of motivating and retaining key employees had been significantly
diminished. As a result, on December 29, 1997, the Compensation Committee
approved (a) the amendment of all options to purchase Common Stock granted in
1997 (the "1997 Options") from incentive stock options under the Internal
Revenue Code of 1986 to non-qualified stock options and (b) the repricing of
the 1997 Options to an exercise price of $21.0938 per share, the then fair
market value of the Common Stock. Other than the repricing and the change from
incentive stock option to non-qualified stock option, the terms of all of the
repriced 1997 Options remain the same as before the repricing, including the
term and vesting schedule. In the aggregate, options to purchase 305,975 shares
with exercise prices ranging from $28.19 to $48.20 were repriced, of which
options to purchase an aggregate of 133,000 shares belonging to the Named
Executive Officers were repriced.
18
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation awarded to, earned by or
paid to (a) Jorge Mas, the Company's Chief Executive Officer, (b) Mr. Jorge L.
Mas, the Chairman of the Board of the Company until November 1997, and (c) the
four other most highly compensated executive officers of the Company whose
total salary and bonus exceeded $100,000 (together, the "Named Executive
Officers") for services rendered in all capacities to the Company and its
subsidiaries for the years ended December 31, 1997, 1996, and 1995.
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- ----------------------------
AWARDS
----------------------------
RESTRICTED SECURITIES
OTHER STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS ANNUAL AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(2) COMPENSATION(3) ($) (#)(4) ($)(9)
- ------------------ ------------- ----------- ---------- ----------------- ------------ --------------- -------------
Jorge L. Mas, 1997 $275,000 $ -- $-- $ -- $ -- --
Chairman of the Board 1996 293,000 675,000 -- 500,000 -- --
(until November 1997) 1995 311,000 -- -- -- -- --
Jorge Mas, Chairman of 1997 325,000 234,100 -- -- 100,000 6,000
the Board of Directors, 1996 325,000 675,000 -- 500,000 50,000(5) 3,500
Chief Executive Officer 1995 322,000 -- -- -- 75,000(6) --
and President
Ismael Perera, 1997 180,000 187,280 -- -- 15,000 721
Senior Vice President- 1996 150,000 160,000 -- 65,000 20,000(5) 392
Operations 1995 144,000 30,000 -- -- 15,000(6) --
Edwin D. Johnson, 1997 150,000 152,165 -- -- 15,000 966
Senior Vice President- 1996 109,336 70,000 -- 20,000 37,500(7) 490
Chief Financial Officer 1995(1) -- -- -- -- -- --
Ubiratan Simoes 1997 108,227 163,870 -- -- 40,000(8) --
Rezende, Senior Vice 1996 140,000 40,000 -- -- 15,000 --
President-International 1995(1) -- -- -- -- -- --
Operations
Carlos A. Valdes, 1997 150,000 152,165 -- -- 15,000 1,005
Senior Vice President- 1996 130,000 50,000 -- 20,000 8,000(5) 490
Corporate Development 1995 124,000 10,000 -- -- -- --
- ----------------
(1) Mr. Johnson and Mr. Rezende were hired in March 1996 as the Senior Vice
President-Chief Financial Officer and Senior Vice President-International
Operations, respectively. They were not employed by the Company in 1995.
(2) All of the bonuses awarded in 1997 were paid in Company Common Stock.
(3) The Named Executive Officers also received certain perquisites and personal
benefits that did not exceed applicable reporting thresholds.
(4) The exercise prices for all options granted to the Named Executive Officers
in 1997 were repriced on December 29, 1997. See "Executive
Compensation--Ten Year Option Repricings" and "Compensation Committee
Report on Executive Compensation."
(5) Reflects options actually granted in March 1997 for 1996 performance.
(6) Reflects options actually granted in 1996 for 1995 performance.
(7) Includes options to purchase 15,000 shares of the Company's Common Stock
granted in March 1997 for 1996 performance.
(8) Does not include options to purchase 15,000 and 10,000 shares of the
Company's Common Stock (25,000 shares in the aggregate) issued to Mr.
Rezende on March 17, 1997 and May 20, 1997, respectively, with exercise
prices of $31.63 and $28.19 per share, respectively, which were cancelled
and replaced (together with options to purchase 13,900 shares of Common
Stock granted in 1996 at an exercise price of $21.25 per share) with
options to purchase 40,000 shares.
