SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
COMPANY NAME
(Name of Registrant as Specified in Its Charter)
ANDEAN DEVELOPMENT CORP.
COMPANY NAME
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
ANDEAN DEVELOPMENT CORP.
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
1900 GLADES ROAD, SUITE 351
BOCA RATON, FLORIDA 33431
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 1, 1997
----------------
To the Shareholders of
ANDEAN DEVELOPMENT CORPORATION:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders
(the "Annual Meeting") of Andean Development Corporation, a Florida corporation
(the "Company"), will be held at 9:30 a.m., local time, on Wednesday, October 1,
1997, at The Holiday Inn, 1950 Glades Road, Boca Raton, Florida 33431, for the
following purposes:
(1) To elect five members to the Company's Board of Directors to
hold office until the Company's 1998 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To ratify the appointment of Spear, Safer, Harmon & Co., P.A.,
independent certified public accountants, as the Company's
auditors; and
(3) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
All shareholders are cordially invited to attend; however, only
shareholders of record at the close of business on August 21, 1997 are entitled
to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
PEDRO P. ERRAZURIZ
CHAIRMAN OF THE BOARD
Boca Raton, Florida
August 29, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. SHAREHOLDERS
WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY
AND VOTE THEIR SHARES IN PERSON.
<PAGE>
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
ANDEAN DEVELOPMENT CORPORATION
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Andean Development Corporation, a Delaware
corporation (the "Company"), of proxies from the holders of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), for use at the 1997 Annual
Meeting of Shareholders of the Company to be held at 9:30 a.m., local time, on
Wednesday, October 1, 1997, or at any adjournment(s) or postponement(s) thereof
(the "Annual Meeting"), pursuant to the foregoing Notice of Annual Meeting of
Shareholders.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to shareholders is August 29, 1997. Shareholders
should review the information provided herein in conjunction with the Company's
1996 Annual Report, which accompanies this Proxy Statement. The Company's
principal executive offices are located at 1900 Glades Road, Suite 351, Boca
Raton, Florida 33431, and its telephone number is (561) 416-8930.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) The election of five members to the Company's Board of
Directors to serve until the Company's 1998 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To ratify the appointment of Spear, Safer, Harmon & Co., P.A.,
independent certified public accountants, as the Company's
auditors; and
(3) Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) FOR the election of the five
<PAGE>
nominees for director named below, and (b) FOR the proposal to ratify the
appointment of Spear, Safer, Harmon & Co., P.A., independent public accountants,
as the Company's auditors. In the event a shareholder specifies a different
choice by means of the enclosed proxy, his shares will be voted in accordance
with the specification so made. The Board of Directors does not know of any
other matters that may be brought before the Annual Meeting nor does it foresee
or have reason to believe that proxy holders will have to vote for substitute or
alternate nominees. In the event that any other matter should come before the
Annual Meeting or any nominee is not available for election, the persons named
in the enclosed proxy will have discretionary authority to vote all proxies not
marked to the contrary with respect to such matters in accordance with their
best judgment.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on August 21, 1997
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 2,820,100 shares of Common Stock issued and outstanding,
all of which are entitled to be voted at the Annual Meeting. Each share of
Common Stock is entitled to one vote on each matter submitted to shareholders
for approval at the Annual Meeting. Shareholders do not have the right to
cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. If less than a majority of outstanding shares entitled to
vote are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting to another date, time or place, and
notice need not be given of the new date, time or place if the new date, time or
place is announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof.
Pursuant to Delaware law, abstentions and broker non-votes are counted
as present for purposes of determining the presence of a quorum. However,
abstentions are treated as present and entitled to vote and will be counted as
votes cast at the Annual Meeting, but will not be counted as votes cast for or
against any given matter. A broker non-vote on a matter is considered not
entitled to vote on that matter and thus is not counted in determining whether a
matter requiring approval of a majority of the shares present and entitled to
vote has been approved or whether a plurality of the shares present and entitled
to vote has been voted.
