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:

                         [X] Preliminary Proxy Statement
                         [ ] Definitive Proxy Statement
                       [ ] Definitive Additional Materials
                 [ ] Soliciting Material Pursuant to Rule 14a-12
                [ ] Confidential, For Use of the Commission Only
                       (as permitted by Rule 14a-6(e)(2))

                                  Watsco, Inc.
                (Name of Registrant as Specified in Its Charter)

                                  Watsco, Inc.
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

               Payment of Filing Fee (Check the appropriate box):

                              [X] No fee required.

[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(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>

                                  WATSCO, INC.

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                           TO BE HELD ON JUNE 4, 2001

To the Shareholders of Watsco, Inc.:

NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders (the "Annual
Meeting") of Watsco, Inc., a Florida corporation (the "Company"), will be held
on Monday, June 4, 2001, at 8:15 A.M., Eastern Daylight Time, at the Regency
Hotel, 540 Park Avenue, New York, New York, 10021, for the following purposes:

         (1) To elect three members to the Company's Board of Directors until
         the 2004 Annual Meeting of Shareholders or until their successors are
         duly elected and qualified, one of whom will be elected by the holders
         of Common Stock and two of whom will be elected by the holders of
         Common Stock and Class B Common Stock, voting together;

         (2) To consider and act upon a proposal to approve an amendment to the
         Company's Amended and Restated Articles of Incorporation to increase
         the number of authorized shares of Common Stock, par value $.50 per
         share, of the Company to 60,000,000 and to increase the number of
         authorized shares of Class B Common Stock, par value $.50 per share, of
         the Company to 10,000,000;

         (3) To consider and vote upon a proposal to approve the Company's 2001
         Incentive Compensation Plan; and

         (4) To transact such other business as may properly come before the
         Annual Meeting and any adjournment or postponements thereof.

         The Board of Directors has fixed the close of business on April 6, 2001
         as the record date for determining those shareholders entitled to
         notice of, and to vote at, the Annual Meeting and any adjournments or
         postponements thereof.

       Whether or not you expect to be present, please sign, date and return the
       enclosed proxy card in the enclosed pre-addressed envelope as promptly as
       possible. No postage is required if mailed in the United States.


                                            By Order of the Board of Directors

                                            BARRY S. LOGAN, Secretary


Coconut Grove, Florida
April 30, 2001

THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY, AND VOTE THEIR SHARES IN PERSON.

                                       2

<PAGE>

                       2001 ANNUAL MEETING OF SHAREHOLDERS
                                       OF
                                  WATSCO, INC.

                                 PROXY STATEMENT

                     DATE, TIME AND PLACE OF ANNUAL MEETING

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Watsco, Inc., a Florida corporation (the "Company"), of
proxies from the holders of the Company's Common Stock, par value $.50 per share
(the "Common Stock"), and the Company's Class B Common Stock, par value $.50 per
share (the "Class B Common Stock"), for use at the 2001 Annual Meeting of
Shareholders (the "Annual Meeting") of the Company to be held on Monday, June 4,
2001, at 8:15 A.M., Eastern Daylight Time, at the Regency Hotel, 540 Park
Avenue, New York, New York, 10021, and at any adjournments or postponements
thereof, pursuant to the enclosed Notice of Annual Meeting. This Proxy Statement
and the enclosed form of proxy are first being sent to holders of Common Stock
and Class B Common Stock on or about May 1, 2001. Shareholders should review the
information provided herein in conjunction with the Company's 2000 Annual Report
to Shareholders (the "2000 Annual Report") which accompanies this Proxy
Statement. The complete mailing address of the Company's principal executive
office is 2665 South Bayshore Drive, Suite 901, Coconut Grove, Florida 33133.

