<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
NEW MEXICO AND ARIZONA LAND COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NEW MEXICO AND ARIZONA LAND COMPANY
3033 NORTH 44TH STREET, SUITE 270
PHOENIX, ARIZONA 85018
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1996
MAILING DATE: ON OR ABOUT APRIL 9, 1996
To our Shareholders:
We cordially invite you to the Annual Meeting of the Shareholders of New
Mexico and Arizona Land Company (the "Company"), to be held at Sunburst Resort,
4925 North Scottsdale Road, Scottsdale, Arizona 85251 on Monday, May 20, 1996 at
9:30 a.m., Arizona time, pursuant to the Company's Bylaws, for the following
purposes:
1. The election of Class B Directors;
2. Approval of the adoption of an amendment to Article Fourth of the
Company's Articles of Incorporation;
3. Approval of the adoption of an amendment to Article Seventh of the
Company's Articles of Incorporation;
4. The ratification of KPMG Peat Marwick LLP as independent auditor
for the Company in 1996; and
5. The transaction of such other business as may properly come before
the meeting.
Shareholders of record at the close of business on March 25, 1996 will be
entitled to receive notice of, and to vote at, the meeting and any adjournment
thereof. Additional copies of the proxy material may be obtained from the
Company's Corporate Secretary.
By order of the Board of Directors,
ELIZABETH M. BEDEWI,
Senior Vice President, Treasurer,
and Corporate Secretary
Phoenix, Arizona
April 9, 1996
MANY SHAREHOLDERS OWN LESS THAN 100 SHARES. ALL VOTES ARE IMPORTANT. PLEASE
SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOU MAY REVOKE YOUR
PROXY AT ANY TIME BEFORE THE SHARES ARE VOTED AT THE MEETING.
<PAGE> 3
NEW MEXICO AND ARIZONA LAND COMPANY
3033 NORTH 44TH STREET, SUITE 270
PHOENIX, ARIZONA 85018
PROXY STATEMENT
MAILING DATE: ON OR ABOUT APRIL 9, 1996
VOTING AND OTHER MATTERS
GENERAL. The enclosed proxy is solicited by the Board of Directors of New
Mexico and Arizona Land Company, an Arizona corporation ("the Company" or "NZ"),
for use at the Annual Meeting of Shareholders to be held on May 20, 1996 (the
"Annual Meeting"). Shares represented by a properly executed proxy will be voted
at the meeting. The proxy may be revoked at any time before its exercise by
notifying the Corporate Secretary in person or in writing. If the proxy is
signed without votes indicated in the boxes, the shares will be voted as
recommended by the Board of Directors. The Proxy Statement, the accompanying
proxy, and the Annual Report will be mailed to the shareholders on or about
April 9, 1996.
As of the date of this Proxy Statement, the Company knows of no matters to
be brought before the Annual Meeting other than those referred to in the
accompanying notice of the Annual Meeting. If other matters are properly
presented, however, the Proxy Committee members, Mr. Renneckar and Ms. Bedewi,
will have discretion to vote thereon according to their best judgment.
RECORD DATE. The Board of Directors has fixed the close of business on
March 25, 1996 as the record date for the determination of shareholders entitled
to notice of the Annual Meeting, and to vote at it and any adjournment thereof.
PROXY SOLICITATION. The Company will bear the cost of proxy solicitation
for the Annual Meeting. In addition to solicitation by mail, certain directors,
officers, and regular employees of the Company may, without compensation other
than their regular salaries and fees, solicit proxies personally, by telephone,
or electronically. The Company will reimburse brokerage firms and others for
expenses in forwarding solicitation material to beneficial owners.
VOTING. Except with respect to the election of directors, each share is
entitled to one vote upon each matter presented for action. The presence in
person or by proxy of a majority of the outstanding shares entitled to vote is
required to constitute a quorum at the Annual Meeting. The affirmative vote of a
majority of the shares then represented at the meeting and entitled to vote will
constitute the act of the shareholders. Abstentions are counted as "shares
present" for purposes of determining the presence of a quorum, and have the
effect of a vote "against" any matter as to which they are specified. Broker
non-votes with respect to any matter are not considered "shares present" and
will not affect the outcome of the vote on such matters. With respect to the
election of directors, shareholders have cumulative voting rights in the
election of directors: each shareholder is entitled to vote the number of shares
owned for as many persons as there may be directors to be elected; or the
shareholder may cumulate the shares and give one nominee all of the
shareholder's votes, multiplied by the number of directors to be elected; or the
shareholder may distribute votes among as many nominees as he or she thinks fit
to serve. The enclosed proxy does not seek discretionary authority to cumulate
votes in the election of directors.
<PAGE> 4
VOTING SECURITIES, PRINCIPAL HOLDERS, AND INSIDER OWNERSHIP
On January 8, 1996, there were 2,734,538 shares of common stock
outstanding, no par value ("Common Stock"); the Company has issued no other
category of stock. The following table sets forth beneficial ownership of Common
Stock of the Company as of January 8, 1996. For additional information about
beneficial ownership, see "Executive Compensation."
