SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,1997
Commission file number 0-3797
MASTEC, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-1259279
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3155 N.W. 77th Avenue, Miami, FL 33122-1205
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 599-1800
Securities registered pursuant to Section 12(b) of
the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.10 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of
the Act:
None
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
The number of shares of Common Stock outstanding as of March 20, 1998
was 27,736,541. The aggregate market value of the voting stock held by
non-affiliates of the registrant computed by reference to the closing price of
the registrant's Common Stock on the New York Stock Exchange on March 20, 1998
was $428,346,532. Directors, executive officers and 10% or greater stockholders
are considered affiliates for purposes of this calculation but should not
necessarily be deemed affiliates for any other purpose.
Documents Incorporated by Reference
Portions of the registrant's Proxy Statement for the 1998 Annual
Meeting of Stockholders to be held on May 14, 1998, which will be filed with the
Commission on or before April 15, 1998, are incorporated by reference into Part
III.
Certain statements included in this Annual Report are forward-looking,
such as statements regarding the future prospects of the telecommunications
construction industry and the Company's growth strategy. These forward-looking
statements are based on the Company's current expectations and are subject to a
number of risks and uncertainties that could cause actual results in the future
to differ significantly from results expressed or implied in any forward-looking
statements included in this Annual Report. These risks and uncertainties
include, but are not limited to, uncertainties relating to the Company's
relationships with key customers and implementation of the Company's growth
strategy. These and other risks are detailed in this Annual Report and in other
documents filed by the Company with the Securities and Exchange Commission.
1. BUSINESS
General
MasTec is one of the world's largest contractors specializing in the
design, installation and maintenance of infrastructure for the
telecommunications and other utilities industry. The Company's business consists
of the installation of aerial and underground copper, coaxial and fiber optic
cable networks as well as wireless antenna networks ("outside plant services").
The Company believes it is the largest independent contractor for these systems
in the United States and Spain, and one of the largest in Argentina, Brazil,
Chile and Peru. The Company also installs central office switching equipment,
and designs, installs and maintains integrated voice, data and video local and
wide area networks inside buildings ("inside wiring"). Clients for the Company's
services include major domestic and international telecommunication service
providers such as the regional Bell operating companies ("RBOCs"), other
incumbent and competitive local exchange carriers, cable television operators,
long-distance operators and wireless phone companies. The Company also provides
infrastructure construction services to the electric power industry and other
public utilities.
MasTec has experienced significant and consistent growth as a result of
its favorable trends in the telecommunications industry, its ability to identify
and integrate strategic acquisitions and, its competitive position as one of the
largest providers of infrastructure services. The Company's revenue has
increased from $142.6 million in 1994 to $703.4 million in 1997. The Company
expects to continue to grow through additional strategic acquisitions as well as
through internal expansion. Since January 1996, the Company has completed 16
domestic and three foreign acquisitions and actively continues to pursue
complimentary acquisitions in the highly fragmented infrastructure services
industry. Internal growth is expected to be driven by the expansion of the
global telecommunications and power distribution industries resulting from (i)
continued global deregulation, which is allowing numerous new service providers
to enter the marketplace and is increasing the competitive pressure on existing
participants to upgrade and expand their networks; (ii) increasing consumer
demand for advanced communications services which require the upgrading of
existing infrastructure to handle increased bandwidth needs; and (iii)
increasing reliance on outsourcing of infrastructure needs to full service
contractors by service providers in an effort to reduce costs and focus on their
core competencies.
Competitive Strengths
The Company seeks to differentiate itself from its competitors through
the following characteristics:
Strong Customer Relationships. Founded in 1929, the Company has
developed strong relationships with numerous telecommunications service
providers by providing high quality services in a cost and time efficient
manner. The Company has been providing services to Telefonica de Espana, S.A.
("Telefonica") and BellSouth Telecommunications, Inc. ("BellSouth"), its two
largest customers, since 1950 and 1969, respectively, and maintains similar
long-term relationships with many of its other customers. For the year ended
December 31, 1997, the company derived approximately 26% and 12% of its revenue
from services performed for Telefonica and BellSouth, respectively. MasTec
currently has 23 multi-year service contracts with Telefonica, the RBOCs and
other telecommunications service providers for certain of their outside plant
requirements up to a specific dollar amount per job and within certain
geographic areas.
Diverse Customer Base. MasTec provides a full range of infrastructure
services to a diverse customer base. Domestically, the Company provides outside
plant services to local exchange customers such as BellSouth, US West
Communications, Inc., SBC Communications, Inc., United Telephone Company of
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Florida, Inc. (a subsidiary of Sprint Corporation ("Sprint")) and GTE
Corporation. The Company also provides outside plant services to competitive
local exchange carriers such as MFS Communications Company, Inc., Sprint
Metropolitan Networks, Inc. and MCI Metro, Inc. (the local telephone
subsidiaries of Sprint and MCI Communications Corporation ("MCI"),
respectively), cable television operators such as Time Warner Inc., Cox
Communications, Inc. and Marcus Cable Company, long distance carriers such as
MCI and Sprint, and wireless communications providers such as PrimeCo Personal
Communications LP and Sprint Spectrum, L.P. Internationally, the Company
provides outside plant services, turn-key switching systems installation and
inside wiring services primarily to Telefonica, the principal telephone company
in Spain, and Telefonica's affiliates in Argentina, Chile and Peru. The Company
also services the local telephone subsidiaries of Telecomunicacoes Brasileiras
S.A. ("Telebras"), the Brazilian government-owned telecommunications system, in
Sao Paulo, Rio de Janeiro, Parana and other states in the more populous and
developed Southern region of Brazil, as well as Companhia Riograndense de
Telecomunicacoes S/A ("CRT"), the local telephone company in Rio Grande do Sul
which is partly owned by Telefonica. For the year ended December 31, 1997, the
Company derived approximately 11% of its revenue from services performed for
Telebras.
The Company renders inside wiring services nationwide to large
corporate customers with multiple locations such as First Union National Bank,
International Business Machines Corporation ("IBM") and Dean Witter Reynolds
Inc., and to universities and health care providers.
Turn-key Capabilities. The Company believes it is one of the few
contractors capable of providing all of the design, installation and maintenance
services necessary for a cable or wireless network starting from a transmission
point, such as a central office or head-end, and running continuously through
aerial and underground cables to the ultimate end users' voice and data ports,
cable outlets or cellular stations. The Company can also install the switching
devices at a central office or set up local and wide area voice, data and video
networks to expand a business' telecommunications infrastructure both inside a
specific structure or between multiple structures.
The Company believes that its customers increasingly are seeking
comprehensive solutions to their infrastructure needs by turning to fewer
qualified contractors who have the size, financial capability and technical
expertise to provide a full range of infrastructure services. The Company
believes that this trend will accelerate as industry consolidations increase and
as these consolidated entities begin to provide bundled services to end users.
The Company believes it has positioned itself through acquisitions and internal
growth as a full service provider of outside plant and inside wiring
infrastructure services to take advantage of this trend.
Broad Geographic Presence. The Company has significantly broadened its
geographic presence in recent years through strategic acquisitions.
Domestically, MasTec has expanded beyond its historical base in the Southeastern
United States and currently has operations in more than 30 states in the
Southeast, mid-Atlantic, Southwest, West and upper Midwest regions of the
country. The Company also substantially increased its international operations
through the acquisition in April 1996 of Sistemas e Instalaciones de
Telecomunicacion, S.A. ("Sintel"), the largest telecommunications infrastructure
contractor in Spain, and through the acquisition in July 1997 of a majority
interest in MasTec Inepar S/A Sistemas de Telecomunicacoes ("MasTec Inepar"), a
leading telecommunications construction company in Brazil. Due to its broad
geographic presence, the Company believes that it is well suited to service
customers with operations across the United States as well as companies that are
active in multiple areas of the world such as multinational corporations and
telecommunications service providers that are expanding into international
markets. In addition, by developing business in many geographic regions, the
Company believes it is less susceptible to changes in the market dynamics in any
one region.
Growth Strategy
The Company is pursuing a disciplined strategy of growth and
diversification in its core business through strategic acquisitions and internal
expansion as follows:
Strategic Acquisitions. The Company plans to continue to pursue
strategic acquisitions in the fragmented telecommunications and utilities
infrastructure industry that either expand its geographic coverage and customer
base or broaden the range of services it can offer to clients. The Company
focuses its acquisition efforts primarily on companies with successful track
records and strong management. The Company has acquired 19 companies since
January 1996 and has significant experience in identifying, purchasing and
integrating telecommunications infrastructure businesses both domestically and
internationally. Management believes that MasTec is able to improve the acquired
companies' operating performance by providing strategic guidance, administrative
support, greater access to capital and savings in the cost of capital,
purchasing and insurance costs.
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Internal Expansion. The Company believes it is poised to capitalize on
the anticipated growth in its industry due to its status as one of the world's
largest telecommunications infrastructure contractors and its strong customer
relationships. The International Telecommunications Union estimates that between
1996 and 2000 telecommunications infrastructure investment will exceed $50
billion in the United States and $600 billion worldwide. In addition, the
Company believes that the RBOCs and other utilities in the United States, which
still conduct a significant portion of their construction work in-house, will
out-source more infrastructure construction in the future in response to
competitive pressures to cut costs, streamline their operations and focus on
their core competencies. The Company believes that its reputation for quality
and reliability, operating efficiency, financial strength, technical expertise,
presence in key geographic areas and ability to offer a full range of
construction services make it well positioned to compete for this business,
particularly the larger, more technically complex infrastructure projects.
The Company also anticipates that its Brazilian operations will become
a more significant part of its operations. The Brazilian government has
estimated that approximately $75 billion will need to be invested over a seven
year period in order to modernize and expand Brazil's telecommunications
infrastructure. To accomplish this objective, the government has stated its
intention of deregulating and privatizing Brazil's telecommunications system.
The Company believes that, through MasTec Inepar, it is well positioned to
participate in this anticipated expansion.
In addition to focusing on its core telecommunications customers, the
Company plans to achieve incremental growth by continuing to develop
complementary lines of businesses. These businesses include the provision of
premise wiring services to corporations and infrastructure construction services
to the electric power industry and other public utilities.
Services, Markets and Customers
The Company's principal business is the provision of telecommunications
and other utilities infrastructure construction services, consisting of both
outside plant services and inside wiring services. For the years ended, December
31, 1995, 1996 and 1997, the percentage of the Company's total revenue generated
by outside plant services was 91%, 84%, and 84%, respectively, and by inside
wiring services was 9%, 16% and 16%, respectively. The Company operates in North
America, Spain, Argentina, Chile, Peru, and Brazil. See Note 9 of Notes to
Consolidated Financial Statements for a description of revenue, operating profit
and identifiable assets attributable to the Company's North American and
International operations.
Telecommunications Construction - North American Operations
Outside Plant Construction. The Company's principal domestic business
consists of outside plant services for telecommunications providers, including
incumbent and competitive local exchange carriers, cable television operators,
long-distance carriers and wireless communications providers. Outside plant
services consist of all of the services necessary to design, install and
maintain the physical facilities used to provide telecommunications services
from the provider's central office, switching center or cable headend to the
ultimate consumer's home or business. These services include the placing and
splicing of cable, the excavation of trenches in which to place the cable, the
placing of related structures such as poles, anchors, conduits, manholes,
cabinets and closures, the placing of drop lines from the main transmission
lines to the customer's home or business, and the maintenance and removal of
these facilities. The Company has developed expertise in directional boring, a
highly specialized and increasingly common method of placing buried cable
networks in congested urban markets without digging a trench.
The Company provides a full range of outside plant services to its
telecommunications company customers, although certain of the Company's
customers, principally the RBOCs, handle certain of these services in-house. The
Company's customers generally supply materials such as cable, conduit and
telephone equipment, and the Company provides the expertise, personnel, tools
and equipment necessary to perform the required installation and maintenance
services.
The Company currently provides outside plant services primarily to
customers in Alabama, Alaska, Arizona, California, Colorado, Florida, Georgia,
Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, North Carolina, North
Dakota, South Dakota, South Carolina, Tennessee, Texas, Virginia and Wyoming, as
well as Ontario, Canada. Principal customers for telecommunications outside
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plant services include BellSouth, US West Communications, Inc., SBC
Communications, Inc., the long distance and local exchange subsidiaries of both
MCI and Sprint, GTE Corp., MFS Communications Company, Inc., Time Warner Inc.,
Cox Communications, Inc. and Marcus Cable Company.
Services rendered to the Company's incumbent local exchange customers,
including BellSouth, are performed primarily under master contracts, which
typically are exclusive service contracts to provide all of the carrier's
outside plant requirements up to a specified dollar amount per job within
certain geographic areas. These contracts generate revenue ranging between $3.0
million and $30.0 million over their respective terms, generally two to three
years. Such contracts are typically subject to termination at any time upon 90
to 180 days prior notice to the Company. Each master contract contemplates
hundreds of individual construction and maintenance projects generally valued at
less than $100,000 each. These contracts typically are awarded on a competitive
bid basis, although customers are sometimes willing to negotiate contract
extensions beyond their original terms without opening them up to bid. The
Company currently has 20 master contracts with telecommunications customers
covering defined regions within the United States, including 12 with BellSouth.
In addition to services rendered pursuant to master contracts, the
Company provides outside plant services on individual projects awarded on a
competitive bid basis or through individual negotiation. While such projects
generally are substantially larger than the individual projects covered by
master contracts, they typically require the provision of services identical to
those rendered under master contracts.
The Company also provides turn-key site acquisition, design,
installation and maintenance services to the wireless communications industry,
including site acquisition and preparation, design and construction of
communications towers, placement of antennas and associated wiring, and
construction of equipment huts.
The Company provides outside plant construction services to electric
power companies and other public utilities, including the City of Austin
Electric Department, City Public Service of San Antonio, Duke Energy
Corporation, Florida Power and Light Company, Florida Power Corporation,
Jacksonville Electric Authority, Memphis Light, Gas and Water Division, Texas
Utilities Company, Carolina Power & Light Co., and Georgia Power Co., and a
number of regional electrical cooperatives. These services, which are
substantially similar to the outside plant services provided to
telecommunications companies, include directional boring for conduit and pipes,
trenching, placing of electric cables, and restoring asphalt and concrete
surfaces. Services to many of these customers are provided under exclusive
master contracts with two to three year initial terms expiring at various dates.
Inside Premises Construction. The Company provides design, installation
and maintenance of integrated voice, data and video networks inside buildings
for large companies with multiple locations such as First Union National Bank,
IBM and Dean Witter Reynolds Inc., for college campuses such as the University
of California at Riverside and the University of Miami and for health care
providers such as Carolina Medical Center and Kaiser Permanente. The Company
provides these services primarily on the east and west coasts of the United
States although the Company is capable of providing these services nationwide.
Inside wiring services consist of designing, installing and maintaining
local area networks and wide area networks linking the customers' voice
communications networks at multiple locations with their data and video
services. This type of work is similar to outside plant construction; both
involve the placing and splicing of copper, coaxial and fiber optic cables.
Inside wiring is less capital intensive than outside plant construction but
requires a more technically proficient work force.
The Company contracts with primary contractors to provide services to
First Union National Bank and IBM under subcontracts that are similar to master
contracts in the outside plant business because they grant the Company the
exclusive right to provide inside wiring services to these customers within
certain geographic regions. The Company also provides inside wiring services on
individual projects that are awarded on a competitive bid basis or through
individual negotiation. The Company intends to take advantage of the
fragmentation of the inside wiring industry by marketing a full range of inside
wiring services to large corporations with multiple locations across the
country. The Company believes that these types of customers increasingly are
seeking a single vendor to provide all of their inside wiring.
The Company is one of two distributors in the United States, Canada and
Mexico of a fiber optic cable installation technology known as FutureFlex. This
technology allows the installation of individual strands of optical fiber by
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means of compressed gas blown through flexible tubing without the necessity of
cutting or splicing the cable except at the terminal points. As a result, the
network can be expanded, changed or moved more easily and cost-effectively.
Telecommunications Construction - International Operations
Overview. The Company is engaged in the telecommunications and other
utility construction business internationally, a wholly owned subsidiary of the
Company, primarily in Argentina, Brazil, Chile, Peru and Spain through Sintel
and its affiliates and MasTec Inepar. Sintel is a Spanish company that has
provided telecommunications construction services to Telefonica and Telefonica's
affiliates since 1950. Telefonica is the principal provider of local and long
distance telephony in Spain. Through its affiliate, Telefonica Internacional,
S.A., Telefonica owns interests in certain local telephone companies in
Argentina, Brazil, Chile and Peru. Through Sintel, the Company is the leading
provider of telecommunications infrastructure services to Telefonica and its
affiliates in Spain, and one of the leading providers of these services to
Telefonica's affiliates in Argentina, Chile and Peru.
The Company renders telecommunications construction services in Brazil
through MasTec Inepar, a Brazilian company owned 51% by the Company and 49% by
Inepar SA Industrias e Construcoes ("Inepar"), a leading telecommunications and
power infrastructure and equipment company in Brazil. MasTec Inepar was formed
in July 1997 to take advantage of construction opportunities created by the
privatization, de-monopolization and deregulation of the Brazilian
telecommunications market.
Spanish Operations. In Spain, Sintel's principal business is providing
outside plant services, inside wiring services and equipment installation to
Telefonica and its affiliates. These services are substantially similar to those
provided by the Company in the United States. Sintel also installs Telefonica
telephone equipment in residences and businesses. Sintel's Spanish operations
are concentrated in Spain's largest commercial centers, Madrid, Barcelona,
Seville and Valencia, and surrounding areas, although Sintel maintains a
presence throughout Spain.
Sintel provides the largest percentage of Telefonica's outside plant
services requirements. Sintel provides the bulk of these services under three
separate multi-year comprehensive services contracts, which are similar to
master contracts in the United States, for distinct types of outside plant
services: (i) placement and splicing of communications lines; (ii) trenching and
placing of conduits; and (iii) placing of drop lines to residences and
businesses. These agreements set the unit prices at which Sintel will render
services to Telefonica and establish the percentage of Telefonica's requirements
in these categories that will be satisfied by Sintel in particular geographic
areas of Spain. These three contracts expire at the end of 1998; the Company
expects to negotiate new comprehensive services contracts with Telefonica
beginning in October 1998. Telefonica enters into similar agreements with
Sintel's principal competitors in Spain. The Company believes that Telefonica
considers various factors in awarding these contracts and setting their terms,
including price, quality, technical proficiency and the contractor's
relationship with Telefonica. Telefonica also awards individual projects through
a competitive bidding process or through individual negotiation.
In addition to outside plant services, Sintel provides inside wiring
services to Telefonica that are substantially similar to those provided by the
Company in the United States. Sintel also installs transmission equipment,
central office switching equipment, power generating equipment and cellular
equipment for telecommunications systems for Telefonica. This equipment includes
multiplexers, carrier systems and microwave systems, and central office
equipment such as frames, protectors, connector blocks, batteries and power
systems, and cellular antennas and cell sites. The contracts for this work are
awarded on a competitive bid basis or through individual negotiation.
Telefonica is the principal provider of local and long distance
telephony in Spain. As a result of European Union initiatives, Spain must
liberalize its telecommunications industry by December 1, 1998 to permit
competitors to Telefonica. In July 1997, a second license to provide public
switched telephony was awarded to Retevision, S.A. ("Retevision"), which is
owned partly by the Spanish government, Societa Finanziaria Telefonica per
Azioni SpA ("STET"), an Italian telephone company, and Empresa Nacional de
Electricidad, S.A., a Spanish electric utility company. Retevision has begun
providing local telephony in Spain in 1998, and a third local and long distance
telephony license is expected to be awarded by may 30, 1998. By December 1,
1998, it is expected that the industry will be completely open to competition.
The Company believes that the increased competition in the Spanish telephony
market will increase demand for outside plant services in Spain as new service
providers build competing networks. The Company has commenced providing
telecommunications construction services to Retevision.
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Sintel also installs and maintains cable television networks for
Telefonica and its affiliates and for Retevision. The Spanish cable television
market has been underdeveloped due to the lack of a legal structure for the
provision of cable telecommunications services in Spain. In 1997, a legal
structure for the provision of these services was completed and 21 new licenses
to provide cable television services have been awarded and applications for 13
additional licenses are pending. In addition, as of January 1, 1998, cable
operators are entitled to provide local telephony within their service areas as
well as long distance telephony. The Company anticipates that the demand for
construction services to the cable television industry will increase
significantly as new networks are constructed and existing networks are
upgraded. Sintel also has begun providing infrastructure services to the
electric power industry through a recently formed joint venture with a
Portuguese electrical contractor.
Argentina, Chile, Peru Operations. The Company operates in Argentina,
Chile and Peru through unconsolidated subsidiaries in which the Company holds a
50% interest. The other 50% interests in these subsidiaries are held by
established local infrastructure construction companies and operational control
is shared by the Company and its local partner. In Argentina and Chile, the
Company's partner is a subsidiary of Sociedad Macri, one of the largest
commercial groups in Argentina. In Peru, the Company's partner is a subsidiary
of Grana y Montero, S.A., a leading construction company in Peru. The principal
shareholder of Grana y Montero, S.A., is a shareholder and a director of
Telefonica del Peru. The Company's Latin American affiliates primarily provide
outside plant services, cable television installation and similar services to
Telefonica's local telephone company affiliate in each of the countries in which
the affiliate is located: Telefonica de Argentina in Argentina; Compania de
Telefonos de Chile in Chile; and Telefonica del Peru in Peru. As part of the
agreement with Sociedad Macri for the acquisition of its interest in Sintel's
Argentine affiliate, Sociedad Macri has contributed to the affiliate certain of
its telecommunications construction contracts with Telecom de Argentina, S.A.,
the principal provider of local telephony in northern Argentina.
Brazilian Operations. MasTec Inepar, a Brazilian company, was formed in
July 1997 by the Company and Inepar. As part of the formation, Inepar
transferred the personnel, qualifications and other assets of its
telecommunications construction division to MasTec Inepar together with
contracts for specific projects with prices totaling approximately $280 million.
These contracts cover the provision of outside plant services for the local
exchange subsidiaries of Telebras, the Brazilian government-owned
telecommunications company, particularly in Sao Paulo, Rio de Janeiro, Parana
and other states in the more populous and developed southern region of Brazil.
MasTec Inepar also provides services to CRT, the local telephone company in Rio
Grande do Sul which is partly owned by Telefonica. The services provided are
principally outside plant services for wireless communications networks.
Telecommunications Investments
The Company has invested in certain telecommunications businesses
located in or servicing Latin America. These include minority interests in
Supercanal Holding, S.A. ("Supercanal") and related entities, which operate a
cable television system in Argentina, and in Consorcio Ecuatoriano de
Telecomunicaciones, S.A. ("Conecel"), an Ecuadorian cellular company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company also recently acquired a license in Paraguay to
construct and operate a nationwide personal communication system ("PCS"), and
has reached agreement with Inepar, its partner in MasTec Inepar, and with
Sociedad Macri, its partner in Argentina and Chile, to share in development of
the system. The agreement with Inepar and Sociedad Macri regarding Paraguay
provides that MasTec Inepar will construct the system.
Sales and Marketing
Executives of the Company's outside plant subsidiaries market outside
plant services to existing and potential telecommunications and other utility
customers in order to negotiate new contracts or be placed on lists of vendors
invited to submit bids for master contracts and individual construction
projects. Inside premises services are marketed both by the executives of the
subsidiaries that provide these services and through commissioned salespeople
employed by the Company. The Company is developing a company-wide marketing plan
to emphasize the "MasTec" brand name to national and international customers.
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Suppliers
The Company's customers supply the majority of the raw materials and
supplies necessary to carry out the Company's contracted work. The Company is
not dependent on any one supplier for any raw materials or supplies that the
Company obtains for its own account other than the FutureFlex airblown fiber
product that the Company distributes for Sumitomo Electric Lightwave Co.
Competition
The industry in which the Company competes is highly competitive and
fragmented. The Company competes with a number of contractors in the markets in
which it operates, ranging from small independent firms servicing local markets
to larger firms servicing regional markets, as well as with large national and
international equipment vendors on turn-key projects who subcontract
construction work to contractors other than the Company. These equipment vendors
typically are better capitalized and have greater resources than the Company.
Most companies engaged in the same or similar business tend to operate in a
specific, limited geographic area, although larger competitors may bid on a
particular project without regard to location. Although the Company believes it
is the largest provider of infrastructure services to the telecommunications and
other utilities industry in the United States and Spain and one of the largest
in Argentina, Brazil, Chile and Peru, neither the Company nor any of its
competitors can be considered dominant in the industry on a national or
international basis. The Company also faces competition from the in-house
construction and maintenance departments of RBOCs and other customers and
potential customers, which employ personnel who perform some of the same types
of services as those provided by the Company.
Employees
As of December 31, 1997, the Company (excluding its unconsolidated
companies) had approximately 7,850 employees, 4,600 of whom are employed in
domestic operations and 3,250 of whom are employed in international operations.
Approximately 100 of the Company's domestic employees and approximately 3,200 of
Sintel's employees are unionized. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations Overview" for a discussion of
Sintel's labor relations.
2. PROPERTIES
The Company's corporate headquarters are located in a 60,000 square
foot building owned by the Company in Miami, Florida. The Company also has
regional offices in owned facilities located in Tampa, Florida, Austin, Texas
and Charlotte, North Carolina. Sintel's principal executive offices are located
in leased premises in Madrid, Spain and MasTec Inepar's principal executive
offices are located in leased premises in Sao Paulo, Brazil.
The Company's principal operations are conducted from field offices,
equipment yards and temporary storage locations, none of which the Company
believes is material to its operations because most of the Company's services
are performed on the customers' premises or on public rights of way. In
addition, the Company believes that equally suitable alternative locations are
available in all areas where it currently does business.
3. LEGAL PROCEEDINGS
The following is a summary of legal proceedings involving the Company.
In December 1990, Albert H. Kahn, a stockholder of the Company, filed a
class action and derivative suit in Delaware state court against the Company,
the then-members of its Board of Directors and National Beverage Corporation
("NBC"), the Company's then-largest stockholder. The complaint alleges, among
other things, that the Company's Board of Directors and NBC breached their
respective fiduciary duties in approving certain transactions. The lawsuit seeks
to rescind these transactions and to recover damages in an unspecified amount.
In November 1993, Mr. Kahn filed a class action and derivative
complaint against the Company, the then members of its Board of Directors, and
Jorge L. Mas, Jorge Mas and Juan Carlos Mas, the principal shareholders of the
Company. The lawsuit alleges, among other things, that the Company's Board of
Directors and NBC breached their respective fiduciary duties by approving the
terms of the acquisition of the Company by the Mas family, and that the Mas
family had knowledge of the fiduciary duties owed by NBC and the Company's Board
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of Directors and knowingly and substantially participated in the breach of these
duties. The lawsuit also claims derivatively that each member of the Company's
Board of Directors engaged in mismanagement, waste and breach of fiduciary
duties in managing the Company's affairs prior to the acquisition by the Mas
family.
There has been no activity in either of these lawsuits in more than one
year. The Company believes that the allegations in each of these lawsuits are
without merit and intends to defend these lawsuits vigorously.
In November 1997, Church & Tower, Inc., a wholly-owned subsidiary of
the Company ("Church & Tower"), filed a lawsuit against Miami-Dade County (the
"County") in Florida state court alleging breach of contract and seeking damages
exceeding $3.0 million in connection with the County's refusal to pay amounts
due to Church & Tower under a multi-year agreement to perform road restoration
work for the Miami-Dade Water and Sewer Department ("MWSD"), a department of the
County, and the County's wrongful termination of the agreement. The County has
refused to pay amounts due to Church & Tower under the agreement until alleged
overpayments under the agreement have been resolved, and has counterclaimed
against Church & Tower seeking damages. The Company believes the counterclaim,
if successful, will not exceed $2.1 million. The County also has refused to
award a new road restoration agreement for MWSD to Church & Tower, which was the
low bidder for the new agreement. The Company believes that any amounts due to
the County under the existing agreement are not material and may be recoverable
in whole or in part from Church & Tower subcontractors who actually performed
the work and whose bills were submitted directly to the County.
The Company is a party to other pending legal proceedings arising in
the normal course of business, none of which the Company believes is material to
the Company's financial position or results of operations.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no vote of security holders during the fourth quarter of the
last fiscal year.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the names and ages of all of the executive
officers of the Company, indicating all positions and offices with the Company
held by each such person, and each such person's principal occupation or
employment during the past five years. The executive officers hold office for
one year or until their successors are elected by the Board of Directors.
Name Age Position
Jorge Mas 35 Chairman of the Board of Directors,
President and Chief Executive Officer
Henry N. Adorno 50 Executive Vice President and Special Counsel
Ismael Perera 49 Senior Vice President-Operations
Edwin D. Johnson 41 Senior Vice President-Chief Financial Officer
Carlos A. Valdes 34 Senior Vice President-Corporate Development
Jose M. Sariego 43 Senior Vice President-General Counsel
Jorge Mas has been President, Chief Executive Officer and a director of
the Company since March 1994 and was elected Chairman of the Board of Directors
of the Company in January 1998. Prior to that time and during the preceding five
years, Mr. Mas served as the President and Chief Executive Officer of Church &
Tower. In addition, Mr. Mas is the Chairman of the Board of Directors of Neff
Corporation, a company that sells and leases construction equipment, Atlantic
Real Estate Holding Corp., a real estate holding company, U.S. Development
Corp., a real estate development company and Santos Capital, 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.
9
Henry N. Adorno was elected Executive Vice President and Special
Counsel of the Company in January 1998. Prior to joining the Company, Mr. Adorno
was President and Chief Executive Officer of Adorno & Zeder, P.A., a Miami law
firm that he co-founded in 1986.
Ismael Perera has been Senior Vice President-Operations of the Company
since March 1994. From August 1993 until March 1994, he served as the Vice
President-Operations of Church & Tower. From 1970 until July 1993, Mr. Perera
served in various capacities in network operations for BellSouth, including most
recently as a Senior Director of Network Operations from 1985 to 1993.
Edwin D. Johnson has been Senior Vice President-Chief Financial Officer
of the Company since March 1996. During the 10 years prior to joining the
Company, Mr. Johnson served in various capacities with Attwoods plc, a British
waste services company, including Chief Financial Officer and member of the
Board of Directors during the final three years of his employment with Attwoods.
Carlos A. Valdes has been Senior Vice President-Corporate Development
of the Company since March 1996. Prior to that time, Mr. Valdes was Senior Vice
President-Finance of the Company from March 1994 to March 1996 and Chief
Financial Officer of Church & Tower from 1991 to 1994.
Jose M. Sariego has been Senior Vice President-General Counsel of the
Company since September 1995. Prior to joining the Company, Mr. Sariego was
Senior Corporate Counsel and Secretary of Telemundo Group, Inc., a Spanish
language television network, from August 1994 to August 1995. From January 1990
to August 1994, Mr. Sariego was a partner in the Miami office of Kelley Drye &
Warren, an international law firm.
5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock currently is listed on the New York Stock
Exchange under the symbol MTZ. Prior to February 14, 1997, the Common Stock was
listed on the Nasdaq National Market under the symbol MASX. The high and low
closing prices of the Common Stock for each quarter of the last two fiscal
years, as reported by the New York Stock Exchange and Nasdaq, are set forth
below:
1997 1996
High Low High Low
First Quarter $ 68 7/8 $ 23 $ 12 5/8 $ 9 1/2
Second Quarter $ 47 15/16 $ 26 1/2 $ 35 3/4 $ 11 3/8
Third Quarter $ 54 3/8 $ 39 $ 38 3/8 $ 21 1/2
Fourth Quarter $ 45 1/16 $ 20 3/4 $ 57 3/4 $ 32 5/8
The above quotations reflect interdealer prices, without retail mark
up, mark down or commission, and may not necessarily represent actual
transactions. The Company's Board of Directors declared a three-for-two stock
split in the form of a stock dividend for stockholders of record on February 3,
1997 payable on February 28, 1997. The prices set forth in the preceding table
have not been adjusted for the stock split. The Company did not declare any cash
dividends for the years ended December 31, 1997 and 1996.
At March 20, 1998, there were 4,752 stockholders of record of the
Common Stock.
On January 30, 1998, the Company issued $200 million of its 7 3/4%
Senior Subordinated Notes due 2008 (the "Senior Notes") to qualified
institutional buyers and institutional accredited investors in reliance on Rule
144A and pursuant to exemptions from registration under Section 4(2) of the
Securities Act of 1933, as amended. The initial purchasers for the Senior Notes
sold to the qualified institutional buyers and institutional accredited
investors were Jefferies & Company, Inc., BancBoston Securities Inc., CIBC
Oppenheimer Corp. and NationsBanc Montgomery Securities LLC. The net proceeds
from the offering of the Senior Notes were approximately $194.2 million after
underwriting discounts and commissions of approximately $5.0 million and other
transaction costs.
10
6. SELECTED FINANCIAL INFORMATION
The following table presents selected consolidated financial
information of the Company as of the dates and for each of the periods
indicated. The selected financial data set forth below should be read in
conjunction with the Consolidated Financial Statements, the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report on Form 10-K.
Year Ended December 31, (1)
---------------------------
1993 1994 (2) 1995 1996 (3) 1997
--------------------------------------------------------------
(Amounts in thousands except per share amounts)
--------------------------------------------------------------
Statement of Income Data:
Revenue $ 74,728 $ 142,583 $ 218,859 $ 534,068 $ 703,369
Cost of revenue 51,763 105,451 158,598 394,497 522,470
Depreciation and amortization 1,520 5,545 8,178 13,686 24,127
General and administrative expenses 15,681 20,595 28,918 72,392 90,995
------ ------- ------- ------- -------
Operating income 5,764 10,992 23,165 53,493 65,777
Interest expense 302 3,846 5,306 11,940 11,920
Interest and dividend income 359 1,550 3,501 3,480 1,921
Special charges-real estate and
investment write-downs (4) 0 0 23,086 0 0
Other income, net (5) 355 1,348 2,250 2,553 8,221
Equity in earnings (losses) of
unconsolidated companies and
minority interest (6) 1,177 247 (139) 3,133 (449)
Provision for income taxes (7) 2,765 3,541 148 17,492 23,610
Income from continuing operations (7) 4,588 6,750 237 33,227 39,940
Discontinued operations 0 825 2,531 (111) 129
------ ------- ------- ------- -------
Net income $ 4,588 $ 7,575 $ 2,768 $ 33,116 $ 40,069
====== ======= ======= ======= =======
Pro forma basic earnings per share:
Continuing operations (7) $ 0.27 $ 0.26 $ 0.01 $ 1.27 $ 1.46
weighted average common
shares outstanding (8) 16,746 25,487 25,263 26,074 27,294
Pro forma diluted earnings per share:
Continuing operations (7) $ 0.27 $ 0.26 $ 0.01 $ 1.25 $ 1.43
weighted average common
shares outstanding (8) 16,746 25,487 25,440 26,499 27,853
As of December 31,
------------------
1993 1994 1995 1996 1997
---------------------------------------------------------
(Amounts in thousands)
Balance Sheet Data:
Property and equipment, net $ 8,038 $ 44,157 $ 50,572 $ 67,177 $ 86,109
Total assets 32,988 155,969 191,272 511,154 587,598
Total debt 5,545 46,977 77,668 164,934 149,057
Total stockholders' equity 16,396 57,270 60,614 116,983 180,731
(1) Amounts have been restated to reflect the 1997 acquisitions of Wilde
Construction, Inc. and two related companies and AIDCO, Inc. and one
related company, which were accounted for as poolings of interest.