                          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 card 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 and facsimile. They will receive no
compensation, therefore, in addition to 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)      To elect three members to the Company's Board of Directors
                  until the 2004 Annual Meeting of Shareholders or until their
                  successors are duly elected and qualified, one of whom will be
                  elected by the holders of Common Stock and two of whom will be
                  elected by the holders of Common Stock and Class B Common
                  Stock, voting together;

         (2)      To consider and act upon a proposal to approve an amendment to
                  the Company's Amended and Restated Articles of Incorporation
                  to increase the number of authorized shares of Common Stock,
                  par value $.50 per share, of the Company to 60,000,000 and to
                  increase the number of authorized shares of Class B Common
                  Stock, par value $.50 per share, of the Company to 10,000,000;

         (3)      To consider and vote upon a proposal to approve the Company's
                  2001 Incentive Compensation Plan; and

         (4)      To transact such other business as may properly come before
                  the Annual Meeting and 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 respective nominees for director named herein,
(b) FOR the proposal to approve the amendment to the Company's Amended and
Restated Articles of Incorporation, (c) FOR the proposal to approve the 2001
Incentive Compensation Plan and (d) in favor of all other proposals described in
the Notice of Annual Meeting or as may properly come before the Annual Meeting.
In the event a shareholder specifies a different choice by means of the enclosed
proxy, such shares will be voted in accordance with the specification so made.

                                       3

<PAGE>

                 OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

The Board of Directors has set the close of business on April 6, 2001, 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 23,330,922 shares of Common Stock outstanding (representing
26,480,572 shares issued less 3,149,650 shares held in treasury) and 3,296,843
shares of Class B Common Stock outstanding (representing 3,345,106 shares issued
less 48,263 shares held in treasury), all of which are entitled to be voted at
the Annual Meeting.

The attendance, in person or by proxy, of the majority of the Common Stock and a
majority of the Class B Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum.

Holders of Common Stock are entitled to vote as a separate class to elect 25
percent of the directors of the Company (rounded up to the next whole number),
which presently equates to three directors. Holders of Common Stock and Class B
Common Stock are entitled to vote together as a single class to elect 75 percent
of the directors (rounded down to the next whole number), which presently
equates to five directors, with holders of Common Stock entitled to one vote per
share and holders of Class B Common Stock entitled to ten votes per share. In
that the Company's Board of Directors is divided into three equal divisions to
serve in staggered terms of office of three years, for purposes of electing 25
percent of the directors at the Annual Meeting, the one nominee receiving the
greatest number of votes of Common Stock shall be elected as the director, and
for purpose of electing 75 percent of the directors at the Annual Meeting, the
two nominees receiving the greatest number of votes of Common Stock and Class B
Common Stock, voting together as a single class, with holders of Common Stock
entitled to one vote per share and holders of Class B Common Stock entitled to
ten votes per share, shall be elected as directors.

Holders of Common Stock and Class B Common Stock vote as separate classes on the
proposal to approve the amendment to the Amended and Restated Articles of
Incorporation. The amendment to the Amended and Restated Articles of
Incorporation will be approved if the votes of Common Stock cast in favor of the
proposal exceed the votes of Common Stock cast opposing the proposal and if the
votes of Class B Common Stock cast in favor of the proposal exceed the votes of
Class B Common Stock cast opposing the proposal.

Holders of Common Stock and Class B Common stock are entitled to vote together
as a single class on the proposals to approve the 2001 Incentive Compensation
Plan and on each matter that is submitted to shareholders for approval, with
holders of Common Stock entitled to one vote per share and holders of Class B
Common Stock entitled to ten votes per share. The affirmative vote of a majority
of the votes cast at the Annual Meeting (either in person or by proxy), with
Common Stock and Class B Common Stock voting together as a single class, with
holders of Common Stock entitled to one vote per share and holders of Class B
Common Stock entitled to ten votes per share, is required for approval of the
2001 Incentive Compensation Plan and any other matter that may be submitted to a
vote of the Company's shareholders.

As of the Record Date, the directors and executive officers of the Company and
certain entities affiliated with such persons owned (i) Common Stock
representing 4.4% of the outstanding shares of Common Stock, (ii) Class B Common
Stock representing 82.1% of the outstanding shares of Class B Common Stock and
(iii) 49.9% of the aggregated combined votes of Common Stock and Class B Common
Stock entitled to be cast at the Annual Meeting. Such persons and entities have
informed the Company that they intend to vote all of their shares of Common
Stock and Class B Common Stock in favor of all proposals set forth in the Proxy
Statement.