A list of shareholders entitled to vote at the Annual Meeting will be
available at the Company's offices, 1900 Glades Road, Suite 351, Boca Raton,
Florida 33431, for a period of ten days prior to the Annual Meeting and at the
Annual Meeting itself for examination by any shareholder.
2
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of August 1, 1997, the number of
shares of Common Stock which were owned beneficially by (i) each person who is
known by the Company to own beneficially more than 5% of its Common Stock, (ii)
each director, (iii) each executive officer and (iv) all directors and executive
officers as a group. As of August 1, 1997, there were 2,820,100 shares issued
and outstanding.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS OF AMOUNT AND NATURE OF OUTSTANDING
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) SHARES OWNED(3)
- ------------------- ----------------------- ---------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Pedro P. Errazuriz(4), 450,100 15.96%
President, CEO and
Chairman of the Board
Jose Luis Yrarrazaval -0- -0-
Chief Financial Officer, Treasurer,
Secretary and Director
Alberto Coddou(5), -0- -0-
Director
Sergio Jimenez, -0- -0-
Director
Claude Mermier(6)(7), 2,250 Less than 1%
Director
All directors and executive officers
as a group (five persons) 452,350 16.04%
BENEFICIAL SHAREHOLDERS (5%)
Igenor, Ingenierie et Gestion, S.A.(6)(8),
a Swiss corporation 900,000 31.91%
Errazuriz y Asociados 600,000 21.28%
Arquitectos, Limitada(9),
a Chilean limited partnership
Berta Dominguez(10) 791,250 28.06%
</TABLE>
- -----------------
(1) Unless otherwise indicated, the address of each beneficial owner is Los
Conquistadores 1700, Piso 21, Santiago, Chile.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon
exercise of options and warrants. Each beneficial
3
<PAGE>
owner's percentage ownership is determined by assuming that options and
warrants that are held by such person (but not those held by any other
person) and that are exercisable within 60 days from the date hereof
have been exercised.
(3) Does not give effect to the exercise of warrants or options into shares
of Common Stock.
(4) Includes shares of Common Stock owned by Igenor, Ingenierie et Gestion,
S.A. of which Mr. Errazuriz owns 50% of the outstanding equity and 100
shares of Common Stock were issued to him on October 19, 1994.
(5) The address is Santa Lucia 280-OF, 12 Santiago, Chile.
(6) The address is c/o Etude Montavon-Mermier, 22, rue Etienne Dumont, 1211
Geneve 3, Switzerland.
(7) M. Mermier owns a .25% interest in Igenor, Ingenierie & Gestion, S.A.
(8) The shareholders are Mr. Pedro P. Errazuriz (50%), the President, Chief
Executive Officer and Chairman of the Board of ADC; Ms. Berta Dominguez
(49.25%), the wife of Mr. Errazuriz and the Chairman, Chief Executive
Officer and director of E&A; Mr. Pedro Pablo Errazuriz, a son of Mr.
Errazuriz and his wife; Mr. Claude Mermier (.25%), a director of Andean
Development Corporation; and Pierre Yves Montavon (.25%), an unrelated
third party.
(9) The partners are Ms. Berta Dominguez (58%), and the six children of Mr.
Pedro P. Errazuriz and Ms. Dominguez, who each owns a 7% interest and
who are (i) Pedro Pablo Errazuriz Dominguez, (ii) Berta Errazuriz
Dominguez, (iii) Magdalena Errazuriz Dominguez, (iv) Juan Andres
Errazuriz Dominguez, (v) Felipe Errazuriz Dominguez, and (vi) Arturo
Errazuriz Dominguez.
(10) Mrs. Dominguez owns 49.25% of Igenor, Ingenierie et Gestion, S.A. and
58% interest in Errazuriz y Asociados Arquitectos, Ltda. She is the
wife of Mr. Errazuriz, the President, CEO and Chairman of ADC.