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF COMMON
SHARES STOCK
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED(1) OWNED
---------------- ------------ ------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Elizabeth M. Bedewi........................................... 8,580 *
Senior Vice President, Treasurer, and
Corporate Secretary
John C. Lucking............................................... 3,200 *
Director
William A. Pope............................................... 9,930(2) *
President and CEO
Arnold L. Putterman........................................... 34,637(3) 1.3%
Director
Stephen E. Renneckar.......................................... 1,660 *
Chairman of the Board
Ronald E. Strasburger......................................... 1,330 *
Director
Robert Wertheim............................................... 3,436(4) *
Director
Richard A. Wessman............................................ 1,110 *
Director
Directors and Officers as a group (9 persons)................. 74,778 2.7%
5% SHAREHOLDERS
Sun NZ L.L.C. ................................................ 1,370,792(5) 50.1%
</TABLE>
- ---------------
* Less than 1% of outstanding shares of Common Stock
(1) The numbers of shares shown and corresponding percentages shown include
shares subject to restrictions under the Company's Restricted Stock Plan and
shares owned of record by the listed person's minor children and spouse and
by other related individuals and entities over whose shares such person has
custody, voting control, or power of disposition. There are no shares of
Common Stock which any of the persons or entities listed above have a right
to acquire within 60 days of January 8, 1996.
(2) This amount includes 1,000 shares that Mr. Pope holds as custodian for his
children and 7,930 shares that Mr. Pope holds indirectly through Sterling
Pacific Assets, Inc., which he controls. In addition, Mr. Pope, as the
appointed nominee of Sun NZ L.L.C., may be deemed to have shared voting and
dispositive power with respect to the 1,370,792 shares owned by Sun NZ
L.L.C.("Sun Securities"). Mr. Pope disclaims beneficial ownership of the Sun
Securities. Mr. Pope's address is c/o SunChase Holdings, Inc., 2525 East
Camelback Road, Suite 888, Phoenix, Arizona 85016.
(3) Mr. Putterman may be deemed to own beneficially an additional 27,207 shares
of Common Stock held by relatives of Mr. Putterman. Mr. Putterman disclaims
beneficial ownership of such shares.
(4) This amount includes 1,100 shares that Mr. Wertheim holds indirectly through
Charter SW Commercial, Inc., which he controls.
(5) The address of Sun NZ L.L.C. is 2525 E. Camelback Road, Suite 888, Phoenix,
Arizona 85016.
2
<PAGE> 5
AGENDA ITEM NO. 1
ELECTION OF DIRECTORS
NOMINEES FOR TERMS AS CLASS B DIRECTORS
TERMS TO EXPIRE AT THE 1996 ANNUAL MEETING
The following have been nominated as Class B Directors, to serve for two
years. Unless shareholders withhold authority, their proxies will be voted for
the election of these nominees. If any nominee is unable to serve at the time of
the meeting, the proxies will be voted for a substitute nominee designated by
the Board of Directors. Management believes that all nominees will serve if
elected.
<TABLE>
<CAPTION>
SHARES
DIRECTOR OWNED
NAME SINCE AT 1/8/96
---- -------- ---------
<S> <C> <C> <C>
Arnold L. Putterman, 57..... Mr. Putterman is an attorney in private 1988 34,637
practice
in New York City. In addition, since 1970,
Mr. Putterman has been a partner of SNF
Management Services. SNF Management Services
is involved in the development and
management of health facilities and
commercial real estate.
Stephen E. Renneckar, 51.... Since October 1992, Mr. Renneckar has been 1994 1,660
Vice President and General Counsel of
SunChase Holdings, Inc., which is engaged
primarily in the business of acquiring,
developing, managing, and marketing
residential and commercial properties in the
United States and in wood products, fiber
optic cable, and computer software in the
United States and abroad. Prior to joining
SunChase Holdings, Inc., Mr. Renneckar was a
partner with the law firm of O'Connor
Cavanagh in Tucson, Arizona.
Robert Wertheim, 63......... Since 1976, Mr. Wertheim has served as 1981 3,436
Chairman, President and Chief Executive
Officer of The
Charter Companies, Albuquerque, including
Charter Bank for Savings FSB, Charter SW
Commercial, Inc., and Charter Insurance
Services, Inc.
Richard A. Wessman, 53...... Since May 1992, Mr. Wessman has been 1994 1,110
President of Sterling Pacific Assets, Inc.,
a property and financial management company.
From October 1978 to April 1992, he was a
partner in the accounting firm of Ernst &
Young.