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 and Class B 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.
Abstentions will be considered as shares present and entitled to vote at the
Annual Meeting 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. If less than a
majority of each of the Common Stock and Class B Common Stock are represented at
the Annual Meeting, a majority of the shares so represented may adjourn the
Annual Meeting from time to time without further notice.

A broker or nominee holding shares registered in its name, or in the name of its
nominee, which are beneficially owned by another person and for which it has not
received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election of
directors and other matters addressed at the Annual Meeting. Any such shares,
which are not represented at the Annual Meeting either in person or by proxy,
will not be considered to have cast votes on any matters addressed at the Annual
Meeting.

                                       4

<PAGE>

                          BENEFICIAL SECURITY OWNERSHIP

The following table sets forth as of the Record Date, information with respect
to the beneficial ownership of the Company's Common Stock and Class B Common
Stock by (i) each shareholder known by the Company to beneficially own more than
5% of any class of the Company's voting securities, (ii) each director of the
Company who owns any such shares, (iii) each executive officer named in the
Summary Compensation Table in "Executive Compensation", and (iv) all directors
and executive officers as a group. The table also sets forth, in its final
column, the combined voting power of the voting securities on all matters
presented to the shareholders for their approval, except for the election of
directors and for such separate class votes as are required by Florida law.


<TABLE>
<CAPTION>
                                                                                        Class B                Combined
                                                           Common Stock              Combined Stock             Percent
                                                           Beneficially               Beneficially             of Voting
                                                             Owned (2)                  Owned (2)            Securities (2)
Name and Address                                      ----------------------     -----------------------     --------------
of Beneficial Owners (1)                               Shares        Percent      Shares         Percent
------------------------                              --------       -------     ---------       -------
<S>                                                  <C>              <C>        <C>               <C>             <C>
Shareholders owning more than 5% of 
any class of common stock:

Merrill Lynch Asset Management Group (3).........    3,598,999        15.4%             --         --               6.4%
T. Rowe Price Associates, Inc. (4)...............    3,375,500        14.5              --         --               6.0
Rheem Manufacturing Company (5)..................    2,169,812         9.3              --         --               3.9
Dimensional Fund Advisors Inc. (6)...............    1,572,912         6.7              --         --               2.8

Directors and executive officers:

Alna Capital Associates (7)......................      250,277         1.1%      1,534,301         46.5%           27.7%
Albert H. Nahmad (8).............................      701,963         3.0       4,311,653         83.1            58.0
Roberto Motta (9)................................      264,990         1.1         139,723          4.2             3.0
Barry S. Logan (10)..............................      208,420         *           100,000          3.0             2.1
David B. Fleeman (11)............................      280,504         1.2          43,586          1.3             1.3
Terrence E. Kelly (12)...........................       51,114         *            50,000          1.5             1.0
Bob L. Moss (13).................................       82,141         *                --         --               *
J. Ira Harris (14)...............................       72,624         *                --         --               *
Ana M. Menendez (15).............................       23,203         *                --         --               *
Paul F. Manley (16)..............................       20,747         *             1,255          *               *
Cesar L. Alvarez (17)............................       20,250         *                --         --               *
Charles Walker (18)..............................       20,000         *                --         --               *

All directors and executive officers
  as a group (11 persons)(19)....................    1,745,956         7.3%      4,646,217         88.7%           63.1%
</TABLE>


* Less than 1%.

         (1) Unless otherwise indicated below, (a) the address of each of the
         beneficial owners identified is 2665 South Bayshore Drive, Suite 901,
         Coconut Grove, Florida 33133 and (b) each person or group has sole
         voting and investment power with respect to all such shares.