(9) Represents premiums paid by the Company for term life insurance on the
lives of the Named Executive Officers.
19
OPTION GRANTS
The following table provides information with respect to stock options to
purchase Common Stock granted to the Named Executive Officers during the year
ended December 31, 1997 pursuant to the Company's 1994 Stock Incentive Plan:
INDIVIDUAL GRANTS
------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SHARES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR(1) ($/SH)(2) DATE 5% 10%
- ---- -------------- ---------------- ----------- ----------- ------------ ------------
Jorge L. Mas .................... 0 0% $ -- -- $ -- $ --
Jorge Mas ....................... 50,000 5.7% 21.09 3/17/07 1,602,444 3,176,352
4,704(4) 0.5% 23.20 12/29/07 52,881 149,351
95,260 10.9% 21.09 12/29/07 1,263,690 3,202,446
Ismael Perera ................... 20,000 2.3% 21.09 3/17/07 640,978 1,270,541
15,000 1.7% 21.09 12/29/07 198,985 504,269
Edwin D. Johnson ................ 15,000 1.7% 21.09 3/17/07 480,733 952,905
15,000 1.7% 21.09 12/29/07 198,985 504,269
Ubiratan Simoes Rezende ......... 40,000(5) 4.6% 21.09 12/29/07 530,628 1,344,718
Carlos A. Valdes ................ 8,000 0.9% 21.09 3/17/07 256,391 508,216
15,000 1.7% 21.09 12/29/07 199,345 504,269
- ----------------
(1) Based on options to purchase an aggregate of 874,725 shares of Common Stock
granted to employees during 1997.
(2) Except as otherwise indicated, all options were granted at an exercise
price equal to fair market value based on the mean between the high and
low sales prices of the Company's Common Stock on the date of grant. The
exercise prices for certain of these options were repriced on December 29,
1997. See "Executive Compensation--Ten Year Option Repricings" and
"Compensation Committee Report on Executive Compensation."
(3) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on Securities and Exchange Commission rules, and do not
represent the Company's estimate or projection of the price of the
Company's stock in the future. Actual gains, if any, on stock option
exercises depend upon the actual future performance of the Company's
Common Stock and the continued employment of the option holders throughout
the vesting period. Accordingly, the potential realizable values set forth
in this table may not be achieved or may be exceeded.
(4) Incentive stock option grant with an exercise price of $23.20, which was
110% of the fair market value of the Common Stock on the date of grant.
(5) Does not include options to purchase 15,000 and 10,000 shares of the
Company's Common Stock (25,000 shares in the aggregate) issued to Mr.
Rezende on March 17, 1997 and May 20, 1997, respectively, with exercise
prices of $31.63 and $28.19 per share, respectively, which were cancelled
and replaced (together with options to purchase 13,900 shares of Common
Stock granted in 1996 at an exercise price of $21.25 per share) with the
options to purchase 40,000 shares set forth above.
20
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information with respect to each exercise
of stock options during the fiscal year ended December 31, 1997 by the Named
Executive Officers and the value at December 31, 1997 of unexercised stock
options held by the Named Executive Officers.
NUMBER OF SHARES
UNDERLYING UNEXERCISED
SHARES OPTIONS AT DECEMBER 31, 1997(1)
ACQUIRED ON VALUE -----------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#)
- ---- ------------- ------------ ---------------- ------------------
Jorge L. Mas .................... 0 $ 0 0 0
Jorge Mas ....................... 0 0 51,000 264,000
Ismael Perera ................... 3,900 65,887 27,600 95,000
Edwin D. Johnson ................ 4,500 76,312 0 48,000
Ubiratan Simoes Rezende ......... 1,100 26,813 40,000 0
Carlos A. Valdes ................ 12,000 444,480 24,000 71,000
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1997(2)
----------------------------------
NAME EXERCISABLE($) UNEXERCISABLE($)
- --------------------------------- ---------------- -----------------
Jorge L. Mas .................... $ 0 $ 0
Jorge Mas ....................... 713,993 1,899,063
Ismael Perera ................... 355,858 795,321
Edwin D. Johnson ................ 0 331,685
Ubiratan Simoes Rezende ......... 71,248 0
Carlos A. Valdes ................ 356,740 754,447
- ----------------
(1) Option amounts have been adjusted for a three-for-two stock split effected
on February 28, 1997.