CONTINUING IN OFFICE AS CLASS A DIRECTORS
TERMS TO EXPIRE AT THE 1997 ANNUAL MEETING
William A. Pope(1), 40...... Since June 1994, Mr. Pope has served as 1995 9,930
President and Chief Executive Officer of the
Company. In addition, since 1993, Mr. Pope
has served as President and Chief Executive
Officer of SunChase Holdings, Inc. and its
affiliated companies. Prior to 1993, Mr.
Pope served as Executive Vice President and
Chief Operating Officer of SunChase
Holdings, Inc. and its affiliated companies.
SunChase Holdings, Inc. is engaged primarily
in the business of acquiring, developing,
managing, and marketing residential and
commercial properties in the United States
and in wood products, fiber optic cable, and
computer software in the United States and
abroad.
</TABLE>
- ---------------
(1) Effective October 20, 1995, Mr. Pope was appointed as a Class A
Director. This appointment followed the resignation on September 16,
1995 of Sherman Kasper as a Class A Director.
3
<PAGE> 6
<TABLE>
<CAPTION>
SHARES
DIRECTOR OWNED
NAME SINCE AT 1/8/96
---- -------- ---------
<S> <C> <C> <C>
John C. Lucking, 52......... Since 1995, Mr. Lucking has been 1993 3,200
self-employed as an Economist for
Econ-Linc., which provides economic
consulting services. From 1984 to 1994, Mr.
Lucking served as an Economist for Bank One,
Arizona. Mr. Lucking also serves as a
Trustee of the Tax Free Trust of Arizona
(Mutual Fund of Arizona Municipal Bonds).
Ronald E. Strasburger, 57... Since 1993, Mr. Strasburger has been 1994 1,330
employed as Acquisition Manager by Sterling
Pacific Management Services, Inc., which is
in the business of portfolio purchases and
sales. From 1991 to 1993, he was
self-employed as a consultant for the
review, negotiation, and disposition of
complex portfolios for various institutions
after being employed by the Resolution Trust
Corporation from 1990 to 1991.
</TABLE>
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Company's Board of Directors met four times in 1995, and all members
attended 75% or more of those meetings and the meetings of the committees to
which they are assigned. There are three standing committees: Audit; Executive;
and Compensation and Nominating.
Audit. This committee met twice in 1995, and is composed of Arnold L.
Putterman, Robert Wertheim, and Richard Wessman (Chairman). The committee
reviews with the Company's independent public accountants the annual audit plan,
the scope and results of the audit, and internal control procedures.
Compensation and Nominating. This committee met twice in 1995, and is
composed of John C. Lucking (Chairman), Stephen E. Renneckar, and Ronald E.
Strasburger. The committee administers the Company's salary, bonus, and
restricted stock plans. It also recommends nominees to fill vacancies on the
Board of Directors. Recommendations for nominees to the Board of Directors may
be sent to the Chairman of the Compensation and Nominating Committee, in care of
the Company's Corporate Secretary.
Executive. This committee did not meet in 1995. It is composed of John C.
Lucking, Stephen E. Renneckar (Chairman), and Richard A. Wessman. It is
empowered to act in the absence of, but as limited by, the Board.
DIRECTORS FEES AND EXPENSES
Board members are reimbursed for expenses incurred while attending meetings
and are paid the following compensation each year.
<TABLE>
<S> <C>
Director fees:
Annual retainer: $6,000
Board meetings: $700 for each meeting attended
Committee $500 for each meeting attended, payable only to nonemployee
meetings: directors
Telephone $300 for each meeting attended, payable only to nonemployee
meetings: directors
</TABLE>
Director bonus:
On December 15, 1995, the Company issued to each director as bonus
compensation (a) 1,000 shares of the Company's Common Stock, valued at $11.875
per share, the closing price of the Company's Common Stock on the American Stock
Exchange on December 15, 1995, and (b) $4,750.00 in cash.
There are no other arrangements or agreements (such as consulting
contracts) between the Company and any Board member.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation awarded to or paid by the Company and its subsidiaries to
the Chief Executive Officer and Senior Vice President, Treasurer, and Corporate
Secretary of the Company for services rendered during the fiscal years ended
December 31, 1995, 1994, and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION -----------------------
-------------------------------- SECURITIES PAYOUTS
OTHER RESTRICTED UNDERLYING -------
FISCAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND POSITION(1) YEAR SALARY BONUS COMPENSATION AWARDS(2) SARS PAYOUTS COMPENSATION
-------------------- ------ ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Pope.............. 1995 $20,000 $80,000 $0 0 0 $ 0 $ 18,025(3)
President & Chief 1994(4) 0 0 0 0 0 0 0
Executive Officer
Elizabeth M. Bedewi(5)....... 1995 90,000 20,000 0 0 0 0 3,982(6)
Senior Vice President,
Treasurer, and Corporate
Secretary
</TABLE>
- ---------------
(1) There are no other executive officers of the Company whose total annual
salary and bonus for the 1995 fiscal year exceeded $100,000.