         (2) Although each named person and all directors and executive officers
         as a group are deemed to be the beneficial owners of securities that
         may be acquired within 60 days through the exercise of, exchange, or
         conversion rights, and the Class B Common Stock is immediately
         convertible into Common Stock on a one-for-one basis, the number of
         shares set forth opposite each shareholder's name does not include
         shares of Common Stock issuable upon conversion of the Company's Class
         B Common Stock.

         (3) The address of Merrill Lynch Asset Management Group is 800 Scudders
         Mill Road, Plainsboro, New Jersey 08536.

         (4) These shares are owned by various individual and institutional
         investors for which T. Rowe Price Associates, Inc. ("Price Associates")
         serves as investment adviser with power to direct investments and/or
         sole power to vote the securities. For purpose of the reporting
         requirements of the Securities Exchange Act of 1934, Price Associates
         is deemed to be a beneficial owner of such securities; however, Price
         Associates expressly disclaims that it is, in fact, the beneficial
         owner of such securities. The address of Price Associates, Inc. is 100
         East Pratt Street, Baltimore, Maryland 21202.

         (5) The address of Rheem Manufacturing Company is 405 Lexington Avenue,
         22nd Floor, New York, New York 10174.

         (6) The address of Dimensional Funds Advisors Inc. is 1299 Ocean
         Avenue, 11th Floor, Santa Monica, California 90401.

                                       5

<PAGE>


         (7) Alna Capital Associates ("Alna Capital") is a New York limited
         partnership of which Mr. Nahmad owns a 43% interest and is the sole
         general partner and David B. Fleeman is a limited partner. The address
         of Alna Capital is 505 Park Avenue, 16th Floor, New York, New York
         10022.


         (8) Includes shares indicated as beneficially owned by Alna Capital.
         See footnote (7) above. The number of shares of Common Stock indicated
         also includes (i) 11,016 shares directly owned; (ii) 20,200 shares
         owned pursuant to the Watsco, Inc. Amended and Restated Profit Sharing
         Retirement Plan & Trust (the "Profit Sharing Plan"); and (iii) 420,470
         shares issuable upon exercise of presently exercisable options granted
         pursuant to the Company's Third Amended and Restated 1991 Stock Option
         Plan ("1991 Plan"). The number of shares of Class B Common Stock
         indicated includes (i) 483,423 shares directly owned; (ii) 405,000
         shares owned pursuant to Restricted Stock Agreements; and (iii)
         1,888,929 shares issuable upon exercise of presently exercisable
         options granted pursuant to the 1991 Plan.


         (9) The number of shares of Common Stock indicated includes (i) 254,865
         shares owned by Republic Trading, Inc. ("Republic Trading") of which
         Mr. Motta is a principal and (ii) 10,125 shares issuable upon exercise
         of presently exercisable options granted pursuant to the 1991 Plan. The
         number of shares of Class B Common Stock indicates shares owned by
         Republic Trading.


         (10) The number of shares of Common Stock indicated includes (i) 450
         shares directly owned; (ii) 88,750 shares owned pursuant to Restricted
         Stock Agreements; (iii) 4,358 shares owned pursuant to the Company's
         Amended and Restated 1996 Qualified Employee Stock Purchase Plan
         ("Stock Purchase Plan"); (iv) 1,237 shares owned pursuant to the Profit
         Sharing Plan; and (v) 33,750 and 79,875 shares issuable upon exercise
         of presently exercisable options granted pursuant to the 1983 Executive
         Stock Option Plan and 1991 Plan, respectively. The number of shares of
         Class B Common Stock indicated includes (i) 50,000 shares issuable upon
         exercise of presently exercisable options granted pursuant to the 1991
         Plan; and (ii) 50,000 shares owned pursuant to a Restricted Stock
         Agreement.


         (11) Excludes shares beneficially owned by Alna Capital. See footnote
         (7) above. The number of shares of Common Stock indicated includes (i)
         44,294 shares directly owned; (ii) 203,552 shares owned by Fleeman
         Builders, a Florida partnership of which Mr. Fleeman is a General
         Partner; (iii) 10,125 shares issuable upon exercise of presently
         exercisable options granted pursuant to the 1991 Plan; and (iv) 22,533
         shares owned by 3JG Trust of which Mr. Fleeman is a trustee. The number
         of shares of Class B Common Stock indicates shares owned by Fleeman
         Builders.