(2) Market value of shares underlying in-the-money options at December 31, 1997
based on the product of $22.875 per share, the closing price of the
Company's Common Stock on the New York Stock Exchange on December 31 1997,
less the exercise price of each option times the number of in-the-money
options as of that date.
The following sets forth certain information concerning the repricing,
replacement or cancellation and regrant of options, within the last 10 fiscal
years, of options held by executive officers of the Company.
TEN-YEAR OPTION REPRICINGS
MARKET PRICE LENGTH OF
NUMBER OF OF STOCK AT EXERCISE PRICE NEW ORIGINAL TERM
DATE OF SHARES UNDERLYING TIME OF AT TIME OF EXERCISE REMAINING AT DATE
NAME REPRICING OPTIONS REPRICED REPRICING ($) REPRICING ($) PRICE($) OF REPRICING
- ---- ----------- ------------------- --------------- ---------------- ---------- ------------------
Jorge Mas ....................... 12/29/97 50,000 $ 21.09 $ 31.63 $ 21.09 9.25 years
Ismael Perera ................... 12/29/97 20,000 21.09 31.63 21.09 9.25 years
Edwin D. Johnson ................ 12/29/97 15,000 21.09 31.63 21.09 9.25 years
Ubiratan Simoes Rezende ......... 12/29/97 15,000 21.09 31.63 21.09 9.25 years
12/29/97 10,000 21.09 28.19 21.09 9.25 years
12/29/97 13,900 21.09 21.25 21.09 8.50 years
Carlos A. Valdes ................ 12/29/97 8,000 21.09 31.63 21.09 9.25 years
Jose M. Sariego ................. 12/29/97 8,000 21.09 31.63 21.09 9.25 years
21
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's Common Stock from December 31, 1992 through December 31, 1997
with the cumulative total return of the S & P 500 Stock Index and a
Company-constructed index of two peer companies consisting of Dycom Industries,
Inc. and MYR Group, Inc. (the "Peer Index"). The graph assumes that the value
of the investment in the Common Stock was $100 on December 31, 1992 and that
all dividends were reinvested. This data is not necessarily indicative of
future results.
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
MasTec, Inc. $100 $215 $374 $483 $1,815 $1,149
Peer Index $100 $ 75 $ 64 $111 $ 169 $ 313
S&P 500 $100 $107 $105 $141 $ 174 $ 215
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1994, Church & Tower, Inc. and Church & Tower of Florida, Inc. provided
Messrs. Jorge L. Mas, Chairman of the Board and President of Church & Tower of
Florida, Inc., Jorge Mas, President and Chief Executive Officer of Church &
Tower, Inc., and Juan Carlos Mas and Jose Ramon Mas, each a shareholder of
Church & Tower, Inc. and a son of Jorge L. Mas, with a loan of $2,000,000,
$1,280,000, $158,000 and $132,000, respectively, bearing interest at prime plus
2% (10.50% at December 31, 1997) with interest due annually and principal due
on December 31, 1997. The loans were made to assist these individuals in
meeting their estimated federal income tax obligations related to the 1993 S
corporation earnings of Church & Tower, Inc. and Church & Tower of Florida,
Inc. As of December 31, 1997, the estate of Jorge L. Mas, Jorge Mas, Juan
Carlos Mas and Jose Ramon Mas remained indebted to the Company for $500,000,
$400,000, $58,000 and $32,000, respectively, plus accrued interest.
The Company purchases and leases construction equipment from a company
controlled by Jorge Mas. The Company also makes available certain office space
and the part-time services of certain employees to affiliates. The Company
believes the value of these transactions is not material.
SELECTION OF AUDITORS
Coopers & Lybrand L.L.P. was appointed by the Board of Directors of the
Company to audit the Company's financial statements for 1998. Coopers & Lybrand
L.L.P. has acted as independent public accountants for the Company since 1995.
Representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions from stockholders.
23
MISCELLANEOUS
A list of the Company's stockholders as of March 20, 1998, the record date
for the Annual Meeting, will be available for inspection at the offices of the
Company, 3155 N.W. 77th Street, Miami, Florida, during normal business hours
during the ten-day period prior to the Annual Meeting.