(2) There were no grants of restricted stock during the 1995, 1994, or 1993
fiscal years. Mr. Pope does not hold any shares of restricted stock. At the
Company's fiscal year end, December 31, 1995, Ms. Bedewi held 2,016 shares
of restricted stock, at a value of $24,192 on December 31, 1995. Holders of
restricted stock are entitled to receive all dividends paid by the Company.
(3) Mr. Pope received $1,400 as fees for serving on the Board of Directors from
October 1995 through December 1995. In addition, on December 15, 1995, Mr.
Pope received, as bonus compensation for his service on the Board of
Directors, $4,750 in cash and 1,000 shares of Common Stock, valued at
$11.875 per share, the closing price of the Common Stock on the American
Stock Exchange on December 15, 1995. See "Directors Fees and Expenses."
(4) Mr. Pope was appointed President and Chief Executive Officer on June 27,
1994. He elected not to take any compensation for his services to the
Company for the 1994 fiscal year.
(5) Ms. Bedewi's annual compensation did not exceed $100,000 during the 1994 and
1993 fiscal years.
(6) Represents 1995 401(k) Plan Contribution.
NEW MEXICO AND ARIZONA LAND COMPANY DEFINED BENEFIT PLAN. All employees
who have completed a twelve (12) month period in which the employee has
performed 1,000 Hours of Service (as defined in the New Mexico and Arizona Land
Company Restated Defined Benefit Plan (the "Plan")) may participate in the Plan.
Non-employee directors of the Company may not participate. Normal retirement age
is 65, but eligible employees may elect to retire at age 60 with a reduced
pension. The Plan was restated on December 6, 1994 (the "Restated Plan")
pursuant to Federal law. A participant's gross annual pension under the Restated
Plan is equal to the sum of (1) 1.5% of such participant's average annualized
total compensation paid during the highest paid 60 consecutive months multiplied
by years of service (up to a maximum of 25 years), plus (2) .65% of such average
annualized compensation in excess of the applicable Social Security benefit
multiplied by years of service (up to a maximum of 25 years). However, in no
event will the benefit under the restated plan be less than the "protected
accrued benefit" under the Prior Plan (defined below). For employees hired
before July 23, 1982, the "protected accrued benefit" is 50% of the average
annualized total compensation paid during the highest-paid 60 consecutive
months, less 60% of the applicable Social Security benefit (the "Prior Plan").
Employees hired before July 23, 1982, will receive the greater of the benefit
5
<PAGE> 8
calculated under the Restated Plan and the Prior Plan. The following table
illustrates the annual protected benefit under the Prior Plan:
PROTECTED ACCRUED BENEFIT, EMPLOYED BEFORE 7/23/82
<TABLE>
<CAPTION>
AVG. ANNUAL ANNUAL
SALARY PENSION
----------- -------
<S> <C>
$ 25,000 ................................ $ 6,294
50,000 ................................ 16,108
75,000 ................................ 27,802
100,000 ................................ 40,302
125,000 ................................ 52,802
150,000 ................................ 65,302
175,000 ................................ 77,802
185,000 ................................ 82,802
</TABLE>
The following table illustrates annual pension allowances under the
Restated Plan:
EMPLOYED AFTER 7/23/82, RESTATED FORMULA
<TABLE>
<CAPTION>
YEARS OF SERVICE
PENSION -------------------------------------------
EARNINGS 10 15 20 30
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
$ 25,000 .................. $ 3,750 $ 5,625 $ 7,500 $11,250
50,000 .................. 8,041 11,362 15,000 22,500
75,000 .................. 13,416 19,424 25,129 36,497
100,000 .................. 18,791 27,487 35,879 52,622
125,000 .................. 24,166 35,549 46,629 57,747
150,000 .................. 29,541 43,612 57,379 84,872
</TABLE>
Ms. Bedewi's estimated credited years of service is 21 years. In addition,
Ms. Bedewi's 1995 compensation covered by the Prior Plan and Restated Plan is
$90,000 and $110,000, respectively. The compensation covered by the Prior Plan
is fixed at Ms. Bedewi's 1989 total annual compensation, which was $90,000. The
compensation covered by the Restated Plan is Ms. Bedewi's total annual
compensation as reported in the Summary Compensation Table. Mr. Pope is not
eligible to participate in the Plan.
Payments to the retirement plan trust fund are voluntary on the part of the
Company, and may be discontinued at any time. In that event, however, the trust
assets must be used to provide pensions in the manner set forth in the plan. The
Plan is self-funded, and Company contributions are no longer necessary.
COMPENSATION AND NOMINATING COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation and Nominating Committee is composed of three
members of the Board of Directors. The members of the Compensation and
Nominating Committee are not employees of the Company.