See Note 2 of Notes to Consolidated Financial Statements.
(2) Includes the results of Burnup & Sims Inc. from March 11, 1994.
(3) Includes the results of Sintel from May 1, 1996.
(4) As a result of the disposal of non-core real estate assets and other
investments, the Company recorded $23.1 million in special charges in
the year ended December 31, 1995. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
(5) In 1997, the Company sold a portion of its indirect interest in Conecel
for a gain of $7.1 million. See Note 2 of Notes to Consolidated
Financial Statements.
11
(6) Included in 1997 results is the minority interest related to the
Company's Brazilian operation. See Note 2 to Notes to the Consolidated
Financial Statements.
(7) Provision for income taxes and income from continuing operations have
been adjusted to reflect a pro forma tax provision for companies that
were previously S Corporations.
(8) Amounts have been adjusted to reflect the three-for-two stock split
effected February 28, 1997 and shares issued in connection with two
acquisitions accounted for under the pooling of interest method.
7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
MasTec is one of the world's largest contractors specializing in the
build-out of telecommunications and other utilities infrastructure. The
Company's business consists of the design, installation and maintenance of the
outside physical plant for telephone and cable television communications systems
and of integrated voice, data and video local and wide area networks inside
buildings, and the installation of central office telecommunications equipment.
The Company also provides infrastructure construction services to the electric
power industry and other public utilities.
MasTec was formed in March 1994 through the combination of Church &
Tower and Burnup & Sims Inc. ("Burnup & Sims"), two established names in the
U.S. telecommunications and other utilities construction services industry. In
April 1996, the Company purchased Sintel, a company engaged in
telecommunications infrastructure construction services in Spain, Argentina,
Chile and Peru, from Telefonica. The Sintel acquisition gave the Company a
significant international presence and more than doubled the size of the Company
in terms of revenue and number of employees. In Argentina, Chile and Peru, the
Company operates through incorporated entities in which it holds a 50% interest
and which are accounted under the equity method. Operational control of these
entities is shared by the Company and its local partner. See Notes 2 and 9 of
Notes to Consolidated Financial Statements for pro forma financial information
and geographic information, respectively.
In July and August 1997, the Company acquired Wilde Construction,
Inc. and two related companies and AIDCO, Inc. and one related company
(collectively, the "Pooled Companies") through an exchange of common stock.
The acquisitions were accounted for as poolings of interest. Accordingly,
the Company's consolidated financial statements include the results of the
Pooled Companies for all periods presented. See Note 2 of Notes to
Consolidated Financial Statements.
In July 1997, the Company acquired a 51% interest in MasTec Inepar, a
Brazilian telecommunications infrastructure construction company. At the time of
the acquisition, MasTec Inepar had a backlog of construction contracts of
approximately $280.0 million. The results of MasTec Inepar are consolidated in
the results of the Company, net of a 49% minority interest, beginning August
1997.
During the year ended December 31, 1997, the Company completed nine
other acquisitions that have been accounted for under the purchase method of
accounting and the results of operations of which have been included in the
Company's consolidated financial statements from the respective acquisition
dates. The Company's pro forma results of operations for 1997 giving effect to
these acquisitions would not differ materially from actual results.
On September 3, 1997, Sintel filed a petition with the Spanish labor
authorities to approve a restructuring of its workforce. In response to the
Company's petition, the unionized employees declared work stoppages during the
latter part of September 1997 and continued with half day strikes through the
first week in October 1997.
In March 1998, Sintel entered into an agreement with its unions to
resolve the labor dispute. Under the agreement, the Company is entitled to
permanently reduce its workforce, beginning with the placement of 209 employees
on unemployment partly paid by the Spanish government for up to six months.
Additional voluntary terminations and the results of certain agreed upon
restructuring activities will allow the Company to quantify final severance
arrangements over that period. In addition, the agreement calls for reductions
in certain non-wage compensation and increases in productivity benchmarks. The
agreement also contemplates an increase in base wage rates for remaining union
workers. While management anticipates a reduction in ongoing operating costs to
result from these negotiations, the Company recognizes that it services an
12
increasingly competitive telephony industry in the Spanish market and a
substantial portion of any savings may be offset by more competitive prices to
Telefonica and other communication service customers. As of December 31, 1997,
the Company had not reserved for possible restructuring costs associated with a
settlement of the Sintel labor situation in its consolidated financial
statements. The Company is currently negotiating with its unions to determine
the final number of employees and related severance amounts. The ultimate amount
to be paid, which is expected to be significant, cannot be presently quantified.
Results of Operations
Revenue is generated primarily from telecommunications and other
utilities infrastructure services. Infrastructure services are provided to
telephone companies, public utilities, cable television operators, other
telecommunications providers, governmental agencies and private businesses.
Costs of revenue includes subcontractor costs and expenses, materials not
supplied by the customer, fuel, equipment rental, insurance, operations payroll
and employee benefits. General and administrative expenses include management
salaries and benefits, rent, travel, telephone and utilities, professional fees
and clerical and administrative overhead.
The following table sets forth certain historical consolidated
financial data as a percentage of revenue for the years ended December 31, 1995,
1996 and 1997.
Years Ended December 31,
----------------------------------
1995 1996 1997
---- ---- ----
Revenue 100.0% 100.0% 100.0%
Costs of revenue 72.5 73.9 74.3
Depreciation and amortization 3.7 2.6 3.4
General and administrative expenses 13.2 13.6 12.9
---- ---- ----
Operating income 10.6 9.9 9.4
Interest expense 2.4 2.2 1.7
Interest and dividend income, other income,
net, equity in earnings of unconsolidated
companies and minority interest 2.6 1.7 1.4
Special charges-real estate and investment
write-downs 10.6 0.0 0.0
---- ---- ----
Income from continuing operations before provision
for income taxes 0.2 9.4 9.1
Provision for income taxes (1) 0.1 3.2 3.4
---- ---- ----
Income from continuing operations (1) 0.1% 6.2% 5.7%
==== ==== ====
(1) Provision for income taxes and income from continuing
operations has been adjusted to reflect a tax provision for
companies that were S corporations.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Revenue from domestic operations increased $75.1 million, or 21.7%, to
$421.0 million in 1997 as compared to $345.9 million in 1996. Domestic growth
was generated by acquisitions. Revenue generated by international operations
increased $94.2 million, or 50.1%, to $282.4 million in 1997 as compared to
$188.2 million in 1996 due primarily to the inclusion of Sintel's results for
the entire period in 1997 compared to eight months in the 1996 period and the
results of MasTec Inepar for five months ended December 31, 1997, which totaled
$74.9 million. Sintel's revenue was negatively impacted in 1997 by an 18%
devaluation in the Spanish peseta and by work stoppages in the second half of
1997 as discussed in "Overview".
Gross profit (revenue less cost of revenue), excluding depreciation and
amortization, increased $41.3 million, or 29.6%, to $180.9 million, or 25.7% of
revenue in 1997 as compared to $139.6 million, or 26.1% of revenue in 1996. The
decrease in gross profit as a percentage of revenue was due primarily to lower
margins generated by international operations. Domestic gross margins (gross
profit as a percentage of revenue) increased to 27.4% in 1997 from 25.1% in 1996
primarily due to the performance of certain higher margin domestic jobs during
1997 and domestic cost reductions. There can be no assurance that the Company
will be able to obtain higher margin jobs and implement further cost reductions
in the future. International gross margins decreased to 23.2% in 1997 as
compared to 28.0% in 1996 due to overall lower margins from the Company's newly
formed Brazilian operations (15.0%) and lower productivity in the second half of
1997 from the Company's Spanish operations.
13
Depreciation and amortization increased $10.4 million, or 75.9%, to
$24.1 million in 1997 from $13.7 million in 1996. The increase in depreciation
and amortization was a result of increased capital expenditures in the latter
part of 1996, as well as depreciation and amortization associated with
acquisitions. As a percentage of revenue, depreciation and amortization was 3.4%
and 2.6% of revenue for 1997 and 1996, respectively.
General and administrative expenses increased $18.6 million, or 25.7%,
to $91.0 million, or 12.9% of revenue for 1997 from $72.4 million, or 13.6% of
revenue for 1996. Domestic general and administrative expenses were $49.9
million, or 11.9% of domestic revenue in 1997, compared to $41.4 million, or
12.0% of domestic revenue for 1996. The increase in dollar amount of domestic
general and administrative expenses is due primarily to acquisitions. The
decline as a percentage of domestic revenue is due primarily to the higher
revenue volume. International general and administrative expenses increased
$10.1 million, or 32.6%, to $41.1 million, or 14.6% of international revenue in
1997 from $31.0 million, or 16.5% of international revenue for 1996. The
increase in international general and administrative expenses was due to the
inclusion of Sintel's results for the entire 1997 period, compared to only eight
months during the 1996 period. The decline in international general and
administrative expenses as a percentage of international revenue is due to a
lower general and administrative expense for the Brazilian operations, which was
2.2% of Brazilian revenue.
Operating income increased $12.3 million, or 23.0%, to $65.8 million,
or 9.4% of revenue in 1997 from $53.5 million, or 9.9% of revenue in 1996.
Interest expense remained constant at $ 11.9 million for both periods,
primarily due to the lower interest rates on Spanish and domestic borrowings and
the conversion of the Company's 12% Subordinated Convertible Debentures into
Common Stock on June 30, 1996. Offsetting the decline was the inclusion of
interest expense associated with Sintel's working capital needs for the entire
1997 period compared to eight months for the 1996 period. The Company
anticipates increased interest expense as a result of its recently completed
bond offering. See -"Financial Condition, Liquidity and Capital Resources."
Included in other income for 1997, is a $7.1 million gain on sale of
the Company's indirect interest in Conecel (See Note 2 of Note to Consolidated
Financial Statements).
Provision for income taxes on a pro forma basis was $23.6 million, or
36.9% of income from continuing operations before equity in earnings of
unconsolidated companies, taxes and minority interests in 1997, compared to
$17.5 million, or 36.8% of income from continuing operations before equity in
earnings of unconsolidated companies, taxes and minority interests in 1996.
Income from continuing operations on a pro forma basis increased $6.7
million, or 20.2%, from $33.2 million in 1996 to $39.9 million in 1997. Income
from continuing operations on a pro forma basis as a percentage of revenue
decreased to 5.7% in 1997 from 6.2% in 1996.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Revenue increased $315.2 million, or 144.0%, to $534.1 million for the
year ended December 31, 1996 from $218.9 million for the year ended December 31,
1995. Domestic revenue increased $127.0 million, or 58.0%, to $345.9 million for
1996 from $218.9 million for 1995, primarily due to growth in revenue generated
from existing contracts and to domestic acquisitions completed in 1996 which
generated $23.5 million in revenue. International revenue, comprised of revenue
from Sintel, which the Company acquired in April 1996, contributed $ 188.2
million of revenue for the year ended December 31, 1996.
Gross profit (revenue less costs of revenue), excluding depreciation
and amortization, increased $79.3 million, or 131.5%, to $139.6 million, or
26.1% of revenue, for the year ended December 31, 1996 from $60.3 million, or
27.5% of revenue, for the year ended December 31, 1995. Domestic gross margins
(gross profit as a percentage of revenue) decreased to 25.1% for the year ended
December 31, 1996 from 27.5% for the year ended December 31, 1995. The decline
in domestic gross margins was primarily due to additional start-up and expansion
costs relating to the rapid growth in revenue. International gross margins were
28.0% for the year ended December 31, 1996.
14
Depreciation and amortization increased $5.5 million, or 67.1%, to
$13.7 million for the year ended December 31, 1996 from $8.2 million for the
year ended December 31, 1995. Domestic depreciation and amortization as a
percentage of domestic revenue decreased to 3.4% for 1996 from 3.7% for 1995 due
to economies of scale obtained over a larger domestic revenue base.
International depreciation and amortization was 1.1% of international revenue
for the year ended December 31, 1996, as the Company's international operations
are less capital intensive than the Company's domestic operations.
General and administrative expenses increased $43.5 million, or 150.5%,
to $72.4 million, or 13.6% of revenue for the year ended December 31, 1996 from
$28.9 million, or 13.2% of revenue for the year ended December 31, 1995.
Domestic general and administrative expenses increased $12.5 million, or 43.3%,
to $41.4 million, or 12.0% of domestic revenue, for 1996 from $28.9 million, or
13.2% of domestic revenue in 1995. The decrease in domestic general and
administrative expenses as a percentage of domestic revenue is primarily the
result of spreading overhead expenses over a broader revenue base. Included in
domestic general and administrative expenses for 1996 and 1995 are salaries and
bonuses for employees of the Pooled Companies of approximately $6.1 million and
$3.8 million, respectively. International general and administrative expenses
were $31.0 million, or 16.5% of international revenue, for the year ended
December 31, 1996.
Operating income increased $30.3 million, or 130.6%, to $53.5 million,
or 9.9% of revenue, for the year ended December 31, 1996 from $23.2 million, or
10.6% of revenue, for the year ended December 31, 1995. The decline in operating
income as a percentage of revenue was due to the decline in domestic gross
margins in 1996 and bonuses earned by employees of the Pooled Companies.
Interest expense increased $6.6 million, or 124.5%, to $11.9 million
for the year ended December 31, 1996 from $5.3 million for the year ended
December 31, 1995 primarily due to borrowings used for equipment purchases and
to fund investments in unconsolidated companies, offset in part by the
conversion of the Company's 12% Subordinated Convertible Debentures into Common
Stock on June 30, 1996.
As a result of the decision to accelerate the disposal of certain
non-core real estate assets and other investments, the Company recorded $23.1
million in special charges during the year ended December 31, 1995. The Company
recorded a special charge of $15.4 million in the third quarter of 1995 to
adjust the carrying values of its real estate investments to estimated net
realizable value based on offers received by the Company to dispose of certain
real estate in a bulk transaction. The original value assigned to the real
estate investments contemplated the disposition of the properties on an
individual basis and no consideration had previously been given to a bulk sale.
In the fourth quarter of 1995, the Company recorded an additional charge of $7.7
million to reflect the value realized upon a sale of certain real estate and the
Company's preferred stock investment in early 1996. These assets were sold at
prices and in a manner designed to facilitate their immediate disposal so that
the Company could concentrate its resources on its core telecommunications
construction business.
Income from continuing operations after a pro forma tax provision
increased to $33.2 million, or 6.2% of revenue, for the year ended December 31,
1996 from $0.2 million for the year ended December 31, 1995 which included the
special charge of $23.1 million.
In the third quarter of 1995, the Company adopted a plan to dispose of
certain non-core businesses acquired as a result of the acquisition of Burnup &
Sims in March 1994. See Note 13 of Notes to Consolidated Financial Statements.
These businesses included the operations of a printing company, a theater chain
and an uninterrupted power supply device assembler. During 1995, the Company
sold the assets of the theater chain and the assembler. The two transactions
netted a gain of $7.4 million after tax. The remaining theater operations have
been closed and are currently being marketed for sale for the underlying real
estate value. Based on the estimated net realizable value of these businesses, a
loss on disposition of approximately $6.4 million, net of tax, relating to the
remaining discontinued operations was recorded in 1995. The Company sold the
printing company in January 1997 for its carrying value.
Financial Condition, Liquidity and Capital Resources
The Company's primary liquidity needs are for working capital, to
finance acquisitions and capital expenditures and to service the Company's
indebtedness. The Company's primary sources of liquidity have been cash flow
15
from operations, borrowings under revolving lines of credit and the proceeds
from the sale of investments and non-core assets.
Net cash provided by operating activities for the year ended December
31, 1997 was $23.1 million, compared to $41.9 million for the year ended 1996.
This decrease was due to fluctuations in working capital, particularly a
reduction of accounts payable balances companywide and an increase in accounts
receivable and unbilled revenue from Brazilian operations, offset by an increase
in net income to $42.7 million as compared to net income of $35.9 million in the
comparative 1996 period.
Net cash provided by the sale of investments and non-core assets
amounted to $29.6 million for 1997 compared to $9.4 million for 1996. The
Company invested cash, net of cash acquired, in acquisitions and investments in
unconsolidated companies totaling $50.2 million during 1997 compared to $6.2
million in 1996. During 1997, the Company made capital expenditures of $23.6
million, primarily for machinery and equipment used in the production of
revenue, compared to $8.4 million in 1996.
As of December 31, 1997, working capital totaled $123.7 million,
compared to working capital of $136.2 million at December 31, 1996 excluding a
note receivable of $29.0 million which was converted into an investment, a
portion of which was sold in December 1997. See Note 2 of Notes to Consolidated
Financial Statements. Included in working capital are net assets of discontinued
operations of $4.2 million and real estate held for sale totaling $10.9 million.
In December 1997, the Company sold its indirect investment in Conecel
for $20.0 million in cash and the right to receive shares of Conecel non-voting
common stock. The Company will have certain registration rights with respect to
the Conecel common stock that it receives. A gain of $4.4 million, net of tax,
was recognized based on the percent of cash received to the total transaction
value. In September 1997, the Company agreed to sell a portion of its interest
in Supercanal for $20.0 million in cash. In January 1998, the Company elected to
retain its entire interest in Supercanal and terminated the agreement.
The Company continues to pursue a strategy of growth through
acquisitions and internal expansion. In July 1997, the Company closed its
acquisition of 51% of MasTec Inepar for stock and $29.4 million in cash payable
over eleven months. In addition, in connection with its acquisition of Sintel,
the Company is required to make payments of 1.8 billion pesetas (approximately
$11.8 million at the exchange rate in effect at December 31, 1997) on each of
December 31, 1997 and 1998. The Company has paid a portion of the December 31,
1997 payment, with the remaining amounts to be paid pending resolution of
offsetting amounts between the Company and Telefonica. See Note 2 of Notes to
Consolidated Financial Statements. The Company believes that cash generated
from operations, borrowings under its $125.0 million revolving credit facility
with a syndicate of banks led by BankBoston, N.A. (the "Credit Facility"),
and proceeds from the sale of investments and non-core assets will be sufficient
to finance these payments, as well as the Company's working capital needs,
capital expenditures and debt service obligations for the foreseeable
future. Future acquisitions are expected to be financed from these sources, as
well as other external financing sources to the extent necessary, including the
issuance of equity securities and additional borrowings.
In June 1997, the Company refinanced its domestic credit facility with
the Credit Facility. Borrowings under this facility may be used for domestic
acquisitions, working capital, capital expenditures and general corporate
purposes. At December 31, 1997, borrowings under this facility totaled
approximately $83.0 million and standby letters of credit issued pursuant to
this facility totaled approximately $3.5 million. In January 1998, the Company
sold $200.0 million principal amount of 7.75% Senior Subordinated Notes (the
"Notes") due 2008 with interest due semi-annually. The Company repaid all
outstanding borrowings under the Credit Facility other than outstanding letters
of credit with a portion of the proceeds of the Notes, as a result of which the
Company has approximately $121.5 million of borrowing capacity under the Credit
Facility. The Credit Facility and the Notes contain certain covenants which,
among other things, restrict the payment of dividends, limit the Company's
ability to incur additional debt, create liens, dispose of assets, merge or
consolidate with another entity or make other investments or acquisitions, and
provide that the Company must maintain minimum amounts of stockholders' equity
and financial ratio coverages, requiring, among other things, minimum ratios at
the end of each fiscal quarter of debt to earnings, earnings to interest expense
and accounts receivable to trade payables. See Note 5 of Notes to Consolidated
Financial Statements.
The Company conducts business in several foreign currencies that are
subject to fluctuations in the exchange rate relative to the U.S. dollar. The
16
Company does not enter into foreign exchange contracts. It is the Company's
intent to utilize foreign earnings in the foreign operations for an indefinite
period of time. In addition, the Company's results of operations from foreign
activities are translated into U.S. dollars at the average prevailing rates of
exchange during the period reported, which average rates may differ from the
actual rates of exchange in effect at the time of the actual conversion into
U.S. dollars. The Company currently has no plans to repatriate significant
earnings from its international operations.
The Company's current and future operations and investments in certain
foreign countries are generally subject to the risks of political, economic or
social instability, including the possibility of expropriation, confiscatory
taxation, hyper-inflation or other adverse regulatory or legislative
developments, or limitations on the repatriation of investment income, capital
and other assets. The Company cannot predict whether any of such factors will
occur in the future or the extent to which such factors would have a material
adverse effect on the Company's international operations.
Year 2000
Management believes that a significant portion of its computer systems
are year 2000 compliant and is in the process of assessing the balance of its
systems. The Company intends to communicate with its customers, suppliers,
financial institutions and others with which it does business to ensure that any
year 2000 issue will be resolved timely. This issue affects computer systems
that have time-sensitive programs that may not properly recognize the year 2000.
If necessary modifications and conversions by those with which the Company does
business are not completed timely or if all of the Company's systems are not
year 2000 compliant, the year 2000 issue may have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.
Seasonality
The Company's domestic operations have historically been seasonally
weaker in the first and fourth quarters of the year and have produced stronger
results in the second and third quarters. Sintel has experienced seasonal
weakness in the first quarter, but has produced relatively strong results in the
fourth quarter. This seasonality is primarily the result of customer budgetary
constraints and preferences and, to a lesser extent, the effect of winter
weather on outside plant activities. Certain U.S. customers, particularly the
RBOCs, tend to complete budgeted capital expenditures before the end of the year
and defer additional expenditures until the following budget year. Telefonica,
the Company's principal international customer, has historically rushed to
complete budgeted expenditures in the last quarter. Revenue from MasTec Inepar
is not expected to fluctuate seasonally.
Impact of Inflation
The primary inflationary factor affecting the Company's operations is
increased labor costs. The Company has not experienced significant increases in
labor costs to date. Competition for qualified personnel could increase labor
costs for the Company in the future. As a result, of the Company's recent
increase in international activities, it may, at times in the future, operate in
countries that may experience high inflation.
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See index to Consolidated Financial Statements.
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning directors and nominees for director of the
Company set forth under the caption "Election of Directors" of the Company's
Proxy Statement for the 1998 Annual Meeting of Stockholders (the "Proxy
17
Statement") is incorporated by reference into this Annual Report on Form 10-K.
Information concerning the executive officers of the Company is included under
the caption "Executive Officers of the Registrant" in reliance upon General
Instruction G to Form 10-K and Instruction 3 of Item 40 l(b) of Regulation S-K.
11. EXECUTIVE COMPENSATION
The information concerning executive compensation set forth under the
caption "Executive Compensation" of the Company's Proxy Statement is
incorporated by reference into this Annual Report on Form 10-K.
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information concerning security ownership set forth under the
caption "Security Ownership of Certain Beneficial Owners and Management" of the
Company's Proxy Statement is incorporated by reference into this Annual Report
on Form 10-K.
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Relationships and
Related Transactions" of the Company's Proxy Statement is incorporated by
reference into this Annual Report on Form 10-K.
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page Number
Report of Independent Accountants F-1
Report of Independent Accountants F-2
(a)(i) Consolidated Financial Statements
Statements of Income for the three years ended
December 31, 1997 F-3
Balance Sheets at December 31, 1996 and 1997 F-5
Statements of Stockholders' Equity for the
three years ended December 31, 1997 F-6
Statements of Cash Flows for the three
years ended December 31, 1997 F-7
Notes to Consolidated Financial Statements F-12
(b) Report on Form 8-K
On October 16, 1997, the Company filed a Form 8-K current report dated
September 30, 1997 with the Securities and Exchange Commission reporting
information under Item 5 thereof regarding the sale of 5.5% of Supercanal
Holding, S.A. See Note 2 of Notes to Consolidated Financial Statements.
On October 16, 1997, the Company filed a Form 8-K current report dated
October 6, 1997 with the Securities and Exchange Commission reporting
information under Item 5 thereof regarding the sale of its indirect equity
interest in Consorcio Ecuatoriano de Telecomunicaciones S.A. (Conecel).
Index to Exhibits E-1
18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of MasTec, Inc.
Miami, Florida
We have audited the accompanying consolidated balance sheets of MasTec, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of Sistemas e Instalaciones de Telecomunicacion, S.A.
("Sintel"), a wholly owned subsidiary, as of December 31, 1997 and for the year
then ended which statements reflect total assets and revenue constituting 33.2%
and 29.5%, respectively, of the related consolidated totals. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Sintel is based
solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provides a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of MasTec, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 10, 1998
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Sintel, S.A.
We have audited the consolidated balance sheet of SINTEL, S.A. and subsidiaries
("Sintel") as of December 31,1997, the related consolidated statements of income
and cash flows for the year then ended, and the notes to the financial
statements, all expressed in Spanish pesetas. These financial statements are the
responsibility of Sintel's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Note 18 of the notes to the consolidated financial statements details Sintel's
significant transactions with its main customer, Telefonica de Espana, S.A.,
performed under a contract in force for 1996-1998.
Certain accounting practices of Sintel used in preparing the consolidated
financial statements of Sintel conform with generally accepted accounting
principles in Spain, but do not conform with accounting principles generally
accepted in the United States. A description of these differences and the
adjustments required to conform the consolidated financial statements to
accounting principles generally accepted in the United States are set forth in
Note 22.
In our opinion, the consolidated financial statements referred to above present
fairly, in all materials respects, the consolidated financial position of
SINTEL, S.A. and subsidiaries as of December 31,1997, and the results of their
operations and changes in financial position for the year then ended, in
conformity with generally accepted accounting principles in the United States as
set forth in Note 22.
ARTHUR ANDERSEN L.L.P.
Madrid, Spain
February 25, 1998
F-2
MASTEC, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
For the Years Ended December 31, (3)
------------------------------------
1995 1996 1997
---- ---- ----
Revenue $ 218,859 $ 534,068 $ 703,369
Costs of revenue 158,598 394,497 522,470
Depreciation and amortization 8,178 13,686 24,127
General and administrative expenses 28,918 72,392 90,995
------- ------- -------
Operating income 23,165 53,493 65,777
Interest expense 5,306 11,940 11,920
Interest and dividend income 3,501 3,480 1,921
Special charges-real estate and investment write-downs 23,086 0 0
Other income, net 2,250 2,553 8,221
------- ------- -------
Income from continuing operations before equity in
(losses) earnings of unconsolidated companies,
(benefit) provision for income taxes and minority interest 524 47,586 63,999
Equity in (losses) earnings of unconsolidated companies (300) 3,040 2,897
(Benefit) provision for income taxes (1,115) 14,665 21,015
Minority interest 161 93 (3,346)
------- ------- -------
Income from continuing operations 1,500 36,054 42,535
Discontinued operations:
Income (loss) from discontinued operations,
(net of applicable income taxes) 38 (177) 129
Net gain on disposal of discontinued operations net of
a provision of $6,405 for 1995 to write down related
assets to realizable values and including operating
losses during phase-out period, net of applicable income taxes 2,493 66 0
------- ------- -------
Net income $ 4,031 $ 35,943 $ 42,664
======= ======= =======
Pro forma data (1):
Income from continuing operations before equity in
(losses) earnings of unconsolidated companies, pro
forma provision for income taxes and minority interest $ 524 $ 47,586 $ 63,999
Equity in (losses) earnings of unconsolidated companies (300) 3,040 2,897
Pro forma provision for income taxes (1) 148 17,492 23,610
Minority interest 161 93 (3,346)
Discontinued operations 2,531 (111) 129
------- ------- -------
Pro forma net income $ 2,768 $ 33,116 $ 40,069
======= ======= =======
Basic earnings per share:
Weighted average common shares outstanding (2) 25,263 26,074 27,294
Pro forma earnings per share (1) (2):
Continuing operations $ 0.01 $ 1.27 $ 1.46
Discontinued operations 0.10 0.00 0.01
------- ------- -------
$ 0.11 $ 1.27 $ 1.47
======= ======= =======
Diluted earnings per share:
Weighted average common shares outstanding (2) 25,440 26,499 27,853
Pro forma earnings per share (1) (2):
Continuing operations $ 0.01 $ 1.25 $ 1.43
Discontinued operations 0.10 0.00 0.01
------- ------- -------
$ 0.11 $ 1.25 $ 1.44
======= ======= =======
(1) Provision for income taxes and net income have been adjusted to reflect
a tax provision for companies which were previously S corporations.
F-3
(2) Amounts have been adjusted to reflect the three-for-two stock split
effected on February 28, 1997 and shares issued in connection with two
acquisitions accounted for under the pooling of interest method.
(3) The historical amounts have been restated to reflect the results of
operation of two 1997 acquisitions accounted for under the pooling of
interest method.
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
MASTEC, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
------------
1996 1997
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 10,989 $ 6,063
Accounts receivable-net and unbilled revenue 318,967 346,596
Notes receivable 29,549 682
Inventories 5,737 8,746
Other current assets 35,529 32,109
------- -------
Total current assets 400,771 394,196
------- -------
Property and equipment-at cost 95,467 129,968
Accumulated depreciation (28,290) (43,859)
------- -------
Property and equipment-net 67,177 86,109
------- -------
Investments in unconsolidated companies 30,209 48,160
Other assets 12,997 59,133
------- -------
TOTAL ASSETS $ 511,154 $ 587,598
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of debt $ 39,916 $ 54,562
Accounts payable 166,993 166,843
Other current liabilities 28,651 49,043
------- -------
Total current liabilities 235,560 270,448
------- -------
Other liabilities 33,593 41,924
------- -------
Long-term debt 125,018 94,495
------- -------
Commitments and contingencies
Stockholders' equity:
Common stock 2,780 2,805
Capital surplus 149,083 99,235
Retained earnings 49,070 86,921
Accumulated translation adjustments (802) (3,466)
Treasury stock (83,148) (4,764)
------- -------
Total stockholders' equity 116,983 180,731
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 511,154 $ 587,598
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
MASTEC, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three years ended December 31, 1997
(In thousands)
Common Stock Accumulated
Issued Capital Retained Translation Treasury
Shares Amount Surplus Earnings Adjustments Stock Total
- ---------------------------------------------------------------------------------------------------------------
Balance December 31, 1994 27,806 $ 2,780 $134,094 $ 12,531 $ 0 $(92,135) $ 57,270
Net income 4,031 4,031
Distributions by Pooled Companies (926) (926)
Stock issued to 401(k)
Retirement savings plan from
treasury shares 92 146 238
Accumulated translation adjustment 1 1
- ---------------------------------------------------------------------------------------------------------------
Balance December 31, 1995 27,806 2,780 134,186 15,636 1 (91,989) 60,614
Net income 35,943 35,943
Distributions by Pooled Companies (2,509) (2,509)
Cumulative effect of translation (803) (803)
Stock issued from treasury stock
for options exercised 48 523 571
Tax benefit for stock option plan 513 513
Stock issued from treasury stock
for an acquisition 8,844 2,201 11,045
Stock issued for debentures
from treasury stock 5,492 6,117 11,609
- ---------------------------------------------------------------------------------------------------------------
Balance December 31, 1996 27,806 2,780 149,083 49,070 (802) (83,148) 116,983
Net income 42,664 42,664
Distributions by Pooled Companies (4,813) (4,813)
Cumulative effect of translation (2,664) (2,664)
Stock issued from treasury stock
for options exercised 206 979 1,185
Tax benefit for stock option plan
exercises 1,538 1,538
Stock issued for acquisition 250 25 6,600 6,625
Stock issued from treasury stock
for an acquisition 4,479 1,603 6,082
Stock issued for stock dividend
from treasury stock (75,802) 75,802 0
Treasury stock sold 3,007 3,007
Tax benefit for pooling treated as
asset sales for income tax purposes 10,124 10,124
- ---------------------------------------------------------------------------------------------------------------
Balance December 31,1997 28,056 $ 2,805 $ 99,235 $86,921 $ (3,466) $ 4,764 $180,731
- ---------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
MASTEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended December 31,
-------------------------------------------
1995 1996 1997
---- ---- ----
Cash flows from operating activities:
Net income $ 4,031 $ 35,943 $ 42,664
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest (161) (93) 3,346
Depreciation and amortization 8,178 13,686 24,127
Equity in losses (earnings) of
unconsolidated companies 300 (3,040) (2,897)
Special charges-real estate and
investments write downs 23,086 0 0
Gain on sale of assets (2,823) (365) (6,848)
Changes in assets and liabilities net of
effect of acquisitions and divestitures:
Accounts receivable-net and unbilled revenue (24,760) (13,057) (39,950)
Inventories and other current assets (2,207) (2,574) (331)
Other assets (2,617) (4,657) (7,994)
Accounts payable 10,807 26,460 12,188
Income and deferred taxes (8,338) 2,574 (4,276)
Other current liabilities 451 (9,151) 8,208
Net assets of discontinued operations 963 1,148 (394)
Other liabilities 1,032 (4,943) (4,740)
------- ------- -------
Net cash provided by operating activities 7,942 41,931 23,103
------- ------- -------
Cash flows from investing activities:
Capital expenditures (17,202) (8,386) (23,585)
Cash acquired in acquisitions 148 1,130 2,106
Cash paid for acquisitions (1,750) (6,164) (48,910)
Distributions from unconsolidated companies 245 1,365 2,130
Investments in unconsolidated companies (7,408) (1,212) (3,364)
Investments in notes receivable (25,000) 0 0
Repayment of notes receivable 443 1,273 565
Repayment of stockholders loans receivable 1,800 0 780
Net proceeds from sale of assets and other non-core assets 24,269 9,404 29,628
------- ------- -------
Net cash used in investing activities (24,455) (2,590) (40,650)
------- ------- -------
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
MASTEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
For the Years Ended December 31,
-------------------------------------------
1995 1996 1997
---- ---- ----
Cash flows from financing activities:
Proceeds from revolving credit facilities $ 46,125 $ 17,476 $ 57,321
Other borrowings 10,200 28,888 19,936
Repayment of notes payable to stockholders (2,500) 0 0
Debt repayments (40,091) (75,280) (65,147)
Distributions by Pooled Companies (926) (2,509) (4,813)
Proceeds from common stock issued
from treasury 238 792 6,264
Financing costs (516) 0 (587)
------- ------- -------
Net cash provided by (used in) financing activities 12,530 (30,633) 12,974
------- ------- -------
Net (decrease) increase in cash and cash equivalents (3,983) 8,708 (4,573)
Net effect of translation on cash 0 (803) (353)
Cash and cash equivalents - beginning of period 7,067 3,084 10,989
------- ------- -------
Cash and cash equivalents - end of period $ 3,084 $ 10,989 $ 6,063
======= ======= =======
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $ 5,302 $ 10,530 $ 9,058
Income taxes $ 7,527 $ 12,867 $ 10,432
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
MASTEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
Supplemental disclosure of non-cash investing and financing activities:
For the Years Ended December 31,
-------------------------------------------
1995 1996 1997
---- ---- ----
Acquisitions accounted for under purchase method of accounting:
Fair value of assets acquired:
Accounts receivable $ 167 $ 248,087 $ 20,482
Inventories 0 2,980 955
Other current assets 67 12,661 1,618
Property and equipment 2,688 13,148 19,257
Investments in unconsolidated companies 0 9,373 0
Real estate and other assets 50 6,385 3,820
------- ------- -------
Total non-cash assets 2,972 292,634 46,132
------- ------- -------
Liabilities 71 162,928 20,299
Long-term debt 93 78,966 2,153
------- ------- -------
Total liabilities assumed 164 241,894 22,452
------- ------- -------
Net non-cash assets acquired 2,808 50,740 23,680
Cash acquired 148 1,130 2,106
------- ------- -------
Fair value of net assets acquired 2,956 51,870 25,786
Excess over fair value of assets acquired 0 4,956 44,905
------- ------- -------
Purchase price $ 2,956 $ 56,826 $ 70,691
======= ======= =======
Notes payable issued in acquisitions $ 800 $ 36,561 $ 130
Cash paid and common stock issued for acquisitions 1,750 17,340 60,354
Contingent consideration 406 2,250 9,907
Acquisition costs 0 675 300
------- ------- -------
Purchase price $ 2,956 $ 56,826 $ 70,691
======= ======= =======
Property acquired through financing arrangements $ 9,452 $ 8,550 $ 413
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
MASTEC, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
Supplemental disclosure of non-cash investing and financing activities (cont.)