Solicitation of proxies will be made initially by mail. The Company's
directors, officers and employees also may solicit proxies in person or by
telephone without additional compensation. In addition, proxies may be
solicited by certain banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries who will mail material to or otherwise
communicate with the beneficial owners of shares of the Company's Common Stock.
In addition, Corporate Investor Communications, Inc. has been engaged by the
Company to act as proxy solicitors and will be paid $4,000 for their services.
The cost of this solicitation will be borne by the Company.
Any proposal of an eligible stockholder intended to be presented at the
next annual meeting of stockholders of the Company must be received by the
Company by January 14, 1999 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to that annual meeting.
The Board of Directors does not intend to present and knows of no others
who intend to present at the Annual Meeting any matter or business other than
that set forth in the accompanying Notice of Annual Meeting of Stockholders. If
other matters are properly brought before the Annual Meeting, it is the
intention of the persons named in the accompanying form of proxy to vote any
proxies on such matters in accordance with their judgment.
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 is being mailed with this Proxy Statement to stockholders of
record on March 20, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ NANCY J. DAMON
----------------------------------
Nancy J. Damon
Corporate Secretary
Miami, Florida
April 14, 1998
24
APPENDIX A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER, dated , 1998 (the "Agreement"), is
entered into between MASTEC REINCORPORATION, INC., a Florida corporation
("FLORIDA"), and MASTEC, INC., a Delaware corporation ("MasTec").
RECITALS
A. MasTec has an aggregate authorized capital of 105 million shares,
consisting of 100 million shares of Common Stock, par value $0.10 per share
(the "MasTec Common Stock"), and 5 million shares of preferred stock, par value
$1.00 per share (the "MasTec Preferred Stock"). As of March 20, 1998, there
were 27,736,542 shares of MasTec Common Stock and no shares of MasTec Preferred
Stock issued and outstanding.
B. FLORIDA has an aggregate authorized capital stock of 105 million
shares, consisting of 100 million shares of Common Stock, par value $0.10 per
share (the "FLORIDA Common Stock"), and 5 million shares of preferred stock,
par value $1.00 per share (the "FLORIDA Preferred Stock"). As of the date
hereof, there were 100 shares of FLORIDA Common Stock and no shares of FLORIDA
Preferred Stock issued and outstanding.
C. The respective Boards of Directors of FLORIDA and MasTec believe that
the best interests of FLORIDA and MasTec and their respective stockholders will
be served by the merger of MasTec with FLORIDA under and pursuant to the
provisions of this Agreement and the Delaware General Corporation Law and the
Florida General Corporation Act.
AGREEMENT
In consideration of the Recitals and of the mutual agreements contained in
this Agreement, the parties hereto agree as set forth below.
1. MERGER. MasTec shall be merged with and into FLORIDA (the "Merger").
2. EFFECTIVE DATE. The Merger shall become effective immediately upon the
later of the filing of this Agreement or a certificate of merger with the
Secretary of State of Delaware in accordance with the Delaware General
Corporation Law and the filing of articles of merger with the Secretary of
State of Florida in accordance with the Florida General Corporation Act. The
time of such effectiveness is hereinafter called the "Effective Date."
3. SURVIVING CORPORATION. FLORIDA shall be the surviving corporation of
the Merger and shall continue to be governed by the laws of the State of
Florida. On the Effective Date, the separate corporate existence of MasTec
shall cease.
4. NAME OF SURVIVING CORPORATION. On the Effective Date, the Articles of
Incorporation of FLORIDA shall be amended to change the name of FLORIDA to
"MasTec, Inc."
5. ARTICLES OF INCORPORATION. Except as provided in Section 4, the
Articles of Incorporation of FLORIDA as it exists on the Effective Date shall
be the Articles of Incorporation of FLORIDA following the Effective Date,
unless and until the same shall thereafter be amended or repealed in accordance
with the laws of the State of Florida.
6. BYLAWS. The Bylaws of FLORIDA as they exist on the Effective Date shall
be the Bylaws of FLORIDA following the Effective Date, unless and until the
same shall be amended or repealed in accordance with the provisions thereof and
the laws of the State of Florida.