The Compensation and Nominating Committee reviews and determines the amount
of compensation paid to its President and Chief Executive Officer, Mr. Pope, and
its Senior Vice President, Treasurer, and Corporate Secretary, Ms. Bedewi. The
determination of the salary and bonus paid to Mr. Pope and Ms. Bedewi,
respectively, for the 1995 fiscal year as described in the Summary Compensation
Table was based on an assessment of the officer's performance and the Company's
performance during the fiscal year. The Compensation and Nominating Committee's
assessment of the performance of the officer and Company, respectively, is
subjective and not subject to specific criteria.
6
<PAGE> 9
In addition, the Compensation and Nominating Committee administers the
Company's Restricted Stock Plan (the "Plan"), which serves as a long-term
incentive program for the Company's executive officers. In making stock awards,
the Compensation and Nominating Committee considers the demonstrated value of
the executive to the Company, the extent and quality of that executive's
contribution to Company performance, and the desirability of retaining that
executive as a Company employee. The certificates representing an executive's
award are kept by the Company until certain vesting restrictions expire.
Certificates are typically delivered to the executive as follows: 1/3 of the
award on the third, 1/3 on the fourth, and 1/3 on the fifth anniversaries of the
award. The Company has no other stock or long-term incentive plans. No
restricted stock was awarded under the Plan in 1995.
Dated March 8, 1996
New Mexico and Arizona Land Company
Compensation and Nominating Committee:
John C. Lucking (Chairman)
Stephen E. Renneckar
Ronald E. Strasburger
STOCK PRICE PERFORMANCE GRAPH
The following compares the total return on the Company's Common Stock for
the period December 31, 1990 through December 31, 1995 with the cumulative total
return on the AMEX Composite Index, and an industry index composed of SIC Code
651: Real Estate Operators and Lessors. The comparison assumes that $100 was
invested on December 31, 1990 in the Company's Common Stock and in each of the
comparison indices, and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
SIC 651:
Real Estate
Measurement Period Operators and AMEX
(Fiscal Year Covered) NZ Lessors Composite Index
- --------------------- ------ ------------- ---------------
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 106.67 115.59 123.17
1992 153.33 123.04 124.86
1993 160.00 148.09 148.34
1994 140.00 139.96 131.04
1995 213.33 160.59 168.90
</TABLE>
7
<PAGE> 10
AGENDA ITEM NO. 2
APPROVAL OF THE ADOPTION OF
AN AMENDMENT TO ARTICLE FOURTH OF
THE COMPANY'S ARTICLES OF INCORPORATION
DESCRIPTION OF PROPOSED AMENDMENT
The last paragraph of Article Fourth of the Company's Articles of
Incorporation (the "Indemnification Provision") reads as follows:
All directors and officers who now are, or hereafter may become, directors
or officers, shall be indemnified by the corporation against expenses incurred
by them, including legal fees, judgments, or penalties rendered or levied
against any such person in a legal action, paid with the approval of the Board
of Directors in settlement of a legal action, or brought against any such person
for actions or omissions alleged to have been committed by any such person while
acting within the scope of his employment as a director or officer of the
corporation, provided that the Board of Directors shall determine in good faith
that such person did not act, fail to act, or refuse to act willfully, with
gross negligence, or with fraudulent or criminal intent in regard to the matter
involved in the action.
On March 8, 1996, the Board of Directors adopted, subject to shareholder
approval at the Annual Meeting, a proposed Amendment to the Company's Articles
of Incorporation that would delete the Indemnification Provision from Article
Fourth.
PURPOSE AND EFFECT OF THE AMENDMENT
The Board of Directors recommends deleting the Indemnification Provision
from Article Fourth because (i) the standard of conduct that an indemnified
party must meet is no longer consistent with Arizona law and (ii) the
Indemnification Provision provides that the Board of Directors must determine
whether a director or officer has met the required standard of conduct, while
the Code provides a corporation with greater flexibility in making such a
determination.
Standard of Conduct
The Arizona Corporate Code (the "Code"), which became effective January 1,
1996, establishes the standard of conduct that a director or officer must meet
to be eligible for indemnification by an Arizona corporation. Generally, (i) the
director or officer's conduct must have been in good faith, (ii) the director or
officer must have reasonably believed that the conduct was in the corporation's
best interests, and (iii) in the case of any criminal proceeding, the director
or officer must not have had any reasonable cause to believe the conduct was
unlawful (the "Code Standard of Conduct").
As noted above, the Indemnification Provision provides that a director or
officer is not eligible for indemnification if the director or officer "did not
act, fail to act, or refuse to act willfully, with gross negligence, or with
fraudulent or criminal intent in regard to the matter involved in the action."
Section 10-858A of the Code provides, in part, that a director indemnification
provision in a corporation's articles of incorporation is valid only if and to
the extent that it is consistent with the Code Standard of Conduct. Because the
Indemnification Provision does not require a finding that the director to be
indemnified acted in good faith or in a manner the director reasonably believed
to be in the corporation's best interests, the Indemnification Provision is
inconsistent with the Code Standard of Conduct, at least in that respect. Rather
than allowing uncertainty to remain about what portions of the Indemnification
Provision, if any, are consistent with the Code Standard of Conduct (and
therefore still effective), the Board of Directors recommends that the
Indemnification Provision be deleted from the Company's Articles of
Incorporation.