December 31,
1995
----
Disposals:
Assets sold:
Accounts receivable $ 2,158
Inventories 1,770
Other current assets 22
Property and equipment 1,832
Other assets 4
-------
Total non-cash assets 5,786
Liabilities 1,878
Long-term debt 343
-------
Total liabilities 2,221
-------
Net non-cash assets sold $ 3,565
=======
Sale price $ 12,350
Transaction costs (521)
Note receivable (450)
=======
Net cash proceeds $ 11,379
=======
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
MASTEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
for the three years ended December 31, 1997
Supplemental disclosure of non-cash investing and financing activities:
In 1995, the Company's purchase of a 33% interest in Supercanal was
financed in part by the seller for $7 million. (See Note 2.)
During 1995, MasTec issued $146,000 of common stock from treasury
stock for purchases made by The MasTec, Inc. 401 (k) Retirement Savings Plan.
Capital surplus was increased by $92,000.
In 1996, the Company issued approximately 198,000 shares of common
stock for an acquisition. Common stock was issued from treasury at a cost of
$2.2 million.
In 1996, the Company converted $11.6 million of its 12% convertible
subordinated debentures into common stock. Common stock was issued from treasury
at a cost of $6.1 million. (See Note 5.)
In 1996, the Company's purchase of an additional 3% interest in
Supercanal was financed in part by the sellers for $2 million. (See Note 2.)
During 1996, MasTec issued $523,000 of common stock from treasury for
stock option exercises. Capital surplus was increased by $48,000.
In 1997, the Company issued approximately 173,000 shares of common
stock for domestic acquisitions. Common stock was issued from treasury stock at
a cost of approximately $1.6 million. (See Note 2 for non-cash transactions
related to MasTec Inepar.)
In July 1997, the Company converted a note receivable and accrued
interest thereon totaling $29 million into stock of Conecel. (See Note 2.)
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
MasTec, Inc. (the "Company" or "MasTec") is one of the world's 1eading
contractors specializing in the build-out of telecommunications and other
utilities infrastructure. The Company's business consists of the design,
installation and maintenance of the outside physical plant ("outside plant") for
telephone and cable television communications systems, including the
installation of aerial, underground and buried copper, coaxial and fiber optic
cable networks and the construction of wireless antenna networks for
telecommunications service companies such as local exchange carriers,
competitive access providers, cable television operators, long-distance
carriers, and wireless phone companies. The Company also installs central office
equipment and designs, installs and maintains integrated voice, data and video
local and wide area networks inside buildings ("inside wiring"). The Company
believes it is the largest independent contractor providing telecommunications
infrastructure construction services in the United States and Spain and one of
the largest in Argentina, Chile, Brazil and Peru. The Company also provides
infrastructure construction services to the electric power industry and other
public utilities.
The Company is able to provide a full range of infrastructure services
to its telecommunications company customers. Domestically, the Company provides
outside plant services to local exchange carriers such as BellSouth
Telecommunications, Inc. ("BellSouth"), U.S. West Communications, Inc., SBC
Communications, Inc., United Telephone of Florida, Inc. (a subsidiary of Sprint
Corporation) and GTE Corp. At December 31, 1997, MasTec had 20 multi-year
service contracts ("master contracts") with regional bell operating companies
("RBOCs") and other local exchange carriers to provide all of their outside
plant requirements up to a specific dollar amount per job and within certain
geographic areas. Internationally, the Company provides through its wholly owned
subsidiary Sistemas e Instalaciones de Telecomunicacion, S.A. ("Sintel") outside
plant services, turn-key switching system installation and inside wiring
services to Telefonica de Espana, S.A. ("Telefonica") under three separate
multi-year contracts similar to those in the U.S. which expire in 1998. In July
1997, the Company also began servicing the local telephone subsidiaries of
Telecomunicacoes Brasileiras S.A., the Brazilian government-owned
telecommunications system ("Telebras"), in Sao Paulo, Rio de Janeiro, Parana and
other states in the more populous and developed Southern region of Brazil, as
well as Companhia Riograndense de Telecomunicacoes, S.A. ("CRT"), the local
telephone company in Rio Grande do Sul which is partly owned by Telefonica.
The Company was formed through the combination of Church & Tower, Inc.
("Church and Tower") and Burnup & Sims Inc. ("Burnup & Sims"), two established
names in the U.S. telecommunications and other utilities construction services
industry. On March 11, 1994, the shareholders of Church & Tower acquired 65% of
the outstanding common stock of Burnup & Sims in a reverse acquisition (the
"Burnup Acquisition"). Following the change in control, the senior management of
Burnup & Sims was replaced by Church & Tower management and the name of Burnup &
Sims was changed to "MasTec, Inc." Church & Tower is considered the predecessor
company to MasTec and, accordingly, the results of Burnup & Sims subsequent to
March 11, 1994 are included in the results of the Company.
In July and August 1997, Wilde Construction, Inc. and two related
companies ("Wilde") and AIDCO, Inc. ("Aidco") and one related company were
merged with and into the Company through an exchange of common stock. The
mergers were accounted for as poolings of interest. Accordingly, the Company's
consolidated financial statements include the results of Wilde and Aidco for all
periods presented (see Note 2).
Management's Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The Consolidated Financial Statements include MasTec, Inc. and
its subsidiaries. All material intercompany accounts and transactions have
been eliminated. Certain prior year amounts have been reclassified to conform to
the current presentation.
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995 (continued)
Foreign Currency
The financial position and results of operations of the Company's
foreign subsidiaries are measured using local currency as the functional
currency. The Company translates foreign currency financial statements by
translating balance sheet accounts at the exchange rate on the balance sheet
date and income statement accounts at the average exchange rate for the period.
Translation gains and losses are recorded in stockholders' equity, and
transaction gains and losses are reflected in income.
Revenue Recognition
Revenue and related costs for short-term construction projects (i.e.,
projects with duration of less than one month) are recognized as the projects
are completed. Revenue generated by certain long-term construction contracts are
accounted for by the percentage-of-completion method under which income is
recognized based on the ratio of estimated cost incurred to total estimated
contract cost. Losses, if any, on such contracts are provided for in full when
they become known. Billings in excess of costs and estimated earnings on
uncompleted contracts are classified as current liabilities. Any costs in excess
of billings are classified as current assets (See Note 3). Work in process on
contracts is based on work performed but not billed to customers as per
individual contract terms.
The Company also provides management, coordination, consulting and
administration services for construction projects. Compensation for such
services is recognized ratably over the term of the service agreement.
Earnings Per Share
In 1997, the Company adopted Statement of Financial Standards ("SFAS")
No. 128, "Earnings per Share" issued by the Financial Accounting Standards Board
"FASB" SFAS No. 128 requires the presentation of basic earnings per common share
and diluted earnings per common share. Basic earnings per common share is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding. Diluted earnings per common share
includes the diluting effect of stock options and warrants using the treasury
stock method. The difference between the weighted average common shares
outstanding used to calculate basic and diluted earnings relates to options
assumed exercised which were 177,000, 425,000 and 559,000 at December 31, 1995,
1996 and 1997, respectively.
Cash and Cash Equivalents
The Company considers all short-term investments with maturities of
three months or less when purchased to be cash equivalents. The Company places
its temporary cash investments with high credit quality financial institutions.
At times, such investments may be in excess of the F.D.I.C. insurance limits.
The Company has not experienced any loss to date on these investments.
Inventories
Inventories (consisting principally of material and supplies) are
carried at the lower of first-in, first-out cost or market.
Property and Equipment, Net
Property and equipment are recorded at cost, less accumulated
depreciation. Depreciation is provided using the straight-line method over the
estimated useful life of the assets as follows: buildings and improvements -- 5
to 20 years, and machinery and equipment -- 3 to 7 years. Leasehold improvements
are amortized over the shorter of the term of the lease or the estimated useful
lives of the improvements. Expenditures for repairs and maintenance are charged
to expense as incurred. Expenditures for betterments and major improvements are
capitalized. The carrying amounts of assets sold or retired and related
accumulated depreciation are eliminated in the year of disposal and the
resulting gains and losses are included in income.
F-13
Investments
The Company's investment in real estate located primarily in Florida,
acquired in connection with the Burnup Acquisition, is stated at its estimated
net realizable value. Investments in unconsolidated companies are accounted for
following the equity method of accounting when significant influence by the
Company exists (see Note 2).
Accrued Insurance
The Company is self-insured for certain property and casualty and
worker's compensation exposure and, accordingly, accrues the estimated losses
not otherwise covered by insurance.
Income Taxes
The Company records income taxes using the liability method. Under this
method, the Company records deferred taxes based on temporary taxable and
deductible differences between the tax bases of the Company's assets and
liabilities and their financial reporting bases. A valuation allowance is
established when it is more likely than not that some or all of the deferred tax
assets will not be realized.
Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income" which establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This statement requires that an
enterprise classify items of other comprehensive income by their nature in a
financial statement and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial position. This statement is effective
for fiscal years beginning after December 15, 1997. The Company anticipates the
effects of SFAS No. 130 will result in the disclosure of foreign currency
translation adjustment as part of comprehensive income.
In June 1997, the FASB issued SFAS No. 131 "Disclosure about Segments
of an Enterprise and Related Information" which establishes standards for public
business enterprises to report information about operating segments in annual
financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes the standards for related disclosures about
products and services, geographic areas, and major customers. This statement
requires a public business enterprise report financial and descriptive
information about its reportable operating segments. The financial information
is required to be reported on the basis that it is used internally for
evaluating segment performance and deciding how to allocate resources to
segments. Operating segments are components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. This statement is effective for financial statements for
periods beginning after December 15, 1997. Management is currently evaluating
the requirements of SFAS No. 131 to determine the extent of additional
disclosure.
2. ACQUISITIONS AND INVESTING ACTIVITIES
Domestic
In July 1997, the Company completed the acquisition of Wilde, which
provides telecommunications and cable television infrastructure services in
Minnesota, North and South Dakota, Iowa, Nebraska and other bordering states. In
August 1997, the Company completed the acquisition of Aidco, a company engaged
in the installation and maintenance of voice, data and video local-area networks
in the Western and Midwestern states. These acquisitions were consummated
through stock-for-stock exchanges in which the Company issued approximately
1,371,000 shares of common stock. The Company has accounted for these mergers
under the pooling of interest method. Accordingly, historical financial
information has been restated to reflect the mergers as though they occurred as
of the earliest period presented. These acquisitions are collectively referred
to as the "Pooled Companies."
F-14
During 1996 and 1997, the Company completed certain other acquisitions
which have been accounted for under the purchase method of accounting and the
results of operations have been included in the Company's consolidated financial
statements from the respective acquisition dates. If the acquisitions had been
made at the beginning of 1996 or 1997, pro forma results of operations would not
have differed materially from actual results. Acquisitions made in 1997 were
Kennedy Cable Construction, Inc., GJS Construction Co. d/b/a Somerville
Construction and Shanco Corporation, three contractors servicing multiple
systems operators such as Time Warner, Inc., Marcus Cable Company and Cox
Communications, Inc. in a number of states including Alabama, Arizona, Florida,
Georgia, New Jersey, New York, North Carolina, South Carolina and Texas; and
R.D. Moody Associates, Inc., B&D Contractors of Shelby, Inc.,
Tele-Communications Corporation of Virginia, E.L. Dalton & Company, Inc., R.D.
Moody Associates of Virginia, Inc. and Weeks Construction, Inc., six
telecommunications and utility contractors with operations primarily in the
southeastern and southwestern United States. Acquisitions made in 1996 were
Carolina ComTec, Inc., a privately held company engaged in installing and
maintaining voice, data and video networks, and Harrison-Wright Company Inc.,
one of the oldest telecommunications contractors in the southeastern United
States.
Intangible assets of approximately $23.6 million resulting from
domestic business acquisitions are included in other long-term assets and
principally consist of the excess acquisition cost over the fair value of
the net assets acquired (goodwill). Goodwill associated with domestic
acquisitions is being amortized on a straight-line basis over a range of
15-20 years. The Company periodically reviews goodwill to assess
recoverability.
Separate results of the Pooled Companies for the periods prior to the
consummation of the combinations, including a pro forma adjustment for income
taxes related to the Subchapter S status of certain Pooled Companies are as
follows:
Pooled
MasTec Companies Combined
-------- --------- --------
Year ended December 31, 1995
Total revenue $174,583 $ 44,276 $218,859
Pro forma net (loss) income $ (609) $ 3,377 $ 2,768
Year ended December 31, 1996
Total revenue $472,800 $ 61,268 $534,068
Pro forma net income $ 30,065 $ 3,051 $ 33,116
Year ended December 31, 1997
Total revenue $659,439 $ 43,930 $703,369
Pro forma net income $ 35,398 $ 4,671 $ 40,069
International
On April 30, 1996, the Company purchased from Telefonica 100% of the
capital stock of Sintel, a company engaged in telecommunications infrastructure
construction services in Spain, Argentina, Chile, and Peru. In Argentina, Chile
and Peru, the Company currently operates through unconsolidated corporations in
which it holds 50% interests. The purchase price for Sintel was Spanish Pesetas
("Pesetas") 4.9 billion (US$39.5 million at the then exchange rate of 124
Pesetas to one U.S. dollar). An initial payment of Pesetas 650 million ($5.1
million) was made at closing. An additional Pesetas 650 million ($4.9 million)
was paid on December 31, 1996, with the balance of the purchase price, Pesetas
3.6 billion (US$27.5 million), due in two equal installments on December 31,
1997 and 1998. The Company has paid a portion of the December 31, 1997
installment in connection with the acquisition debt, with the remaining amount
to be paid pending resolution of the offsetting amounts between the Company and
Telefonica. Prior to April 30, 1996, as part of the terms of the purchase and
sale agreement with Telefonica, Sintel sold certain buildings to Telefonica and
Telefonica repaid certain tax credits and made a capital contribution to Sintel
(collectively referred to as the "Related Transactions"). The total proceeds
from the Related Transactions were approximately $41.0 million and resulted in
an increase in equity of $28.1 million prior to the purchase. The assets and
liabilities resulting from the acquisition are disclosed in the supplemental
schedule of non-cash investing and financing activities in the Consolidated
Statements of Cash Flows. The Sintel acquisition gave the Company a significant
international presence. See Note 9 regarding geographic information.
The following information presents the unaudited pro forma condensed
results of operations for the year ended December 31, 1996 as if the Company's
acquisition of Sintel and the Related Transactions had occurred on January 1,
F-15
1996. The Sintel acquisition has been treated as a "purchase" as the term is
used under generally accepted accounting principles. Management's estimate of
fair value approximated that of the carrying value of the net assets acquired
after reflecting a reserve for involuntary employee terminations of $12.4
million and deferred taxes of $4.3 million. The pro forma results, which include
adjustments to increase interest expense resulting from the debt incurred
pursuant to the Sintel acquisition ($700,000), offset by the reduction in
interest and depreciation expenses resulting from the Related Transactions ($1
million) and a tax benefit at 35% is presented for informational purposes only
and are not necessarily indicative of the future results of operations or
financial position of the Company or the results of operations or financial
position of the Company had the Sintel acquisition and the Related Transactions
occurred January 1, 1996.
Pro forma results of operations
for the year ended December 31, 1996
(in thousands)
Revenue $ 617,763
Income from continuing operations 36,423
Net income 36,312
Basic earnings per share:
Continuing operations $ 1.40
Discontinued operations 0.00
--------
Net income $ 1.40
========
Diluted earnings per share:
Continuing operations $ 1.37
Discontinued operations .00
--------
Net income $ 1.37
========
The pro forma results for the year ended December 31, 1996, include
special charges incurred by Sintel related to a restructuring plan of $1.4
million.
On July 31, 1997, the Company completed its acquisition of 51% of
MasTec Inepar S/A-Sistemas de Telecomunicacoes ("MasTec Inepar"), a newly formed
Brazilian telecommunications infrastructure contractor, for $29.4 million in
cash payable over eleven months and 250,000 shares of common stock. Goodwill
related to this acquisition at December 31, 1997 is $16.5 million and is
included in other long-term assets. Goodwill is being amortized over 15 years.
Investing Activities
In July 1996, the Company contributed its 36% ownership interest in
Supercanal, S.A. ("Supercanal"), a cable television operator in Argentina, to a
holding company which also held the other shares of Supercanal. Concurrently,
Multicanal, S.A., one of the leading cable television operators in Argentina
acquired a 20% interest in the holding company for approximately $17 million
in cash and provided significant additional financing to fund pending
acquisitions. As a result of the Multicanal investment, the shareholders entered
into an agreement whereby Multicanal was granted veto powers over certain
fundamental board and stockholder decisions and, along with the majority
shareholder, was given operational control of Supercanal. The Company's
interest in the holding company was reduced to approximately 28.8% by this
transaction and the Company no longer exercised significant influence in the
operations of Supercanal. Accordingly, its investment is accounted for at
cost and is included in investments in unconsolidated companies.
At December 31, 1997, the Company's investment in Supercanal was $16.0
million. Based on the most recent available financial information, for the nine
months ended September 30, 1997, Supercanal incurred losses of $19.5 million
(unaudited) and reflected a shareholders' deficiency of $7.2 million
(unaudited).
In July 1995, the Company made a $25 million non-recourse term loan to
Devono Company Limited, a British Virgin Islands corporation ("Devono"). The
loan was collateralized by 40% of the capital stock of a holding company that
owned 52.6% of the capital stock of Consorcio Ecuatoriano de Telecomunicaciones,
S.A. ("Conecel"), one of two cellular phone operators in the Republic of
Ecuador. In June 1997, the Company converted its loan and accrued interest into
the stock of the holding company. In December 1997, the Company sold its
investment in the holding company for $20.0 million in cash and 7.5 million
F-16
shares of Conecel Class B non-voting stock valued at $25.0 million. Accordingly,
the Company recognized a gain of $4.4 million net of tax based of the percent of
cash received to the total transaction value.
3. ACCOUNTS RECEIVABLE-NET
Accounts receivable are presented net of an allowance for doubtful
accounts of $1.0 million, $3.1 million, and $3.1 million at December 31, 1995,
1996 and 1997, respectively. The Company recorded a provision for doubtful
accounts of $.4 million, $1.2 million, and $0.3 million during 1995, 1996 and
1997 respectively. In addition, the Company recorded write-offs of $0.7 million,
$0.1 million, and $0.7 million during 1995, 1996 and 1997, respectively and in
1996 and 1997 transferred from other accounts $0.9 million and $0.4 million,
respectively.
Accounts receivable include retainage which has been billed but is not
due until completion of performance and acceptance by customers, and claims for
additional work performed outside original contract terms. Retainage aggregated
$4.1 million and $10.2 million at December 31, 1996 and 1997, respectively.
Included in accounts receivable is unbilled revenue of $42.4 million
and $97.5 million at December 31, 1996 and 1997, respectively. Such unbilled
amounts represent work performed but not billable to customers as per individual
contract terms.
4. PROPERTY AND EQUIPMENT
Property and equipment is comprised of the following as of December 31,
1996 and 1997 (in thousands):
1996 1997
---- ----
Land $ 7,583 $ 8,430
Buildings and improvements 6,754 9,474
Machinery and equipment 77,254 106,254
Office furniture and equipment 3,876 5,810
-------- --------
95,467 129,968
Less-accumulated depreciation (28,290) (43,859)
-------- --------
$ 67,177 $ 86,109
======== ========
F-17
5. DEBT
Debt is comprised of the following (in thousands):
At December 31,
1996 1997
---- ----
Revolving Credit Facility, at LIBOR plus 1.00% (6.96%
at December 31, 1997) $ 0 $ 83,010
Fleet Credit Facility at LIBOR plus 2.00%-2.25%
and 7.75% -7.94% at December 31, 1996) 46,865 0
Revolving Credit Facility, at MIBOR plus 0.30% (7.0% at
December 31, 1996 and 5.60% at December 31, 1997
due on November 1, 1998) 43,613 10,894
Other bank facilities, denominated in Spanish pesetas,
at interest rates from 8.1% to 9.3% at December 31, 1996
and 5.65% - 6.75% at December 31, 1997 11,048 17,438
Notes payable for equipment, at interest rates from
7.5% to 8.5% due in installments through the year 2000 28,607 14,500
Notes payable for acquisitions, at interest rates from
7% to 8% due in installments through February 2000 32,253 23,215
Real estate mortgage notes, at interest
rates from 8.5% to 8.53% 2,548 0
------- -------
Total debt 164,934 149,057
Less current maturities (39,916) (54,562)
------- -------
Long term debt $ 125,018 $ 94,495
======= =======
In June 1997, the Company obtained a $125.0 million revolving credit
facility (the "Credit Facility"), from a group of financial institutions led by
BankBoston, N.A. maturing on June 9, 2000 to replace the Fleet Credit Facility
and certain other domestic debt. As a result of the prepayment of the Fleet
Credit Facility, deferred financing costs and a termination fee totaling
$690,000 were expensed in the second quarter of 1997. The Credit Facility is
secured by a pledge of the stock of the Company's principal domestic
subsidiaries and a portion of the stock of Sintel.
Additionally, the Company has several credit facilities denominated in
Pesetas, one of which is a revolving credit facility with a wholly-owned finance
subsidiary of Telefonica. Interest on this facility accrues at MIBOR (Madrid
interbank offered rate) plus .30%. At December 31, 1996 and 1997, the Company
had $82.1 million (11.3 billion Pesetas) and $50.6 million (7.7 billion
Pesetas), respectively of debt denominated in Pesetas, including $27.4 million
and $22.3 million, respectively, remaining under the acquisition debt incurred
pursuant to the Sintel acquisition (see Note 2). The Company has paid a portion
of the December 31, 1997 installment in connection with the acquisition debt,
with the remaining amount to be paid pending resolution of the offsetting
amounts between the Company and Telefonica.
On January 30, 1998, the Company sold $200.0 million, 7.75% senior
subordinated notes (the "Notes") due in 2008 with interest due semi-annually.
The net proceeds were used to repay amounts outstanding under the Credit
Facility and for other corporate purposes.
The Credit Facility and Notes contain certain covenants which, among
other things, restrict the payment of dividends, limit the Company's ability to
incur additional debt, create liens, dispose of assets, merge or consolidate
with another entity or make other investments or acquisitions, and provide that
the Company must maintain minimum amounts of stockholders' equity and financial
ratio coverages, requiring, among other things, minimum ratios at the end of
each fiscal quarter of debt to earnings, earnings to interest expense and
accounts receivable to trade payables.
In May 1996, the Company called its 12% convertible subordinated
debentures (the "Debentures") effective June 30, 1996. The Debentures were
converted into common stock increasing the number of shares outstanding by
690,456.
At December 31, 1997 debt matures as follows:
1998 $ 54,562
1999 11,485
2000 83,010
--------
Total $ 149,057
=======
F-18
6. STOCK OPTION PLANS
Shares underlying stock options and exercise prices have been adjusted
to reflect the three-for-two stock split declared in 1997 by the Board of
Directors. The Company's only stock option plan currently in effect is the 1994
Stock Incentive Plan (the "1994 Plan"). However, options which were outstanding
under the Company's 1976 and 1978 stock option plans at the time of the Burnup
Acquisition remain outstanding in accordance with the terms of the respective
plans. Approximately 49,200 shares have been reserved for and may still be
issued in accordance with the terms of such plans. Compensation expense of
$589,000 and $14,700 was recorded in 1996 and 1997, respectively, related to the
1976 plan.
The 1994 Plan authorizes the grant of options or awards of restricted
stock up to 2,500,000 shares of the Company's common stock, of which 500,000
shares may be awarded as restricted stock. As of December 31, 1997, options to
purchase 1,412,625 shares had been granted. Options become exercisable over a
five year period in equal increments of 20% per year beginning the year after
the date of grant and must be exercised within ten years from the date of grant.
Options are issued with an exercise price no less than the fair market value of
the common stock at the grant date.
The Company also adopted the 1994 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan"). The Directors' Plan authorized the grant of
options to purchase up to 600,000 shares of the Company's common stock to the
non-employee members of the Company's Board of Directors. Options to purchase
112,500 shares have been granted to Board members through 1997. The options
granted become exercisable ratably over a three year period from the date of
grant and may be exercised for a period of up to ten years beginning the year
after the date of grant at an exercise price equal to the fair market value of
such shares on the date the option is granted.
In addition, during 1994 options to purchase 150,000 shares of common
stock at $3.83 per share were granted to a director outside the Directors' Plan
in lieu of the Director's Plan and annual fees paid to the director.
Compensation expense of $42,500 in connection with the issuance of this option
is being recognized annually over the five year vesting period. The options are
exercisable ratably over a five year period beginning the year after the date of
grant and may be exercised for a period of up to ten years beginning the year
after the date of grant.
During 1997, options to purchase 209,000 shares of common stock at
prices no less than the fair market value of the common stock at the date of
grant ranging from $21.09 to $40.67 were granted to individuals outside the 1994
Plan subject to varying vesting schedules.
F-19
The following is a summary of all stock option transactions:
Weighted Avg.
Weighted Avg. Exercise Fair Value of
Shares Exercise Price Price Options Granted
------ -------------- ----- ---------------
Outstanding December 31, 1994 407,700 $ 4.62 $ 0.10 - $ 5.29
Granted 303,000 8.48 $ 6.83 - $ 8.92 $ 4.22
Exercised (3,150) 5.29 $ 0.10 - $ 5.29
Canceled (30,750) 3.94 $ 0.10 - $ 8.92
--------
Outstanding December 31, 1995 676,800 $ 6.33 $ 0.10 - $ 8.92
Granted 306,000 17.05 $ 7.42 - $ 28.58 $ 9.23
Exercised (82,200) 6.38 $ 0.10 - $ 8.92
Canceled (2,700) 5.29 $ 5.29 - $ 8.92
--------
Outstanding December 31, 1996 897,900 9.98 $ .10 - $ 28.58
Granted 992,725 24.96 $ 21.09 - $ 48.19 $ 19.97
Exercised (201,950) 5.58 $ 0.10 - $ 21.83
Canceled (78,850) 23.62 $ 5.29 - $ 31.63
--------
Outstanding December 31, 1997 1,609,825 19.10 $ 1.33 - $ 48.18
=========
The following table summarizes information about stock options outstanding at
December 31, 1997:
Options Outstanding Options Exercisable
-------------------------------------------- ---------------------------
Number Wtd. Avg. Wtd. Avg. Number Wtd. Avg.
Range of Outstanding Remaining Exercise Excercisable Exercise
Exercise Prices at 12/31/97 Contractual Life Price at 12/31/97 Price
--------------- ----------- ---------------- ----- ----------- -----
$ 1.33 - $ 8.16 251,250 6.9 $ 5.73 43,650 $ 5.63
$ 8.67 - $ 9.81 250,200 7.1 $ 9.09 92,550 $ 9.10
$ 21.09 - $ 26.50 839,400 9.7 $ 21.47 26,250 $ 21.52
$ 28.19 - $ 31.62 218,985 9.2 $ 31.55 750 $ 28.58
$ 34.79 - $ 48.19 49,990 9.3 $ 42.05 - $ -
------- ---- ----- ------- ------
$ 1.33 - $ 48.19 1,609,825 8.79 $ 19.10 163,200 $ 10.26
========= ==== ===== ======= ======
In 1996, the Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, the Company is required
to disclose pro forma net income and earnings per share both for 1996 and 1997
as if compensation expense relative to the fair value of the options granted had
been included in earnings. The fair value of each option grant was estimated
using the BlackScholes option-pricing model with the following assumptions used
for grants in 1996 and 1997, respectively: a five and six year expected life for
1996 and 1997, respectively; volatility factors of 51% and 82%, respectively;
risk-free interest rates of 6.13% and 5.5%, respectively; and no dividend
payments. Had compensation cost for the Company's options plans been determined
and recorded in accordance with SFAS No. 123, the Company's net income and
earnings per share would have been reduced to the pro forma amounts as follows:
F-20
1996 1997
---- ----
Net income:
As reported, including pro forma tax adjustment $ 33,116 $ 40,069
Pro forma $ 32,262 $ 34,202
Basic earnings per share:
As reported, including pro forma tax adjustment $ 1.27 $ 1.47
Pro forma $ 1.24 $ 1.25
Diluted earnings per share:
As reported, including pro forma tax adjustment $ 1.25 $ 1.44
Pro forma $ 1.22 $ 1.23
The 1996 and 1997 pro forma effect on net income is not necessarily
representative of the effect in future years because it does not take into
consideration pro forma compensation expense related to grants made prior to
1995 and does not reflect a tax benefit related to the compensation expense as
such benefit would be reflected directly in stockholders' equity given that the
options are considered incentive stock options.
7. INCOME TAXES
The provision (benefit) for income taxes consists of the following (in
thousands):
1995 1996 1997
---- ---- ----
Current:
Federal $ 5,541 $ 9,896 $ 9,606
Foreign 5,347 6,505
State and local (284) 1,535 1,670
------ ------- -------
Total current 5,257 16,778 17,781
------ ------- -------
Deferred:
Federal (5,879) (1,895) 2,778
State and local (493) (218) 456
------- ------- ------
Total deferred (6,372) (2,113) 3,234
------- ------- ------
(Benefit) provision for income taxes (1,115) 14,665 21,015
Discontinued operations 135 (70) 80
------- ------- ------
Total $ (980) $ 14,595 $ 21,095
======= ======= ======
F-21
The tax effects of significant items comprising the Company's net
deferred tax liability as of December 31, 1996 and 1997 are as follows (in
thousands):
1996 1997
---- ----
Deferred tax assets:
Accrued self insurance $ 3,050 $ 2,100
Operating loss and tax credit carry forward 525 1,565
Accrual for disposal of discontinued
operations 1,147 0
Intangible assets 9,471
All other 4,774 7,550
------ -------
Total deferred tax assets 9,496 20,686
------ -------
Deferred tax liabilities:
Property and equipment 5,817 7,536
Asset revaluations 5,462 6,066
All other 1,718 3,871
------ -------
Total deferred tax liabilities 12,997 17,473
Valuation allowance 500 1,376
------- -------
Net deferred tax (liabilities) assets $ (4,001) $ 1,837
======= =======
The net change in the valuation allowance for deferred tax assets was
an increase of $876,000. Such change is attributed to $1,304,000 related to a
net operating loss which if not used will expire between 2006-2009, and a
decrease of $428,000 related to the utilization of net operating losses.
Deferred tax assets of $2,096,000 and $1,164,000 for 1996 and 1997,
respectively, have been recorded in current assets in the accompanying
consolidated financial statements.
A reconciliation of U.S. statutory federal income tax expense on the
earnings from continuing operations is as follows:
l995 1996 1997
---- ---- ----
U.S. statutory federal rate
applied to pretax income 35% 35% 35%
State and local income taxes 0 2 2
Effect of dividend exclusion (49) 0 0
Effect of non-U.S. tax rates 0 (1) (1)
Foreign loss producing no tax benefit 62 0 0
Adjustment of prior years' taxes (46) 0 0
Change in federal statutory tax rate 82 0 0
Change in state tax filing status (77) 0 0
Income from S corporations accounted
for as poolings (240) (5) (4)
Other 20 0 1
--- --- ---
(Benefit) provision for income taxes (213)% 31% 33%
==== === ===
No provision was made in 1996 and 1997 for U.S. income taxes on the
undistributed earnings of the foreign subsidiaries as it is the Company's
intention to utilize those earnings in the foreign operations for an indefinite
period of time. At December 31, 1997, undistributed earnings of the foreign
subsidiaries amounted to $26.2 million. If the earnings of such foreign
subsidiaries were not indefinitely reinvested, a deferred tax liability of $2.3
million would have been required.
The Internal Revenue Service (the "IRS") has examined the tax returns
of Burnup & Sims for the fiscal years ended April 30, 1989 through April 30,
1993. The Company has filed a protest with the appellate level of the IRS
regarding assessments made for the years 1989 through 1991. Adjustments, if any,
as a result of this audit will be recorded as an adjustment to purchase
accounting.
F-22
8. CAPITAL STOCK
The Company has authorized 100,000,000 shares of common stock. At
December 31, 1996 and 1997, approximately 27,806,000 and 28,056,000 shares of
common stock were issued, 26,992,000 and 27,580,000 shares were outstanding
(adjusted for the stock split and pooling transactions) (see Note 2),
respectively, and 814,000 and 476,000 were held in treasury, at cost (after
giving effect to the stock split paid in the form of a dividend from treasury
stock), respectively. At December 31, 1996 and 1997, the Company had 5,000,000
shares of authorized but unissued preferred stock.
9. OPERATIONS BY GEOGRAPHIC AREAS
The Company's principal source of revenue is derived from
telecommunications infrastructure construction services in the United States,
Spain and Brazil. The Company did not have significant international operations
in 1995 accordingly, geographic information for 1996 and subsequent is presented
below:
For the Year Ended December 31,
------------------------------
1996 1997
---- ----
Revenue
Domestic $ 345,913 $ 420,976
International 188,155 282,393
------- -------
Total $ 534,068 $ 703,369
======= =======
Operating income
Domestic $ 33,760 $ 44,327
International 19,733 21,450
------- -------
Total $ 53,493 $ 65,777
======= =======
Identifiable assets
Domestic $ 147,065 $ 206,200
International 258,071 258,105
Corporate 106,018 123,293
------- -------
Total $ 511,154 $ 587,598
======= =======
There are no transfers between geographic areas. Operating income
consists of revenue less operating expenses, and does not include interest
expense, interest and other income, equity in earnings of unconsolidated
companies, minority interest and income taxes. Domestic operating income is net
of corporate general and administrative expenses. Identifiable assets of
geographic areas are those assets used in the Company's operations in each area.
Corporate assets include cash and cash equivalents, investments in
unconsolidated companies, net assets of discontinued operations, real estate
held for sale and notes receivable.
10. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK
The Company derives a substantial portion of its revenue from providing
telecommunications infrastructure services to Telefonica, BellSouth and
Telebras. For the year ended December 31, 1995, the Company derived 33% of its
revenue from services performed for BellSouth. For the year ended December 31,
1996, approximately 31% and 13% of the Company's revenue was derived from
services performed for Telefonica and BellSouth, respectively. For the year
ended December 31, 1997, approximately 26%, 12% and 11% of the Company's revenue
was derived from services performed for Telefonica, BellSouth and Telebras,
respectively. Revenue generated by MasTec Inepar from Telebras is included from
August 1, 1997 (See Note 2). Accounts receivable from the Company's two largest
customers at December 31, 1996 and three largest for 1997 were $194.2 million
and $192.0 million, respectively. Although the Company's strategic plan
envisions diversification of its customer base, the Company anticipates that it
will continue to derive a significant portion of its revenue in the future from
Telefonica and its affiliates, BellSouth and Telebras.
F-23
11. COMMITMENTS AND CONTINGENCIES
In December 1990, Albert H. Kahn, a stockholder of the Company, filed a
purported class action and derivative suit in Delaware state court against the
Company, the then-members of its Board of Directors, and National Beverage
Corporation ("NBC"), the Company's then-largest stockholder. The complaint
alleges, among other things, that the Company's Board of Directors and NBC
breached their respective fiduciary duties in approving certain transactions.