A-1
7. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of Directors
and the officers of MasTec immediately prior to the Effective Date shall be the
members of the Board of Directors and the officers, respectively, of FLORIDA
following the Effective Date, and such persons shall serve in such offices for
the terms provided by law or in the Bylaws, or until their respective
successors are elected and qualified.
8. RETIREMENT OF OUTSTANDING FLORIDA STOCK. Forthwith upon the Effective
Date, each of the 100 shares of the FLORIDA Common Stock presently issued and
outstanding shall be retired, and no shares of FLORIDA Common stock or other
securities of FLORIDA shall be issued in respect thereof.
9. CONVERSION OF OUTSTANDING MASTEC STOCK. Forthwith upon the Effective
Date, each issued and outstanding share of MasTec Common Stock and all rights
in respect thereof shall be converted into one fully-paid and nonassessable
share of FLORIDA Common Stock, and each certificate representing shares of
MasTec Common Stock shall for all purposes be deemed to evidence the ownership
of the same number of shares of FLORIDA Common Stock as are set forth in such
certificate. After the Effective Date, each holder of an outstanding
certificate representing shares of MasTec Common Stock may, at such
shareholder's option, surrender the same to FLORIDA's registrar and transfer
agent for cancellation, and each such holder shall be entitled to receive in
exchange therefor a certificate(s) evidencing the ownership of the same number
of shares of FLORIDA Common Stock as are represented by the MasTec
certificate(s) surrendered to FLORIDA's registrar and transfer agent.
10. STOCK OPTIONS, WARRANTS AND CONVERTIBLE DEBT. Forthwith upon the
Effective Date, each stock option, stock warrant, convertible debt instrument
and other right to subscribe for or purchase shares of MasTec Common Stock
shall be converted into a stock option, stock warrant, convertible debt
instrument or other right to subscribe for or purchase the same number of
shares of FLORIDA Common Stock, and each certificate, agreement, note or other
document representing such stock option, stock warrant, convertible debt
instrument or other right to subscribe for or purchase shares of MasTec Common
Stock shall for all purposes be deemed to evidence the ownership of a stock
option, stock warrant, convertible debt instrument or other right to subscribe
for or purchase shares of FLORIDA Common Stock.
11. RIGHTS AND LIABILITIES OF FLORIDA. At and after the Effective Date,
and all in the manner of and as more fully set forth in Section 607.1106 of the
Florida General Corporation Act and Section 259 of the Delaware General
Corporation Law, the title to all real estate and other property, or any
interest therein, owned by each of MasTec and FLORIDA shall be vested in
FLORIDA without reversion or impairment; FLORIDA shall succeed to and possess,
without further act or deed, all estates, rights, privileges, powers, and
franchises, both public and private, and all of the property, real, personal
and mixed, of each of MasTec and FLORIDA without reversion or impairment;
FLORIDA shall thenceforth be responsible and liable for all the liabilities and
obligations of each of MasTec and FLORIDA; any claim existing or action or
proceeding pending by or against MasTec or FLORIDA may be continued as if the
Merger did not occur or FLORIDA may be substituted for MasTec in the
proceeding; neither the rights of creditors nor any liens upon the property of
MasTec or FLORIDA shall be impaired by the Merger; and FLORIDA shall indemnify
and hold harmless the officers and directors of each of the parties hereto
against all such debts, liabilities and duties and against all claims and
demands arising out of the Merger.
12. TERMINATION. This Agreement may be terminated and abandoned by action
of the respective Boards of Directors of MasTec and FLORIDA at any time prior
to the Effective Date, whether before or after approval by the stockholders of
either or both of the parties hereto.
13. AMENDMENT. The Boards of Directors of the parties hereto may amend
this Agreement at any time prior to the Effective Date; provided that an
amendment made subsequent to the approval of this Agreement by the stockholders
of either of the parties hereto shall not: (a) change the amount or kind of
shares, securities, cash, property or rights to be received in exchange for or
on conversion of all or any of the shares of the parties hereto, (b) change any
term of the Articles of Incorporation of
A-2
FLORIDA, or (c) change any other terms or conditions of this Agreement if such
change would adversely affect the holders of any capital stock of either party
hereto.
14. REGISTERED OFFICE. The registered office of FLORIDA in the State of
Florida is located at 1201 Hays Street, Tallahassee, Florida, 32301-2607, and
Corporation Services Company is the registered agent of FLORIDA at such
address.