ELECTION OF DIRECTORS; NOMINEES
The Company's Bylaws provide that the number of directors shall be
fixed from time to time by resolution of the Board of Directors within the units
specified by the Company's Certificate of Incorporation. The Board of Directors
has fixed at five as the number of directors that will constitute the Board of
Directors for the ensuing year. Each director elected at the Annual Meeting will
serve for a term expiring at the Company's 1998 Annual Meeting of Shareholders
or when his successor has been duly elected and qualified.
The Company has nominated each of Pedro P. Errazuriz, Jose Luis
Yrarrazaval, Alberto Coddou, Sergio Jimenez, and Claude Mermier to be elected as
a director at the Annual Meeting. The Board of Directors has no reason to
believe that any nominee will refuse or be unable to accept election; however,
in the event that one or more nominees are unable to accept election or if any
other unforeseen contingencies should arise, each Proxy that does not direct
otherwise will be voted for the remaining nominees, if any, and for such other
persons as may be designated by the Board of Directors.
4
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND SIGNIFICANT EMPLOYEES
The executive officers, directors and significant employees of the
Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- ------ ---------------------------------------------------------------
<S> <C> <C>
Pedro P. Errazuriz................... 60 Chairman of the Board, Chief Executive
Officer, and President
Jose Luis Yrarrazaval................ 57 Chief Financial Officer, Treasurer, Secretary,
and Director
Alberto Coddou....................... 58 Director
Sergio Jimenez....................... 61 Director
Berta Dominguez...................... 58 Chairman, Errazuriz y Asociados Ingenieros
S.A.
===================================================================================================================
</TABLE>
PEDRO PABLO ERRAZURIZ has served as Chief Executive Officer and
Chairman of the Board of Directors of Andean Development Corporation ("ADC")
since October 19, 1994, and its President since January 11, 1995. He has also
served as the President and sole Director of Andean Export Corporation since
February 9, 1995. Mr. Errazuriz founded Ingenieria Norconsult Andina, the
predecessor company of Igenor Andina S.A. ("INA"), a wholly owned subsidiary of
the Company in 1986 as a continuation of his activities in the sales of
equipment, project management and procurement for electricity generation
projects and has served as its president since its inception and through March
20, 1995. In 1991, Mr. Errazuriz founded Errazuriz y Asociados Inenieros S.A.
("E&A"), a wholly owned subsidiary and served as its president since its
inception through March 20, 1995. Mr. Errazuriz has also served as Chairman of
the Board of Kvaerner Chile S.A., a subsidiary of Kvaerner A.S., a
Norwegian-based manufacturer of electrical and mechanical equipment) since 1992
and as the exclusive agent for Kvaerner Turbin A.B. (Sweden) since 1994. Since
1986, Mr. Errazuriz has acted as an exclusive agent in Chile for Norconsult. Mr.
Errazuriz is a civil engineer, having received his engineering degree from the
Catholic University of Chile in 1959.
JOSE LUIS YRARRAZAVAL has been a member of the Board of Directors of
ADC since March 20, 1995 and its Chief Financial Officer, Treasurer and
Secretary since March 20, 1995. He also serves as Chief Executive Officer and a
Director of INA and Chief Financial Officer, Treasurer, Secretary and a Director
of E&A since March 20, 1995. Since November 1993, Mr. Yrarrazaval has served as
the general manager of both E&A and INA, which responsibilities include all
financial matters and personnel management. From April 1988 through October
1993, Mr. Yrarrazaval served as the project manager for INA, supervising the
projects of INA. From 1973 through 1988, Mr. Yrarrazaval was a partner and
technical manager of a construction company, including the construction of
industrial plants, buildings, and housing developments. He also acted as
supervisor in the construction of agro-industrial and cold storage plants. Mr.
5
<PAGE>
Yrarrazaval has a Civil Engineering and Construction Degree from the State
Technical University in Santiago, Chile.