Section 10-856 of the Code allows an Arizona corporation, like the Company,
to provide indemnification rights to officers, employees, and agents in the
corporation's articles of incorporation or bylaws or by board resolution or
contract (any such indemnification rights being hereinafter referred as
"Contractual-Indemnifi
8
<PAGE> 11
cation Rights"). Subject to "public policy" limitations, these Contractual
Indemnification Rights would apparently allow a corporation to indemnify an
officer, employee, or agent even if the officer, employee, or agent did not meet
the Code Standard of Conduct. In the absence of such Contractual Indemnification
Rights, an officer, employee, or agent would have to meet the Code Standard of
Conduct to be eligible for indemnification. In the case of a director, the
Contractual Indemnification Rights could not lessen the Code Standard of
Conduct. The Company has not granted any Contractual Indemnification Rights to
any of its officers, employees, or agents that would change the Code Standard of
Conduct. If, however, the Indemnification Provision is not deleted from the
Company's Articles of Incorporation, uncertainty may exist about whether an
officer's conduct should be evaluated under the Indemnification Provision or the
Code Standard of Conduct.
Finally, the Code requires Arizona corporations to indemnify any "outside
director" (a director who is not an officer, employee, or holder of five percent
or more of any class of the corporation's stock) against liability unless (i)
the corporation's articles of incorporation limit such indemnification, (ii) the
outside director is adjudged liable in a proceeding by or in the right of the
corporation or in any other proceeding charging improper personal benefit to the
director, or (iii) a court determines, before payment to the outside director,
that the director failed to meet the Code Standard of Conduct and is not
otherwise entitled to indemnification. If the Indemnification Provision is not
deleted from the Company's Articles of Incorporation, uncertainty may exist
about whether the Indemnification Provision is intended to limit the otherwise
mandatory indemnification to which an outside directors is entitled.
Determination of Standard of Conduct
As noted above, the Indemnification Provision provides that the Board of
Directors must determine whether a director or officer has met the standard of
conduct to be eligible for indemnification. Under the Code, in order for an
Arizona corporation to provide indemnification, a majority of the corporation's
disinterested directors, independent legal counsel, or the shareholders must
find that the director or officer met the Code Standard of Conduct to be
eligible for indemnification. A disinterested director is a director who is not
then a party to the proceeding for which indemnification is sought. By requiring
the Board of Directors to make the standard of conduct determination, the
Indemnification Provision is inconsistent with the Code, at least in situations
in which there are no disinterested directors. The Code provides greater
flexibility to an Arizona corporation, like the Company, in determining whether
a director or officer is entitled to indemnification. By deleting the
Indemnification Provision from Article Fourth of the Company's Articles of
Incorporation, it will be clear that any indemnification determination will be
made by a majority of the Company's disinterested directors, independent legal
counsel, or its shareholders.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the proposed Amendment requires the affirmative vote of a
majority of the Company's outstanding shares of Common Stock. The Board believes
that it is in the best interest of the Company and its shareholders for the
Company's shareholders to so amend the Company's Articles of Incorporation.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS A VOTE FOR THIS AGENDA ITEM TO
AMEND ARTICLE FOURTH OF THE COMPANY'S ARTICLES OF INCORPORATION.
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AGENDA ITEM NO. 3
APPROVAL OF THE ADOPTION OF
AN AMENDMENT TO ARTICLE SEVENTH OF
THE COMPANY'S ARTICLES OF INCORPORATION
DESCRIPTION OF PROPOSED AMENDMENT
Section 10-202B.1 of the Arizona Corporate Code (the "Code"), which became
effective January 1, 1996, permits an Arizona corporation to limit or eliminate
the liability of its directors to the corporation or its shareholders for money
damages by means of an amendment to its articles of incorporation. On March 8,
1996, the Board of Directors adopted, subject to shareholder approval at the
1996 Annual Meeting, a proposed Amendment to the Company's Articles of
Incorporation that is consistent Section 10-202B.1 of the Code. A copy of the
proposed Amendment, which is attached as Exhibit A to this Proxy Statement,
would replace the current "Article Seventh" of the Company's Articles of
Incorporation. The proposed Amendment provides that a director is not subject to
monetary liability in suits brought by the Company or its shareholders for any
action taken or any failure to take any action as a director, except liability
for any of the following:
(i) the amount of a financial benefit received by a director to which the
director was not entitled;
(ii) an intentional infliction of harm on the Company or its shareholders;
(iii) an approval of a specified unlawful distribution by the Company to
its shareholders; and
(iv) an intentional violation of criminal law.