15. INSPECTION OF AGREEMENT. Executed copies of this Agreement will be on
file at the principal place of business of FLORIDA at 3155 N.W. 77th Avenue,
Suite 135, Miami, Florida 33122-1205. A copy of this Agreement shall be
furnished by FLORIDA, on request and without cost, to any stockholder of either
MasTec or FLORIDA.
16. GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Florida.
17. SERVICE OF PROCESS. On and after the Effective Date, FLORIDA agrees
that it may be served with process in Delaware in any proceeding for
enforcement of any obligation of MasTec or FLORIDA arising from the Merger.
18. DESIGNATION OF DELAWARE SECRETARY OF STATE AS AGENT FOR SERVICE OF
PROCESS. On and after the Effective Date, FLORIDA irrevocably appoints the
Secretary of State of Delaware as its agent to accept service of process in any
suit or other proceeding to enforce the rights of any stockholders of MasTec or
FLORIDA arising from the Merger. The Delaware Secretary of State is requested
to mail a copy of any such process to FLORIDA at 3155 N.W. 77th Avenue, Suite
130, Miami, Florida 33122-1205, Attention: Legal Department.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to authority duly
granted by their respective Board of Directors, has caused this Plan and
Agreement of Merger to be executed, respectively, by its President and attested
by its Secretary.
ATTEST: MASTEC REINCORPORATION, INC.,
a Florida corporation
By:
- ------------------------------- ------------------------------------
Secretary
ATTEST: MASTEC, INC.,
a Delaware corporation
By:
- ------------------------------- ------------------------------------
Secretary
A-3
APPENDIX B
ARTICLES OF INCORPORATION
OF
MASTEC REINCORPORATION, INC.
ARTICLE I - NAME AND ADDRESS
The name of this corporation is MasTec Reincorporation, Inc. (the
"Corporation"). The address of the principal office and the mailing address of
this Corporation is 3155 N.W. 77th Avenue, Miami, Florida 33122-1205.
ARTICLE II - PURPOSE
This Corporation is organized for the purpose of transacting any and all
lawful business for corporations organized under the Florida Business
Corporation Act.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which this Corporation shall have authority
to issue is one hundred five million (105,000,000) shares, consisting of (a)
one hundred million (100,000,000) shares of Common Stock, par value $0.10 per
share (the "Common Stock"); and (b) five million (5,000,000) shares of
preferred stock, par value $1.00 per share (the "Preferred Stock"). The Board
of Directors is authorized to issue shares of Preferred Stock in one or more
series by adoption of amendments to these Articles of Incorporation, which may
be effected without shareholder approval, setting forth the number of shares to
be included in each such series and the designation, preferences, limitations
and relative rights of the shares of each such series.
ARTICLE IV - REGISTERED OFFICE AND AGENT
The street address of the registered office of this Corporation and the
name of the registered agent of this Corporation at such office are:
NAME ADDRESS
---- -------
Corporation Services Company 1201 Hays Street
Tallahassee, Florida 32301-2607
ARTICLE V - SPECIAL MEETINGS OF SHAREHOLDERS
The shareholders of this Corporation may only call a special meeting of
shareholders if the holders of at least 25% all of the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to this Corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to
be held.
ARTICLE VI - APPROVAL OF MERGERS, CONSOLIDATIONS
AND CERTAIN OTHER CORPORATE TRANSACTIONS
6.1 REQUISITE VOTE. Except as hereinafter set forth, the affirmative vote
or consent of the holders of 80% of all shares of capital stock of the
Corporation entitled to vote generally at an election of directors, considered
for the purposes of this Article VI as one class, shall be required (i) for the
adoption of any agreement for the merger or consolidation of the Corporation
with or into any other
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corporation, or (ii) to authorize any sale or lease of all or any substantial
part of the property and assets of the Corporation to, or any sale or lease to
the Corporation or any subsidiary thereof in exchange for securities of the
Corporation of any property and assets (except property and assets having an
aggregate fair market value of less than $1,000,000) of, any other corporation,
person or other entity, if, in either case, as of the record date for the
determination of shareholders entitled to notice thereof and to vote thereon or
consent thereto such other corporation, person or entity is the beneficial
owner, directly or indirectly, of more than 10% of the outstanding shares of
capital stock of the Corporation entitled to vote generally in elections of
directors considered for the purposes of this Article VI as one class. Such
affirmative vote or consent shall be in addition to the vote or consent of the
holders of the capital stock of the Corporation otherwise required by law or
any agreement between the Corporation and any national securities exchange.