ALBERTO CODDOU has served as a member of the Board of Directors of the
Company since March 20, 1995, and as a member of the Board of Directors of E&A
since March 20, 1995. Mr. Coddou has been a partner with the law firm of
Figueroa & Coddou in Santiago, Chile since 1965. He has also been an Assistant
Professor of Law at the University of Chile, School of Law from 1959 through
1982. In May 1995, Mr. Coddou was appointed Chairman of the Board and Legal
Representative of Consorio Periodistico de Chile S.A., the owners and editors of
a Chilean newspaper called La Epoca.
SERGIO JIMENEZ has served on the Board of Directors of ADC since March
20, 1995. As of June 1995, Mr. Jimenez has been appointed as a member of the
Board of ENAP (Empresa Nacional del Petroleo) the Chilean oil company owned by
the government. Mr. Jimenez served as President of Edelnor S.A. from March 1990
to March 1994. Edelnor, which generates and transmits electricity in the
northern regions of Chile, was a subsidiary of CORFO, the holding company of
Chilean state-owned companies before it was privatized in 1994. From 1990
through 1992, Mr. Jimenez was President and Chief Executive Officer of Metro
S.A., also a subsidiary of CORFO, which operates the Santiago subway system. Mr.
Jimenez is also a partner and Managing Director of Consultora Jimenez y Zanartu
Limitada, which consults on engineering projects for segments of the Chilean
government related to public works. Mr. Jimenez is a civil engineer, having
received his degree from the University of Chile, in Santiago and has a post
graduate degree in project evaluation from the University of Chile.
CLAUDE MERMIER has served on the Board of Directors of ADC since March
20, 1995. Mr. Mermier has served as the Chairman of the Board of INA since March
20, 1995. Mr. Mermier has also served as Chairman of Igenor Ingenierie & Gestion
S.A., a principal shareholder of the Company, since its inception in March 1992.
Since 1979, Mr. Mermier has been the President of Compagnie Financiere pour le
Commerce Exterieur S.A., a Swiss company involved in property development
throughout Europe.
Directors are elected at the Company's annual meeting of shareholders
and serve for one year or until their successors are elected and qualified.
Officers are elected by the Board of Directors and their terms of office are,
except to the extent governed by employment contract, at the discretion of the
Board. All of the Company's executive officers are full-time employees of the
Company. The Company pays its non-employee directors a fee of $1,000 per meeting
attended, and reimburses all directors for their expenses in connection with
their activities as directors of the Company. Directors of the Company who are
also employees of the Company will not receive additional compensation for their
services as directors. The Company intends to purchase directors and officers
insurance to the extent that it is available and cost effective to do so.
The Company has agreed that after the effective date of this
Prospectus, the Representative may designate a person to attend meetings of the
Board of Directors. The Company may elect additional Board Members following the
completion of this Offering.
6
<PAGE>
DIRECTORS AND OFFICERS OF THE SUBSIDIARIES
Berta Dominguez has served as the Chairman of the Board of E&A since
1988 and its Chief Executive Officer since March 20, 1995. Mrs. Dominguez has
served as a Director of Errazuriz y Asociados Arquitectos Limitada, one of the
principal shareholders of the Company since 1990.
Mrs. Berta Dominguez serves as the Chairman of the Board and CEO of
E&A. Mrs. Berta Dominguez is the wife of Mr. Pedro P. Errazuriz.
ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company's officers are elected annually by the Board of Directors
and serve at the discretion of the Board of Directors. The Company's directors
hold office until the next annual meeting of shareholders and until their
successors have been duly elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has five committees, the Audit Committee, Compensation
Committee, Nominating Committee, Employee Stock Option Committee and the
Directors Stock Option Committee. The members of these committees consist of
Pedro Pablo Errazuriz, Alberto Coddou and Sergio Jimenez. Messrs. Coddou and
Jimenez are independent directors.
The principal functions of the Audit Committee are to recommend the
annual appointment of the Company's independent auditors, to consult and review
with the Company's auditors concerning the scope of the audit and the results of
their examination, to review and approve any material accounting policy changes
affecting the Company's operating results and to review the Company's internal
control procedures. The Compensation Committee reviews and recommends
compensation and benefits for the executives of the Company. The Nominating
Committee seeks out qualified persons to act as members the Company's Board of
Directors.