PURPOSE AND EFFECT OF AMENDMENT
Section 10-202B.1 of the Code is not unique. Other states also include in
their corporate codes provisions permitting corporations to limit or reduce the
personal risks inherent in serving as a director of a corporation. The new
statutory provision is designed generally to allow Arizona corporations to limit
the liability of directors in situations involving unintentional errors or the
directors' exercise of judgment and is not designed to limit or eliminate
liability in situations involving intentional wrongdoing or bad faith.
The official commentary to the Model Business Corporation Act, on which
Section 10-202B.1 of the Code is based, states that "[d]evelopments in the mid-
and late 1980s highlighted the need to permit reasonable protection of directors
from exposure to personal liability, in addition to indemnification, so that
directors would not be discouraged from fully and freely carrying out their
duties, including responsible entrepreneurial risk-taking." The Company believes
that the proposed Amendment will enable the Company to continue to attract and
retain qualified directors. The Board of Directors believes that concerns over
possible personal liability can hamper the decision-making process to the
detriment of the Company. The Board of Directors believes that the level of
scrutiny, diligence and care exercised by directors of the Company will not be
lessened by adoption of the proposed Amendment.
Generally, the Company has not experienced difficulty in recruiting and
retaining qualified directors, and the proposed Amendment is not being proposed
in response to any resignation or threat of resignation of any director, nor is
it being proposed in response to any refusal by any director to continue to
serve or to stand for reelection. The Company is not aware of any pending or
threatened claim which would be covered by the proposed Amendment, and the
Company is not submitting the proposed Amendment for shareholder approval in
anticipation of any such claim. However, the Board of Directors believes that
the Company should take every step to ensure that the Company will be able to
attract and retain the best possible directors.
While the Board of Directors believes that the proposed Amendment is in the
best interest of the Company and its shareholders, the shareholders should note
that adoption of the proposed Amendment will abrogate certain rights and
remedies of shareholders that might otherwise exist under Arizona law. Under the
Company's Articles of Incorporation as currently in effect, for example, the
Company's directors cannot be held liable to the corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director, except for,
among other things, (i) a breach of the director's duty of loyalty to the
corporation or its
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shareholders, and (ii) acts or omissions which are not in good faith or which
involve intentional misconduct or a knowing violation of law. The official
commentary to the Model Business Corporation Act, on which Section 10-202B.1 of
the Code is based, states that terms such as "duty of loyalty" are not precise,
and that "[d]irectors should be afforded reasonable predictability; they are
entitled to know whether a contemplated course of action will result in personal
liability for money damages." Although the proposed Amendment may eliminate the
ambiguity caused by terms such as "duty of loyalty," it would do so by requiring
the Company or its shareholders to demonstrate intentional wrongdoing or bad
faith on the part of a director before the director may be held liable for money
damages. This may have the practical effect of making it more difficult for the
Company or its shareholders to hold a director liable for money damages.
The proposed Amendment will not affect the standard of conduct to which
directors are required to conform under the Code, which requires directors to
discharge their duties (i) in good faith, (ii) with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and (iii) in a manner the director reasonably believes to be in the best
interests of the corporation. If the proposed Amendment is adopted, however, it
would eliminate monetary liability of directors in suits brought by the Company
or its shareholders in instances in which the directors' conduct would have been
found to be grossly negligent (except for the four categories of conduct
referenced in the first paragraph above). Adoption of the proposed Amendment
would not eliminate or limit the right of the Company or any shareholder to seek
an injunction or any other non-monetary relief in the event of a breach of a
director's fiduciary duty, although in some circumstances injunctive relief may
not be available as a practical manner. The proposed Amendment will be
prospective only, and will not affect the rights of the Company or its
shareholders to pursue monetary claims under Federal law, including the Federal
securities laws.
Because Section 10-202B.1 of the Code has been so recently enacted, there
has not been any judicial interpretation regarding its precise scope or
validity. As a result, the potential outcome of any litigation arising out of
interpretations of Section 10-202B.1 cannot be predicted.
The Company's directors acknowledge that they have a direct personal
interest in having the proposed Amendment adopted. If adopted, the proposed
Amendment may reduce the likelihood of derivative litigation against directors
and may discourage or deter the Company or its shareholders from bringing a
lawsuit against directors for breach of their fiduciary duty even though such an
action, if successful, might otherwise have benefited the Company or its
shareholders.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the proposed Amendment requires the affirmative vote of a
majority of the Company's outstanding shares of Common Stock. The Board of
Directors believes that the Arizona legislature acted responsibly in adopting
Section 10-202B.1 of the Code and that, given the significant duties and
responsibilities of directors of a corporation like New Mexico and Arizona Land
Company, adoption of the proposed Amendment to the Articles of Incorporation, as
permitted by Section 10-202B.1 of the Code, will contribute to responsible
decisions by the Board of Directors in furtherance of the Company's corporate
mission. Accordingly, the Board believes that it is in the best interest of the
Company and its shareholders for the Company's shareholders to so amend the
Company's Articles of Incorporation.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS A VOTE FOR THIS AGENDA ITEM TO
AMEND ARTICLE SEVENTH OF THE COMPANY'S ARTICLES OF INCORPORATION.