In November 1993, Mr. Kahn filed a class action and derivative
complaint against the Company, the then members of its Board of Directors, and
Jorge L. Mas, Jorge Mas and Juan Carlos Mas, the principal shareholders of the
Company. The 1993 lawsuit alleges, among other things, that the Company's Board
of Directors and NBC breached their respective fiduciary duties by approving the
terms of the acquisition of the Company by the Mas family, and that the Mas
family had knowledge of the fiduciary duties owed by NBC and the Company's Board
of Directors and knowingly and substantially participated in the breach of these
duties. The lawsuit also claims derivatively that each member of the Company's
Board of Directors engaged in mismanagement, waste and breach of fiduciary
duties in managing the Company's affairs prior to the acquisition by the Mas
Family.
There has been no activity in either of these lawsuits in more than a
year. The Company believes that the allegations in each of the lawsuits are
without merit and intends to defend these lawsuits vigorously.
In August 1997, the Company settled its lawsuit with BellSouth arising
from certain work performed by a subcontractor of the Company from 1991 to 1993
for nominal consideration.
In November 1997, Church & Tower filed a lawsuit against Miami-Dade
County (the "County") in Florida state court alleging breach of contract and
seeking damages exceeding $3.0 million in connection with the County's refusal
to pay amounts due to Church & Tower under a multi-year agreement to perform
road restoration work for the Miami-Dade Water and Sewer Department ("MWSD"), a
department of the County, and the County's wrongful termination of the
agreement. The County has refused to pay amounts due to Church & Tower under the
agreement until alleged overpayments under the agreement have been resolved, and
has counterclaimed against the Company seeking damages that the Company believes
will not exceed $2.1 million. The County also has refused to award a new road
restoration agreement for MWSD to Church & Tower, which was the low bidder for
the new agreement. The Company believes that any amounts due to the County under
the existing agreement are not material and may be recoverable in whole or in
part from Church & Tower subcontractors who actually performed the work and
whose bills were submitted directly to the County.
The Company is a party to other pending legal proceedings arising in
the normal course of business, none of which the Company believes is material to
the Company's financial position or results of operations.
In 1990, Trilogy Communications, Inc. filed suit against Excom Realty,
Inc., a wholly owned subsidiary of the Company, for damages and declaratory
relief. The Company counterclaimed for damages. On May 1, 1995, the Company
settled its counterclaim for $1.3 million, which is recorded as other income in
the accompanying consolidated financial statements.
In connection with certain contracts, the Company has signed certain
agreements of indemnity in the aggregate amount of approximately $87.5 million,
of which approximately $37.3 million relate to the uncompleted portion of
contracts in process. These agreements are to secure the fulfillment of
obligations and performance of the related contracts.
Federal, state and local laws and regulations govern the Company's
operation of underground fuel storage tanks. The Company is in the process of
removing, restoring and upgrading these tanks, as required by applicable laws,
and has identified certain tanks and surrounding soil which will require
remedial cleanups.
F-24
12. FAIR VALUE
For certain of the Company's financial instruments, including cash and
cash equivalents, accounts and notes receivable, accounts payable and other
liabilities, the carrying amounts approximate fair value due to their short
maturities. Long-term floating rate debt is carried at amounts that approximate
fair value. The Company uses letters of credit to back certain insurance
policies. The letters of credit reflect fair value as a condition of their
underlying purpose and are subject to fees competitively determined in the
market place.
The estimated fair values may not be representative of actual values of
the financial instruments that could have been realized as of year end or that
will be realized in the future.
13. DISCONTINUED OPERATIONS AND REAL ESTATE HELD FOR SALE
In the third quarter of 1995, the Company determined to concentrate its
resources and better position itself to achieve its strategic growth objectives
by disposing of all of the general products segment that the Company acquired as
part of the Burnup Acquisition. These operations and assets included
Southeastern Printing Company, Inc. ("Southeastern"), Lectro Products, Inc.
("Lectro") and Floyd Theatres, Inc. ("Floyd Theatres"). As a result of the
decision to accelerate disposal of these assets, the Company recorded a special
charge in the third quarter of 1996 of $15.4 million to adjust the carrying
values of its real estate investment to estimated net realizable value based on
offers received by the Company to dispose of certain real estate investments in
a bulk transaction. The original value assigned to the real estate investments
contemplated the disposition of the properties on an individual basis and no
considerations had previously been given to a bulk sale. In the fourth quarter
of 1995, the Company recorded an additional charge of $7.7 million to reflect
the value realized upon a sale of certain real estate and the Company's
preferred stock investment in early 1996. These assets were sold at prices and
in a manner designed to facilitate their immediate disposal so that the Company
could concentrate its resources on its core telecommunications and other
utilities construction business.
In March 1995, the Company sold the indoor theater assets of Floyd
Theatres for approximately $11.5 million. A gain of $1.5 million, net of tax,
resulted from this transaction in the first quarter of 1995. In August 1995, the
Company sold the stock of Lectro for $11.9 million in cash and a note receivable
of $450,000. A gain of $5.9 million, net of tax, was recorded in the third
quarter of 1995 related to the sale of Lectro. A loss of approximately $6.4
million, net of tax, relating to the disposition of these discontinued
operations was recorded in the fourth quarter of 1995. In January 1997, the
Company sold the assets of Southeastern at its carrying value for approximately
$2.1 million in cash and a note for $500,000.
As part of the acquisition of Harrison-Wright Company, Inc. (see Note
2), the Company purchased the assets of Utility Pre-cast, Inc. The Company
intends to sell the pre-cast business and accordingly has reflected the net
assets of approximately $4.2 million as a discontinued operation.
Included in other current assets in the accompanying balance sheet is
approximately $15.7 million and $10.9 million of real estate held for sale at
December 31, 1996 and 1997, respectively.
Discontinued operations include management's best estimates of the
amounts expected to be realized on the sale of these assets. While the estimates
are based on current negotiations, the amounts the Company will ultimately
realize could differ materially in the near term from the amounts assumed in
arriving at the loss on disposal of the discontinued operations.
Summary operating results of discontinued operations, excluding net
gains on disposal and estimated loss during the phase-out period, are as follows
(in thousands):
1995 1996 1997
---- ---- ----
Revenue $ 21,952 $ 12,665 $ 4,471
====== ====== ======
Earnings (loss) before income taxes $ 58 $ (288) $ 209
Provision (benefit) for income taxes 20 (111) 80
------ ------ ------
Net income (loss) from discontinued operations $ 38 $ (177) $ 129
====== ====== ======
F-25
14. QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands, except earnings per share)
First Second Third Fourth
Quarter Quarter (2) Quarter (3) Quarter (4) Total
------- ---------- ---------- ---------- -----
1996:
Revenue $ 70,670 $ 122,964 $ 162,208 $ 178,226 $ 534,068
======= ======= ======= ======= =======
Operating income $ 5,954 $ 10,194 $ 17,131 $ 20,214 $ 53,493
======= ======= ======= ======= =======
Income from continuing operations,
as reported $ 3,696 $ 5,689 $ 11,586 $ 15,083 $ 36,054
======= ======= ======= ======= =======
Pro forma income from
continuing operations (6) $ 3,371 $ 5,645 $ 10,752 $ 13,459 $ 33,227
(Loss) income from
discontinued operations including gain
(loss) on disposal, net of taxes (14) 27 163 (287) (111)
------- ------- ------- ------- -------
Pro forma net income $ 3,357 $ 5,672 $ 10,915 $ 13,172 $ 33,116
======= ======= ======= ======= =======
Pro forma basic earnings per share (1) (5):
Continuing operations $ 0.13 $ 0.22 $ 0.41 $ 0.50 $ 1.27
Discontinued operations 0.00 0.00 0.01 (0.01) 0.00
------- ------- ------- ------- -------
$ 0.13 $ 0.22 $ 0.42 $ 0.49 $ 1.27
======= ======= ======= ======= =======
Diluted earnings per share (1) (5):
Continuing operations $ 0.13 $ 0.22 $ 0.40 $ 0.49 $ 1.25
Discontinued operations 0.00 0.00 0.01 (0.01) 0.00
------- ------- ------- ------- -------
$ 0.13 $ 0.22 $ 0.41 $ 0.48 $ 1.25
======= ======= ======= ======= =======
1997:
Revenue $ 138,290 $ 160,726 $ 201,117 $ 203,236 $ 703,369
======= ======= ======= ======= =======
Operating income $ 15,704 $ 19,818 $ 22,319 $ 7,936 $ 65,777
======= ======= ======= ======= =======
Income from continuing operations,
as reported $ 9,571 $ 12,816 $ 13,832 $ 6,316 $ 42,535
======= ======= ======= ======= =======
Pro forma income from
continuing operations (6) $ 9,478 $ 12,001 $ 12,145 $ 6,316 $ 39,940
(Loss) income from
discontinued operations
including gain (loss)
on disposal, net of taxes) (51) 123 46 11 129
-------- ------- ------- ------- -------
Pro forma net income $ 9,427 $ 12,124 $ 12,191 $ 6,327 $ 40,069
======== ======= ======= ======= =======
Pro forma:
Basic earnings per share (1) (5):
Continuing operations $ 0.35 $ 0.44 $ 0.44 $ 0.23 $ 1.46
Discontinued operations 0.00 0.00 0.00 0.00 0.01
-------- ------- ------- ------- -------
$ 0.35 $ 0.44 $ 0.44 $ 0.23 $ 1.47
======== ======= ======= ======= =======
Diluted earnings per share (1) (5):
Continuing operations $ 0.35 $ 0.43 $ 0.43 $ 0.23 $ 1.43
Discontinued operations 0.00 0.00 0.00 0.00 0.01
-------- -------- ------- ------- --------
$ 0.35 $ 0.43 $ 0.43 $ 0.23 $ 1.44
======== ======= ======= ======= ========
F-26
(1) Earnings per share amounts have been adjusted to reflect the
three-for-two stock split declared effected on February 28, 1997 and
shares issued in connection with two acquisitions accounted for under
the pooling of interest method.
(2) The Company acquired Sintel (see Note 2) on April 30, 1996.
(3) In the third quarter of 1997, the Company commenced operations in
Brazil (see Note 2). (4) In the fourth quarter of 1997, the Company
sold, at a gain of $4.4 million net of tax, a portion of its investment
in Conecel. See Note 2.
(5) Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly per share data does not
equal the total computed for the year due to changes in the weighted
average number of common shares outstanding.
(6) Amounts and earnings per share have been adjusted to reflect a pro
forma tax provision for two acquisitions accounted for under the
pooling of interest method which were previously S corporations.
F-27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 31, 1998.
MasTec, Inc.
(Registrant)
------------------------------------
Edwin D. Johnson
Senior Vice President -
Chief Financial Officer
(Principal Financial and Accounting Officer)
The undersigned directors and officers of MasTec, Inc. hereby constitute and
appoint Edwin D. Johnson and Jose M. Sariego and each of them with full power
to act without the other and with full power of substitution and resubstitution,
our true and lawful attorneys-in-fact with full power to execute in our name
and behalf in the capacities indicated below this Annual Report on Form 10-K
and any and all amendments thereto and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission and hereby ratify and confirm all that such
attorneys-in-fact, or any of them, or their substitutes shall lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 31, 1998.
_______________________________ ___________________________
Jorge Mas Joel-Tomas Citron
Chairman of the Board, President and Director
Chief Executive Officer
(Principal Executive Officer)
_______________________________
Jose S. Sorzano
Director
_______________________________
Arthur B. Laffer
Director
_______________________________
Eliot C. Abbott
Director
S-1
EXHIBIT INDEX
3.1 Certificate of Incorporation and By-laws of the Company, filed as
Exhibit 3(i) to Company's Registration Statement on Form S-8 (File
No. 33-55237) and incorporated by reference herein.
3.2 Certificate of Amendment to Certificate of Incorporation of the
Company.
4.1 7 3/4% Senior Subordinated notes Due 2008 Indenture dated as of
February 4, 1998, filed as Exhibit 4.2 to the Company's Registration
Statement on Form S-4 (file No. 333-46361) and incorporated by
reference herein.
10.1 Stock Option Agreement dated March 11, 1994 between the Company and
Arthur B. Laffer as filed as Exhibit 10.6 to the Company's Form 10-K
for the year ended December 31, 1995 and incorporated by reference
herein.
10.2 Stock Option Agreement dated December 29, 1997 between the Company and
Henry N. Adorno.
10.3 Stock Option Agreement dated December 29, 1997 between the Company
and Joel-Tomas Citron.
10.4 Revolving Credit Agreement dated as of June 9, 1997 between the
Company, certain of its subsidiaries, and Bank Boston, N.A. as agent.
10.5 Agreement dated July 21, 1997 between the Company and Inepar S/A
Industrias e Construcoes.
21.1 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen L.L.P.
23.2 Consent of Arthur Andersen L.L.P.
23.3 Consent of Arthur Andersen L.L.P.
23.4 Consent of Arthur Andersen L.L.P.
23.5 Consent of Arthur Andersen L.L.P.
23.6 Consent of Arthur Andersen L.L.P.
23.7 Consent of Arthur Andersen L.L.P.
23.8 Consent of Arthur Andersen L.L.P.
23.9 Consent of Arthur Andersen L.L.P.
23.10 Consent of Coopers & Lybrand L.L.P.
23.11 Consent of Coopers & Lybrand L.L.P.
23.12 Consent of Coopers & Lybrand L.L.P.
23.13 Consent of Coopers & Lybrand L.L.P.
23.14 Consent of Coopers & Lybrand L.L.P.
23.15 Consent of Coopers & Lybrand L.L.P.
23.16 Consent of Coopers & Lybrand L.L.P.
23.17 Consent of Coopers & Lybrand L.L.P.
23.18 Consent of Coopers & Lybrand L.L.P.
27.1 Financial Data Schedule - 1997
27.2 Financial Data Schedule - 1996
27.3 Financial Data Schedule - 1995
Exhibit 23.2
CERTIFICATE OF AMENDMENT
TO CERTIFICATE OF INCORPORATION
OF MASTEC, INC.
1. MasTec, Inc., a Delaware corporation (the "Corporation"), amends its
Amended and Restated Certificate of Incorporation under Sections 141 and 242 of
the Delaware General Corporation Law as follows:
The first paragraph of Article IV of the Corporation's Amended and
Restated Certificate of Incorporation is deleted in its entirety and
the following is substituted in its place:
The total number of shares of capital stock which the
Corporation shall have authority to issue is One Hundred Five
Million (105,000,000) shares, of which One Hundred Million
(100,000,000) shares, Ten Cents ($.10) par value per share,
shall be common stock ("Common Stock"), and Five Million
(5,000,000) shares, One Dollar ($1.00) par value per share,
shall be preferred stock
("Preferred Stock").
2. The foregoing amendment to the Amended and Restated Certificate of
Incorporation of the Corporation was duly adopted by the Board of Directors and
by vote of the stockholders of the Corporation on May 21, 1997, in accordance
with the applicable provisions of the Delaware General Corporation Law.
3. The capital of the Corporation will not be reduced under or by
reason of this amendment.
EXECUTED: September 4, 1997.
MASTEC, INC.
[SEAL]
By:___________________________________
JOSE M. SARIEGO, Senior Vice President
STATE OF FLORIDA )
) SS
COUNTY OF DADE )
THE FOREGOING instrument was acknowledged and sworn to before me this
4th day of September, 1997 on behalf of MasTec, Inc. by Jose M. Sariego, Senior
Vice-President of the corporation.
-------------------------------
Notary Public
Exhibit 10.2
STOCK OPTION AGREEMENT
MASTEC, INC., a Delaware corporation, (the "Company"), grants to HENRY
N. ADORNO ("Optionee") an option (the "Option") to purchase One Hundred Thousand
(100,000) shares of Common Stock, $.10 par value, of the Company (the "Stock").
The exercise price under the Option shall be $21.0938 per share of Stock. The
Option to purchase the Stock shall vest on each of December 29, 1998, 1999,
2000, 2001 and 2002 in accordance with the following schedule:
First Year Second Year Third Year Fourth Year Fifth Year
- ---------- ----------- ---------- ----------- ----------
20,000 20,000 20,000 20,000 20,000
This option is not being issued under the Company's 1994 Incentive
Stock Plan and shall not be treated as an incentive stock option as defined in
Section 422A(b) of the Internal Revenue Code of 1986, as amended.
1. TERM OF OPTION. The term of this option shall end at the close of
business on the earliest of the following dates:
(a) Ten (10) years from the date of grant hereof; or
(b) Upon termination of the Optionee's employment with the Company or
its subsidiaries for any reason other than retirement, disability or death, or
upon the Optionee's voluntary termination of employment with the Company; or
(c) At the expiration of three months after termination of the
Optionee's employment by reason of retirement or disability, provided that if
the Optionee dies within such three month period sub-paragraph (d) shall apply;
or
(d) Upon the expiration of one year from the date of death of the
Optionee.
2. EXERCISE OF OPTION. This option may not be exercised (i) at a time
when the exercise hereof or the issuance or transfer of shares hereunder would
constitute a violation of any federal or state law or regulation or any listing
requirements of any national securities exchange or other appropriate exchange
on which the Company's securities may be listed; or (ii) until one year from the
date of the grant thereof, as heretofore provided. Thereafter the Optionee may
exercise this option in cumulative annual equal installments during the term of
the option.
The Optionee may, for the term of the option: (a) exercise the option
to purchase those number of shares listed under "First Year" beginning on the
first year after the date of the grant hereof; (b) exercise the option to
purchase those number of shares listed under "Second Year"; beginning on the
second year after the date of the grant hereof; (c) exercise the option to
purchase those number of shares listed under "Third Year"; beginning on the
third year after the date of the grant hereof; (d) exercise the option to
purchase those number of shares under "Fourth Year"; beginning on the fourth
year after the date of the grant hereof; and (e) exercise the option to purchase
those number of shares under "Fifth Year"; beginning on the fifth year after the
date of the grant hereof.
This option may be exercised at any time and from time to time in full
or in part during its term (up to the amount of Stock then exercisable) upon
written notice given by the Optionee or, in the event of the Optionee's death,
by the person designated in the Optionee's will, or in the absence of such
designation, by his legal representatives to the Treasurer of the Company, which
shall (i) specify the number of shares to be purchased and (ii) contain, if
directed by the Company, a representation by the Optionee that such shares are
being acquired for his own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof and which shall be
accompanied by payment in cash of shares of stock having a fair market value
equal to the option price for the number of shares with respect to which the
option is then exercised.
An Optionee shall not be, or have any of the rights or privileges of, a
shareholder of the Company in respect of any shares purchasable upon the
exercise of an option unless and until a certificate or certificates
representing such shares shall have been issued by the Company to or in the name
of the Optionee. Certificates representing shares purchased by an Optionee shall
be issued upon receipt by the Company of the full amount of the option price.
3. ASSIGNMENT. This option is not transferable by the Optionee
otherwise than by will or the laws of descent and distribution, and is
exercisable, during his lifetime, only by him. In the event of death of the
Optionee, the person designated in his will, or in the absence of such
delegation, his legal representative may exercise each option held by the
deceased Optionee subject to clause (d) of paragraph 1 and paragraph 2, above.
4. RECAPITALIZATION. In the event of any increase or reduction in the
amount of outstanding shares of Stock by reason of a stock split, stock
dividend, combination of shares or recapitalization occurring after the
effective date hereof the number and class of shares subject to this option and
the option price shall be correspondingly adjusted by Compensation and Stock
Option Committee of the Board of Directors ("Committee"). No adjustment shall be
made by reason of the distribution of subscription rights on outstanding Stock.
5. CORPORATE TRANSACTIONS. In the event of a dissolution or liquidation
of the Company or a merger or consolidation in which the Company is not the
surviving corporation, the Committee may, at its sole discretion, recommend that
the Board of directors take any of the actions specified in the Plan.
6. GOVERNING LAW. This option agreement shall be construed,
administered and governed in all respects under and by the laws of the State
of Delaware.
7. ADMINISTRATION. This option shall be exercised in accordance with
such administration regulations as the Committee shall from time to time adopt.
DATED: December 29, 1997.
MASTEC, INC.
By:______________________________
Jorge Mas, Chairman of the Board,
President and Chief Executive Officer
ACCEPTED:
- ----------------------------
Henry N. Adorno
Exhibit 10.3
NONINCENTIVE STOCK OPTION AGREEMENT
A Nonincentive Stock Option (the "Option") is hereby granted
by MASTEC, INC., a Delaware corporation (the "Company"), to JOEL-TOMAS CITRON
("Optionee"), for and with respect to common stock of the Company, par value
$.10 per share (the "Common Stock"), subject to the following terms and
conditions:
1. Option Grant. Subject to the provisions set forth
herein, and in consideration of the agreements of the Optionee herein provided,
the Company hereby grants to the Optionee an Option to purchase from the Company
the number of shares of Common Stock, at the purchase price per share, and on
the schedule, all as set forth below. This Option shall not be treated as an
incentive stock option as defined in Section 422A(b) of the Internal Revenue
Code of 1986, as amended.
Number of Shares
Subject to Option: 10,000
Option Price Per Share: $21.0938
Date of Grant: December 29, 1997
Exercise Schedule:
Number of Shares Commencement Expiration
Subject to Option Date Date
----------------- ------------ ----
3,334 Dec. 29, 1998 Dec. 29, 2007
3,333 Dec. 29, 1999 Dec. 29, 2007
3,333 Dec. 29, 2000 Dec. 29, 2007
2. General Terms and Conditions of Option.
(a) The Option shall be subject to the following
restrictions on exercise:
i. The Option shall not be immediately exercisable.
The Option shall not be exercisable, in whole or in part,
prior to the expiration of one (1) year from the date of grant
except in the event of the Optionee's death, or after the
expiration of ten years from the date the Option was granted.
In no event may the Option be exercised prior to the
expiration of six (6) months from the date of grant. To the
extent that the Option is not exercised within the ten-year
period of exercisability, it shall expire as to the then
unexercised part.
ii. The Option shall not be exercisable with respect
to a fractional share or with respect to the lesser of fifty
(50) shares or the full number of shares then subject to the
Option.
iii. Except as provided in Section 3, the Option shall
not be exercisable in whole or in part unless the Optionee, at
the time the Optionee exercises the Option, is, and has been
at all times since the date of grant of the Option, a director
of the Company.
(b) Written notice of an election to exercise any portion
of the Option, specifying the portion thereof being exercised and the exercised
date, shall be given by the Optionee, or his personal representative in the
event of the Optionee's death, (i) by delivering such notice at the principal
executive offices of the Company no later than the exercise date, or (ii) by
mailing such notice, postage prepaid, addressed to the Secretary of the Company
at the principal executive offices of the Company at least three business days
prior to the exercise date.
(c) The Option may be exercised only by making payment in
full for the shares of Common Stock being acquired thereunder at the time of
exercise (including applicable withholding taxes, if any) by check or bank
draft, or by tendering to the Company Common Stock shares already owned by the
person exercising the Option, which may include shares received as the result of
a prior exercise of the Option, and having a fair market value equal to the cash
exercise price applicable to such Option, or by tendering a combination of cash
and Common Stock shares as aforesaid.
(d) In the event the Option shall be exercised in whole,
this agreement shall be surrendered to the Company for cancellation. In the
event the Option shall be exercised in part, or a change in the number or
designation of the Common Stock shall be made, this agreement shall be delivered
by the Optionee to the Company for the purpose of making appropriate notation
thereon, or of otherwise reflecting, in such manner as the Company shall
determine, the partial exercise or the change in the number or designation of
the Common Stock.
3. Termination of Service. The Option shall
terminate upon the termination, for any reason, of the Optionee's directorship
with the Company, and no shares may thereafter be purchased under such Option,
except as follows:
(a) Upon retirement as a director of the Company
after at least six years of service, the unexpired part of
the Option held by the Optionee shall, to the extent otherwise
exercisable on such date, remain exercisable, in whole or in
part, for a period of three (3) years following such
retirement.
(b) Upon termination of service as a director of the
Company by reason of death or disability, the unexpired part
of the Option held by the Optionee, or in the case of death,
the Optionee's executors, administrators, heirs or
distributors, as the case may be, shall become immediately
exercisable and shall remain exercisable, in whole or in part,
for a period of three (3) years after such termination.
Disability shall mean an inability as determined by the
Board of Directors of the Company ("Board") to perform duties
and services as a director of the Company by reason of a
medically determinable physical or mental impairment,
supported by medical evidence, which can be expected to last
for a continuous period of not less than six (6) months.
In the event the Option is exercised by the executors,
administrators, heirs or distributees of the estate of the deceased Optionee,
the Company shall be under no obligation to issue Common Stock thereunder unless
and until the Company is satisfied that the person or persons exercising the
Option are the duly appointed legal representative of the deceased Optionee's
estate or the proper legatees or distributees thereof.
In no event, however, may the Option be exercised (i) prior to
the expiration of six months from the date of grant, or (ii) after ten (10)
years from the date it was granted.
4. Change in Control. (a) Subject to the limitations set
forth in the last paragraph, in the event of a change in control of the Company,
(i) the Option shall immediately become exercisable in full, and (ii) the
Optionee shall have the right within one (1) year after such event to exercise
the Option in full.
(b) For purposes of this Section 4, a "change in
control" shall be deemed to have occurred if at any time on
or after the date hereof:
i. there shall be consummated:
(1) any consolidation or merger of the
Company in which the Company is not the continuing
or surviving corporation or pursuant to which
any shares of Common Stock are to be converted into
cash, securities or other property, provided that the
consolidation or merger is not with a
corporation which was a wholly-owned subsidiary of
the Company immediately before the consolidation or
merger; or
(2) any sale, lease, exchange or other
transfer (in one transaction or a series of
related transactions) of all, or
substantially all, of the assets of the
Company; or
ii. the shareholders of the Company approve
any plan or proposal for the liquidation or
dissolution of the Company; or
iii. any "person," including a "group" as
determined in accordance with Sections 13(d) and 14
(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), becomes the beneficial
owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of 33% or more
of the combined voting power of the Company's then
outstanding Common Stock, provided that such person,
immediately before it becomes such 33% or more
beneficial owner, is not (a) a wholly-owned
subsidiary of the Company or (b) an individual, or a
spouse or a child of such individual, that on March
12, 1994, owned greater than 20% of the combined
voting power of such Common Stock, or (c) a trust,
foundation or other entity controlled by an
individual or individuals described in Section
4(b)(3)(iii); or
iv. individuals who constitute the Board on March
12, 1994 (the "Incumbent Board") cease for any reason
to constitute at least a majority thereof, provided
that any person becoming a director subsequent to
March 12, 1994, whose election, or nomination for
election by the Company's shareholders, was approved
by a vote of at least three quarters of the directors
comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the
Company in which such person is named as a nominee
for director, without objection to such nomination)
shall be, for purposes of this clause iv, considered
as though such person were a member of the Incumbent
Board.
5. Transferring of Option. The Optionee's rights and
interest may not be assigned or transferred in whole or in part either directly
or by operation of law or otherwise (except in the event of the Optionee's
death, by will or the laws of descent and distribution), including, but not by
way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy
or in any other manner, and no such right or interest of the Optionee shall be
subject to any obligation or liability of the Optionee.
6. Option Rights. Neither the Optionee nor any other
person entitled to exercise the Option under the terms hereof shall be, or have
any of the rights or privileges of, a shareholder of the Company in respect of
any of the shares of Common Stock issuable on exercise of the Option, unless and
until the Option has been exercised pursuant to the terms hereof and the
purchase price for such shares shall have been paid in full.
7. Adjustment in the Event of Change in Stock. In the
event of changes in the outstanding Common Stock of the Company by reason of
stock dividends, reverse split, subdivision, recapitalizations, mergers,
consolidations (whether or not the Company is a surviving corporation),
split-ups, combinations or exchanges of shares, reorganization or liquidation,
an extraordinary dividend payable in cash or property, and the like, the number,
class and the price of shares of Common Stock subject to this outstanding Option
shall be appropriately adjusted by the Board, whose determination shall be
conclusive.
8. Administration of Option. (a) The Option shall be
exercised in accordance with such administrative regulations as the Board
shall from time to time reasonably adopt.
(b) If at any time the Board shall determine, in its
reasonable discretion, that the listing, registration or qualification of shares
upon any national securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with the exercise of this option
hereunder, the Option may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board in the exercise of its reasonable judgment.
9. Investment Representation. The Board may require
the Optionee to furnish to the Company, prior to the issuance of any shares upon
the exercise of all or part of this Option, an agreement stating that the shares
acquired by him upon exercise are being acquired for investment and not with a
view to the sale or distribution hereof.
10. Governing Law. The Option, and this agreement shall
be construed, administered and governed in all respects under and by the laws of
the State of Delaware.
EXECUTED: December 29, 1997.
MASTEC, INC.
By: _________________________
Jorge Mas, Chairman of the Board,
President and Chief Executive Officer
The undersigned hereby accepts the foregoing Option and the
terms and conditions hereof.
-----------------------------
Joel-Tomas Citron
such state or (B) have filed a notice of business activities report with the
appropriate office or agency of such state for the current year; (vii) that are
payable in Dollars; and (viii) that are not payable from an office outside of
the United States.
Real Property. All real property heretofore, now, or hereafter owned or
leased by the Borrowers.
Reimbursement Obligation. The Borrowers' obligation to reimburse the Agent
and the Banks on account of any drawing under any Letter of Credit as provided
in ss.3.2.
RCRA. See definition of Release.
Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss.ss.9601 et seq. ("CERCLA") and the term "Disposal" (or "Disposed") shall have
the meaning specified in the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.ss.6901 et seq. ("RCRA") and regulations promulgated thereunder;
provided, that in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply as of
the effective date of such amendment and provided further, to the extent that
the laws of a state wherein the property lies establishes a meaning for
"Release" or "Disposal" which is broader than specified in either CERCLA or
RCRA, such broader meaning shall apply.
Reserve Rate. For any day with respect to a LIBOR Loan, the maximum rate
(expressed as a decimal) at which any lender subject thereto would be required
to maintain reserves under Regulation D of the Board of Governors of the Federal
Reserve System (or any subsequent or similar regulation relating to such reserve
requirements) against "Eurocurrency Liabilities" (as such term is defined in
Regulation D), if such liabilities were outstanding. The Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Rate.
Revolving Credit Loans. Loans made by the Banks to the Borrowers pursuant
to ss.2.1.
Revolving Credit Notes. The promissory notes of the Borrowers evidencing
the Revolving Credit Loans hereunder, dated as of the date of this Agreement and
in substantially the form of Exhibit A hereto.
Senior Debt. Funded Debt minus Subordinated Debt.
Sintel. Sistemas e Instalaciones de Telecomunicacion, S.A.
Sintel Group. Sintel, Sietel, S.A., Sintelar, S.A., Sintel Peru, S.A. and
any Subsidiary of Sintel.
Sintel Stock Pledge Agreement. The stock pledge agreement and the
International Pledge Documents (defined therein) among the International
Signatories and the Agent for the benefit or in the name of the Banks in form
and substance satisfactory to the Agent.
Stock Pledge Agreements. The U.S. Stock Pledge Agreement and the Sintel
Stock Pledge Agreement.
Subordinated Debt. Indebtedness incurred by the Parent which has been
subordinated to the Obligations; provided that (a) at the time such Subordinated
Debt is incurred, no Default or Event of Default has occurred or would occur
(including under ss.8.1 hereof) as a result of such incurrence, and the Parent
shall have provided the Banks with a calculation of the Leverage Ratios required
by ss.8.1 hereof showing compliance therewith on a pro forma basis taking into
account the incurrence of such Subordinated Debt, and (b) the documentation
evidencing such Subordinated Debt shall have been delivered to the Agent and
shall contain all of the following characteristics: (i) it shall be unsecured,
(ii) it shall bear a market rate of interest, (iii) it shall have an average
weighted maturity of at least seven (7) years, (iv) it shall not require
principal repayments thereof prior to the Maturity Date, (v) it shall have
financial covenants (including covenants relating to incurrence of indebtedness)
which are meaningfully less restrictive than those set forth herein, (vi) it
shall have no restrictions on the Parent's or any of its Subsidiaries' ability
to grant liens securing indebtedness ranking senior to such Subordinated Debt,
(vii) it shall permit the incurrence of senior indebtedness under this Credit
Agreement (and under any refinancings hereof) in a principal amount at least
equal to the Total Commitment hereunder at the time of incurrence of such
Subordinated Debt minus any mandatory or optional reductions thereof plus
$25,000,000, (viii) it may be cross-accelerated with the Obligations and other
senior indebtedness of the Borrowers (but shall not be cross-defaulted except
for payment defaults which the senior lenders have not waived) and may be
accelerated upon bankruptcy, (ix) it shall provide that (A) upon any payment or
distribution of the assets of the Parent or its Subsidiaries (including after
the commencement of a bankruptcy proceeding) of any kind or character, all of
the Obligations (including interest accruing after the commencement of any
bankruptcy proceeding at the rate specified for the applicable Obligation,
whether or not such interest is an allowable claim in any such proceeding) shall
be paid in full prior to any payment being received by the holders of the
Subordinated Debt and (B) until all of the Obligations (including the interest
described in subclause (A) above) are paid in full, any payment or distribution
to which the holders of the Subordinated Debt would be entitled but for the
subordination provisions of the type described in clauses (x) and (xi) hereof
shall be made to the holders of the Obligations, (x) it shall provide that in
the event of a payment default under ss.12.1(a) or (b) hereof, the Parent shall
not be required to pay the principal of, or any interest, fees and all other
amounts payable with respect to the Subordinated Debt until the Obligations have
been paid in full in cash, (xi) it shall provide that in the event of any other
Event of Default, the Banks shall be permitted to block payments of principal,
interest, fees and all other amounts payable with respect to the Subordinated
Debt for a period of 180 days, and (xii) it shall acknowledge that none of the
provisions outlined in part (b) of this definition can be amended, modified or
otherwise altered without the prior written consent of the Banks.
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority of the outstanding
capital stock or other interest entitled to vote generally.
Swing Line Loans. Loans made by BKB to the Borrowers pursuant to
ss.2.11(a).
Swing Line Note. The promissory note of the Borrowers to BKB evidencing the
Swing Line Loans hereunder, dated as of the date of this Agreement and in
substantially the form of Exhibit B hereto.
Swing Line Settlement. The making or receiving of payments, in immediately
available funds, by the Banks to or from the Agent in accordance with ss.2.11
hereof to the extent necessary to cause each Bank's actual share of the
outstanding amount of the Loans to be equal to such Bank's Commitment Percentage
of the outstanding amount of such Loans, in any case when, prior to such action,
the actual share is not so equal.
Swing Line Settlement Amount. See ss.2.11(b).
Swing Line Settlement Date. See ss.2.11(b).
Swing Line Settling Bank. See ss.2.11(b).
Total Commitment. See ss.2.1.
U.S. Stock Pledge Agreement. The stock pledge agreement among the Parent,
its U.S. Subsidiaries (other than Excluded Subsidiaries) and the Agent for the
benefit or in the name of the Banks in form and substance satisfactory to the
Agent.
U.S. Subsidiaries. Subsidiaries of the Parent which are organized under the
laws of the United States of America, any state thereof or the District of
Columbia.
ss.1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms capitalized but not otherwise defined
herein have the meanings assigned to them by generally accepted
accounting principles applied on a consistent basis by the accounting
entity to which they refer.
(f) The words "include," "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein.
(h) Reference to a particular "ss." refers to that section of
this Agreement unless otherwise indicated.