The Employee Stock Option Committee and Director Stock Option
Committee, has the sole and exclusive authority to grant stock options to
employees and to directors who are also employees or consultants of the Company,
respectively.
During the fiscal year ended December 31, 1996, the Company's Board of
Directors held meetings and took action by unanimous written consent a total of
three times. All of the directors attended at least 100% of the meetings. During
fiscal year ended December 31, 1996, none of the committees met.
COMPENSATION OF DIRECTORS
Directors are elected at the Company's annual meeting of shareholders
and serve for one year or until their successors are elected and qualified.
Officers are elected by the Board of Directors and their terms of office are,
except to the extent governed by employment contract, at the discretion of the
Board. All of the Company's executive officers are full-time employees of the
Company. The Company pays its non-employee directors a fee of $1,000 per meeting
attended, and reimburses all directors for their
7
<PAGE>
expenses in connection with their activities as directors of the Company.
Directors of the Company who are also employees of the Company will not receive
additional compensation for their services as directors. The Company intends to
purchase directors and officers insurance to the extent that it is available and
cost effective to do so.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the outstanding Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of beneficial ownership on Form
3 and reports of changes in beneficial ownership of Common Stock on Forms 4 or
5. Such persons are required by SEC regulation to furnish the Company with
copies of all such reports they file.
Based solely on a review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the year ended December 31, 1996, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
The following table sets forth compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and each executive officer whose
compensation exceeded 60,000 for the years ended 1996. The Company did not grant
any stock options, restricted stock awards or stock appreciation rights or make
any long-term incentive plan payments during 1995 and 1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1)(2) BONUS ($) COMPENSATION($)
- --------------------------- ---- --------------- --------- ---------------
<S> <C> <C> <C> <C>
Pedro P. Errazuriz 1996 $51,475(3) $96,000 $73,016(7)
Chief Executive Officer 1995 $97,801(3) $92,000 $79,104(4)
President, Chairman 1994 $90,000 $78,481(5) $92,112(3)
Jose L. Yrarrazaval(8) 1996 $37,419(3) $35,000 $32,932(9)
Chief Financial Officer/ 1995 $56,886(3) $30,000 $17,700(6)
Treasurer/Secretary/Director 1994 $58,077(3) $30,000 $17,700(6)
Juan Andres Errazuriz(10) 1996 $34,343 None $14,437(9)
1995 $48,000(3) $12,000 None
Gonzalo Cordua Hoffman 1995 $48,000(3) $16,000 None
8
<PAGE>
Juan Phillips Davila 1996 $34,608(3) $40,000 $31,488(9)
1995 $48,000(3) $16,000 None
</TABLE>
- -----------
(1) Payment of the compensation to the persons set forth above was
apportioned among the following subsidiaries and affiliated companies
as follows: E&A - 35%; INA 25%; Electromecanica Osorno S.A. - 20%, a
Chilean corporation currently owned by Errazuriz y Asociados
Arquitectos Ltda. ("EAA") and by Igenor, Ingenierie et Gestion, S.A.
("Igenor"), each principal shareholders of the Company; and Proyectos y
Equipos, S.A. a Chilean corporation owned by EAA, Igenor, and a family
member of Mr. Pedro P. Errazuriz, the Chief Executive Officer,
President and Chairman of the Board of ADC. See "Principal
Shareholders." The proportions established as compensation to be paid
by the different companies was arbitrarily determined, intended to
minimize tax payments and to indicate the involvement of the Company's
executives in all related companies. Upon the closing of this Offering,
the Company's management will be employed by ADC.
(2) The gross salary includes social security and retirement benefits.
Social Security in Chile was established as a private system, that
requires all companies to retain 20% of the gross salaries of its
employees which is used to pay both Administrators of Pension Funds
Companies ("AFP") and Institutions of Previsional Health ("ISAPRE").
The allocation of this 20% to each service is as follows:
(a) 10% to the AFP: This amount is deposited in an individual
interest-bearing account of each employee to cover their retirement.