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AGENDA ITEM NO. 4
RATIFICATION OF AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP to audit the
accounts of the Company in 1996 and requests that this selection be ratified by
the shareholders. KPMG Peat Marwick LLP representatives will be present at the
Annual Shareholders' Meeting to make a statement if they so desire and to
respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITOR FOR THE COMPANY IN
1996.
OTHER INFORMATION
SECTION 16(A) REQUIREMENTS. Section 16(a) of the Securities and Exchange
Act of 1934, as amended, requires the Company's directors, officers, and persons
owning more than 10% of a registered class of the Company's registered equity
securities to file reports of ownership and changes of ownership with the
Securities and Exchange Commission. Based on its review of copies of such forms
it received, the Company believes that during 1995 all applicable filing
requirements were complied with.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING. A proposal submitted by a
shareholder and intended for inclusion in the proxy statement for the 1997
Annual Meeting of Shareholders must be received by the Company Secretary by
December 11, 1996 to be included in the Proxy statement for the 1997 Annual
Meeting of Shareholders.
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EXHIBIT A
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
NEW MEXICO AND ARIZONA LAND COMPANY
1. The second paragraph of Article Fourth of the Articles of Incorporation
which reads as follows is deleted in its entirety:
"All directors and officers who now are, or hereafter may become,
directors or officers, shall be indemnified by the corporation against
expenses incurred by them, including legal fees, judgments, or penalties
rendered or levied against any such person in a legal action, paid with the
approval of the Board of Directors in settlement of a legal action, or
brought against any such person for actions or omissions alleged to have
been committed by any such person while acting within the scope of his
employment as a director or officer of the corporation, provided that the
Board of Directors shall determine in good faith that such person did not
act, fail to act, or refuse to act wilfully, with gross negligence, or with
fraudulent or criminal intent in regard to the matter involved in the
action."
2. Article Seventh is amended in its entirety to read as follows:
"SEVENTH: The liability of a director or former director to the
corporation or its shareholders shall be eliminated to the fullest extent
permitted by Section 10-202.B.1 of the Arizona Revised Statutes. If the
Arizona Business Corporation Act is amended to authorize corporate action
further eliminating or limiting the liability of directors, the liability
of a director of the corporation shall be eliminated or limited to the
fullest extent permitted by the Arizona Business Corporation Act, as
amended.
Any repeal or modification of this Article Seventh shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omission occurring prior to or at the
time of such repeal or modification.
The provisions of this Article Seventh shall not be deemed to limit or
preclude indemnification of a director by the Corporation for any liability
of a director which has not been eliminated by the provisions of this
Article Seventh."
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NEW MEXICO AND ARIZONA LAND COMPANY
1995 PROXY
Solicited on behalf of the Board of Directors of New Mexico and Arizona Land
Company. Directors recommend a vote "FOR" Agenda Items 1 through 4. The
undersigned shareholder of New Mexico and Arizona Land Company hereby appoints
Stephen E. Renneckar and Elizabeth M. Bedewi, or either of them, as proxies of
the undersigned, each with power of substitution, at the Annual Meeting of
Shareholders of the Company to be held in Phoenix, Arizona on Monday, May 20,
1996 at 8:30 a.m. and any adjournments thereof, to vote all common shares of the
Company held or owned by the undersigned, as follows:
1. ELECTION OF CLASS B DIRECTORS: Arnold L. Putterman, Stephen E. Renneckar,
Robert Wertheim, Richard A. Wessman
____FOR all nominees (except as marked below)
____WITHHOLD AUTHORITY to vote for nominees
To withhold authority to vote for individual nominees, write those nominees'
names immediately below:
2. APPROVAL OF THE ADOPTION OF AN AMENDMENT TO ARTICLE FOURTH OF THE COMPANY'S
ARTICLES OF INCORPORATION:
____ FOR ____AGAINST ____ ABSTAIN
3. APPROVAL OF THE ADOPTION OF AN AMENDMENT TO ARTICLE SEVENTH OF THE
COMPANY'S ARTICLES OF INCORPORATION:
____ FOR ____AGAINST ____ ABSTAIN
4. RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR 1996:
____ FOR ____AGAINST ____ ABSTAIN
In their discretion, the Proxies are authorized to vote upon other business as
may properly come before the meeting.
The proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted "FOR" Agenda Items 1 through 4. The right to revoke this proxy at any time
before it is voted is reserved.
Date:______________________________________________
Signature:_________________________________________
Signature:_________________________________________
(Sign as shown. If held jointly, all
holders should sign. If held in a
certain capacity, so state.)