6.2 BENEFICIAL OWNERSHIP. For the purposes of this Article VI, (i) any
corporation, person or other entity shall be deemed to be the beneficial owner
of any shares of capital stock of the Corporation (x) which it has the right to
acquire pursuant to any agreement or arrangement, or upon exercise of
conversion rights, warrants or options, or otherwise or (y) which are
beneficially owned, directly or indirectly (including shares deemed owned
through application of clause (x) above), by any other corporation, person or
entity with which it or its "affiliate" or "associate" (as defined below) has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of capital stock of the Corporation, or which is
its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, and
(ii) the outstanding shares of any class of stock of the Corporation shall
include shares deemed owned through application of clauses (x) and (y) above
but shall not include any other shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise.
6.3 DETERMINATION OF THE BOARD. The Board of Directors shall have the
power and duty to determine for the purposes of this Article VI, on the basis
of information known to the Corporation, whether (i) such other corporation,
person or other entity beneficially owns more than 10% of the outstanding
shares of capital stock of the Corporation entitled to vote generally at an
election of directors, (ii) a corporation, person or entity is an "affiliate"
or "associate" (as defined above) of another, (iii) the property and assets
being acquired by the Corporation, or any subsidiary thereof, have an aggregate
fair market value of less than $1,000,000 and (iv) the memorandum of
understanding referred to below is substantially consistent with the
transaction covered thereby. Any such determination shall be conclusive and
binding for the purposes of this Article VI.
6.4 APPLICATION OF SECTION. The provisions of this Article VI shall not be
applicable to (i) any merger or consolidation of the Corporation with or into
any other corporation, or any sale or lease of all or any substantial part of
the property and assets of the Corporation to, or any sale or lease to the
Corporation or any subsidiary thereof in exchange for securities of the
Corporation of any property and assets of, any corporation if the Board of
Directors of the Corporation shall by resolution have approved a memorandum of
understanding with such other corporation with respect to and substantially
consistent with such transaction prior to the time that such other corporation
shall have become a holder of more than 10% of the outstanding shares of stock
of the Corporation entitled to vote in elections of directors or (ii) any
merger or consolidation of the Corporation with, or any sale or lease to the
Corporation or any subsidiary thereof of any of the property and assets of any
corporation of which a majority of the outstanding shares of all classes of
capital stock entitled to vote generally in elections of directors is owned of
record or beneficially by the Corporation and/or any one or more of its
subsidiaries.
ARTICLE VII - INDEMNIFICATION
This Corporation shall indemnify any director or officer, or any former
director or officer of this Corporation, to the fullest extent permitted by
law.
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ARTICLE VIII - AFFILIATED TRANSACTIONS
For purposes of Section 607.0901 of the Florida Business Corporation Act
pursuant to Section 607.0901(1)(h) thereof, the term "disinterested director"
shall mean any member of the Board of Directors of the Corporation who was a
member of the Board of Directors of MasTec, Inc., a Delaware corporation,
immediately prior to the date these Articles of Incorporation are first filed
with the Department of State of the State of Florida (other than any member of
the Board who is the holder of 10% or more of the outstanding Common Stock of
the Corporation) and any member of the Board of Directors of this Corporation
who was recommended for election by, or was elected to fill a vacancy and
received the affirmative vote of, a majority of the disinterested directors
then on the Board.
ARTICLE IX - REMOVAL OF DIRECTORS
At a meeting of shareholders, any director or the entire Board of
Directors may be removed solely with cause and provided the notice of the
meeting states that one of the purposes of the meeting is the removal of the
director. A director may be removed only if the number of votes cast to remove
him constitutes at least a majority of the voting power of all of the shares of
capital stock then entitled to vote generally in the election of directors,
voting together as a single class. For purposes of this Article IX, "cause"
shall mean the failure of a director to substantially perform such director's
duties to the Corporation (other than any such failure resulting from
incapacity due to physical or mental illness) or the willful engaging by a
director in gross misconduct injurious to the Corporation.