In Chile, the age of retirement is 60 years in case of women and 65
years for men.
(b) 3% to the AFP: This amount covers any partial or permanent
disability and, in the case of death, will provide a monthly amount to
the deceased's spouse. The amount paid corresponds to 70% of an
employee's average salary, based upon the last 10 years of the
employee's life.
Both items (a) and (b) are limited to approximately $1,700 per month.
(c) 7% to the ISAPRE: This amount covers medical fees,
hospitalization and clinical examinations, although in many instances
it may be necessary to pay additional costs for health care.
Chilean law requires the payment of one month salary for each year
worked by the employee when he is dismissed. When the employee
terminates his or her employment, no compensation is legally required.
(3) Paid in full from the Company to the employee.
(4) Includes an annual allowance of $15,000 for automobile costs and
maintenance; an annual housing/vacation allowance of $10,500; $7,200
for domestic employees; and $46,404, based upon a percentage of profit
of the Company. This profit percentage was based on 2% of the total net
profits of all related companies for 1995, calculated to Chilean
accounting standards. In the future, all accounting standards will be
pursuant to U.S. GAAP.
(5) Includes an annual allowance of $15,000 for automobile costs and
maintenance; an annual housing/vacation allowance of $10,500; $7,200
for domestic employees and $45,781 based upon a percentage of profit of
the Company for 1994.
9
<PAGE>
(6) Includes $15,000 car allowance.
(7) Includes an annual allowance for automobile costs and maintenance and
an annual housing/vacation allowance.
(8) Mr. Errazuriz resigned as an officer and an employee effective July
31, 1997.
(9) Includes an annual allowance for automobile costs and maintenance.
(10) Mr. Hoffman resigned as an employee effective December 31, 1996.
EMPLOYMENT AGREEMENTS
On March 15, 1996, the Company entered into employment agreements with
Messrs. Pedro P. Errazuriz, Jose Luis Yrarrazaval, Juan Phillips and Gonzalo
Cordua. Each of the employment contracts are for one year. The salaries and
social security benefits will not be less than those for fiscal year 1995, which
shall be determined by the Company's Board of Directors. Additionally, these
individuals will also be entitled to a bonus, as determined by the Company's
Board of Directors.
INCENTIVE AND NON-QUALIFIED STOCK OPTION PLANS
Under the Company's Stock Option Plan (the "Stock Option Plan") and
Directors Stock Option Plan (the "Directors Plan"), 175,000 shares of Common
Stock and 75,000 shares of Common Stock, respectively, are reserved for issuance
upon exercise of options. The Plans are designed to serve as an incentive for
retaining qualified and competent employees and directors. Both the Stock Option
Plan and the Directors Plan apply to Andean Development Corporation and each of
its subsidiaries. No options have been issued under the Plans.
The Company's Board of Directors, or a committee thereof, administers
and interprets the Stock Option Plan and is authorized to grant options
thereunder to all eligible employees of the Company, including officers and
directors (whether or not employees) of the Company. The Stock Option Plan
provides for the granting of "incentive stock options" (as defined in Section
422 of the Internal Revenue Code), non-statutory stock options and "reload
options." Options may be granted under the Stock Option Plan on such terms and
at such prices as determined by the Board, or a committee thereof, except that
in the case of an incentive stock option granted to a 10% shareholder, the per
share exercise price will not be less than 110% of such fair market value. The
aggregate fair market value of the shares covered by incentive stock options
granted under the Plans that become exercisable by a grantee for the first time
in any calendar year is subject to a $100,000 limit.
The purchase price for any option under the Stock Option Plan may be
paid in cash, in shares of Common Stock or such other consideration that is
acceptable to the Board of Directors or the committee thereof. If the exercise
price is paid in whole or in part in Common Stock, such exercise may result in
the issuance of additional options, known as "reload options," for the same
number of shares of Common Stock surrendered upon the exercise of the underlying
option. The reload option would be generally subject to the same provisions and
restrictions set forth in the Stock Option
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Plan as the underlying option except as varied by the Board of Directors or the
committee thereof. A reload option enables the optionee to ultimately own the
same number of shares as the optionee would have owned if the optionee had
exercised all options for cash.