(i) The words "herein," "hereof," "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
ss.2. THE REVOLVING CREDIT FACILITY.
ss.2.1. Commitment to Lend. Subject to the terms and conditions set forth
in this Agreement, each of the Banks severally agrees to lend to the Borrowers
and the Borrowers may borrow, repay, and reborrow from time to time commencing
on the Closing Date and prior to the Maturity Date, upon notice by the Borrowers
to the Agent given in accordance with ss.2.6, its Commitment Percentage of such
sums as are requested by the Borrowers, provided that the outstanding amount of
Loans (including the Swing Line Loans) and the Maximum Drawing Amount of the
Letters of Credit shall not exceed a maximum aggregate amount outstanding of
$125,000,000 at any time, as such amount may be reduced pursuant to ss.2.2
hereof (the "Total Commitment"). Each request for a Loan or Letter of Credit
hereunder shall constitute a representation and warranty by the Borrowers that
the conditions set forth in ss.9 and ss.10, as the case may be, have been
satisfied on the date of such request.
ss.2.2. Reduction of Total Commitment.
(a) The Borrowers shall have the right at any time and from
time to time upon two (2) Business Days' prior written notice to the
Agent to reduce by $10,000,000 or an integral multiple thereof or
terminate entirely the Total Commitment, whereupon the Commitments of
the Banks shall be reduced pro rata in accordance with their respective
Commitment Percentages of the amount specified in such notice or, as
the case may be, terminated. The Agent will notify the Banks promptly
after receiving any notice of the Borrowers delivered pursuant to this
ss.2.2. Notwithstanding the foregoing, at no time may the Total
Commitment be reduced to an amount less than the sum of (i) the Maximum
Drawing Amount, and (ii) all Loans then outstanding.
(b) No reduction or termination of the Commitments once made
may be revoked; the portion of the Commitments reduced or terminated
may not be reinstated; and amounts in respect of such reduced or
terminated portion may not be reborrowed.
ss.2.3. The Revolving Credit Notes; the Swing Line Note.
(a) The Revolving Credit Loans shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of Exhibit
A hereto (each a "Revolving Credit Note"), dated as of the date hereof.
One Revolving Credit Note shall be payable to the order of each Bank in
a principal amount equal to such Bank's Commitment or, if less, the
outstanding amount of all Revolving Credit Loans made by such Bank,
plus interest accrued thereon, as set forth herein.
(b) The Swing Line Loans shall be evidenced by a promissory
note of the Borrowers in substantially the form of Exhibit B hereto
(the "Swing Line Note"), dated as of the date hereof. The Swing Line
Note shall be payable to BKB in the principal amount of $5,000,000 or,
if less, the outstanding amount of all Swing Line Loans made by BKB,
plus interest accrued thereon, as set forth herin.
(c) The Borrowers irrevocably authorize each Bank to make or
cause to be made, in connection with a Drawdown Date of any Loan, or at
the time of receipt of any payment of principal on such Bank's Note(s),
an appropriate notation on such Bank's records reflecting the making of
such Loan or the receipt of such payment (as the case may be). The
outstanding amount of the Loans set forth on such Bank's record shall
be prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so
recording, any such amount shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any Note to make
payments of principal of or interest on any Note when due.
ss.2.4. Interest on Loans.
(a) The outstanding principal amount of the Revolving Credit
Loans shall bear interest at the rate per annum equal to (i) the Base
Rate, or (ii) at the Borrowers' option as provided herein, the LIBOR
Rate plus the Applicable LIBOR Margin.
(b) The outstanding principal amount of the Swing Line Loans
shall bear interest at the rate per annum equal to the Applicable Swing
Line Rate.
(c) Interest shall be payable (i) quarterly in arrears on the
first Business Day of the next succeeding quarter, commencing July 1,
1997, on Base Rate Loans and Swing Line Loans, (ii) on the last day of
the applicable Interest Period, and if such Interest Period is longer
than three (3) months, also on the last day of the third month
following the commencement of such Interest Period, on LIBOR Loans, and
(iii) on the Maturity Date for all Loans.
ss.2.5. Election of LIBOR Rate; Notice of Election; Interest Periods;
Minimum Amounts.
(a) At the Borrowers' option, so long as no Default or Event
of Default has occurred and is then continuing, the Borrowers may (i)
elect to convert any Revolving Credit Loan or a portion thereof from a
Base Rate Loan to a LIBOR Loan, (ii) at the time of any Loan and Letter
of Credit Request, specify that such requested Revolving Credit Loan
shall be a LIBOR Loan, or (iii) upon expiration of the applicable
Interest Period, elect to maintain an existing LIBOR Loan as such,
provided that the Borrowers give notice to the Agent pursuant to
ss.2.5(b) hereof. Upon determining any LIBOR Rate, the Agent shall
forthwith provide notice thereof to the Borrowers and the Banks, and
each such notice to the Borrowers and the Banks shall be considered
prima facie correct and binding, absent manifest error.
(b) Three (3) LIBOR Business Days prior to the making of any
LIBOR Loan or the conversion of any Base Rate Loan to a LIBOR Loan, or,
in the case of an outstanding LIBOR Loan, the expiration date of the
applicable Interest Period, the Borrowers shall give telephonic notice
(confirmed by telecopy on the same LIBOR Business Day) to the Agent not
later than 11:00 a.m. (Boston time) of its election pursuant to
ss.2.5(a). Each such notice delivered to the Agent shall specify the
aggregate principal amount of the Revolving Credit Loans to be borrowed
or maintained as or converted to LIBOR Loans and the requested duration
of the Interest Period that will be applicable to such LIBOR Loan, and
shall be irrevocable and binding upon the Borrowers. If the Borrowers
shall fail to give the Agent notice of their election hereunder
together with all of the other information required by this ss.2.5(b)
with respect to any Revolving Credit Loan, such Loan shall be deemed a
Base Rate Loan. In the event that the Borrowers fail to provide any
such notice with respect to the continuation of any LIBOR Loan as such,
then such LIBOR Loan shall be automatically converted to a Base Rate
Loan at the end of the then expiring Interest Period relating thereto.
(c) Notwithstanding anything herein to the contrary, the
Borrowers may not specify an Interest Period that would extend beyond
the Maturity Date.
(d) All Revolving Credit Loans shall be in a minimum
amount of not less than $5,000,000 and in integral multiples of
$500,000 above such amount.
(e) In no event shall the Borrowers have more than seven
(7) different maturities of LIBOR Loans outstanding at any time.
ss.2.6. Requests for Revolving Credit Loans. The Borrowers shall give to
the Agent written notice in the form of Exhibit C hereto (or telephonic notice
confirmed by telecopy on the same Business Day in the form of Exhibit C hereto)
of each Revolving Credit Loan requested hereunder (a "Loan and Letter of Credit
Request") not later than (a) 9:00 a.m. (Boston time) on the proposed Drawdown
Date of any Base Rate Loan, or (b) three (3) LIBOR Business Days prior to the
proposed Drawdown Date of any LIBOR Loan. Each such notice shall be given by the
Parent as agent for the Borrowers and shall specify the principal amount of the
Revolving Credit Loan requested and shall include a current Loan and Letter of
Credit Request, reflecting the Maximum Drawing Amount of all Letters of Credit
outstanding. Each Loan and Letter of Credit Request shall be irrevocable and
binding on the Borrowers and shall obligate the Borrowers to accept the
Revolving Credit Loan requested from the Banks on the proposed Drawdown Date.
Each of the representations and warranties made by or on behalf of any of the
Borrowers to the Banks or the Agent in this Agreement or any other Loan Document
shall be true and correct in all material respects when made and shall, for all
purposes of this Agreement, be deemed to be repeated on and as of the date of
the submission of any Loan and Letter of Credit Request and on and as of the
Drawdown Date of any Loan (including Swing Line Loans) or the date of issuance
or renewal of any Letter of Credit (except to the extent of changes resulting
from transactions contemplated or permitted by this Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that do not
in the aggregate have a material adverse effect on the Borrowers taken as a
whole, or to the extent that such representations and warranties expressly
relate to an earlier date). The Agent shall promptly notify each Bank of each
Loan and Letter of Credit Request received by the Agent (i) not later than 12:00
p.m. (Boston time) on the proposed Drawdown Date of any Base Rate Loan, (ii)
three (3) LIBOR Business Days prior to the proposed Drawdown Date of any LIBOR
Loan to be made to the Borrowers. or (iii) on a monthly basis with respect to
Letters of Credit.
ss.2.7. Funds for Revolving Credit Loans.
(a) Not later than 1:00 p.m. (Boston time) on the proposed
Drawdown Date of any Revolving Credit Loans, each of the Banks will
make available to the Agent, at its Head Office, in immediately
available funds, the amount of such Bank's Commitment Percentage of the
amount of the requested Revolving Credit Loans. Upon receipt from each
Bank of such amount, and upon receipt of the documents required by
ss.ss.9 and 10 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
Borrowers the aggregate amount of such Revolving Credit Loans made
available to the Agent by the Banks on the Drawdown Date. The failure
or refusal of any Bank to make available to the Agent at the aforesaid
time and place on any Drawdown Date the amount of its Commitment
Percentage of the requested Revolving Credit Loans shall not relieve
any other Bank from its several obligation hereunder to make available
to the Agent the amount of such other Bank's Commitment Percentage of
any requested Revolving Credit Loans.
(b) The Agent may, unless notified to the contrary by any Bank
prior to a Drawdown Date, assume that such Bank has made available to
the Agent on such Drawdown Date the amount of such Bank's Commitment
Percentage of the Revolving Credit Loans to be made on such Drawdown
Date, and the Agent may (but it shall not be required to), in reliance
upon such assumption, make available to the Borrowers a corresponding
amount. If any Bank makes available to the Agent such amount on a date
after such Drawdown Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (i) the average computed for the period
referred to in clause (iii) below, of the weighted average interest
rate paid by the Agent for federal funds acquired by the Agent during
each day included in such period, times (ii) the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans, times (iii) a
fraction, the numerator of which is the number of days that elapse from
and including such Drawdown Date to the date on which the amount of
such Bank's Commitment Percentage of such Revolving Credit Loans shall
become immediately available to the Agent, and the denominator of which
is 365. A statement of the Agent submitted to such Bank with respect to
any amounts owing under this paragraph shall be prima facie evidence,
absent manifest error, of the amount due and owing to the Agent by such
Bank. If the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans is not made available to the Agent by such Bank
within three (3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Borrowers on demand,
with interest thereon at the rate per annum applicable to the Revolving
Credit Loans made on such Drawdown Date.
ss.2.8. Maturity of the Loans; Annual Option to Extend. The Total
Commitment shall terminate and all Loans shall be due and payable on the
Maturity Date; provided, however, that such Total Commitment and Maturity Date
may be extended for successive annual periods up to a final Maturity Date of
June 9, 2002, as provided in this ss.2.8 and at each Bank's sole discretion,
upon the written request of the Borrowers. A written request, if any, for the
extension of the Total Commitment and Maturity Date shall be given by the
Borrowers to the Agent and the Banks not less than one-hundred twenty (120) days
prior to the Extension Date. Except as expressly provided in this ss.2.8, no
extension of the Total Commitment and then current Maturity Date pursuant to
this ss.2.8 shall be effective unless all of the Banks shall have approved such
extension by written notice to the Agent. If on or prior to ninety (90) days
prior to the applicable Extension Date, all of the Banks consent to such
extension by written notice to the Agent, the Total Commitment and Maturity Date
automatically shall be extended to that date which is one year later than the
then current Maturity Date. If on or prior to ninety (90) days prior to the
applicable Extension Date, any Bank (a "Declining Bank") shall have objected to
such requested extension by written notice to the Agent or shall not have
delivered written notice to the Agent consenting to such requested extension,
then the Borrowers or the Agent may, no later than such Extension Date, replace
each such Declining Bank if necessary so that, as of such Extension Date, the
Total Commitment is not less than $100,000,000. In no event shall the Maturity
Date be extended beyond June 9, 2002; nor shall the Total Commitment of such
extended facility be less than $100,000,000.
ss.2.9. Mandatory Repayments of the Loans. If at any time the outstanding
amount of the Loans plus the Maximum Drawing Amount of all outstanding Letters
of Credit exceeds the Total Commitment, whether by reduction of the Total
Commitment or otherwise, then the Borrowers shall immediately pay the amount of
such excess to the Agent for application to the Loans, or if no Loans shall be
outstanding, to be held by the Agent as collateral security for the
Reimbursement Obligations, provided, however, that if the amount of cash
collateral held by the Agent pursuant to this ss.2.9 exceeds the amount of the
Obligations, the Agent shall return such excess to the Borrowers.
ss.2.10. Optional Prepayments or Repayments of Loans. Subject to ss.4.8,
the Borrowers shall have the right, at their election, to repay or prepay the
outstanding amount of the Loans, as a whole or in part, at any time without
penalty or premium, provided that such repayments or prepayments shall be in a
minimum amount of not less than $5,000,000 and in integral multiples of $500,000
above such amount. The Borrowers shall give the Agent, no later than 11:00 a.m.
(Boston time) on the Business Day of such proposed prepayment or repayment,
written notice (or telephonic notice confirmed in writing) of any proposed
prepayment or repayment pursuant to this ss.2.10, specifying the proposed date
of prepayment or repayment of Loans and the principal amount to be paid.
ss.2.11. Swing Line Loans; Settlements.
(a) Solely for ease of administration of the Loans, BKB may,
but shall not be required to, fund Base Rate Loans made in accordance
with the provisions of this Agreement in amounts less than $5,000,000
("Swing Line Loans") provided that the outstanding amount of Swing Line
Loans advanced by BKB hereunder shall not exceed $5,000,000 at any
time. Each Bank shall remain severally and unconditionally liable to
fund its Commitment Percentage of such Swing Line Loans on each Swing
Line Settlement Date and, in the event BKB chooses not to fund all Base
Rate Loans requested on any date, to fund its Commitment Percentage of
the Base Rate Loans requested, subject to satisfaction of the
provisions hereof relating to the making of Base Rate Loans. Prior to
each Swing Line Settlement, all payments or repayments of the principal
of, and interest on, Swing Line Loans shall be credited to the account
of BKB.
(b) The Banks shall effect a Swing Line Settlement of each
Swing Line Loan on (i) the Business Day immediately following any day
on which the Agent gives notice of a Swing Line Settlement, (ii) the
Business Day immediately following the Agent's becoming aware of the
existence of any Default or Event of Default, (iii) the Maturity Date,
and (iv) the Business Day immediately following any day on which the
outstanding amount of Swing Line Loans advanced by BKB exceeds
$5,000,000 (each such date, a "Swing Line Settlement Date"). One (1)
Business Day prior to each such Swing Line Settlement Date, the Agent
shall give telephonic notice to the Banks of (A) the respective
outstanding amount of Loans made by each Bank as at the close of
business on the prior day, (B) the amount that any Bank, as applicable
(a "Swing Line Settling Bank"), shall pay to effect a Swing Line
Settlement (a "Swing Line Settlement Amount") and (C) the portion (if
any) of the aggregate Swing Line Settlement Amount to be paid to each
Bank. A statement of the Agent submitted to the Banks with respect to
any amounts owing hereunder shall be prima facie evidence of the amount
due and owing. Each Swing Line Settling Bank shall, not later than 1:00
p.m. (Boston time) on each Swing Line Settlement Date, effect a wire
transfer of immediately available funds to the Agent at its Head Office
in the amount of such Bank's Swing Line Settlement Amount. The Agent
shall, as promptly as practicable during normal business hours on each
Swing Line Settlement Date, effect a wire transfer of immediately
available funds to each Bank of the Swing Line Settlement Amount to be
paid to such Bank. All funds advanced by any Bank as a Swing Line
Settling Bank pursuant to this ss.2.11(b) shall for all purposes be
treated as a Base Rate Loan made by such Swing Line Settling Bank to
the Borrowers, and all funds received by any Bank pursuant to this
ss.2.11(b) shall for all purposes be treated as repayment of amounts
owed by the Borrowers with respect to Base Rate Loans made by such
Bank. In the event that any Bankruptcy Event prevents a Swing Line
Settling Bank from making any Swing Line Settlement as contemplated
hereby, such Swing Line Settling Bank will make such dispositions and
arrangements, either by way of purchase of participations,
distribution, pro tanto assignment of claims, subrogation or otherwise
as shall result in each Bank's share of the outstanding Revolving
Credit Loans being equal, as nearly as may be, to such Bank's
Commitment Percentage of the outstanding amount of the Revolving Credit
Loans.
(c) The Agent may (unless notified to the contrary by any
Swing Line Settling Bank by 12:00 noon (Boston time) one (1) Business
Day prior to the Settlement Date) assume that each Swing Line Settling
Bank has made available (or will make available by the time specified
in ss.2.11(b)) to the Agent its Swing Line Settlement Amount, and the
Agent may (but shall not be required to), in reliance upon such
assumption, make available to each applicable Bank its share (if any)
of the aggregate Swing Line Settlement Amount. If the Swing Line
Settlement Amount of such Swing Line Settling Bank is made available to
the Agent by such Swing Line Settling Bank on a date after such Swing
Line Settlement Date, such Swing Line Settling Bank shall pay the Agent
on demand an amount equal to the product of (i) the average, computed
for the period referred to in clause (iii) below, of the weighted
average annual interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period times
(ii) such Swing Line Settlement Amount times (iii) a fraction, the
numerator of which is the number of days that elapse from and including
such Swing Line Settlement Date to but not including the date on which
such Swing Line Settlement Amount shall become immediately available to
the Agent, and the denominator of which is 365. Upon payment of such
amount such Swing Line Settling Bank shall be deemed to have delivered
its Swing Line Settlement Amount on the Swing Line Settlement Date and
shall become entitled to interest payable by the Borrowers with respect
to such Swing Line Settling Bank's Swing Line Settlement Amount as if
such share were delivered on the Swing Line Settlement Date. If such
Swing Line Settlement Amount is not in fact made available to the Agent
by such Swing Line Settling Bank within three (3) Business Days of such
Swing Line Settlement Date, the Agent shall be entitled to recover such
amount from the Borrowers, with interest thereon at the Base Rate.
(d) After any Swing Line Settlement Date, any payment by the
Borrowers of Swing Line Loans hereunder shall be allocated among the
Banks, in amounts determined so as to provide that after such
application and the related Swing Line Settlement, the outstanding
amount of Loans of each Bank equals, as nearly as practicable, such
Bank's Commitment Percentage of the aggregate amount of Loans.
ss.3. LETTERS OF CREDIT.
ss.3.1. Letter of Credit Commitments.
(a) Subject to the terms and conditions hereof and the
execution and receipt of a Loan and Letter of Credit Request reflecting
the Maximum Drawing Amount of all Letters of Credit (including the
requested Letter of Credit) and a Letter of Credit Application, the
Agent, on behalf of the Banks and in reliance upon the agreement of the
Banks set forth in ss.3.1(b) and upon the representations and
warranties of the Borrowers contained herein, subject to the provisions
of ss.ss.2.6 and 19.2 hereof, agrees to issue, extend and renew for the
account of the Borrowers one or more standby or documentary letters of
credit (individually, a "Letter of Credit"), in such form as may be
requested from time to time by the Borrowers and agreed to by the
Agent; provided, however, that, after giving effect to such request,
the aggregate Maximum Drawing Amount of all Letters of Credit issued at
any time under this ss.3.1(a) shall not exceed $10,000,000, and no
Letter of Credit shall have an expiration date later than the earlier
of (i) one (1) year after the date of issuance of the Letter of Credit
(which may incorporate automatic renewals for periods of up to one (1)
year, provided that the Agent may, upon 30 days' notice to the
beneficiary, cancel such Letter of Credit which has been renewed beyond
its initial one (1) year term), or (ii) thirty (30) days prior to the
Maturity Date.
(b) Each Bank severally agrees that it shall be absolutely
liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, to the extent of
such Bank's Commitment Percentage thereof, to reimburse the Agent on
demand for the amount of each draft paid by the Agent under each Letter
of Credit to the extent that such amount is not reimbursed by the
Borrowers pursuant to ss.3.2 (such agreement for a Bank being called
herein the "Letter of Credit Participation" of such Bank).
(c) Each such payment made by a Bank shall be treated as the
purchase by such Bank of a participating interest in the Borrowers'
Reimbursement Obligation under ss.3.2 in an amount equal to such
payment. Each Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to ss.3.2.
ss.3.2. Reimbursement Obligation of the Borrowers. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrowers hereby agree to reimburse or pay to the Agent
with respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder as follows:
(a) on each date that any draft presented under any Letter of
Credit is honored by the Agent or the Agent otherwise makes payment
with respect thereto, (i) the amount paid by the Agent under or with
respect to such Letter of Credit, and (ii) the amount of any taxes,
fees, charges or other costs and expenses whatsoever incurred by the
Agent or any Bank in connection with any payment made by the Agent or
any Bank under, or with respect to, such Letter of Credit, provided,
however, that if the Borrowers do not reimburse the Agent on the date
the Agent makes payment with respect to such Letter of Credit, such
amount shall, provided that a Bankruptcy Event has not occurred, become
automatically a Revolving Credit Loan which is a Base Rate Loan; and
(b) upon the Maturity Date or the acceleration of the
Reimbursement Obligations with respect to all Letters of Credit in
accordance with ss.12, an amount equal to the then Maximum Drawing
Amount of all Letters of Credit and any unpaid Reimbursement
Obligations, which amount shall be held by the Agent for the benefit of
the Banks and the Agent as cash collateral for all Reimbursement
Obligations, provided, however, that if the amount of cash collateral
held by the Agent pursuant to this ss.3.2 exceeds the amount of the
Obligations, the Agent shall return such excess to the Borrowers.
ss.3.3. Obligations Absolute. The Borrowers' obligations under this ss.3
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Borrowers further agree with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and the
Borrowers' Reimbursement Obligations under ss.3.2 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Borrowers, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrowers against the beneficiary of
any Letter of Credit or any such transferee. The Agent and the Banks shall not
be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. The Borrowers agree that any action taken
or omitted by the Agent or any Bank under or in connection with each Letter of
Credit and the related drafts and documents, if done in good faith, shall be
binding upon the Borrowers and shall not result in any liability on the part of
the Agent or any Bank to the Borrowers.
ss.3.4. Reliance by Agent. To the extent not inconsistent with ss.3.4, the
Agent shall be entitled to rely, and shall be fully protected in relying upon,
any Letter of Credit, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Agent.
ss.4. FEES, PAYMENTS, AND COMPUTATIONS; JOINT AND SEVERAL LIABILITY.
ss.4.1. Fees.
(a) Commitment Fee. The Borrowers agree to pay to the Agent,
for the accounts of the Banks, a fee (the "Commitment Fee") equal to
the Applicable Commitment Rate multiplied by the amount of the unused
portion of the Total Commitment during each calendar quarter or portion
thereof from the date hereof to the Maturity Date (or to the date of
termination in full of the Total Commitment, if earlier). The
Commitment Fee shall be payable quarterly in arrears on the first day
of each calendar quarter for the immediately preceding calendar quarter
commencing on July 1, 1997, with a final payment on the Maturity Date.
(b) Letter of Credit Fees. The Borrowers shall pay in advance
on the date of issuance of each Letter of Credit an issuance fee to the
Agent for its account equal to one eighth of one percent (1/8%) per
annum on the Maximum Drawing Amount of each Letter of Credit (the
"Issuance Fee"). The Borrowers shall also pay quarterly in advance on
the first Business Day of each fiscal quarter a fee to the Agent equal
to the Applicable L/C Margin multiplied by the Maximum Drawing Amount
of all outstanding Letters of Credit (the "Letter of Credit Fee"),
which fee shall be for the accounts of the Banks in accordance with
their respective Commitment Percentages. In addition to the Issuance
Fee and the Letter of Credit Fee, the Borrowers shall pay to the Agent,
for its own account, all related customary administrative fees in
accordance with customary practice.
ss.4.2. Payments.
(a) All payments of principal, interest, Reimbursement
Obligations, fees and any other amounts due hereunder or under any of
the other Loan Documents shall be made to the Agent, for the respective
accounts of the Banks and the Agent, to be received at the Agent's Head
Office in immediately available funds by 12:00 p.m. (Boston time) on
any due date. If a payment (other than with respect to Swing Line
Loans) is received by the Agent at or before 12:00 p.m. (Boston time)
on any Business Day, the Agent shall on the same Business Day transfer
in immediately available funds to each of the Banks their pro rata
portion of such payment in accordance with their respective Commitment
Percentages. If such payment is received by the Agent after 12:00 p.m.
(Boston time) on any Business Day, such transfer shall be made by the
Agent to the applicable Bank(s) on the next Business Day. In the event
that the Agent fails to make such transfer to any Bank as set forth
above, the Agent shall pay to such Bank on demand an amount equal to
the product of (i) the average, computed for the period referred to in
clause (iii) below, of the weighted average interest rate paid by such
Bank for funds acquired by such Bank during each day included in such
period, times (ii) the amount equal to such Bank's Commitment
Percentage of such payment, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including the date of
payment to and including the date on which the amount due to such Bank
shall become immediately available to such Bank, and the denominator of
which is 365.
(b) All payments by the Borrowers hereunder and under any of
the other Loan Documents shall be made without setoff or counterclaim
and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory
loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrowers are
compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrowers with respect to any amount
payable by them hereunder or under any of the other Loan Documents, the
Borrowers will pay to the Agent, for the account of the Banks or (as
the case may be) the Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the Banks or the
Agent to receive the same net amount which the Banks or the Agent would
have received on such due date had no such obligation been imposed upon
the Borrowers, provided however that the foregoing obligation to pay
such additional amounts shall not apply:
(i) to any payment to a Bank if such Bank is not, on
the date hereof (or on the date it becomes a Bank under this
Agreement) and on the date of any change in the lending office
of such Bank identified after its execution, entitled by
virtue of its status as a non-resident alien to submit either
a Form 1001 (relating to such Bank and entitling it to a
complete exemption from withholding on all interest to be
received by it hereunder in respect of the Revolving Credit
Loans) or Form 4224 (relating to all interest to be received
by such Bank hereunder in respect of Revolving Credit Loans)
of the U.S. Department of Treasury, or
(ii) to any item referred to in the preceding
sentence that would not have been imposed but for the failure
by such Bank to comply with applicable certification,
information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections
of such Bank with the United States if such compliance is
required by statute or regulation of the United States as a
precondition to relief or exemption from such item.
The Borrowers will deliver promptly to the Agent certificates
or other valid vouchers for all taxes or other charges deducted from or
paid with respect to payments made by the Borrowers hereunder or under
such other Loan Document.
ss.4.3. Computations. All computations of interest on Base Rate Loans and
of Commitment Fees, Letter of Credit Fees or other fees shall, unless otherwise
expressly provided herein, be based on a 365-day year (or 366-day year, as
applicable) and paid for the actual number of days elapsed. All computations of
interest on LIBOR Loans shall, unless otherwise expressly provided herein, be
based on a 360-day year and paid for the actual number of days elapsed. Whenever
a payment hereunder or under any of the other Loan Documents becomes due on a
day that is not a Business Day or LIBOR Business Day (as applicable), the due
date for such payment shall be extended to the next succeeding Business Day or
LIBOR Business Day (as applicable), and interest shall accrue during such
extension; provided that, for any Interest Period for any LIBOR Loan, if such
next succeeding LIBOR Business Day falls in the next succeeding calendar month
or after the Maturity Date, it shall be deemed to end on the preceding LIBOR
Business Day.
ss.4.4. Additional Costs, Etc. If, after the date hereof, any change in
present applicable law or adoption of any applicable law after the date hereof
(including, in either case, without limitation, statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank by any central bank or other fiscal, monetary or
other authority, whether or not having the force of law) shall:
(a) subject such Bank to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Bank's Commitment, or the
Loans (other than taxes based upon or measured by the income or profits
of such Bank or any franchise tax imposed by the jurisdiction of its
incorporation or organization, or the location of its lending office,
hereinafter referred to as "Income Taxes"); or
(b) materially change the basis of taxation (except for
changes in Income Taxes) of payments to such Bank of the principal or
of the interest on any Loans or any other amounts payable to such Bank
under this Agreement or the other Loan Documents; or
(c) except as provided in ss.4.5 or as otherwise reflected in
the Base Rate or the LIBOR Rate, impose or increase or render
applicable (other than to the extent specifically provided for
elsewhere in this Agreement) any special deposit, reserve, assessment,
liquidity, capital adequacy or other similar requirements (whether or
not having the force of law) against assets held by, or deposits in or
for the account of, or loans by, or commitments of, an office of any
Bank with respect to this Agreement, the other Loan Documents, the
Commitment, or the Loans; or
(d) impose on such Bank any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans,
such Bank's Commitment, or any class of loans or commitments of which
any of the Loans or such Bank's Commitment forms a part, and the result
of any of the foregoing is
(i) to increase the cost to such Bank of making,
funding, issuing, renewing, extending or maintaining the Loans
or such Bank's Commitment, or issuing or participating in
Letters of Credit;
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank hereunder on account of such
Bank's Commitment or the Loans;
(iii) to require such Bank to make any payment or to
forego any interest or other sum payable hereunder, the amount
of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank from the Borrower
hereunder,
then,and in each such case, the Borrowers will, upon demand made by such
Bank at any time and from time to time as often as the occasion therefore may
arise (which demand shall be accompanied by a statement setting forth the basis
of such demand), pay such reasonable additional amounts as will be sufficient to
compensate such Bank for such additional costs, reduction, payment or foregone
interest or other sum.
ss.4.5. Capital Adequacy. If any Bank shall have determined that, after the
date hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule, or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or any corporation controlling such Bank) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or any corporation controlling such Bank) could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, within thirty (30) days after demand by
such Bank (which demand shall be accompanied by a statement setting forth the
basis of such demand), the Borrower shall pay to such Bank such additional
amount or amounts as will, in such Bank's reasonable determination, fairly
compensate such Bank (or any corporation controlling such Bank) for such
reduction.
ss.4.6. Certificate.
A certificate setting forth any additional amounts payable pursuant to
ss.ss.4.4 or 4.5 and a reasonable explanation of such amounts which are due,
submitted by any Bank or the Agent to the Borrowers, shall be prima facie
correct and binding, absent manifest error.
ss.4.7. Reasonable Efforts to Mitigate. Each Bank agrees that as promptly
as practicable after it becomes aware of the occurrence of an event or the
existence of a condition that would cause it to be affected under ss.ss.4.4, 4.5
or 4.11, such Bank will give notice thereof to the Borrower, with a copy to the
Agent, and, to the extent so requested by the Borrower and not inconsistent with
such Bank's internal policies, such Bank shall use reasonable efforts and take
such actions as are reasonably appropriate if as a result thereof the additional
moneys which would otherwise be required to be paid to such Bank pursuant to
such subsections would be materially reduced, or the illegality or other adverse
circumstances which would otherwise require a conversion of such Loans or result
in the inability to make such Loans pursuant to such sections would cease to
exist, and in each case if, as determined by such Bank in its sole discretion,
the taking such actions would not adversely affect such Loans or such Bank or
otherwise be disadvantageous to such Bank. To the extent practicable and
applicable, each Bank shall allocate such cost increases among its customers in
good faith and on an equitable basis.
ss.4.8. LIBOR Indemnity. The Borrowers agree to indemnify the Banks and the
Agent and to hold them harmless from and against any loss, cost or expenses
(including loss of anticipated profits) that the Banks and the Agent may sustain
or incur as a consequence of (a) default by the Borrowers in payment of the
principal amount of or any interest on any LIBOR Loans as and when due and
payable, including any such loss or expense arising from interest or fees
payable by any Bank or the Agent to lenders of funds obtained by it in order to
maintain its LIBOR Loans, or (b) default by the Borrowers in making a borrowing
or conversion after the Borrowers have given (or are deemed to have given)
notice pursuant to ss.2.5 or ss.2.6, the making of any payment of a LIBOR Loan
or the making of any conversion of any such LIBOR Loan to a Base Rate Loan on a
day that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by any Bank to lenders of funds
obtained by it in order to maintain any such LIBOR Loans. Such loss or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by each Bank of (i) its cost of obtaining the funds for
the LIBOR Loan being paid, prepaid, converted, not converted, or not borrowed,
as the case may be (based on the LIBOR Rate) for the period from the date of
such payment, prepayment, conversion, or failure to borrow or convert, as the
case may be, to the last day of the Interest Period for such Loan (or, in the
case of a failure to borrow, the Interest Period for the Loan which would have
commenced on the date of such failure to borrow) over (ii) the amount of
interest (as reasonably determined by such Bank) that would be realized by such
Bank in re-employing the funds so paid, prepaid, converted, or not borrowed,
converted, or prepaid for such period or Interest Period, as the case may be,
which determinations shall be prima facie correct and binding, absent manifest
error.
ss.4.9. Interest on Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue amounts
payable hereunder or under any of the other Loan Documents shall bear interest
compounded monthly and payable on demand at a rate per annum equal to the Base
Rate plus two (2) percent until such amount shall be paid in full (after, as
well as before, judgment).
ss.4.10. Interest Limitation. Notwithstanding any other term of this
Agreement or any Note or any other document referred to herein or therein, the
maximum amount of interest which may be charged to or collected from any person
liable hereunder or under any Note by any Bank shall be absolutely limited to,
and shall in no event exceed, the maximum amount of interest which could
lawfully be charged or collected under applicable law (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of the United
States of America, as amended, 12 U.S.C. Section 85, as amended), so that the
maximum of all amounts constituting interest under applicable law, howsoever
computed, shall never exceed as to any Person liable therefor such lawful
maximum, and any term of this Agreement, the Notes, the Letter of Credit
Applications, or any other document referred to herein or therein which could be
construed as providing for interest in excess of such lawful maximum shall be
and hereby is made expressly subject to and modified by the provisions of this
paragraph, and in the event any amount in excess of the lawful maximum is
charged or collected by the Agent or the Banks or paid by the Borrowers, the
Borrowers shall be entitled to the reimbursement of such excess together with
interest thereon at the highest lawful rate at the time of such overcharge.
ss.4.11. Illegality; Inability to Determine LIBOR Rate. Notwithstanding any
other provision of this Agreement, if (a) the introduction of, any change in, or
any change in the interpretation of, any law or regulation applicable to the
Agent or any Bank shall make it unlawful, or any central bank or other
governmental authority having jurisdiction thereof shall assert that it is
unlawful, for any Bank or the Agent to perform its obligations in respect of any
LIBOR Loans, or (b) if the Banks or the Agent shall reasonably determine with
respect to LIBOR Loans that (i) by reason of circumstances affecting any LIBOR
interbank market, adequate and reasonable methods do not exist for ascertaining
the LIBOR Rate which would otherwise be applicable during any Interest Period,
or (ii) deposits of Dollars in the relevant amount for the relevant Interest
Period are not available to the Banks or the Agent in any LIBOR interbank
market, or (iii) the LIBOR Rate does not or will not accurately reflect the cost
to the Banks or the Agent of obtaining or maintaining the applicable LIBOR Loans
during any Interest Period, then the Banks or the Agent shall promptly give
telephonic, telex or cable notice of such determination to the Borrowers (which
notice shall be conclusive and binding upon the Borrowers). Upon such
notification by the Banks or the Agent, the obligation of the Banks or the Agent
to make LIBOR Loans shall be suspended until the Banks or the Agent determine
that such circumstances no longer exist, and the outstanding LIBOR Loans shall
continue to bear interest at the applicable rate based on the LIBOR Rate until
the end of the applicable Interest Period, and thereafter shall be deemed
converted to Base Rate Loans in equal principal amounts.
ss.4.12. Concerning Joint and Several Liability of the Borrowers.
(a) Each of the Borrowers is accepting joint and several
liability hereunder and under the other Loan Documents in consideration
of the financial accommodations to be provided by the Banks under this
Agreement, for the mutual benefit, directly and indirectly, of each of
the Borrowers and in consideration of the undertakings of each other
Borrower to accept joint and several liability for the Obligations.