ARTICLE X - BYLAWS
The Bylaws of the Corporation may be altered, amended or repealed, and new
Bylaws adopted, by the affirmative vote of at least a majority of the members
of the Board of Directors then in office or by the affirmative vote of the
holders of at least a majority of the voting power of all shares of capital
stock of the Corporation then entitled to vote generally in the election of
directors, voting as a single class; provided, however, that any proposal to
amend, alter, change or repeal the provisions of Section 1 of Article II of the
Bylaws of the Corporation shall require the affirmative vote of the holders of
at least 80% of the voting power of all the shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
ARTICLE XI - AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation hereby reserves the right from time to time to amend,
alter, change or repeal any provision contained in these Articles of
Incorporation in any manner permitted by law and all rights and powers
conferred upon shareholders, directors and officers herein are granted subject
to this reservation. In addition to any vote otherwise required by law, any
proposal to amend, alter, change or repeal the provisions of Article VI,
Article IX and this Article XI shall require the affirmative vote of the
holders of at least 80% of the voting power of all the shares of capital stock
of the Corporation entitled to vote generally in the election of directors,
voting together as a single class.
ARTICLE XII - INCORPORATOR
The name and address of the person filing these Articles of Incorporation
are Steven D. Rubin, 150 West Flagler Street, Suite 2200, Miami, Florida 33130.
IN WITNESS WHEREOF, the undersigned Incorporator has executed these
Articles of Incorporation on April , 1998.
-----------------------------
Steven D. Rubin, Incorporator
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ACCEPTANCE OF APPOINTMENT
OF
REGISTERED AGENT
I hereby accept the appointment as registered agent contained in the
foregoing Articles of Incorporation and state that I am familiar with and
accept the obligations of Section 607.0501 of the Florida Statutes.
By:
----------------------------------
Its Agent:__________________________
As Registered Agent:________________
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PROXY
ANNUAL MEETING OF STOCKHOLDERS--MAY 14, 1998
PROXY SOLICTED ON BEHALF OF BOARD OF DIRECTORS
The undersigned stockholder of MasTec, Inc. (the "Company") hereby
appoints Jorge Mas and Edwin D. Johnson, and each of them, the undersigned's
proxies, with full power of subsitution, to vote all shares of Common Stock of
the Company that the undersigned would be entitled to vote if personally
present at the Annual Meeting Stockholders to be held on Thursday, May 14, 1998
at 9:30 A.M. local time, at the offices of the Company, 3155 N.W. 77th Avenue,
Miami, Florida and at any adjournments or postponements thereof, to the same
extent and with the same power as if the undersigned was personally present at
said meeting or such adjournments or postponements thereof and, without
limiting the generality of the power hereby conferred, the proxy nominees named
above and each of them are specifically directed to vote as indicated below.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE TWO NOMINEES LISTED IN ITEM NO. 1
AND FOR THE ADOPTION OF THE PROPOSAL FOR THE REINCORPORATION OF THE COMPANY
FROM DELAWARE TO FLORIDA AS SET FORTH IN ITEM NO. 2.
If there are amendments or variations to the matters proposed at the
meeting or at any adjournments or postponements thereof, or if any other
business properly comes before the meeting, this proxy confers discretionary
authority on the proxy nominees named herein and each of them to vote on such
amendments, variations or other business.
(CONTINUED AND TO BE SIGNED ON REVERSE)
(1) Election of two Class III Directors.
[ ] FOR each nominee listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
ARTHUR B. LAFFER and JOSE S. SORZANO
________________________________________________________________________________
(Instructions: To withhold authority to vote for either nominee, write the
nominee's name in the space provided above.)
(2) Proposal for the reincorporation of the Company from Delaware to Florida.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders, Proxy Statement for the May 14, 1998 meeting and the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
Dated:__________________________________________, 1998
______________________________________________________
Signature of Stockholder(s)
______________________________________________________
Print Name(s) Here
(Please sign exactly as your name or names appear
hereon. Full title of one signing in representative
capacity should be clearly designated after signature.
Names of all joint holders should be written even if
signed by one only.)
PLEASE COMPLETE, DATE, SIGN AND MAIL
THIS PROXY IN THE ENVELOPE PROVIDED