Only non-employee directors are eligible to receive options under the
Directors Plan. The Directors Plan provides for an automatic grant of an option
to purchase 3,000 shares of Common Stock upon a person's election as a director
of the Company and an automatic grant of an option to purchase 3,000 shares of
Common Stock at each annual meeting through which a director's term continues.
Upon consummation of this Offering, the Company will grant to each of Messrs.
Coddou and Mermier options to purchase an aggregate of 6,000 shares of Common
Stock under the Directors Plan at an exercise price equal to the initial public
offering price of the Common Stock offered hereby.
Options granted under the Stock Option Plan will be exercisable after
the period or periods specified in the option agreement, and options granted
under the Directors Plan are exercisable immediately. Options granted under the
Plans are not exercisable after the expiration of five years from the date of
grant and are not transferable other than by will or by the laws of descent and
distribution. The Plans also authorize the Company to make loans to optionees to
enable them to exercise their options.
As of August 1, 1997, the Company issued has not issued any options to
purchase Common Stock under its Stock Option Plan or under its Directors Plan.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Florida Business Corporation Act (the "Corporation Act") permits
the indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act. Insofar as indemnification
for liabilities arising under the Act may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. See "Principal Shareholders" for a listing of the
shareholders of EAA and Igenor.
CERTAIN TRANSACTIONS
During 1995 the Company acquired a 45% interest in Aguas y Ecologia
S.A. ("A&E"), which translates into a 4.5% interest in the Bayesa Project from
an affiliate of the Company, Invdemco, a Chilean investment company. The Company
has purchased an additional 22.5% interest in A&E from A&E shares held by
Invdemco, which translates into an additional 2.25% interest in the Bayesa
Project for $141,750. The shareholders of Invdemco are Mr. Pedro P. Errazuriz
(50%), President, CEO, and Chairman of the Board of ADC; Mr. Errazuriz' wife
(45%), Berta Dominguez; and Berta Errazuriz (5%), a daughter of Mr. Errazuriz
and Mrs. Dominguez. As of August 1, 1997, the Company owned a 6.7% interest in
the Bayesa Project.
Upon the closing of the November 1996 Offering, the Company sold to
Invdemco a non-performing asset of the Company consisting of a house located
near Villarrica,
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Chile in the south of Chile, situated on approximately 13.5 acres (the
"Villarrica Property"). Invdemco paid $606,031.50, (50% of the purchase price)
of the Villarrica Property in cash at closing with the balance being paid in
four annual installments of principal together with interest at the rate of
8-1/2% on the unpaid balance.
EAA and Igenor, the principal shareholders of the Company, also own, in
the aggregate, controlling interests in Proyectos y Equipos S.A. and
Electromecanica Osorno S.A., two Chilean corporations which specialize in the
sale of air compressors and ventilators and related products and small
electrical equipment, respectively. The Company, from time to time, intends to
enter into agreements with these companies to perform certain services, based
upon competitive bids received from these companies.
As of August 1, 1997, Mr. Pedro P. Errazuriz, the President, Chief
Executive Officer and Chairman of the Board of Directors of ADC, owned an 88%
interest in Consonni, S.A. and ECESA, S.A., of Spain. Subsequently, on August 8,
1997, Mr. Errazuriz exchanged his 88% interest in Consonni S.A. and ECESA, S.A.
for 2,500,000 shares of Consonni USA, Inc. (representing approximately 83.33% of
the outstanding capital stock of Consonni USA, Inc.) thereby making Consonni and
ECESA majority owned subsidiaries of Consonni USA, Inc. Consonni manufactures
and sells electronic controls and switchgear. The Company currently is the
exclusive representative of Consonni in Chile.