(b) Each of the Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Borrowers with respect to the payment and performance of all of the
Obligations (including, without limitation, any Obligations arising
under this ss.4.12), it being the intention of the parties hereto that
all of the Obligations shall be the joint and several Obligations of
each of the Borrowers without preferences or distinction among them.
(c) If and to the extent that any of the Borrowers shall fail
to make any payment with respect to any of the Obligations as and when
due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event the other Borrowers will make such
payment with respect to, or perform, such Obligation.
(d) The Obligations of each of the Borrowers under the
provisions of this ss.4.12 constitute full recourse Obligations of each
of the Borrowers enforceable against each such corporation to the full
extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement or any other
circumstance whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each of the Borrowers hereby waives notice of acceptance of its joint
and several liability, notice of any Loans made under this Agreement,
notice of any action at any time taken or omitted by the Banks under or
in respect of any of the Obligations, and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities
of every kind in connection with this Agreement. Each of the Borrowers
hereby assents to, and waives notice of, any extension or postponement
of the time for the payment of any of the Obligations, the acceptance
of any payment of any of the Obligations, the acceptance of any partial
payment thereon, any waiver, consent or other action or acquiescence by
the Banks at any time or times in respect of any default by any of the
Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by the Banks in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any of the
Borrowers. Without limiting the generality of the foregoing, each of
the Borrowers assents to any other action or delay in acting or failure
to act on the part of the Banks with respect to the failure by any of
the Borrowers to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to
assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the
provisions of this ss.4.12, afford grounds for terminating, discharging
or relieving any of the Borrowers, in whole or in part, from any of its
Obligations under this ss.4.12, it being the intention of each of the
Borrowers that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of such Borrowers under this ss.4.12 shall
not be discharged except by performance and then only to the extent of
such performance. The Obligations of each of the Borrowers under this
ss.4.12 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, re-construction
or similar proceeding with respect to any of the Borrowers or the
Banks. The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption,
merger, amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any of the Borrowers
or the Banks.
(f) The provisions of this ss.4.12 are made for the benefit of
the Banks and their successors and assigns, and may be enforced in good
faith by them from time to time against any or all of the Borrowers as
often as the occasion therefor may arise and without requirement on the
part of the Banks first to marshal any of their claims or to exercise
any of their rights against any other Borrower or to exhaust any
remedies available to them against any other Borrower or to resort to
any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of
this ss.4.12 shall remain in effect until all of the Obligations shall
have been paid in full or otherwise fully satisfied. If at any time,
any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by
the Banks upon the insolvency, bankruptcy or reorganization of any of
the Borrowers, or otherwise, the provisions of this ss.4.12 will
forthwith be reinstated in effect, as though such payment had not been
made.
ss.4.13. New Borrowers. Any existing or newly-created or acquired U.S
Subsidiary of the Parent (other than members of the MasTec International Group),
which (a) has annual gross revenues of at least $1,000,000 on an historical or
annualized basis, or (b) is the parent of any other Borrower, shall be Borrowers
hereunder, and all other U.S. Subsidiaries of the Parent designated as such by
the Parent shall be Excluded Subsidiaries, provided that the Excluded
Subsidiaries may not, in the aggregate, have in excess of five percent (5%) of
consolidated total assets, consolidated total liabilities or consolidated gross
revenues of the Parent and its U.S. Subsidiaries (other than members of the
MasTec International Group) at any time, in each case as determined in
accordance with GAAP. Any Subsidiary which is required to become a Borrower
pursuant to the terms of this ss.4.13 shall sign Notes, shall enter into an
amendment to this Agreement and the U.S. Stock Pledge Agreement with the other
parties hereto providing that such Subsidiary shall become a Borrower hereunder,
and shall provide such other documentation as the Agent may reasonably request,
including, without limitation, documentation with respect to conditions
specified in ss.9 hereof. In such event, the Agent is hereby authorized by the
parties to amend Schedule 1 hereto to include such Subsidiary as a Borrower
hereunder. The Borrowers hereby agree to pledge all of their stock of the U.S.
Subsidiaries (including members of the MasTec International Group which are U.S.
Subsidiaries), other than the stock of Excluded Subsidiaries, to the Agent for
the benefit of the Banks pursuant to the terms of the U.S. Stock Pledge
Agreement.
ss.4.14. Replacement of Banks.
If any Bank (an "Affected Bank") (i) makes demand upon the Borrowers for
(or if Borrowers are otherwise required to pay) amounts pursuant to
ss.ss.4.2(b), 4.4 or 4.5, (ii) is unable to make or maintain LIBOR Loans as a
result of a condition described in ss.4.11, or (iii) defaults in its obligation
to make Loans or participate in Letters of Credit in accordance with the terms
of this Agreement, the Borrowers or the Agent may, within 90 days of receipt of
such demand, notice (or the occurrence of such other event causing the Borrowers
to be required to pay such compensation or causing ss.4.11 to be applicable) or
default, as the case may be, by notice (a "Replacement Notice") in writing to
such Affected Bank and the Agent or Borrowers, as applicable, (A) request the
Affected Bank to cooperate with the Borrowers in obtaining a replacement bank
satisfactory to the Agent and the Borrowers (the "Replacement Bank"); (B)
request the non-Affected Banks to acquire and assume all of the Affected Bank's
Loans and Commitment and participate in Letters of Credit as provided herein,
but none of such Banks shall be under an obligation to do so; or (C) designate a
Replacement Bank reasonably satisfactory to the Agent or Borrowers, as
applicable. If any satisfactory Replacement Bank shall be obtained, and/or any
of the non-Affected Banks shall agree to acquire and assume all of the Affected
Bank's Loans and Commitment and participate in Letters of Credit, then such
Affected Bank shall, so long as no Event of Default shall have occurred and be
continuing, assign, in accordance with ss.17, all of its Commitment, Loans,
Notes and other rights and obligations under this Agreement and all other Loan
Documents to such Replacement Bank or non-Affected Banks, as the case may be, in
exchange for payment of the principal amount so assigned and all interest and
fees accrued on the amount so assigned, plus all other Obligations then due and
payable to the Affected Bank; provided, however, that (i) such assignment shall
be without recourse, representation or warranty and shall be on terms and
conditions reasonably satisfactory to such Affected Bank and such Replacement
Bank and/or non-Affected Banks, as the case may be, and (ii) prior to any such
assignment, the Borrowers shall have paid to such Affected Bank all amounts
properly demanded and unreimbursed under ss.ss.4.2(b), 4.4, 4.5 or 4.8. Upon the
effective date of such assignment the Borrowers shall issue replacement Notes to
such Replacement Bank and/or non-Affected Banks, as the case may be, and such
Replacement Bank shall become a "Bank" for all purposes under this Agreement and
the other Loan Documents.
ss.5. REPRESENTATIONS AND WARRANTIES. The Borrowers jointly and severally
represent and warrant to the Banks that on and as of the date of this Agreement
(any disclosure on a schedule pursuant to this ss.5 shall be deemed to apply to
all relevant representations and warranties, regardless of whether such schedule
is referenced in each relevant representation):
ss.5.1. Corporate Authority.
(a) Incorporation; Good Standing. Each of the Borrowers and
the International Signatories (i) is a corporation duly organized,
validly existing and in good standing or in current status under the
laws of its respective jurisdiction of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business
as now conducted and as presently contemplated, and (iii) is in good
standing as a foreign corporation and is duly authorized to do business
in each jurisdiction in which its property or business as presently
conducted or contemplated makes such qualification necessary except
where a failure to be so qualified would not have a material adverse
effect on the business, assets or financial condition of the Borrowers,
taken as a whole, or the MasTec International Group, taken as a whole.
(b) Authorization. The execution, delivery and performance of
its Loan Documents and the transactions contemplated hereby and thereby
(i) are within the corporate authority of each of the Borrowers and the
International Signatories, (ii) have been duly authorized by all
necessary corporate proceedings, (iii) do not conflict with or result
in any material breach or contravention of any provision of law,
statute, rule or regulation to which any Borrower or International
Signatory is subject or any judgment, order, writ, injunction, license
or permit applicable to any Borrower or International Signatory so as
to have a material adverse effect on the assets, business or any
activity of such Borrower or International Signatory, (iv) do not
conflict with any provision of the corporate charter or bylaws of any
Borrower or International Signatory, (v) do not conflict with any
material contract, agreement or other instrument binding upon any
Borrower or International Signatory, and (vi) will not create a lien on
any properties of any of the Borrowers or International Signatories
other than pursuant to the Loan Documents.
(c) Enforceability. The execution, delivery and performance of
the Loan Documents will result in valid and legally binding obligations
of the Borrowers and the International Signatories, enforceable against
each of them in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
ss.5.2. Governmental Approvals. The execution, delivery and performance by
the Borrowers and the International Signatories of the Loan Documents and the
transactions contemplated hereby and thereby do not require any approval or
consent of, or filing with, any governmental agency or authority other than
those already obtained; provided, however, that the International Signatories
shall have ninety (90) days after the date hereof to effect this provision.
ss.5.3. Title to Properties; Leases. Each of the Parent and its
Subsidiaries owns all of its respective assets reflected in the consolidated
balance sheet of the Parent as at the Interim Balance Sheet Date or acquired
since that date (except property and assets sold or otherwise disposed of in the
ordinary course of business since that date), subject to no mortgages,
capitalized leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
ss.5.4. Financial Statements; Solvency.
(a) There has been furnished to the Banks (i) unaudited
consolidated financial statements of the Parent dated the Balance Sheet
Date, including reconciliations of (A) the Borrowers and the MasTec
International Group (excluding that portion of assets, liabilities,
income and expenses attributable to the Sintel Group) and (B) the
Sintel Group to the consolidated financial statements of the Parent,
and (ii) an unaudited consolidated balance sheet and statement of
income of the Parent dated the Interim Balance Sheet Date, including
reconciliations of (A) the Borrowers (excluding that portion of assets,
liabilities, income and expenses of the Parent attributable to
non-Borrowers) and (B) the non-Borrowers to the consolidated balance
sheet and statement of income of the Parent. Said financial statements
have been prepared in accordance with GAAP (but only to the extent that
GAAP is applicable to unaudited reports), fairly present in all
material respects the financial condition of the Borrowers, on a
consolidated basis, as at the close of business on the dates thereof
and the results of operations for the period then ended. There are no
contingent liabilities of the Borrowers as of such date involving
material amounts known to the officers of the Borrowers which have not
been disclosed in said balance sheets and the related notes thereto, as
the case may be.
(b) The Parent (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., it has
assets having a fair value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and
matured) and has, and expects to have, the ability to pay its debts
from time to time incurred in connection therewith as such debts
mature.
(c) The Borrowers taken as a whole (both before and after
giving effect to the transactions contemplated by this Agreement) are
solvent (i.e., they have assets having a fair value in excess of the
amount required to pay their probable liabilities on their existing
debts as they become absolute and matured) and have, and expect to
have, the ability to pay their debts from time to time incurred in
connection therewith as such debts mature.
ss.5.5. No Material Changes, Etc. Since the Balance Sheet Date, there have
occurred no material adverse changes in the financial condition or business of
the Borrowers as shown on or reflected in the consolidated balance sheet of the
Parent as at the Balance Sheet Date, or the consolidated statement of income for
the fiscal year then ended other than changes occurring in the ordinary course
of business that in the aggregate have not had a material adverse effect on the
business or financial condition of the Borrowers taken as a whole. Since the
Balance Sheet Date, no Borrower has made any Distribution other than to the
Parent.
ss.5.6. Permits, Franchises, Patents, Copyrights, Etc. Each of the
Borrowers possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
ss.5.7. Litigation. Except as shown on Schedule 5.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or, to the
knowledge of the Borrowers, threatened against any Borrower before any court,
tribunal or administrative agency or board which, if adversely determined,
might, either in any case or in the aggregate, have a material adverse effect on
the properties, assets, financial condition or business of the Borrowers,
considered as a whole, or materially impair the right of the Borrowers,
considered as a whole, to carry on business substantially as now conducted, or
result in any substantial liability not adequately covered by insurance, or for
which adequate reserves are not maintained on the consolidated balance sheet or
which question the validity of any of the Loan Documents or any action taken or
to be taken pursuant hereto or thereto.
ss.5.8. No Materially Adverse Contracts, Etc. None of the Borrowers is
subject to any charter, corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which in the judgment of the Borrowers'
officers has or is expected in the future to have a material adverse effect on
the business, assets or financial condition of the Borrowers taken as a whole.
None of the Borrowers is a party to any contract or agreement which in the
judgment of the Borrowers' officers has or is expected to have any material
adverse effect on the business of the Borrowers taken as a whole, except as
otherwise reflected in adequate reserves.
ss.5.9. Compliance With Other Instruments, Laws, Etc. None of the Borrowers
or the International Signatories is violating any provision of its charter
documents or by-laws or any agreement or instrument by which any of them may be
subject or by which any of them or any of their properties may be bound or any
decree, order, judgment, or any statute, license, rule or regulation, in a
manner which could in the aggregate result in the imposition of substantial
penalties or a material adverse effect on the financial condition, properties or
business of the Borrowers taken as a whole, or would impair the ability of any
Borrower or International Signatory to enter into or perform the Loan Documents.
ss.5.10. Tax Status. The Borrowers have made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject (unless and only to the extent that
any Borrower has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes); and have paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith; and have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. Except as set
forth on Schedule 5.10, there are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Borrowers know of no basis for any such claim.
ss.5.11. No Event of Default. No Default or Event of Default has occurred
and is continuing as of the date of this Agreement.
ss.5.12. Holding Company and Investment Company Acts. None of the Borrowers
is a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is any of them a "registered investment
company," or an "affiliated company" or a "principal underwriter" of a
"registered investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
ss.5.13. Absence of Financing Statements, Etc. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, which purports to cover,
affect or give notice of any present or possible future lien on, or security
interest in, any assets or property of any of the Borrowers or rights
thereunder.
ss.5.14. Employee Benefit Plans.
(a) In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions and the bonding of
fiduciaries and other persons handling plan funds as required by ss.412
of ERISA. The Borrowers have heretofore delivered to the Agent the most
recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
ss.103(d) of ERISA, with respect to each Guaranteed Pension Plan.
(b) Terminability of Welfare Plans. Except as set forth on
Schedule 5.14(b), no Employee Benefit Plan which is an employee welfare
benefit plan within the meaning of ss.3(1) or ss.3(2)(B) of ERISA,
provides benefit coverage subsequent to termination of employment
except as required by Title I, Part 6 of ERISA or applicable state
insurance laws. Any Borrower may terminate each such Plan at any time
(or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of such Borrower without
liability to any Person other than for claims arising prior to
termination.
(c) Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid
the incurrence of an accumulated funding deficiency, the notice or lien
provisions of ss.302(f) of ERISA, or otherwise, has been timely made.
No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan, and neither any of the Borrowers nor any ERISA Affiliate
is obligated to or has posted security in connection with an amendment
of a Guaranteed Pension Plan pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code. No liability to the PBGC (other than
required insurance premiums, all of which have been paid) has been
incurred by any Borrower or any ERISA Affiliate with respect to any
Guaranteed Pension Plan and there has not been any ERISA Reportable
Event, or any other event or condition which presents a material risk
of termination of any Guaranteed Pension Plan by the PBGC. Based on the
latest valuation of each Guaranteed Pension Plan (which in each case
occurred within twelve months of the date of this representation), and
on the actuarial methods and assumptions employed for that valuation,
the aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of ss.4001 of ERISA did not exceed the aggregate
value of the assets of all such Guaranteed Pension Plans, disregarding
for this purpose the benefit liabilities and assets of any Guaranteed
Pension Plan with assets in excess of benefit liabilities.
(d) Multiemployer Plans. None of the Borrowers nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan under ss.4201 of ERISA
or as a result of a sale of assets described in ss.4204 of ERISA. None
of the Borrowers nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or is insolvent under and
within the meaning of ss.4241 or ss.4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under
ss.4041A of ERISA.
ss.5.15. Use of Proceeds. The proceeds of the Loans shall be used as
follows: (a) for general corporate purposes; (b) to repay the existing
indebtedness of the Borrowers; (c) for Investments permitted pursuant to ss.7.3
hereof, and (d) for acquisitions permitted pursuant to ss.7.4 hereof. No
proceeds of the Loans shall be used in any way that will violate Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System.
ss.5.16. Environmental Compliance. Except as shown on Schedule 5.16:
(a) None of the Borrowers, nor any operator of their
properties, is in violation, or alleged violation, of any judgment,
decree, order, law, permit, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising
under RCRA, CERCLA, the Superfund Amendments and Reauthorization Act of
1986, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the
environment (the "Environmental Laws"), which violation would have a
material adverse effect on the business, assets or financial condition
of the Borrowers on a consolidated basis.
(b) None of the Borrowers has received notice from any third
party, including, without limitation, any federal, state or local
governmental authority, (i) that any one of them has been identified by
the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B;
(ii) that any hazardous waste, as defined by 42 U.S.C. ss.6903(5), any
hazardous substances as defined by 42 U.S.C. ss.9601(14), any pollutant
or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic
substance, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous Substances") which any
one of them has generated, transported or disposed of has been found at
any site at which a federal, state or local agency or other third party
has conducted or has ordered that any Borrower conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, legal or administrative
proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances.
(c) (i) No portion of the Real Property has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in material compliance with applicable Environmental Laws; (ii)
in the course of any activities conducted by the Borrowers, or
operators of the Real Property, no Hazardous Substances have been
generated or are being used on such properties except in material
compliance with applicable Environmental Laws; (iii) there have been no
unpermitted Releases or threatened Releases of Hazardous Substances on,
upon, into or from the Real Property, which Releases would have a
material adverse effect on the value of such properties; (iv) to the
best of the Borrowers' knowledge, there have been no Releases on, upon,
from or into any real property in the vicinity of the Real Property
which, through soil or groundwater contamination, may have come to be
located on, and which would have a material adverse effect on the value
of, such properties; and (v) in addition, any Hazardous Substances that
have been generated on the Real Property have been transported offsite
only by carriers having an identification number issued by the EPA,
treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities, to the best of the Borrowers'
knowledge, have been and are operating in material compliance with such
permits and applicable Environmental Laws.
(d) None of the Real Property is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions
set forth herein and contemplated hereby.
ss.5.17. Perfection of Security Interests. Except as set forth on Schedule
5.17, the Collateral and the Agent's rights with respect to the Collateral are
not subject to any setoff, claims, withholdings or other defenses. The Borrowers
and MasTec International, Inc. are the owners of the Collateral free from any
lien, security interest, encumbrance and any other claim or demand, other than
liens in favor of the Agent for the benefit of the Banks to secure the
Obligations. The Stock Pledge Agreements are effective to create in favor of the
Agent, for the benefit of the Banks, a legal, valid and enforceable first
priority security interest in the Collateral. The certificates for the shares of
such Collateral have been delivered to the Agent; provided, however, that MasTec
International, Inc. shall have ninety (90) days after the Closing Date to effect
this provision. The parties agree that there shall be no public filing,
registration or notice of the Sintel Stock Pledge Agreement unless an Event of
Default shall have occurred.
ss.5.18. Certain Transactions. Except as set forth on Schedule 5.18 and
except for arm's length transactions pursuant to which the Borrowers make
payments in the ordinary course of business upon terms no less favorable than
the Borrowers could obtain from third parties, none of the officers, directors,
or employees of the Borrowers is presently a party to any transaction with the
Borrowers (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrowers, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
ss.5.19. Subsidiaries. Schedule 1 sets forth a complete and accurate list
of the direct or indirect Subsidiaries of the Parent, including the name of each
Subsidiary and its jurisdiction of incorporation, together with the number of
authorized and outstanding shares of each Subsidiary. All of the stock of each
U.S. Subsidiary (other than the Excluded Subsidiaries) and 66% of the stock of
Sintel which is directly or indirectly owned by the Parent has been pledged to
the Agent on behalf of the Banks pursuant to the Stock Pledge Agreements. The
Parent has good and marketable title to all of the shares it purports to own of
the stock of each such Subsidiary, free and clear in each case of any lien. All
such shares have been duly issued and are fully paid and non-assessable. Each
Subsidiary of the Parent, other than the Excluded Subsidiaries and the members
of the MasTec International Group, is a Borrower hereunder.
ss.5.20. True Copies of Charter and Other Documents. The Borrowers and the
International Signatories have furnished the Agent copies, in each case true and
complete as of the date hereof, of (a) all charter and other incorporation
documents (together with any amendments thereto) and (b) by-laws (together with
any amendments thereto); provided, however, that the International Signatories
shall have ninety (90) days to effect this provision as regards Sintel.
ss.6. AFFIRMATIVE COVENANTS OF THE BORROWERS. The Borrowers jointly and
severally covenant and agree that, so long as any Loan, Reimbursement Obligation
or Note is outstanding or the Banks have any obligation to make Loans or the
Agent has any obligation to issue, extend, or renew any Letters of Credit
hereunder:
ss.6.1. Punctual Payment. The Borrowers will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all fees and other
amounts provided for in this Agreement and the other Loan Documents, all in
accordance with the terms of this Agreement and such other Loan Documents.
ss.6.2. Maintenance of Office. The Borrowers will maintain their chief
executive offices as set forth on Schedule 1 or at such other place in the
United States of America as the Borrowers shall designate upon thirty (30) days'
prior written notice to the Agent.
ss.6.3. Records and Accounts. Each of the Borrowers will keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP and with the requirements of all regulatory
authorities, and will maintain adequate accounts and reserves for all taxes
(including income taxes), depreciation, depletion, obsolescence and amortization
of its properties, all other contingencies, and all other proper reserves.
ss.6.4. Financial Statements, Certificates and Information. The Borrowers
shall deliver to the Banks:
(a) as soon as practicable, but in any event not later than
fifty (50) days after the end of each fiscal quarter of the Borrowers,
copies of the consolidated balance sheet and statement of income of the
Borrowers (excluding that portion of the Parent's assets, liabilities,
income and expenses attributable to non-Borrowers) as at the end of
such quarter, subject to year end adjustments, and the related
statement of cash flows, all in reasonable detail and prepared in
accordance with GAAP, with a certification by the principal financial
or accounting officer of the Parent (the "CFO") that these consolidated
financial statements are prepared in accordance with GAAP and fairly
present the consolidated financial condition of the Borrowers as at the
close of business on the date thereof and the results of operations for
the period then ended;
(b) as soon as practicable, but in any event not later than
fifty (50) days after the end of each fiscal quarter of the Parent,
copies of the consolidated balance sheet and statement of income of the
Parent as at the end of such quarter, subject to year end adjustments,
and the related statement of cash flows, all in reasonable detail and
prepared in accordance with GAAP, with a certification by the CFO that
these consolidated financial statements are prepared in accordance with
GAAP and fairly present the consolidated financial condition of the
Parent as at the close of business on the date thereof and the results
of operations for the period then ended;
(c) as soon as practicable, but, in any event not later than
one hundred (100) days after the end of each fiscal year of the Parent,
the consolidated and consolidating balance sheets of Parent as at the
end of such year, statements of cash flows, and the related
consolidated and consolidating statements of income, each setting forth
in comparative form the figures for the previous fiscal year, all such
consolidated and consolidating financial statements to be in reasonable
detail, prepared in accordance with GAAP and, with respect to the
consolidated financial statements, certified by Coopers & Lybrand
L.L.P. or another independent accounting firm of national standing
acceptable to the Agent (the "Accountants") and including a
reconciliation of the consolidated financial statements of the
Borrowers (excluding that portion of the Parent's assets, liabilities,
income and expenses attributable to non-Borrowers) to the consolidated
financial statements of the Parent. In addition, simultaneously
therewith, the Borrowers shall use their reasonable best efforts to
provide the Banks with a written statement from such Accountants to the
effect that the Borrowers are in compliance with the covenants set
forth in ss.8 hereof, and that, in making the examination necessary to
said certification, nothing has come to the attention of such
Accountants that would indicate that any Default or Event of Default
exists, or, if such Accountants shall have obtained knowledge of any
then existing Default or Event of Default they shall disclose in such
statement any such Default or Event of Default; provided, that such
Accountants shall not be liable to the Banks for failure to obtain
knowledge of any Default or Event of Default;
(d) as soon as practicable, but in any event not later than
thirty (30) days after the end of each fiscal quarter of the Borrowers,
copies of the Accounts Receivable aging reports of the Borrowers and
the consolidated liquidity calculation for such date required under
ss.8.4 hereof, all in reasonable detail and prepared in accordance with
GAAP, with a certification by the CFO that these reports and
calculation are prepared in accordance with GAAP and fairly present the
Accounts Receivable of the Borrowers as at the close of business on the
date thereof;
(e) simultaneously with the delivery of the items referred to
in (a), (b) and (c) above, a statement in the form of Exhibit D hereto
(the "Compliance Certificate") certified by the CFO that the Borrowers
are in compliance with the covenants contained in ss.ss.6, 7 and 8
hereof as of the end of the applicable period and setting forth in
reasonable detail computations evidencing such compliance, provided
that if the Borrowers shall at the time of issuance of such certificate
or at any other time obtain knowledge of any Default or Event of
Default, the Borrowers shall include in such certificate or otherwise
deliver forthwith to the Banks a certificate specifying the nature and
period of existence thereof and what action the Borrowers propose to
take with respect thereto;
(f) contemporaneously with, or promptly following, the filing
or mailing thereof, copies of all material filed with the Securities
and Exchange Commission or sent to the stockholders of the Parent or
any of the Borrowers; and
(g) from time to time, such other financial data and other
information (including accountants' management letters) as the Banks
may reasonably request.
The Borrowers hereby authorize the Banks to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law; provided, however, that the Banks shall, to
the extent practicable and allowable under law, notify the Borrowers within a
reasonable period prior to the time any such disclosure is made; and provided
further, that this authorization shall not be deemed to be a waiver of any
rights to object to the disclosure by the Banks of any such information which
any Borrower has or may have under the federal Right to Financial Privacy Act of
1978, as in effect from time to time.
ss.6.5. Corporate Existence and Conduct of Business. Except where the
failure of a Borrower to remain so qualified would not materially adversely
impair the financial condition of the Borrowers on a consolidated basis, each
Borrower will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, corporate rights and
franchises; effect and maintain its foreign qualifications, licensing,
domestication or authorization except as terminated by its Board of Directors in
the exercise of its reasonable judgment; and shall not become obligated under
any contract or binding arrangement which, at the time it was entered into would
materially adversely impair the financial condition of the Borrowers on a
consolidated basis. Each Borrower will continue to engage primarily in the
businesses now conducted by it and in related businesses.
ss.6.6. Maintenance of Properties. The Borrowers will cause all material
properties used or useful in the conduct of their businesses to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment and will cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrowers may be necessary so that the
businesses carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this section shall
prevent any Borrower from (i) discontinuing the operation and maintenance of any
of its properties if such discontinuance is, in the judgment of such Borrower,
desirable in the conduct of its or their business and does not in the aggregate
have a material adverse effect on the business or financial condition of the
Borrowers taken as a whole, or (ii) conducting a sale of assets permitted
pursuant to ss.7.4 hereof.
ss.6.7. Insurance. The Borrowers will maintain with financially sound and
reputable insurance companies, funds or underwriters' insurance of the kinds,
covering the risks (other than risks arising out of or in any way connected with
personal liability of any officers and directors thereof) and in the relative
proportionate amounts usually carried by reasonable and prudent companies
conducting businesses similar to that of the Borrowers, but in no event less
than the amounts and coverages set forth in Schedule 6.7 hereto as affected by
adjustments to retention levels in the ordinary course of business. In addition,
the Borrowers will furnish from time to time, upon the Agent's request, a
summary of the insurance coverage of each of the Borrowers, which summary shall
be in form and substance satisfactory to the Agent and, if requested by the
Agent, will furnish to the Agent copies of the applicable policies.
ss.6.8. Taxes. The Borrowers will each duly pay and discharge, or cause to
be paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges (other than taxes, assessments and
other governmental charges imposed by foreign jurisdictions which in the
aggregate are not material to the business or assets of the Borrowers taken as a
whole) imposed upon it and its real properties, sales and activities, or any
part thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies, which if unpaid might by law become a lien or
charge upon any of its property other than a Permitted Lien; provided, however,
that any such tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if such Borrower shall have set aside on its books
adequate reserves with respect thereto; and provided, further, that such
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien which may
have attached as security therefor.
ss.6.9. Inspection of Properties, Books, and Contracts. The Borrowers shall
permit the Banks, the Agent or any of their designated representatives, upon
reasonable notice to the Parent, to visit and inspect any of the properties of
the Borrowers, to examine the books of account of the Borrowers (including the
making of periodic accounts receivable reviews), or contracts (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances and
accounts of the Borrowers with, and to be advised as to the same by, their
officers, all at such times and intervals as the Banks may reasonably request.
ss.6.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance
of Material Licenses and Permits. Each Borrower will (i) comply with the
provisions of its charter documents and by-laws and all agreements and
instruments by which it or any of its properties may be bound; and (ii) comply
with all applicable laws and regulations (including Environmental Laws),
decrees, orders, judgments, licenses and permits, including, without limitation,
all environmental permits hereto ("Applicable Laws"), except where noncompliance
in the case of (i) and (ii) above would not have a material adverse effect in
the aggregate on the consolidated financial condition, properties or business of
the Borrowers taken as a whole, or would not impair the ability of any Borrower
or International Signatory to enter into or perform the Loan Documents. If at
any time while the Notes, or any Loan or Letter of Credit is outstanding or any
Bank or the Agent has any obligation to make Loans or issue Letters of Credit
hereunder, any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that any Borrower may fulfill any of its obligations
hereunder, such Borrower will immediately take or cause to be taken all
reasonable steps within the power of such Borrower to obtain such authorization,
consent, approval, permit or license and furnish the Banks with evidence
thereof.
ss.6.11. ENVIRONMENTAL INDEMNIFICATION. THE BORROWERS COVENANT AND AGREE
THAT THEY WILL INDEMNIFY AND HOLD THE BANKS HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, EXPENSE, DAMAGE, LOSS OR LIABILITY INCURRED BY THE BANKS (INCLUDING
ALL COSTS OF LEGAL REPRESENTATION INCURRED BY THE BANKS) RELATING TO (A) ANY
RELEASE OR THREATENED RELEASE OF HAZARDOUS SUBSTANCES ON THE REAL PROPERTY; (B)
ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT THE REAL
PROPERTY OR THE OPERATIONS CONDUCTED THEREON; OR (C) THE INVESTIGATION OR
REMEDIATION OF OFFSITE LOCATIONS AT WHICH THE BORROWERS OR THEIR PREDECESSORS
ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES. IT
IS EXPRESSLY ACKNOWLEDGED BY THE BORROWERS THAT THIS COVENANT OF INDEMNIFICATION
SHALL INCLUDE CLAIMS, EXPENSE, DAMAGE, LOSS OR LIABILITY INCURRED BY THE BANKS
BASED UPON THE BANKS' NEGLIGENCE, AND THIS COVENANT SHALL SURVIVE ANY
FORECLOSURE OR ANY MODIFICATION, RELEASE OR DISCHARGE OF THE STOCK PLEDGE
AGREEMENTS OR THE PAYMENT OF THE LOANS AND SHALL INURE TO THE BENEFIT OF THE
BANKS, THEIR SUCCESSORS AND ASSIGNS.
ss.6.12. Further Assurances. The Borrowers will cooperate with the Banks
and execute such further instruments and documents as the Banks shall reasonably
request to carry out to the Banks' satisfaction the transactions contemplated by
this Agreement.
ss.6.13. Notice of Potential Claims or Litigation. The Borrowers shall
deliver to the Banks, within 30 days of receipt thereof, written notice of the
initiation of any action, claim, complaint, or any other notice of dispute or
potential litigation wherein the potential liability would be material to the
Borrowers taken as a whole under the regulations of the United States Securities
and Exchange Commission, together with a copy of each such notice received by
the Parent or any of its Subsidiaries.
ss.6.14. Notice of Default. The Borrowers will promptly notify the Banks in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Agreement or any
other note, evidence of indebtedness, indenture or other obligation evidencing
indebtedness in excess of $1,000,000 as to which any Borrower is a party or
obligor, whether as principal or surety, the Borrowers shall forthwith give
written notice thereof to the Banks, describing the notice of action and the
nature of the claimed default.
ss.7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. The Borrowers agree
that, so long as any Loan, Reimbursement Obligation or any Note is outstanding
or the Banks have any obligation to make Loans or the Agent has any obligation
to issue, extend or renew any Letters of Credit hereunder:
ss.7.1. Restrictions on Funded Debt. None of the Borrowers shall become or
be a guarantor or surety of, or otherwise create, incur, assume, or be or remain
liable, contingently or otherwise, with respect to any Funded Debt, or become or
be responsible in any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or advance any funds, assets,
goods or services or otherwise) with respect to any Funded Debt of any other
Person, or incur any Funded Debt other than:
(a) Indebtedness to the Banks and the Agent arising under
this Agreement or the Loan Documents;
(b) Subordinated Debt of the Parent;
(c) Existing Funded Debt listed on Schedule 7.1(c) hereto, on
the terms and conditions in effect as of the date hereof, together with
any renewals, extensions or refinancings thereof on terms which are not
materially different than those in effect as of the date hereof;
provided that no more than $5,000,000 of such indebtedness may be
prepaid without prior written consent of the Banks;
(d) Funded Debt incurred in connection with acquisitions after
the date hereof of any stocks of, partnership or joint venture
interests in, or assets of any Person and owing to the seller(s) of
such stocks, partnership or joint venture interests, or assets;
provided that the principal amount of any such Funded Debt owed (when
aggregated with all such other Funded Debt permitted pursuant to this
ss.7.1(d)) shall not exceed $10,000,000; and provided, further, that
such acquisitions shall be otherwise permitted pursuant to ss.7.4; and
(e) Other Funded Debt not to exceed $10,000,000 in the
aggregate incurred after the date hereof (including existing Funded
Debt of any Borrower acquired pursuant to ss.7.4 hereof after the date
hereof).
ss.7.2. Restrictions on Liens. None of the Borrowers will create or incur
or suffer to be created or incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon any
property or assets of any character, whether now owned or hereafter acquired, or
upon the income or profits therefrom; or transfer any of such property or assets
or the income or profits therefrom for the purpose of subjecting the same to the
payment of indebtedness or performance of any other obligation in priority to
payment of its general creditors; or acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; or suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any indebtedness or claim or demand against it which if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles or chattel paper,
with or without recourse, except as follows (the "Permitted Liens"):
(a) Liens securing Funded Debt permitted under ss.ss.7.1(d)
and 7.1(e) incurred in connection with the lease or acquisition of
property or fixed assets useful or intended to be used in carrying on
the business of the Borrowers, provided that such Liens shall encumber
only the property or assets so acquired and shall not exceed the fair
market value thereof and provided further that the aggregate amount of
Funded Debt secured by such liens shall not exceed $5,000,000;
(b) Liens to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of
obligations not overdue;
(c) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) Liens in respect of judgments or awards which have been in
force for less than the applicable period for taking an appeal so long
as execution is not levied thereunder or in respect of which any
Borrower shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review and in respect
of which the Borrowers have maintained adequate reserves;
(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than one-hundred
and twenty (120) days from the date of creation thereof in respect of
obligations not overdue;
(f) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which any Borrower is a party, and other minor
liens or encumbrances none of which in the opinion of the respective
Borrower interferes materially with the use of the property affected in
the ordinary conduct of the business of such Borrower, which defects do
not individually or in the aggregate have a material adverse effect on
the business of such Borrower individually or of the Borrowers on a
consolidated basis;
(g) Liens (including Liens securing Funded Debt permitted
under ss.7.1(c)) existing as of the date hereof and listed on Schedule
7.2(g) on the terms and conditions in effect as of the date hereof;
(h) Existing Liens in connection with the Fleet Credit
Agreement and the First Union mortgages, provided that the proceeds of
the initial Loan advanced hereunder shall be used to discharge such
Liens;
(i) Liens granted pursuant to the Stock Pledge Agreements; and
(j) Other Liens securing indebtedness in an aggregate amount
not to exceed $500,000 at any time.
ss.7.3. Restrictions on Investments. None of the Borrowers shall make or
permit to exist or to remain outstanding any other Investment other than:
(a) marketable direct or guaranteed obligations of the United
States of America or any agency or instrumentality thereof fully
guaranteed or otherwise fully backed by the full faith and credit of
the United States Government that mature within one (1) year from the
date of purchase by the Borrower;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks or Eligible
Foreign Banks having total assets in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if
rated by Standard and Poor's;
(d) Subject to ss.7.1 and ss.7.4, Investments by any Borrower
in any other Borrower; and
(e) Investments by any Borrower in any affiliate or Subsidiary
of a Borrower which is not also a Borrower (which may include the
MasTec International Group or other non-U.S. entities) or in any other
Person, provided, however, that the aggregate amount from the date
hereof of such Investments outstanding at any time shall not exceed
$15,000,000 plus
(i) the lesser of (A) the sum of net cash proceeds
received in connection with the sale of the Cempresa, S.A.
and Supercanal Holding, S.A. investments and the issuance
of common stock of the Parent after the date hereof or
(B) $35,000,000;
plus
(ii) with the prior consent of the Majority Banks,
(A) 50% of net cash proceeds received in connection with the
issuance of Subordinated Debt after the date hereof plus (B)
without double counting any such amounts included in (i)(A)
hereof, up to 75% of net cash proceeds received in connection
with the issuance of common stock of the Parent after the date
hereof;
provided, however, that the aggregate amount of (ii) hereof shall not exceed
$100,000,000.