         (12) The number of shares of Common Stock indicated includes (i) 25,500
         shares issuable upon exercise of presently exercisable options granted
         pursuant to the 1991 Plan; (ii) 25,000 shares owned pursuant to
         Restricted Stock Agreements; and (iii) 614 shares owned pursuant to the
         Profit Sharing Plan. The number of shares of Class B Common Stock
         includes shares owned pursuant to a Restricted Stock Agreement.


         (13) The number of shares of Common Stock indicated includes (i) 35,437
         shares directly owned; (ii) 10,000 shares owned by Mr. Moss's spouse;
         and (iii) 36,704 shares issuable upon exercise of presently exercisable
         options granted pursuant to the 1991 Plan.


         (14) The number of shares of Common Stock indicated includes (i) 32,500
         shares owned by the J. Ira Harris Living Trust, of which Mr. Harris is
         a trustee; and (ii) 40,124 shares issuable upon exercise of presently
         exercisable options granted pursuant to the 1991 Plan.


         (15) The number of shares of Common Stock indicated includes (i) 203
         shares owned pursuant to the Profit Sharing Plan; (ii) 15,000 shares
         owned pursuant to Restricted Stock Agreements; and (iii) 8,000 shares
         issuable upon exercise of presently exercisable options granted
         pursuant to the 1991 Plan.


         (16) The number of shares of Common Stock indicated includes (i) 1,248
         shares directly owned and (ii) 19,499 shares issuable upon exercise of
         presently exercisable options granted pursuant to the 1991 Plan. The
         number of shares of Class B Common Stock indicates shares directly
         owned.


         (17) The number of shares of Common Stock indicates shares issuable
         upon exercise of presently exercisable options granted pursuant to the
         1991 Plan.


         (18) The number of shares of Common Stock indicates shares issuable
         upon exercise of presently exercisable options granted pursuant to the
         1991 Plan.


         (19) Includes shares beneficially owned by directors and executive
         officers, as described in footnotes (7) - (18).

                                       6

<PAGE>

                                       I.

                              ELECTION OF DIRECTORS

Nominees

The Company's Amended and Restated Articles of Incorporation and Bylaws provide
that the Board of Directors shall consist of not less than three nor more than
nine members, and shall be divided, as nearly as possible, into three equal
divisions to serve in staggered terms of office of three years. Upon election at
the Annual Meeting, Messrs. Walker, Fleeman and Moss will serve terms expiring
at the 2004 Annual Meeting of Shareholders or until their successors have been
duly elected and qualified.

The Board of Directors has one vacancy as a result of the resignation of Alan H.
Potamkin in November, 2000. The Board of Directors may appoint a director to
fill the vacancy at a later date in accordance with the Company's Bylaws.

One director, or 25 percent of the directors up for election, is to be elected
at the Annual Meeting by the holders of Common Stock voting separately as a
class. Mr. Walker has been nominated as a director to be elected by the holders
of Common Stock and proxies will be voted for Mr. Walker absent contrary
instructions. Mr. Walker was appointed as a director of the Company in June 2000
to fill the vacancy created by the resignation of Robert Novello in fiscal 1999.

Two directors, or 75 percent of the directors up for election, are to be elected
at the Annual Meeting by the holders of Common Stock and Class B Common Stock,
voting together as a single class, with holders of Common Stock entitled to one
vote per share and holders of Class B Common Stock entitled to ten votes per
share. Messrs. Fleeman and Moss have been nominated as directors, and proxies of
holders of Common Stock and Class B Common Stock will be voted for Messrs.
Fleeman and Moss absent contrary instructions. Mr. Fleeman has served as a
director of the Company since 1977 and Mr. Moss was appointed as a director in
1992.