All transactions between the Company and its officers, shareholders and
each of their affiliated companies have been made on terms no less favorable to
the Company than those available from unaffiliated parties. In the future, the
Company intends to handle transactions of a similar nature on terms no less
favorable to the Company than those available from unaffiliated parties.
Mr Pedro P. Errazuriz was on the Board of Directors and had power of
attorney for Kvaerner Chile, S.A. and Kvaerner Hydro, Agencia de Kvaerner Turbin
Aguas y Ecologia, S.A., corporations involved in the manufacturing and selling
of electrical materials. Mr. Errazuriz has resigned from the Board of Directors
and has relinquished his power of attorney.
Biwater is represented by the Company is various transactions and is
involved in transactions relating to the Bayesa Project.
RATIFICATION OF APPOINTMENT OF THE COMPANY'S AUDITORS
The appointment of Spear, Safer, Harmon & Co., P.A., as independent
auditors of the Company for the fiscal year ended December 31, 1997, will be
ratified.
Although the Board of Directors of the Company is submitting the
appointment of Spear, Safer, Harmon & Co., P.A. for shareholder approval, it
reserves the right to change the selection of Spear, Safer, Harmon & Co., P.A.
as auditors, at any time during the fiscal year, if it deems such change to be
in the best interest of the Company, even after shareholder approval.
Representatives of Spear, Safer, Harmon & Co., P.A. are not expected to be
present at the Annual Meeting.
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THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF SPEAR, SAFER, HARMON & CO., P.A. AS INDEPENDENT AUDITORS FOR THE
COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than elections to offices.
OTHER MATTERS
Management is not aware of any other business which may come before the
meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy holders.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended to be presented at the Company's 1998
Annual Meeting of Shareholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission promulgated under the Securities Exchange Act
of 1934, as amended, must be received by the Company at its executive offices by
January 30, 1998, for inclusion in the Company's proxy statement and form of
proxy relating to such meeting.
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AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996, including related exhibits as filed with the Securities and
Exchange Commission, is available without charge to shareholders upon request to
Pedro P. Errazuriz, President, 1900 Glades Road, Suite 351, Boca Raton, Florida
33431.
By Order Of The Board of Directors
Boca Raton, Florida Pedro P. Errazuriz
August 29, 1997 CHAIRMAN OF THE BOARD
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THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
ANDEAN DEVELOPMENT CORPORATION
PROXY -- ANNUAL MEETING OF SHAREHOLDERS -- OCTOBER 1, 1997
The undersigned, revoking all previous proxies, hereby appoint(s) Pedro
P. Errazuriz as Proxy, with full power of substitution, to represent and to vote
all Common Stock of Andean Development Corporation owned by the undersigned at
the Annual Meeting of Shareholders to be held in Naples, Florida on Wednesday,
October 1, 1997, including any original or subsequent adjournment thereof, with
respect to the proposals set forth in the Notice of Annual Meeting and Proxy
Statement. No business other than matters described below is expected to come
before the meeting, but should any other matter requiring a vote of shareholders
arise, the person named herein will vote thereon in accordance with his best
judgment. All powers may be exercised by said Proxy. Receipt of the Notice of
Annual Meeting and Proxy Statement is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING.
1. ELECTION OF DIRECTORS. Nominees: Pedro P. Errazuriz, Jose Luis
Yrarrazaval, Alberto Coddou, Sergio Jimenez, Claude Mermier
[ ] FOR ALL NOMINEES LISTED (Except as specified
here:______________)
OR
[ ] WITHHOLDING AUTHORITY to vote for all nominees
listed above
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Proposal to Ratify the Appointment of Independent Auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The shares represented by this proxy will be voted as directed. IF NO
SPECIFIC DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Dated ____________________________, 1997
- ----------------------------- ----------------------------------
(Print Name) (Signature)
- ----------------------------- ----------------------------------
(Print Name) (Signature)
Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your full
title as such. If executed by a corporation or partnership, the proxy should be
signed in the corporate or partnership name by a duly authorized officer or
other duly authorized person, indicating such officer's or other person's title.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