Notwithstanding (e) above, none of the Borrowers shall make any Investment
in any Subsidiary which is not a Borrower hereunder unless, both before and
after giving effect thereto, there does not exist a Default or Event of Default
and no Default or Event of Default would be created by the making of such
Investment.
ss.7.4. Mergers, Consolidations, Sales. None of the Borrowers shall be a
party to any merger, consolidation or exchange of stock, or purchase or
otherwise acquire all or substantially all of the assets or stock of, or any
partnership or joint venture interest in, any other Person except as otherwise
provided in this ss.7.4, or sell, transfer, convey or lease any assets or group
of assets (except sales of equipment tools, parts and related assets in the
ordinary course of business, sales of assets totaling an aggregate amount, from
the date hereof through the Maturity Date, of no more than $10,000,000, and
dispositions listed on Schedule 7.4) or sell or assign, with or without
recourse, any receivables (except to another Borrower). A Borrower may purchase
or otherwise acquire all or substantially all of the assets or stock of any
class of, or joint venture interest in, any Person provided that (a) at the time
of such acquisition, no Default or Event of Default has occurred and is
continuing, and such acquisition will not otherwise create a Default or an Event
of Default hereunder; (b) the business to be acquired is predominantly in the
same lines of business as the Borrowers, or businesses reasonably related
thereto; (c) the aggregate cash consideration to be paid in connection with any
such acquisition (including deferred payments and the aggregate amount of all
Funded Debt assumed, but excluding contingent payments) shall not exceed
$10,000,000; (d) the Borrowers are in current compliance with and, giving effect
to the proposed acquisition (including any borrowings made or to be made in
connection therewith), will continue to be in compliance with all of the
covenants in ss.8 hereof on a pro forma historical combined basis as if the
transaction occurred on the first day of the period of measurement, and in the
event that the aggregate cash consideration given in connection with any such
acquisition exceeds $7,500,000, including deferred payments and the aggregate
amount of all liabilities assumed, the Banks shall have been provided with a
Compliance Certificate demonstrating such compliance; (e) the board of directors
and (if required by applicable law) the shareholders, or the equivalent thereof,
of the business to be acquired has approved such acquisition; (f) the business
to be acquired operates predominantly in the continental United States; (g) in
the case of an asset acquisition, all of the assets to be acquired shall be
owned by an existing or newly created Subsidiary of the Parent which is a
Borrower, all of the stock of which that is directly or indirectly owned by the
Parent has been or will be pledged to the Agent on behalf of the Banks, or, in
the case of a stock acquisition, the acquired company shall become or shall be
merged with a wholly-owned Subsidiary of the Parent which is a Borrower, 100% of
the stock of which has been or will be pledged to the Agent on behalf of the
Banks; and (h) if such acquisition is made by a merger, the surviving entity
shall be a Borrower, 100% of the stock of which shall be pledged to the Agent on
behalf of the Banks. Any Borrower may merge with any other Borrower.
ss.7.5. Sale and Leaseback. None of the Borrowers shall enter into any
arrangement, directly or indirectly, whereby any Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property which such Borrower intends to use for substantially the
same purpose as the property being sold or transferred, without the prior
written consent of the Banks; other than such arrangements which do not in the
aggregate exceed $100,000.
ss.7.6. Restricted Distributions and Redemptions. None of the Borrowers may
make Distributions except as set forth in this ss.7.6. Each Borrower may make
distributions payable solely in common stock or preferred stock of such
Borrower, subject to the requirement to pledge all such stock pursuant to
ss.5.19 hereof. Borrowers other than the Parent may declare or pay Distributions
to the Parent. In addition, the Borrowers (other than the Parent) shall not
redeem, convert, retire or otherwise acquire shares of any class of capital
stock of such Borrowers. The Parent may declare or pay dividends and may redeem,
convert, retire, or otherwise acquire shares of its capital stock, provided that
the aggregate amount of all such Distributions by the Parent shall not exceed
50% of Consolidated Net Income in any one fiscal year. None of the Borrowers may
make any Distribution under this ss.7.6 if a Default or Event of Default exists
or would be created by the making of such Distribution. The Borrowers shall not
effect or permit any change in or amendment to any document or instrument
pertaining to the terms of the Borrowers' or the International Signatories'
capital stock other than the amendment to the Parent's certificate of
incorporation increasing the authorized amount of common stock and the par value
of the common stock and the preferred stock.
ss.7.7. Employee Benefit Plans. None of the Borrowers nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for the Borrowers taken as a whole; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency," as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of any Borrower pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (within the meaning of ss.4001 of ERISA)
of all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities.
The Borrowers will (i) promptly upon filing the same with the Department of
Labor or Internal Revenue Service, furnish to the Banks a copy of the most
recent actuarial statement required to be submitted under ss.103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish to
the Banks any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4066 and 4068
of ERISA, or in respect of a Multiemployer Plan, under ss.ss.4041A, 4202, 4219,
4242, or 4245 of ERISA.
ss.7.8. Negative Pledges. Except for Permitted Liens, no Borrower will
pledge any of its assets to any Person other than to the Agent for the benefit
of the Banks, nor will any Borrower grant any negative pledges on their assets
to any Person other than hereunder.
ss.7.9. Pledges of Stock of the Sintel Group. So long as the Sintel Stock
Pledge Agreement or any successor agreement has not been terminated pursuant to
ss.11 hereof, Sintel will not pledge any of the capital stock of the Sintel
Group to any Person other than to the Agent for the benefit of the Banks, nor
will Sintel grant any negative pledges on the capital stock of the Sintel Group
to any Person other than hereunder.
ss.7.10. Newly-Created Subsidiaries. No Borrower shall create a Subsidiary
which is not a U.S. Subsidiary.
ss.8. FINANCIAL COVENANTS OF THE BORROWERS. The Borrowers agree that, so
long as any Loan, Reimbursement Obligation or any Note is outstanding or the
Banks have any obligation to make Loans or the Agent has any obligation to
issue, extend or renew any Letters of Credit hereunder, they shall comply with
the following covenants:
ss.8.1. Leverage Ratios. As of the end of any fiscal quarter of the
Borrowers commencing with the fiscal quarter ending March 31, 1997, (a) the
ratio of (i) Senior Debt to (ii) EBITDA for the period of four (4) consecutive
fiscal quarters ending on such date shall not exceed 2.50:1, and (b) the ratio
of (i) Funded Debt to (ii) EBITDA for the period of four (4) consecutive fiscal
quarters ending on such date shall not exceed 3.00:1.
ss.8.2. Capital Expenditures. In any fiscal year, the Borrowers shall not
make or commit to make Capital Expenditures in excess of two times the
consolidated depreciation and amortization expenses of the Borrowers for such
fiscal year.
ss.8.3. Interest Coverage Ratio. As of the end of any fiscal quarter of the
Borrowers commencing with the fiscal quarter ending March 31, 1997, the ratio of
(a) EBIT for the period of four (4) consecutive fiscal quarters ending on such
date to (b) Consolidated Total Interest Expense for such period shall not be
less than 4.00:1.
ss.8.4. Liquidity. As of the end of any fiscal quarter of the Borrowers
commencing with the fiscal quarter ending March 31, 1997, (i) the ratio of (a)
Qualified Accounts Receivable to (b) the sum of trade payables of the Borrowers
shall not be less than 1.40:1, and (ii) the ratio of (a) Qualified Accounts
Receivable to (b) Accounts Receivable shall not be less than 0.70:1.
ss.8.5. Profitable Operations. The Borrowers will not permit Consolidated
Net Income to be less than $0 for any two consecutive fiscal quarters.
ss.9. CLOSING CONDITIONS.
The obligations of the Banks to make the Loans and the Agent to issue
Letters of Credit on the Closing Date and otherwise be bound by the terms of
this Agreement shall be subject to the satisfaction of each of the following
conditions precedent:
ss.9.1. Corporate Action. All corporate action necessary for the valid
execution, delivery and performance by each Borrower and International Signatory
of the Loan Documents shall have been duly and effectively taken, and evidence
thereof satisfactory to the Agent shall have been provided to the Agent;
provided, however, that Sintel shall have ninety (90) days after the Closing
Date to effect this provision.
ss.9.2. Loan Documents, Etc. Each of the Loan Documents shall have been
duly and properly authorized, executed and delivered by the respective parties
thereto and shall be in full force and effect in a form satisfactory to the
Banks; provided, however, that Sintel shall have ninety (90) days after the
Closing Date to effect this provision.
ss.9.3. Certified Copies of Charter Documents. The Agent shall have
received from each of the Borrowers and the International Signatories a copy,
certified by a duly authorized officer of such Person to be true and complete on
the date hereof, of each of (a) its charter or other incorporation documents
(including certificates of merger and name changes) as in effect on such date of
certification, and (b) its by-laws as in effect on such date; provided, however,
that Sintel shall have ninety (90) days after the Closing Date to effect this
provision.
ss.9.4. Incumbency Certificate. The Agent shall have received an incumbency
certificate, dated as of the date hereof, signed by duly authorized officers
giving the name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign the Loan Documents on behalf of the Borrowers and the
International Signatories; (b) to make Loan and Letter of Credit Requests; and
(c) to give notices and to take other action on the Borrowers' and the
International Signatories' behalf under the Loan Documents; provided, however,
that Sintel shall have ninety (90) days after the Closing Date to effect this
provision.
ss.9.5. Validity of Liens. Each of the Stock Pledge Agreements shall be
effective to create in favor of the Agent a legal, valid and enforceable first
security interest in and lien upon the Collateral, subject only to Permitted
Liens. All filings, recordings, deliveries of instruments and other actions
necessary or desirable in the opinion of the Agent to protect and preserve such
security interests shall have been duly effected. The Agent shall have received
evidence thereof in form and substance satisfactory to the Agent; provided,
however, that the International Signatories shall have ninety (90) days after
the Closing Date to effect this provision.
ss.9.6. UCC Search Results. The Agent shall have received the results of
UCC searches with respect to the Borrowers indicating no liens other than
Permitted Liens and otherwise in form and substance satisfactory to the Agent.
ss.9.7. Certificates of Insurance. The Agent shall have received (a) a
certificate of insurance from an independent insurance broker dated as of the
date hereof, or within fifteen (15) days prior thereto, identifying insurers,
types of insurance, insurance limits, and policy terms, and otherwise describing
the insurance coverage of the Borrowers and (b) copies of all policies
evidencing such insurance (or certificates therefor signed by the insurer or an
agent authorized to bind the insurer).
ss.9.8. Opinion of Counsel. The Banks shall have received favorable legal
opinions from general counsel to the Borrowers, addressed to the Banks, dated as
of the date hereof, in form and substance satisfactory to the Agent. Opinions
satisfactory to the Agent regarding the Sintel Stock Pledge Agreement and the
International Pledge Documents (defined therein) shall be received within ninety
(90) days of the date hereof.
ss.9.9. Certificate of Financial Condition. The Agent shall have received a
certificate from the CFO satisfactory to the Agent certifying that no material
adverse change has occurred in the financial condition, results of operations,
business, properties or prospects of the Borrowers, taken as a whole, since the
date of the most recent financial statements and projections provided to the
Banks.
ss.9.10. Initial Compliance Certificate. The Agent shall have received a
Compliance Certificate regarding compliance with the covenants set forth in ss.8
hereof as of the Closing Date.
ss.9.11. Interim Balance Sheets and Income Statements. The Agent shall have
received an unaudited consolidated balance sheet and statement of income of the
Parent dated the Interim Balance Sheet Date, including reconciliations of (A)
the Borrowers (excluding that portion of assets, liabilities, income and
expenses of the Parent attributable to non-Borrowers) and (B) the non-Borrowers
to the consolidated balance sheet and statement of income of the Parent, which
balance sheet and statement of income shall be attached hereto as Schedule 9.11.
ss.9.12. Payoff Letters. The Banks shall have received payoff letters from
Fleet Financial Corporation ("Fleet") with respect to the Fleet Credit Agreement
and from First Union regarding its mortgages indicating the amount to be paid to
such lenders on the Closing Date in order to fully discharge such obligations to
the lenders and acknowledging that upon receipt of such funds each will
forthwith execute and deliver to the Agent for filing all termination statements
and take such other actions as may be necessary to discharge all mortgages and
security interests in favor of such lender.
ss.10. CONDITIONS OF ALL LOANS.
The obligations of the Banks to make any Loan (including without limitation
the obligation of the Agent to issue any Letter of Credit) on and subsequent to
the Closing Date is subject to the following conditions precedent:
ss.10.1. Representations True; No Event of Default. Each of the
representations and warranties of the Borrowers contained in this Agreement or
in any document or instrument delivered pursuant to or in connection with this
Agreement shall be true as of the date as of which they were made and shall also
be true at and as of the time of any Drawdown Date with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Agreement and changes occurring
in the ordinary course of business which singly or in the aggregate are not
materially adverse, or to the extent that such representations and warranties
relate expressly to an earlier date) and no Default or Event of Default shall
have occurred and be continuing.
ss.10.2. Performance; No Event of Default. The Borrowers shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by them prior to or at the time of any Loan, and at
the time of any Loan, there shall exist no Event of Default or condition which
would result in an Event of Default upon consummation of such Loan (including
without limitation any amounts to be drawn under a Letter of Credit). Each
request by the Borrowers for a Loan (including without limitation each request
for issuance of a Letter of Credit) subsequent to the first Loan shall
constitute certification by the Borrowers that the conditions specified in
ss.ss.10.1 and 10.2 will be duly satisfied on the date of such Loan or Letter of
Credit issuance.
ss.10.3. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof which in the reasonable
opinion of the Banks would make it illegal for the Banks to make Loans
hereunder.
ss.10.4. Governmental Regulation. The Banks shall have received such
statements in substance and form reasonably satisfactory to the Banks as they
shall require for the purpose of compliance with any applicable regulations of
the Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
ss.10.5. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall have been delivered to the Banks as of the date hereof in form and
substance satisfactory to the Banks, including without limitation a Letter of
Credit and Loan Request in the form attached hereto as Exhibit C, and the Banks
shall have received all information and such counterpart originals or certified
or other copies of such documents as the Banks may reasonably request.
ss.11. COLLATERAL SECURITY. The Obligations shall be secured by a perfected
security interest (having, with respect to each category of Collateral, the
respective rights and priorities set forth herein and in the Stock Pledge
Agreements) in all of the Collateral, whether now owned or hereafter acquired,
pursuant to the terms of the Stock Pledge Agreements. However, provided that no
Default or Event of Default has occurred and is continuing, the Agent shall
release the stock of Sintel and the Sintel Stock Pledge Agreement (or any
successor agreement) shall terminate, if such release and termination is a
required condition of refinancing the indebtedness of Sintel or its immediate
parent (including, without limitation, refinancing existing indebtedness to
Telefonica), provided that the Agent consents to the terms of such refinancing,
which consent shall not be unreasonably withheld.
ss.12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
ss.12.1. Events of Default and Acceleration. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice and/or lapse of time, "Defaults") shall
occur:
(a) the Borrowers shall fail to pay any principal of the Loans
or any Reimbursement Obligations when the same shall become due and
payable, whether at the Maturity Date or any accelerated date of
maturity or at any other date fixed for payment;
(b) the Borrowers shall fail to pay any interest or fees or
other amounts owing hereunder within five (5) Business Days after the
same shall become due and payable whether at the Maturity Date or any
accelerated date of maturity or at any other date fixed for payment;
(c) the Borrowers shall fail to comply with the covenants
contained inss.ss.6.3, 6.5, 6.7, 6.9, 6.13, 6.14, 7 or 8 hereof;
(d) the Borrowers shall fail to comply with the
covenants contained inss.ss.6.4 or 6.10 hereof and such failure shall
be continuing for ten (10) days;
(e) the Borrowers shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other
than those specified in subsections (a), (b), (c) and (d) above) within
thirty (30) days after written notice of such failure has been given to
the Borrowers by the Banks;
(f) any representation or warranty contained in this Agreement
or in any document or instrument delivered pursuant to or in connection
with this Agreement shall prove to have been false in any material
respect upon the date when made or repeated;
(g) any Borrower shall fail to pay at maturity, or within any
applicable period of grace, any and all obligations for Funded Debt
(other than the Obligations) or any Guarantee with respect thereto in
an aggregate amount greater than $1,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money
in an aggregate amount greater than $1,000,000 for such period of time
as would, or would have permitted (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof;
(h) (i) any Borrower makes an assignment for the benefit of
creditors, or admits in writing its inability to pay or generally fails
to pay its debts as they mature or become due, or petitions or applies
for the appointment of a trustee or other custodian, liquidator or
receiver of any Borrower or of any substantial part of the assets of
any Borrower or commences any case or other proceeding relating to any
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or takes any action to
authorize or in furtherance of any of the foregoing (other than the
dissolution of Subsidiaries with assets, liabilities and projected or
anticipated revenues of less than (in each such case) $100,000); or
(ii) any such petition or application is filed or any such case or
other proceeding is commenced against any Borrower and or any Borrower
indicates its approval thereof, consent thereto or acquiescence
therein;
(i) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower bankrupt
or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of
any Borrower in an involuntary case under federal bankruptcy laws as
now or hereafter constituted, and such decree or order remains in
effect for more than sixty (60) days, whether or not consecutive;
(j) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against any Borrower which, with other outstanding
final judgments against any Borrower, exceeds in the aggregate
$1,000,000 after taking into account any undisputed insurance coverage;
(k) any Borrower or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $1,000,000; any Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of
ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $1,000,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), provided the Agent determines in its reasonable
discretion that such event (A) could be expected to result in liability
of such Borrower to the PBGC or the Plan in an agregate amount
exceeding $1,000,000 and (B) could constitute grounds for the
termination of such Plan by the PBGC, for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan or for the imposition of a lien in favor of the Guaranteed
Pension Plan; (ii) the appointment by a United States District Court of
a trustee to administer such Plan; or (iii) the institution by the PBGC
of proceedings to terminate such Plan;
(l) any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of the Borrowers or any of their
respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof; or
(m) (i) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 20% or more of the outstanding shares of common stock of the
Parent, or (ii) members of the Jorge L. Mas family cease to own 30% or
more of the common stock of the Parent; or (iii) during any period of
twelve consecutive calendar months, individuals who were directors of
the Parent on the first day of such period shall cease to constitute a
majority of the Board of Directors of the Parent unless the replacement
directors were nominated by the original directors;
then, and in any such event, so long as the same may be continuing, the Agent
may and, upon the request of the Banks, shall, by notice in writing to the
Borrowers, declare all amounts owing with respect to this Agreement, the Notes
and the other Loan Documents and all Reimbursement Obligations to be, and they
shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers; provided that, in the event of any
Bankruptcy Event, all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Agent or any Bank.
Upon demand by the Banks after the occurrence of any Event of Default, the
Borrowers shall immediately provide to the Agent cash in an amount equal to the
aggregate Maximum Drawing Amount of all Letters of Credit and Reimbursement
Obligations outstanding, to be held by the Agent as collateral security for the
Obligations.
ss.12.2. Termination of Commitments. If any Event of Default shall occur,
any unused portion of the Total Commitment hereunder shall forthwith terminate
and the Banks shall be relieved of all further obligations to make Loans to the
Borrowers and the Agent shall be relieved of all further obligations to issue
Letters of Credit; or if on any Drawdown Date the conditions precedent to the
making of the Loans to be made on such Drawdown Date or the issuance of any
Letters of Credit to be issued on such date are not satisfied (except as a
consequence of a default on the part of the Banks), the Banks may by notice to
the Borrowers, terminate the unused portion of the Total Commitment hereunder,
and upon such Notice being given, such unused portion of the Total Commitment
hereunder shall terminate immediately and the Banks shall be relieved of all
further obligations to make Loans to the Borrowers and the Agent shall be
relieved of all further obligations to issue, extend or renew Letters of Credit.
No termination of any portion of the Total Commitment hereunder shall relieve
the Borrowers of any of the Obligations.
ss.12.3. Remedies. Subject to ss.14.8, in case any one or more of the
Events of Default shall have occurred and be continuing, and whether or not the
Banks shall have accelerated the maturity of the Loans pursuant to ss.12.1, each
Bank, if owed any amount with respect to the Loans or the Reimbursement
Obligations, may, with the consent of the Majority Banks but not otherwise,
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the other Loan Documents
or any instrument pursuant to which the Obligations to such Bank are evidenced,
including, without limitation, as permitted by applicable law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Note or purchaser of any Letter of Credit
Participation is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
ss.13. SETOFF. Regardless of the adequacy of any collateral, during the
continuance of an Event of Default, any deposits or other sums credited by or
due from any Bank to the Borrowers and any securities or other property of the
Borrowers in the possession of such Bank may be applied to or set off against
the payment of the Obligations and any and all other liabilities, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrowers to the Banks. Such Bank shall notify the
Parent and the other Banks of such application or setoff. The Banks agree among
themselves that, if a Bank shall obtain payment on any Obligations outstanding
under this Agreement through the exercise of a right of offset, banker's lien or
counterclaim, or from any other source (other than by way of a pro rata
payment), it shall promptly notify the Agent thereof and make such adjustments
with the other Banks as shall be equitable to the end that all the Banks shall
share the benefits of such payments pro rata in accordance with the aggregate
unpaid amount of the Notes held by each Bank immediately prior to the payment
obtained by such Bank as aforesaid. The Banks further agree among themselves
that if any payment to a Bank obtained by such Bank through the exercise of a
right of offset, banker's lien or counterclaim, or from any other source (other
than by way of a pro rata payment) as aforesaid shall be rescinded or must
otherwise be restored, the Banks who shall have shared the benefit of such
payment shall return their share of that benefit to the Bank whose payment shall
have been rescinded or otherwise restored.
ss.14. THE AGENT.
ss.14.1. Appointment of Agent, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents, provided, however, the Agent is hereby
authorized to serve only as an administrative and collateral agent for the Banks
and to exercise such powers as are reasonably incidental thereto and as are set
forth in this Agreement and the other Loan Documents. The Agent hereby
acknowledges that it does not have the authority to negotiate any agreement
which would bind the Banks or agree to any amendment, waiver or modification of
any of the Loan Documents or bind the Banks except as set forth in this
Agreement or the Loan Documents. Except as provided herein and in the other Loan
Documents, the Agent shall take action or refrain from acting only upon
instructions of the Banks and no action taken or failure to act without the
consent of the Banks shall be binding on any Bank which has not consented. Each
Bank irrevocably authorizes the Agent to execute the Stock Pledge Agreements and
all other instruments relating thereto and to take such action on behalf of each
of the Banks and to exercise all such powers as are expressly delegated to the
Agent under the Loan Documents and all related documents, together with such
other powers as are reasonably incidental thereto. It is agreed that the duties,
rights, privileges and immunities of the Agent, in its capacity as issuer of
Letters of Credit hereunder, shall be identical to its duties, rights,
privileges and immunities as a Bank as provided in this ss.14. The Agent shall
not have any duties, obligations or responsibilities, or any fiduciary
relationship with any Bank, except those expressly set forth in this Agreement
and the other Loan Documents. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with respect to any Default
or Event of Default, except as expressly provided in ss.12. Neither the Agent
nor any of its affiliates shall be responsible to the Banks for any recitals,
statements, representations or warranties made by the Borrowers or any other
Person whether contained herein or otherwise or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, the
other Loan Documents or any other document referred to or provided for herein or
therein or for any failure by the Borrowers or any other Person to perform its
obligations hereunder or thereunder or in respect of the Notes. The Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be responsible for any action taken or omitted to be
taken in good faith by it or them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct. The Agent in its
separate capacity as a Bank shall have the same rights and powers hereunder as
any other Bank.
ss.14.2. Actions By Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement as it reasonably
deems appropriate unless it shall first have received such advice or concurrence
of the Banks and shall be indemnified to its reasonable satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any of the Loan Documents in accordance with a request of the
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon the Banks and all future holders of the Notes or any
Letter of Credit Participation.
ss.14.3. INDEMNIFICATION. WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWERS
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENTS, THE BANKS AGREE TO INDEMNIFY THE
AGENT, RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENT PERCENTAGES, FOR
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER (OTHER THAN LOSSES WITH RESPECT TO THE AGENT'S PRO RATA SHARE OF THE
OBLIGATIONS) WHICH HAVE NOT BEEN REIMBURSED BY THE BORROWERS AND WHICH MAY AT
ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ENFORCEMENT OF ANY OF THE TERMS HEREOF OR
THEREOF OR OF ANY SUCH OTHER DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE
FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE AGENT (OR ANY AGENT THEREOF), IT BEING THE INTENT OF
THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR
THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.
ss.14.4. Reimbursement. Without limiting the provisions of ss.14.3, the
Banks and the Agent hereby agree that the Agent shall not be obliged to make
available to any Person any sum which the Agent is expecting to receive for the
account of that Person until the Agent has determined that it has received that
sum. The Agent may, however, disburse funds prior to determining that the sums
which the Agent expects to receive have been finally and unconditionally paid to
the Agent, if the Agent wishes to do so. If and to the extent that the Agent
does disburse funds and it later becomes apparent that the Agent did not then
receive a payment in an amount equal to the sum paid out, then any Person to
whom the Agent made the funds available shall, on demand from the Agent, refund
to the Agent the sum paid to that Person. If, in the opinion of the Agent, the
distribution of any amount received by it in such capacity hereunder or under
the Loan Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated by
a court of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid,
each Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.
ss.14.5. Documents. The Agent will forward to each Bank, promptly after the
Agent's receipt thereof, a copy of each notice or other document furnished to
the Agent for such Bank hereunder; provided, however, that, notwithstanding the
foregoing, the Agent may furnish to the Banks a monthly summary with respect to
Letters of Credit issued hereunder in lieu of copies of the related Letter of
Credit Applications.
ss.14.6. Non-Reliance on Agent and Other Banks. Each Bank represents that
it has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of the financial condition and affairs of the Borrowers and
decision to enter into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and decisions in taking or not
taking action under this Agreement or any other Loan Document. The Agent shall
not be required to keep informed as to the performance or observance by the
Borrowers of this Agreement, the other Loan Documents or any other document
referred to or provided for herein or therein or by any other Person of any
other agreement or to make inquiry of, or to inspect the properties or books of,
any Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning any person which may come into the
possession of the Agent or any of its affiliates. Each Bank shall have access to
all documents relating to the Agent's performance of its duties hereunder at
such Bank's request. Unless any Bank shall promptly object to any action taken
by the Agent hereunder (other than actions to which the provisions of ss.14.8
are applicable and other than actions which constitute gross negligence or
willful misconduct by the Agent), such Bank shall conclusively be presumed to
have approved the same.
ss.14.7. Resignation of Agent. The Agent may resign at any time by giving
60 days' prior written notice thereof to the Banks and the Borrowers. Upon any
such resignation, the Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Banks and shall have
accepted such appointment within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a financial institution having a
combined capital and surplus in excess of $150,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation, the provisions of this Agreement shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent. Any new Agent appointed pursuant to this ss.14.7 shall
immediately issue new Letters of Credit in place of Letters of Credit previously
issued by the Agent.
ss.14.8. Action by the Banks, Consents, Amendments, Waivers, Etc. Except as
otherwise expressly provided in this ss.14.8, any action to be taken (including
the giving of notice) may be taken or any consent or approval required or
permitted by the Agreement or any other Loan Document to be given by the Banks
may be given, and any term of this Agreement, any other Loan Document or any
other instrument, document or agreement related to this Agreement or the other
Loan Documents or mentioned therein may be amended and the performance or
observance by the Borrowers or any other person of any of the terms thereof and
any Default or Event of Default (as defined in any of the above-referenced
documents or instruments) may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Majority Banks; provided, however, that no such consent or
amendment which affects the rights, duties or liabilities of the Agent (in its
capacity as Agent) shall be effective without the written consent of the Agent.
Notwithstanding the foregoing, no amendment, waiver or consent shall do any of
the following unless in writing and signed by ALL of the Banks: (a) increase the
principal amount of the Total Commitment (or subject the Banks to any additional
obligations), (b) reduce the principal of or interest on the Notes (including,
without limitation, interest on overdue amounts) or any fees or other amounts
payable hereunder, (c) postpone any date fixed for any payment in respect of
principal or interest or Reimbursement Obligations (including, without
limitation, interest on overdue amounts) on the Notes, or any fees or other
amounts payable hereunder; (d) extend the expiration date of any Letter of
Credit beyond the Maturity Date, (e) change the definition of "Majority Banks"
or number of Banks which shall be required for the Banks or any of them to take
any action under the Loan Documents; (f) amend this ss.14.8; (g) change the
Commitment Percentage of any Bank, except as permitted under ss.17 hereof; or
(h) except as otherwise permitted in ss.11 hereof, release any Collateral.
ss.15. EXPENSES.
The Borrowers agree to pay (a) any taxes (including any interest and
penalties in respect thereto) payable by the Agent or any of the Banks (other
than Income Taxes) on or with respect to the transactions contemplated by this
Agreement (the Borrowers hereby agreeing to indemnify the Agent and each Bank
with respect thereto), (b) the reasonable fees, expenses and disbursements of
the Agent's Special Counsel or any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(c) the fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all credit
examination fees, (d) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrowers or
the administration thereof after the occurrence of a Default or Event of Default
and (ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Bank's or the Agent's relationship with the
Borrowers. In addition, the Borrowers agree to pay and save the Agent and the
Banks harmless against any liability for payment of any state documentary stamp
taxes, intangible taxes or similar taxes (including interest or penalties, if
any) which may now or hereafter be determined to be payable in respect to the
execution, delivery or recording of any Loan Document or the funding of any
Loan, whether originally thought to be due or not, and regardless of any mistake
of fact or law on the part of the Agent, the Banks or the Borrowers with respect
to the applicability of such tax. The covenants of this ss.15 shall survive
payment or satisfaction of all other Obligations.
ss.16. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein, all
covenants, agreements, representations and warranties made herein, in the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrowers pursuant hereto shall be deemed to have been relied upon by the
Banks and the Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making of the Loans and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement, any Letter of Credit or the Notes remains outstanding and unpaid or
any Bank has any obligation to make any Loans or the Agent has any obligation to
issue any Letters of Credit hereunder. All statements contained in any
certificate or other paper delivered by or on behalf of the Borrowers pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrowers hereunder.
ss.17. ASSIGNMENT AND PARTICIPATION. It is understood and agreed that each
Bank shall have the right to assign at any time all or a portion of its
Commitment Percentage and interests in the risk relating to the Loans,
outstanding Letters of Credit, and its Commitment hereunder in an amount equal
to or greater than $5,000,000 (which assignment shall be of an equal percentage
of the Commitment, the Loans and outstanding Letters of Credit unless otherwise
agreed to by the Agent) to additional banks or other financial institutions with
the prior written approval of the Agent and, so long as no Default or Event of
Default has occurred and is continuing, the Borrowers, which approvals shall not
be unreasonably withheld. Any Bank may at any time, and from time to time,
assign to any branch, lending office, or affiliate of such Bank all or any part
of its rights and obligations under the Loan Documents by notice to the Agent
and the Borrowers. It is further agreed that each bank or other financial
institution which executes and delivers to the Agent and the Borrowers hereunder
an Assignment and Acceptance substantially in the form of Exhibit E hereto
together with an assignment fee in the amount of $3,500 payable by the assigning
Bank to the Agent, shall, on the date specified in such Assignment and
Acceptance, become a party to this Agreement and the other Loan Documents for
all purposes of this Agreement and the other Loan Documents, and its portion of
the Commitment, the Loans and Letters of Credit shall be as set forth in such
Assignment and Acceptance. The Bank assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement. Upon the execution and delivery of such
Assignment and Acceptance, (a) the Borrowers shall issue to the bank or other
financial institution a Note in the amount of such bank's or other financial
institution's Commitment dated the date of the assignment or such other date as
may be specified by the Agent and otherwise completed in substantially the form
of Exhibit A and to the extent any assigning Bank has retained a portion of its
obligations hereunder, an appropriate replacement Note to the assigning Bank
reflecting its assignment; (b) the Agent shall distribute to the Borrowers, the
Banks and such bank or financial institution a schedule reflecting such changes;
and (c) this Agreement shall be appropriately amended to reflect (i) the status
of the bank or financial institution as a party hereto and (ii) the status and
rights of the Banks hereunder.
Each Bank shall also have the right to grant participations to one or more
banks or other financial institutions in its Commitment, the Loans and
outstanding Letters of Credit. The documents evidencing any such participation
shall limit such participating bank or financial institutions voting rights with
respect to this Agreement to the matters set forth in ss.14.8 which require the
vote of all Banks.
Notwithstanding the foregoing, no assignment or participation shall operate
to increase the Total Commitment hereunder or otherwise alter the substantive
terms of this Agreement. Without the prior consent of the Agent and the
Borrowers, no Bank which retains a Commitment hereunder shall have a Commitment
of less than $5,000,000, as such amount may be reduced upon reductions in the
Total Commitment pursuant to ss.2.2 hereof.