The Board of Directors has no reason to believe that any nominee will refuse to
act or be unable to accept election; however, in the event that a nominee for a
directorship is unable to accept election or if any other unforeseen
contingencies should arise, it is intended that proxies will be voted for the
remaining nominees, if any, and for such other person as may be designated by
the Board of Directors, unless it is directed by a proxy to do otherwise.

                                   MANAGEMENT

Directors and Executive Officers of the Company

The directors and executive officers of the Company are as follows:

Name                     Age         Position with the Company
----                     ---         -------------------------
Albert H. Nahmad         60          Chairman of the Board and President
Barry S. Logan           38          Vice President - Finance and Secretary
Terrence E. Kelly        58          Vice President - Operations
Ana M. Menendez          36          Treasurer and Assistant Secretary
Cesar L. Alvarez         53          Director
David B. Fleeman         87          Director
J. Ira Harris            62          Director
Paul F. Manley           64          Director
Bob L. Moss              53          Director
Roberto Motta            87          Director
Charles Walker           46          Director

ALBERT H. NAHMAD has served as Chairman of the Board and President of the
Company since December 1973. Mr. Nahmad is the general partner of Alna Capital
Associates, a New York limited partnership, which is the principal voting
shareholder of the Company.

BARRY S. LOGAN has served as Vice President - Finance and Secretary of the
Company since 1997 and as Treasurer from 1996 to 1998. From 1992 to 1996, Mr.
Logan served as the Controller of the Company. Prior to joining the Company, Mr.
Logan was associated with the accounting firm of Arthur Andersen LLP from 1985
to 1992.

                                       7

<PAGE>

TERRENCE E. KELLY has served as Vice President - Operations since February 2000
having served as Company Group Vice President since 1999. From 1997 to 1999, Mr.
Kelly served as President of Baker Distributing Company, one of the Company's
largest operating subsidiaries. Prior to joining the Company, Mr. Kelly was
Senior Vice President of Dacor Appliances, Inc., a manufacturer of appliances.

ANA M. MENENDEZ has served as Treasurer of the Company since 1998 and as
Assistant Secretary since 1999. From 1997 to 1998, Ms. Menendez served as Chief
Financial Officer and Secretary of Ezcony Interamerica, Inc., a publicly-held
distribution company. From 1995 to 1997, Ms. Menendez served as Chief Financial
Officer of Diaco, Inc. From 1988 to 1995, Ms. Menendez was associated with the
accounting firm of Arthur Andersen LLP.

CESAR L. ALVAREZ has been a director of the Company since 1997. Mr. Alvarez has
served as the President and Chief Executive Officer of the law firm of Greenberg
Traurig, P.A. since 1997. Mr. Alvarez has been an attorney with Greenberg
Traurig, P.A. for over 20 years, and prior to serving as President and Chief
Executive Officer of Greenberg Traurig, P.A., he served as chairman of its
corporate, securities and banking department. Mr. Alvarez also serves as a
director of Pediatrix Medical Group, Inc., Atlantis Plastics, Inc., Texpack,
N.V., Union Planters Bank (Florida), Avborne, Inc. and Koning Restaurants
International.

DAVID B. FLEEMAN has been a director of the Company since 1977. Since 1956, Mr.
Fleeman has served as the Managing Partner of Fleeman Builders, a Florida
general partnership engaged primarily in real estate development.

J. IRA HARRIS has been a director of the Company since 1998. Mr. Harris is
Chairman of J. I. Harris & Associates, a financial advisory company and as Vice
Chairman of the Pritzker Organization, also a financial advisory company. From
1988 to 1997, Mr. Harris served as a Senior Partner of Lazard Freres & Co, LLC.
From 1969 to 1987, Mr. Harris served in various management capacities and as a
Senior Executive Director of Salomon Brothers. Mr. Harris also serves as a
director of Manpower, Inc., a publicly-held company.

PAUL F. MANLEY has been a director of the Company since 1984. Mr. Manley served
as Executive Director of the law firm of Holland & Knight from 1987 to 1991.
From 1982 to 1987, Mr. Manley served as Vice President of Planning at
Sensormatic Electronics Corporation, a publicly-held manufacturer of electronic
article surveillance systems. Prior to 1982, Mr. Manley served as the Managing
Partner of the Miami office of Arthur Young & Company.

BOB L. MOSS has been a director of the Company since 1992. Since January 2000,
Mr. Moss has served as Chairman of the Board and Chief Executive Officer of
Centex Construction Group, the largest domestic general building contractor in
the nation. From 1986 to December 1999, Mr. Moss served as Chairman of the Board
and Chief Executive Officer of Centex-Rooney Construction Company, Inc.,
Florida's largest contracting organization.

ROBERTO MOTTA has been a director of the Company since 1975. Mr. Motta has been
engaged as a private investor in various business activities for more than five
years.

CHARLES WALKER has been a director of the Company since 2000. Mr. Walker is the
Managing Director of Access Technology Partners, L.P., a private equity fund
affiliated with Chase Capital Partners. Mr. Walker currently is a General
Partner of Chase Capital Partners and has also served as a Managing Director of
Chase H&Q (formerly Hambrecht & Quist). Prior to joining Chase H&Q and Chase
Capital Partners, Mr. Walker was a Director in the venture capital division of
Allstate Insurance Company.

The Company's Amended and Restated Articles of Incorporation provide for the
Board of Directors to have up to nine members, to be divided as nearly as
possible in three equal divisions to serve in staggered terms of three years.
The number of members comprising the Board of Directors presently is eight,
three of whom are Common Stock directors and five of whom are Class B Common
Stock directors. Messrs. Walker (Common Stock), Fleeman (Class B) and Moss
(Class B) serve until the 2001 Annual Meeting of Shareholders. Messrs. Manley
(Common Stock), Alvarez (Common Stock) and Nahmad (Class B) serve until the 2002
Annual Meeting of Shareholders. Messrs. Harris (Class B) and Motta (Class B)
serve until the 2003 Annual Meeting of Shareholders. See "Election of
Directors".

There are no arrangements or understandings with respect to the selection of
officers or directors. The Company pays each director who is not an employee a
$1,000 fee for each meeting of the Board of Directors attended and reimburses
directors for their expenses in connection with their activities as directors of
the Company.

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
officers, directors, and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership on Forms 3, 4 

                                       8

<PAGE>

and 5 with the Securities and Exchange Commission (SEC), the New York Stock
Exchange and the American Stock Exchange. Officers, directors and greater than
ten percent shareholders are required by the SEC regulations to furnish the
Company with copies of all Forms 3, 4 and 5 they file.

Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all its officers, directors, and greater
than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during 2000.

Meetings and Committees of the Board Of Directors

During the fiscal year ended December 31, 2000, the Company's Board of Directors
took certain actions by unanimous written consent and held four meetings. During
2000, no incumbent director attended fewer than 75 percent of the aggregate of
(i) the number of meetings of the Board of Directors held during the period he
served on the Board and (ii) the number of meetings of committees of the Board
of Directors held during the period he served on such committees.

The Board of Directors has established five standing committees: (1) the
Compensation Committee, (2) the Stock Option Committee, (3) the Nominating
Committee, (4) the Technology Committee and (5) the Audit Committee.

Messrs. Manley and Fleeman are members of the Compensation Committee, which held
one meeting during 2000. The Compensation Committee reviews and determines the
compensation of the Company's officers and administers the Company's employee
stock purchase plan.

Messrs. Moss and Alvarez are members of the Stock Option Committee, which held
five meetings during 2000. The Stock Option Committee administers the Company's
stock option plans and has the power and authority to (a) determine the persons
to be awarded options and the terms thereof pursuant to the terms of the plans,
and (b) construe and interpret the Company's stock option plans.

Messrs. Nahmad, Manley and Alvarez are the current members of the Nominating
Committee. Mr. Potamkin served as a member of the Nominating Committee until his
resignation from the Board of Directors in November 2000. Messrs. Manley and
Alvarez were appointed to the Nominating Committee in February 2001. The
Nominating Committee is responsible for (a) establishing procedures for the
selection and retention of members of the Board of Directors, (b) evaluating
Board nominees and members and (c) recommending nominees.