Anything contained in this ss.17 to the contrary notwithstanding, any Bank
may at any time pledge all or any portion of its interest and rights under this
Agreement (including all or any portion of its Notes) to any of the twelve
Federal Reserve Lenders organized under ss.4 of the Federal Reserve Act, 12
U.S.C. ss.341. No such pledge or the enforcement thereof shall release the
pledgor Lender from its obligations hereunder or under any of the other Loan
Documents.
ss.18. PARTIES IN INTEREST. All the terms of this Agreement and the other
Loan Documents shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto and
thereto; provided that no Borrower shall assign or transfer its rights hereunder
without the prior written consent of the Banks.
ss.19. NOTICES, ETC.
ss.19.1. Notices. Except as otherwise expressly provided in this Agreement,
all notices and other communications made or required to be given pursuant to
this Agreement or the other Loan Documents shall be in writing and shall be
delivered in hand, mailed by United States first-class mail, postage prepaid, or
sent by telecopier and confirmed by letter, addressed as follows:
(a) if to the Borrowers, at 3155 N.W. 77th Avenue, Miami, Florida
33122-1205, Attention: Edwin D. Johnson; Senior Vice President & Chief Financial
Officer, telecopy number (305) 406-1908, with a copy to the Legal Department of
the Borrowers at the same address, telecopy number (305) 406-1907;
(b) if to the Agent or BKB, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Arthur Oberheim, Vice President, telecopy
number 617-434-2160;
or such other address for notice as shall have last been furnished in
writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (a) if delivered by hand to a responsible officer
of the party to which it is directed, at the time of the receipt thereof by such
officer, (b) if sent by registered or certified first-class mail, postage
prepaid, five Business Days after the posting thereof, and (c) if sent by
telecopier, at the time of the dispatch thereof with answer-back confirmation,
if in normal business hours in the country of receipt, or otherwise at the
opening of business on the following Business Day.
ss.19.2. Deemed Notice. Except for notice of the occurrence of any Default
or Event of Default required pursuant to ss.6.14 hereof, the Agent and the Banks
shall be deemed to have received notice of any matter disclosed in the filings
of the Parent with the United States Securities and Exchange Commission at the
time such filing are delivered to the Banks.
ss.20. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the Banks or Agent would
otherwise have. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof. This Agreement and any
amendment hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one instrument. In proving
this Agreement it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
ss.21. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except as provided in ss.14.8. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or omission on the part of the Agent or any Bank in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrowers shall entitle the Borrowers to other
or further notice or demand in similar or other circumstances.
ss.22. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWERS (a)
CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b)
ACKNOWLEDGE THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BECAUSE OF, AMONG
OTHER THINGS, THE BORROWERS' WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
ss.23. GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
(OTHER THAN THE INTERNATIONAL PLEDGE DOCUMENTS DEFINED IN THE SINTEL STOCK
PLEDGE AGREEMENT) ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWERS CONSENT TO THE JURISDICTION OF ANY OF
THE FEDERAL OR STATE COURTS LOCATED IN THE COMMONWEALTH OF MASSACHUSETTS IN
CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF ANY BANK OR THE AGENT UNDER
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
ss.24. SEVERABILITY. The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
under seal as of the date first set forth above.
THE BORROWERS:
MASTEC, INC.
By:______________________________________________
Title:___________________________________________
B & D CONTRACTORS OF SHELBY, INC.
BURNUP & SIMS OF TEXAS, INC.
BURNUP & SIMS OF THE CAROLINAS, INC.
HARRISON-WRIGHT CO., INC.
UTILITY PRECAST, INC.
BURNUP & SIMS TELCOM OF FLORIDA, INC.
BURNUP & SIMS TSI, INC.
CHURCH & TOWER ENVIRONMENTAL, INC.
CHURCH & TOWER FIBER TEL, INC.
CHURCH & TOWER, INC.
CHURCH & TOWER OF FLORIDA, INC.
CHURCH & TOWER OF TN, INC.
DESIGNED TRAFFIC INSTALLATION CO.
GDSI, INC.
KENNEDY CABLE CONSTRUCTION, INC.
LATLINK CORPORATION
LATLINK ARGENTINA, INC.
MASTEC COMTEC OF CALIFORNIA, INC.
MASTEC COMTEC OF THE CAROLINAS, INC.
MASTEC TECHNOLOGIES, INC.
MASTEC TELEPORT, INC.
R.D. MOODY & ASSOCIATES, INC.
R.D. MOODY AND ASSOCIATES, INC. OF VIRGINIA
SHANCO CORPORATION
UTILITY LINE MAINTENANCE, INC.
By:______________________________________________
Title:___________________________________________
THE BANKS:
CREDITANSTALT-BANKVEREIN
By:______________________________________________
Title:___________________________________________
By:______________________________________________
Title:___________________________________________
FIRST UNION NATIONAL BANK OF FLORIDA
By:______________________________________________
Title:___________________________________________
THE SUMITOMO BANK, LIMITED
By:______________________________________________
Title:___________________________________________
By:______________________________________________
Title:___________________________________________
SCOTIABANC INC.
By:______________________________________________
Title:___________________________________________
THE FUJI BANK AND TRUST COMPANY
By:______________________________________________
Title:___________________________________________
COMERICA BANK
By:______________________________________________
Title:___________________________________________
LTCB TRUST COMPANY
By:______________________________________________
Title:___________________________________________
BANKBOSTON, N.A.,
individually and as Agent
By:______________________________________________
Title:___________________________________________
AGREEMENT
This AGREEMENT is entered by and between:
MASTEC, INC., a company organized and existing under the laws of the
State of Florida, United States of America, with head office at 3155
N.W. 77th Avenue, in the city of Miami, State of Florida, United States
of America, and/or any of its affiliated companies (hereinafter
referred to as "MasTec"), and
INEPAR, S.A. - INDUSTRIA E CONSTRUCOES, a company organized and
existing under the laws of Brazil, with head office at Av. Jusceline K.
De Oliveira, no. 11.400, Cidade Industrial, in the city of Curitiba,
State of Parana, Brazil (hereinafter referred to as "Inepar"),
(hereinafter jointly referred to as "Parties"@).
WHEREAS
This Agreement is based on the following:
A. MasTec and Inepar executed an Agreement of Intent, dated May 17, 1997
(hereinafter referred to as "Agreement"), providing for the terms and
conditions to organize a Brazilian corporation, with the purpose of
operating in the Brazilian market of rendering of services for the
introduction of telecommunication systems, and which stocks would be
100% (one hundred per cent) held by the Parties.
B. Inepar, organized on June 26, 1997, a corporation under its control,
named MasTec Inepar, S.A.- Sistemas de Telecomunicacoes, with head
office at Avenida Jusceline K. De Oliveira, no. 11.400-CIC, in the city
of Curitiba, State of Parana, Brazil, with acts of incorporation filed
with the Most Worthy Commercial Registry of the State of Parana,
Brazil, under no. 41300045739, in session held on July 01, 1997
(hereinafter referred to as ("Corporation"), in order that, in the
future and in accordance with the Agreement, the Corporation carried
out a capital increase to allow the admittance of the new stockholder
MasTec (hereinafter referred to as "Capital Increase"), and as of the
Capital Increase, referred to as "Newco"
Taking into consideration the terms of the Agreement of Intent and its mutual
commitments stipulated herein, the Parties agree to execute this Agreement to be
governed by the following clauses and conditions:
I - THE CORPORATION
1. The corporation capital is currently composed of 100,000 (one hundred)
common nominative stocks, in that Inepar holds 99.50% of its total
capital:
1.1 Newco shall be a corporation governed by the provisions of
its articles of organization (hereinafter referred to as "Articles of
Organization") and by the applicable laws, in that all of its existing
stocks and each and every stock to be issued in the future shall be
subject to the terms and conditions of this Agreement.
2. Inepar transferred the Corporation all backlog - with the respective
accounting on June 30, 1997 - of its agreement:
(i) - PI 5148 with Telrj, dated June 30, 1996;
(ii) - PI 5152 with Equitel, dated February 17, 1997;
(iii) - PI 5153 with Telepar, dated March 11, 1997;
(iv) - PI 5154 with Telepar, dated January 31, 1997;
(v) - PI 5155 with Telesp, dated December 31, 1996;
(vi) - PI 5156 with Telesp, dated December 31, 1996;
(vii) - PI 5157 with Motorola, dated March 11, 1997;
(viii) - PI 5158 with Telesp, dated May 30, 1997;
(ix) - PI 5159 with Telesp, dated June 23, 1997;
(x) - PI 5160 with Telepar, dated April 01, 1997, and
(xi) - PI 5161 with Alcoa, dated June 20, 1997, (hereinafter jointly
referred to as "Transferred Agreements").
Inepar shall also transfer the Corporation the Agreements which on the occasion
of this Agreement are under negotiation with the customers:
(i) Motorola - Telepar - South Region, valued estimated at
US $32,000,000.00 (thirty two million US dollars);
(ii) Consorcio Globaltelecom - Band E. Value estimated at
US $100,000,000.00 (one hundred million US dollars)and
(iii) Telepar - infrastructure for the conventional telephony, value
estimated at US $9,000,000.00 (nine million US dollars), (hereinafter
jointly referred to as "Agreements to be Transferred").
The Transferred Agreements together with the Agreements to be Transferred
represent a total backlog of approximately the equivalent in Brazilian currency
to US $370,000,000.00 (three hundred seventy million US dollars), in that the
Agreements to be Transferred shall be automatically incorporated to Newco by
Inepar on the occasion of their definite execution.
2.1 Inepar shall gear its best efforts with its customers to
approve the transfer of the Transferred Agreements and of the
Agreements to be Transferred to Newco. In the event the status
of minority of Inepar in Newco causes any impediment for the
presentation of the Agreements at Newco, the Parties shall
consider, among others, the alternative to subcontract the
purpose of the Transferred Agreements and of the Agreements to
be Transferred to Newco and/or present Newco the Backlog -
with the respective accounting - of other agreements or
services for Inepar and/or of any of its subsidiary companies
in order to perform the amount of the invoicing and respective
margins of profitability which arise out of the agreements
herein referred to above.
II. CAPITAL INCREASE
3. The Parties agree that at July 31, 1997 (hereinafter referred to as
"capital increase date") Inepar, company's majority stockholder, will
carry out a Special Stockholders' Meeting, recording its respective
Minutes with the purpose of: (i) increasing the corporate's capital so
as to allow the admittance of the new stockholder MasTec,
(ii) transferring the head office of Newco from Curitiba (State of
Parana) to Sao Paulo (State of Sao Paulo) and (iii) issuing new common
stocks of Newco (the "Stocks"), which shall be subscribed and paid in
by MasTec representing fifty-one per cent (51%) of Newco's total
capital (hereinafter referred to as "Subscription"). The Subscription
shall be preceded by the guarantee statements issued by Inepar pursuant
to item iv hereof.
3.1 MasTec shall transfer, in cash the amount in Brazilian
currency equivalent to us$ 29,400,000.00 (twenty-nine million
four hundred thousand US dollars) in order to pay up the
Stocks. Such value shall be paid in eleven (11) installments
in that the first installment shall be paid, at the Capital
increase Date, in the value, in Brazilian currency, equivalent
to US$ 5,000,000.00 (five million US dollars), followed by ten
(10) equal monthly installments in the value, in Brazilian
currency, equivalent to US$ 2,440,000.00 (two million four
hundred forty thousand US dollars).
4. MasTec will pay Inepar, at the Capital Increase Date, a goodwill
equivalent to two hundred fifty thousand (250,000) common stocks of
MasTec and an option to acquire fifty thousand (50,000) additional
common stocks of MasTec at the NYSE closing market price on May 16,
1997, for a term of up to ten (10) years.
5. Newco's stock composition, once the Subscription is carried out, will
be fifty-one per cent (51%) of the stocks to MasTec and forty-nine
percent (49%) of the stocks to Inepar, in order to allow the
consolidation and merger of Newco results, in Brazil, in the
accounting-financial structure of MasTec in the United States of
America.
III - OPERATION CONDITIONS
6. On the Capital Increase Date, Inepar will provide and transfer to the
Company all documents needed for the operation of the Corporation in
the field of rendering of services of introduction of
telecommunications systems.
7. After the Capital Increase Date, possible acquisitions of regional
companies will be analyzed aiming for the best Brazilian market share;
in that the first company to be analyzed for such purposes will be CIDE
ENGEHARIA LTDA., with head office in the city of Curitiba, State of
Parana, Brazil.
IV - GUARANTEES AND REPRESENTATIONS
8. Inepar states the following:
(A) the legal existence and regular operation and functioning of the
Controlled Corporation;
(B) the validity and effectiveness of transferred Agreements and
Agreements to be Transferred;
(C) the nonexistence of any labor, fiscal or social security demand
against the Controlled Corporation, and the nonexistence of any
liens regarding the properties and assets of the Controlled
Corporation;
(D) the net equity position of Controlled Company is reflected in
the balance sheet of the Capital increase Date, attached
hereto as Annex 8 (D); and
(E) the nonexistence of any liabilities or contingencies not
disclosed in said Annex 8 (D).
V - NEWCO'S MANAGEMENT
9. After the Capital Increase date, the Parties agree that Newco shall
have a Management Committee formed by up to five (5) members, among
those it will necessarily be the President Director of Newco. The
Management Committee shall be formed as follows: (i) one (1) member
named Chairman, appointed by mutual agreement between the Parties; (ii)
two (2) members simply named Committee Members appointed by MasTec; and
(iii) other two (2) members simply named Committee Members appointed by
Inepar. The powers of said Committee Members will be defined in the
Articles of Organization.
9.1 In case of temporary impediment, the Chairman himself may
appoint another Member to substitute for him, and in case of
definitive vacancy the Parities will choose, by common
agreement, another Chairman who will be in office until the
end of the tenure.
9.2 In case of vacancy or definitive impediment of nay Committee
Member, the Party which has appointed said Member shall
appoint a substitute who will complete the performance of the
tenure of the substituted Member.
10. Newco shall have a Board of Directors formed by up to five (5) members
as follows; (i) one (1) member named President Director appointed by
mutual agreement of the Parties, who will also be necessarily appointed
for one of the office of the Company's Management Committee; (ii) tow
(2) members named individually Executive Vice-President Director and
Commercial Director appointed by President Director; (iii) one (1)
member named Financial Managing Director appointed by MasTec; and (iv)
one (1) member named Technical Director appointed by Inepar. The powers
of said Directors will be defined in the Articles of Organization.
10.1 In case of vacancy or definitive impediment of any Director,
the party or the President Director who appointed him, as the
case may be, shall appoint a substitute who will end the
tenure of the substituted Director.
10.2 Newco's President Director shall have all the necessary powers
to carry out the Company's management.
10.3 In Newco's President Director absence, Executive
Vice-President Director, jointly with any other Director, may
perform the President Director's duties.
10.4 The Parties agree that, as stockholders of Newco, MasTec
and/or Inepar, as the case may be, they may grant and assign a
sole stock held by them to natural individuals who come to
form the Management Committee of Newco, in order to comply
with the legal demand related to the member of such board. The
stocks then disposed of shall be encumbered in favor of the
respective assignor stockholders. It is also agreed that,
should any of said natural individuals fail to participate in
Newco's Management Committee, the stocks shall be immediately
assigned to the respective assignor stockholder, who will be
fully in charge of such obligation fulfillment.
VI NOTICES
11. Any notices shall be given, as provided for herein, in writing, and
will be effective upon its receipt, if sent by registered air mail, and
in case the notice is sent by fax it will be effective when confirmed
by the original copy sent via registered air mail, to the Party at the
address indicated hereinbelow or at another address, as said Party may
indicate, by means of written notice pursuant to the provisions of this
Section.
To MasTec: To Inepar:
Attention: Attention: Di Marco Pozzo
Fax No.: Fax No.: ++ 55 41 341 1414
VII - MISCELLANEOUS
12. This Agreement shall be effective for a period of ten (10) years as of
the present date or, whenever observed that time limitation meanwhile
no changes in the original share of Newco's stockholders occur, and in
such case, if none of them delivers a notice informing about its
determination not to consent with its renewal before the end of the
ten-year term, this Agreement shall be renewed without any additional
measure for an indefinite term.
12.1 In case of decrease in Newco's original interests, the terms
of this Agreement shall be reviewed.
13. The Parties may validate the obligations hereunder by specific
performance or any other legal action, including claim for damages, to
which they have the right, under the applicable laws.
14. The terms of this Agreement shall bind the parties to their respective
successors or authorized assignees. No right or obligation shall be
granted or assigned hereunder, by any of the Parties, without prior
written consent of the other Party.
15. This Agreement represents the full agreement between the Parties
regarding the matters discussed and shall prevail on all other prior
related settlements, compromises, and documents. Any amendments,
cancellation or renounce shall require a written document duly executed
by the Parties.
16. This Agreement will be ruled by Brazilian laws. Any disputes which
result from this Agreement shall be (first settled by arbitration), and
then, if necessary, by the Courts of the city of Sao Paulo, State of
Sao Paulo, excluding any other, no matter how privileged it may be.
IN WITNESS WHEREOF, the Parties execute this Agreement in three (3) counterparts
before the two (2) undersigned witnesses.
Sao Paulo, July 21, 1997
MASTEC, INC.
- -------------------------- ----------------------------
By: By:
Title: Title:
INEPAR S.A. INDUSTRIA E CONSTRUCOES
- -------------------------- ----------------------------
By: Atilano De Oms Sobrinho By: Mario Celso Petraglia
Title: President Title: Vice-President
Witnesses:
- -------------------------- ----------------------------
By: By:
RG: RG
"SIDE LETTER"
Without any detriment of the provisions of the AGREEMENT executed between:
MASTEC, INC., a company organized and existing under the laws of the
State of Florida, United States of America, with head office at 3155
N.W. 77th Avenue, in the City of Miami, State of Florida, United States
of America, and/or any of its affiliated companies (hereinafter
referred to as "MasTec"), and
INEPAR, S.A. - INDUSTRIA E CONSTRUCOES, a company organized and
existing under the laws of Brazil, with head office at Av. Juscelino K.
De Oliveria, no. 11.400, Cidade Industrial, in the city of Curitiba,
State of Parana, Brazil (hereinafter referred to as "Inepar"),
the parties, shareholders of MASTEC INEPAR S/A - SISTEMAS DE
TELECOMUNICACOES, have established herewith that the decisions related
to the matters specified hereafter shall be invariably made by mutual
agreement:
a) Amendments to the Articles of Organization of MASTEC INEPAR S/A -SISTEMAS
DE TELECOMUNICACOES related to:
(i) changes to the corporate purposes which determine, directly or
indirectly, amendments to the corporate purpose of products
and services of the Corporation;
(ii) creation, amendment or extinction of types of shares or rights
related to the stocks;
(iii) creation of beneficiary parties or debentures convertibles
into stocks and/or that have interest in the profits, or of
other securities which represent the interest in the capital
and/or in the results of the Corporation or even securities
which guarantee any rights of vote in the administration of
the Corporation;
(iv) definition and/or amendment to the fiscal year of the
Corporation;
(v) amendments to the policy of dividends distribution of the
Corporation;
(vi) definition and/or amendment to the hypothesis of call of the
Statutory Audit Committee as well as of the number of its
members;
b) - The following operational decisions:
(i) dissolution, liquidation, bankruptcy, reorganization or
suspension of the liquidation;
(ii) reorganizations of corporations, such as mergers or
consolidations and others which cause the creation, amendment
and replacement of stocks or other securities which represent
the interest in the capital and/or in the results of the
Corporation;
(iii) sale, acquisition or taxation of interest in any company which
competes with the Corporation or which capital also pertains
to a competitor of the Corporation or that holds majority
interest in any company;
(iv) increase and/or reduction in the corporate capital of the
Corporation;
(v) manufacture of new products and/or beginning of new projects
unrelated to the rendering of services of introduction of
systems of telecommunications.
Exhibit 10.5
AGREEMENT
This AGREEMENT is entered by and between:
MASTEC, INC., a company organized and existing under the laws
of the State of Florida, United States of America, with head
office at 3155 N.W. 77th Avenue, in the city of Miami, State
of Florida, United States of America, and/or any of its
affiliated companies (hereinafter referred to as "MasTec"),
and
INEPAR S.A. - INDUSTRIA E CONSTRUCOES, a company organized and existing
under the laws of Brazil, with head office at Av. Juscelino K. de Oliveira,
no. 11.400, Cidade Industrial, in the city of Curitiba, state of Parana,
Brazil (hereinafter referred to as "Inepar" ),
(hereinafter jointly referred to as "Parties").
WHEREAS
This Agreement is based on the following:
A. MasTec and Inepar executed an Agreement of Intent, dated May 17, 1997
(hereinafter referred to as "Agreement"), providing for the terms and
conditions to organize a Brazilian corporation, with the purpose of
operating in the Brazilian market of rendering of services for the
introduction of telecommunication systems, and which stocks would be
100% (one hundred per cent) held by the Parties.
B. Inepar organized on June 26, 1997, a corporation under its control,
named MasTec Inepar S.A. - Sistemas de Telecomunicacoes, with head
office at Avenida Juscelino K. de Oliveira, no. 11.400-CIC, in the city
of Curitiba, State of Parana, Brazil, with acts of incorporation filed
with the Most Worthy Commercial Registry of the State of Parana under
no. 41300045739, in session held on July 01, 1997 (hereinafter referred
to as "Corporation"), in order that, in the future and in accordance
with the Agreement, the Corporation carried out a capital increase to
allow the admittance of the new stockholder MasTec (hereinafter
referred to as "Capital Increase"), and as of the Capital Increase,
referred to as "Newco".
Taking into consideration the term of the Agreement of Intent and its mutual
commitments stipulated herein, the Parties agree to execute this
Agreement to be governed by the following clauses and conditions:
I - THE CORPORATION
1. The corporation capital is currently composed of 100,000 (one hundred
thousand) common nominative stocks, in that Inepar holds 99.50% of its
total capital:
1.1 Newco shall be a corporation governed by the provisions of its
articles of organization (hereinafter referred to as "Articles
of Organization") and by the applicable laws, in that all of
its existing stocks and each and every stock to be issued in
the future shall be subject to the terms and conditions of
this Agreement.
2. Inepar transferred the Corporation all backlog - with the respective
accounting on June 30, 1997 - of the following agreements:
(i) PI 5148 with Telerj, dated June 30,1996;
(ii) PI 5152 with Equitel, dated February 17, 1997;
(iii) PI 5153 with Telepar, dated March 1l, 1997;
(iv) PI 5154 with Telepar, dated January 31, l997;
(v) PI 5155 with Telesp, dated December 31, 1996;
(vi) PI 5156 with Telesp, dated December 31, 1996;
(vii) PI 5157 with Motorola, dated March 11, l997;
(viii) PI 5158 with Telesp, dated May 30, 1997;
(ix) PI 5159 with Telesp, dated June 23, 1997;
(x) FI 5160 with Telepar, dated April 01, 1997; and
(xi) PT 5161 with Alcoa, dated June 20, 1997, (hereinafter jointly referred
to as "Transferred Agreements").
Inepar shall also transfer to the Corporation the Agreements which on the
occasion of this Agreement are under negotiation with the customers:
(i) Motorola - Telepar - South Region, value estimated at
US$ 32,000,000.00 (thirty two million US dollars);
(ii) Consorcio Globaltelecom - Band B, value estimated at
US$ 100,000,000.00 (one hundred million US dollars) and
(iii) Telepar - infrastructure for the conventional telephony, value
estimated at US$ 9,000,000.00 (nine million US dollars), (hereinafter
jointly referred to as "Agreements to be Transferred").
The Transferred Agreements together with the Agreements to be Transferred
represent a total backlog of approximately the equivalent in Brazilian currency
to US$ 370,000,000.00 (three hundred seventy million US dollars), in that the
Agreements to be Transferred shall be automatically incorporated to Newco by
Inepar on the occasion of their definite execution.
2.1. Inepar shall gear its best efforts with its customers
to approve the transfer of the Transferred Agreements and
of the Agreements to be Transferred to Newco. In the
event the status of minority of Inepar in Newco causes
any impediment for the presentation of the Agreements at
Newco, the Parties shall consider, among others, the
alternative to subcontract the purpose of the Transferred
Agreements and of the Agreements to be Transferred to
Newco and/or present Newco the backlog - with the
respective accounting - of other agreements or services of
Inepar and/or of any of its subsidiary companies in order
to perform the amount of the invoicing and respective margins
of profitability which arise out of the agreements herein
referred to above.
II - CAPITAL INCREASE
3. The Parties agree that at July 31, 1997 (hereinafter referred to as
"capital increase date") Inepar, company's majority stockholder, will
carry out a Special Stockholders' Meeting, recording its respective
Minutes with the purpose of: (i) increasing the corporate's capital so as
to allow the admittance of the new stockholder MasTec, (ii) transferring
the head office of Newco from Curitiba (State of Parana) to Sao Paulo
(State of Sao Paulo) and (iii) issuing new common stocks of Newco (the
"Stocks"), which shall be subscribed and paid in by MasTec representing
fifty-one per cent (51%) of Newco's total capital (hereinafter referred to
as "Subscription"). The Subscription shall be preceded by the guarantee
statements issued by Inepar pursuant to item iv hereof.
3.1. MasTec shall transfer, in cash, the amount in
Brazilian currency equivalent to US$ 29,400,000.00 (twenty-
nine million four hundred thousand US dollars) in order to pay
up the stocks. Such value shall be paid in eleven (11)
installments in that the first installment shall be paid, at
the Capital Increase Date, in the value, in Brazilian
currency, equivalent to US$ 5,000,000.00 (five million US
dollars), followed by ten (10) equal monthly installments in
the value, in Brazilian currency, equivalent to
US$ 2,440,000.00 (two million four hundred forty thousand
US$ dollars).
4. MasTec will issue to Inepar at the Capital Increase Date, in recognition
of goodwill, two hundred fifty thousand (250,000) common stocks of MasTec
and an option to acquire fifty thousand (50,000) additional common stocks
of MasTec at the NYSE closing market price on May 16 1997 for a term of up
to ten (10) years.
5. Newco's stock composition, as of July 31, 1997, will be fifty-one percent
(51%) of the stocks to MasTec and forty-nine percent (49%) of the stocks
to Inepar, in order to allow the consolidation and merger of Newco
results, in Brazil, in the accounting-financial structure of MasTec in the
United States of America.
III - OPERAT1ONAL CONDITIONS
6. On the Capital Increase Date, Inepar will provide and transfer to the
Company all documents needed for the operation of the Corporation in the
field of rendering of services of introduction of telecommunication
systems.
7. After the Capital Increase Date, possible acquisitions of regional
companies will be analyzed aiming for the best Brazilian market share; in
that the first company to be analyzed for such purpose will be CIDE
ENGENHARIA LTDA., with head office in the city of Curitiba, State of
Parana, Brazil.
IV - GUARANTEES AND REPRESENTATIONS
Inepar states the following:
(A) the legal existence and regular operation and functioning of
the controlled Corporation;
(B) the validity and effectiveness of Transferred Agreements to
be Transferred;
(C) the nonexistence of any labor, fiscal or social security
demand against the Controlled Corporation, and the
nonexistence of any liens regarding the properties and assets
of the Controlled Corporation;
(D) the net equity position of controlled Company is reflected in
the balance sheet of the Capital Increase Date, attached
hereto as Annex 8. (D); and
(E) the nonexistence of any liabilities or contingencies not
disclosed in said Annex 8. (D).
V - NEWCO'S MANAGEMENT
9. After the Capital Increase Date, the Parties agree that Newco shall have
a Board of Directors formed by up to five (5) members. The Board of
Directors shall consist of two (2) Directors appointed by MasTec, two (2)
Directors to be appointed by Inepar and the President of Newco. A
chairman of the board will be appointed by mutual agreement between the
parties. The powers of said Board of Directors will be defined in the
Articles of Organization.
9.1 In case of temporary impediment, the Chairman himself may appoint
another Member to substitute for him, and in case of definitive
vacancy the Parties will choose, by common agreement another
Chairman who will be in office until the end of the tenure.
9.2. In case of vacancy or definitive impediment of any Board Member,
the Party which has appointed said Member shall appoint a
substitute who will complete the performance of the tenure of the
substituted Member.
10.0 Newco will be formed having five officers as follows: (i) one President
named by MasTec, who will serve also serve as a Board Director, (ii)
two (2) officers named individually Executive Vice-President to be
appointed by the President and the Commercial Director to be appointed
by Inepar, (iii) one Financial-Managing Director to be appointed by
MasTec, and (iv) one Technical Director to be appointed by Inepar. The
powers of said officers will be defined in the Articles of
Organization.
10.1. In case of vacancy or definitive impediment of any officer,
the Party or the President appointed him, as the case may be,
shall appoint a substitute who will end the tenure of the
substituted officer.
10.2. Newco's President shall have all the necessary powers to carry
out the Company's management.
10.3. In Newco President's absence, Executive VicePresident
Director, jointly with any other Director, may perform the
President Director's duties.
10.4. The Parties agree that, as stockholders of Newco, MasTec
and/or Inepar, as the case may be, they may grant and assign a
sole stock held by them to natural individuals who come to
form the Management Committee of Newco, in order to comply
with the legal demands related to the members of such board.
The stocks then disposed of shall be encumbered in favor of
the respective assignor stockholders. It is also agreed that,
should any of said natural individuals fail to participate in
Newco's Management Committee, the stocks shall be immediately
assigned to the respective assignor stockholder, who will be
fully in charge of such obligation fulfillment.
VI - NOTICES
11. Any notice shall be given, as provided for herein, in writing, and will
be effective upon its receipt, if sent by registered air mail, and in
case the notice is sent by fax it will be effective when confirmed by
the original copy sent via registered air mail, to the Party at the
address indicated hereinbelow or at another address, as said Party may
indicate, by means of written notice pursuant to the provisions of this
Section.
- ----------------------------------------------------------- ---------------------------------------------------------
To MasTec: To Inepar:
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
Attention: Jose Sariego Attention: Di Marco Pozzo
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
Fax no.:305 406 1908 Fax no.: 55 41 341 1414
- ----------------------------------------------------------- ---------------------------------------------------------
VII - MISCELLANEOUS
12. This Agreement shall be effective for a period of ten (10) years as of
the present date or, whenever observed that time limitation meanwhile no
changes in the original share of Newco's stockholders occur, and in such
case, if none of them delivers a notice informing about its
determination not to consent with its renewal before the end of the
ten-year term, this Agreement shall be renewed without any additional
measure for an indefinite term.
12.1. In case of decrease in either party's interests in Newco, the
terms of this Agreement shall be reviewed.
13. The Parties may validate the obligations hereunder by specific
performance or any other legal action, including claim for damages, to
which they have the right, under the applicable laws.
14. The terms of this Agreement shall bind the Parties to their respective
successors or authorized assignees. No right or obligation shall be
granted or assigned hereunder, by any of the Parties, without prior
written consent of the other Party.
15. This Agreement represents the full agreement between the Parties
regarding the matters discussed and shall prevail on all other prior
related settlements, compromises, and documents. Any amendments,
cancellation or renounce shall require a written document duly executed
by the Parties.
16. This Agreement will be ruled by Brazilian laws. Any disputes which
result from this Agreement shall be firstly settled by arbitration,
then, if necessary, by the Courts of the city of Sao Paulo, State of
Sao Paulo, excluding any other, no matter how privileged it may be.
IN WITNESS WHEREOF, the Parties execute this Agreement in three (3) counterparts
before the two (2) undersigned witnesses,
Sao Paulo, July 21, 1997
MASTEC, INC.
/s/ Edwin D. Johnson /s/ Ismael Perera
By: Edwin D. Johnson By: Ismael Perera
Title: Senior Vice President and Title: Senior Vice President
Chief Financial Officer
INEPAR S . A. INDUSTRIA E CONSTRUCOES
/s/ Atilano de Oms Sobrinho /s/ Mario Celso Petraglia
By: Atilano de Oms Sobrinho By: Mario Celso Petraglia
Title: President title: Vice-President
Witnesses:
/s/ Kalil Cury Filho
Name: Name:
RG: RG:
Exhibit 21.1
Set forth below is a list of the significant subsidiaries of the Company.
Burnup & Sims of Texas, Inc.
Burnup & Sims Telcom of Florida, Inc.
Church & Tower, Inc.
Church & Tower Fiber Tel, Inc.
Church & Tower of TN, Inc.
Harrison-Wright Co., Inc.
Kennedy Cable Construction, Inc.
LatLink Corporation
MasTec ComTec of California, Inc.
MasTec ComTec of the Carolinas, Inc.
MasTec International, Inc.
MasTec Technologies, Inc.
R.D. Moody & Associates, Inc.
Shanco Corporation
Sistemas e Instalaciones de Telecomunicacion, S.A.
Aidco, Inc.
B&D Contractors of Shelby, Inc.
C & S Directional Boring, Inc.
E.L. Dalton & Company, Inc.
M. E. Hunter & Associates, Inc.
Phasecom Systems, Inc.
Weeks Construction Company
Wilde construction, Inc.
MasTecInepar S/A Sistemas de Telecomunicacoes
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No. 333-55327) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31, 1997 and for the year then ended, which report is incorporated
by reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-3 (No. 333-46067) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicaci6n, S.A. (Sintel) and subsidiaries as
of December 31,1997 and for the year then ended, which report is incorporated by
reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-4 (No. 333-30645) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31, 1997 and for the year then ended, which report is incorporated
by reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-4 (No. 333-46361) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31,1997 and for the year then ended, which report is incorporated by
reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-4 (No. 333-9607) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31,1997 and for the year then ended, which report is incorporated by
reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No. 333-22465) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31, 1997 and for the year then ended, which report is incorporated
by reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No. 333-30647) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31,1997 and for the year then ended, which report is incorporated by
reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No. 333-7003) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31, 1997 and for the year then ended, which report is incorporated
by reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.9
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-3 (No. 333-11013) of our report dated
February 25, 1998, on our audit of the consolidated financial statements of
Sistemas e Instalaciones de Telecomunicacion, S.A. (Sintel) and subsidiaries as
of December 31,1997 and for the year then ended, which report is incorporated by
reference in this Annual Report on Form 10-K.
ARTHUR ANDERSEN LLP
Madrid, Spain
March 27, 1998
Exhibit 23.10
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No.333-22465) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No.33-55327) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.12
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-3 (No.333-11013) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.13
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-3 (No.333-30645) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.14
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No.333-47003) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.15
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-4 (No.333-46361) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.16
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-3 (No.333-46067) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.17
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-8 (No.333-30647) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
Exhibit 23.18
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
MasTec, Inc. and subsidiaries on Form S-4 (No.333-9607) of our report dated
March 10, 1998, on our audits of the consolidated financial statements of
MasTec, Inc. and subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996, and 1995, which report is incorporated by
reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Miami, Florida
March 30, 1998
5
0000015615
MasTec, Inc.
1,000
UDS
12-MOS
DEC-31-1997
JAN-1-1997
DEC-31-1997
1
6,063
0
346,596
(3,100)
8,746
349,196
129,968
(43,859)
587,598
270,448
0
0
0
2,805
177,926
587,598
703,369
703,369
522,470
522,470
115,122
0
11,920
63,550
21,015
42,535
129
0
0
42,664
1.47
1.44
5
0000015615
MasTec, Inc.
1,000
UDS
12-MOS
DEC-31-1996
JAN-1-1996
DEC-31-1996
1
10,989
0
318,967
(3,100)
5,737
400,771
95,467
(28,290)
511,154
235,560
0
0
0
2,780
114,203
511,154
534,068
534,068
394,497
394,497
86,078
0
11,940
47,586
14,665
36,054
(111)
0
0
35,943
1.27
1.25
5
0000015615
MasTec, Inc.
1,000
UDS
12-MOS
DEC-31-1995
JAN-1-1995
DEC-31-1995
1
3,084
0
578,025
(1,000)
3,600
120,034
68,152
(17,580)
191,272
67,007
9,625
0
0
2,780
57,834
191,272
218,859
218,859
158,598
158,598
37,096
0
5,306
5,024
(1,115)
1,500
2,531
0
0
4,031
0.11
0.11