Messrs. Nahmad, Walker, Alvarez and Moss are members of the Technology
Committee. The Technology Committee is responsible for reviewing and approving
the Company's strategic technology initiatives and for assisting in the
identification and evaluation of new technology initiatives.

Report of the Audit Committee

Messrs. Manley, Moss and Harris are the current members of the Audit Committee,
all of whom are independent. Mr. Potamkin served on the Audit Committee until
his resignation from the Board of Directors in November 2000. Messrs. Moss and
Harris were appointed to the Audit Committee in February 2001. The committee
held four meetings during 2000. The Audit Committee's role is to act on behalf
of the Board of Directors in the oversight of all material aspects of the
Company's corporate financial reporting and external audit, including, among
other things, the Company's internal control structure, the results and scope of
the annual audit and other services provided by the independent auditors and the
Company's compliance with legal requirements that have a significant impact on
the Company's financial reports. Although management of the Company has the
primary responsibility for the financial statements and the reporting process,
including the systems of internal controls, the Audit Committee consults with
management and independent auditors regarding the preparation of financial
statements and, as appropriate, initiates inquiries into aspects of the
Company's financial affairs. In addition, the Audit Committee has the
responsibility to consider and recommend the appointment of, and to review fee
arrangements with, the independent auditors. A full description of the duties
and responsibilities of the Audit Committee are set forth in a written charter
adopted by the Company's Board of Directors, a copy of which is attached to this
proxy statement as Appendix A.

In fulfilling its oversight responsibilities, the Audit Committee has:

         1)       Reviewed and discussed with management the Company's audited
                  financial statements as of and for the fiscal year ended
                  December 31, 2000;
         2)       Discussed with the Company's independent public accountants,
                  Arthur Andersen LLP, the matters required to be discussed by
                  Statement on Auditing Standards No. 61, "Codification of
                  Statements on Accounting Standards", as amended; and
         3)       Received and reviewed the written disclosures and the letter
                  from the independent auditors required by Independence
                  Standards Board Standard No. 1, "Independence Discussions with
                  Audit Committees", as amended, and have discussed with the
                  independent auditors their independence.

                                       9

<PAGE>

Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the financial statements referred to
above be included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000.

                                AUDIT COMMITTEE:

                            Paul F. Manley, Chairman
                            Bob L. Moss
                            J. Ira Harris

                                       10

<PAGE>

                             EXECUTIVE COMPENSATION

The following table sets forth the aggregate compensation paid to the Company's
Chief Executive Officer and each of the Company's other executive officers whose
total annual salary and bonus for the 2000 fiscal year was $100,000 or more.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                             ANNUAL COMPENSATION                               LONG TERM COMPENSATION           
                               ------------------------------------------------        --------------------------------------
                                                                        OTHER          RESTRICTED       NUMBER
NAME AND                       FISCAL                                   ANNUAL           STOCK         OF STOCK      ALL OTHER
PRINCIPAL POSITION              YEAR       SALARY         BONUS      COMPENSATION (2)  AWARDS (3)       OPTIONS   COMPENSATION (4)
---------------------------    ------    ----------    ----------       -------        ----------       -------      --------
<S>                              <C>     <C>           <C>                   <C>       <C>              <C>          <C>     
Albert H. Nahmad                 2000    $  742,632    $  500,000 (1)        --        $  569,625       200,000      $  2,550
 President and Chief             1999       711,603     1,250,000            --           258,750       200,000         2,600
 Executive Officer               1998       719,092       478,500            --         1,265,625       375,000         2,400
                                                                                                                   
Barry S. Logan                   2000    $  209,087    $  125,000            --        $  183,750        75,000      $  2,550
 Vice President, Finance         1999       202,175       125,000            --           272,500        50,000         2,400
 and Secretary                   1998       124,099        80,000            --           253,125        30,000         2,400
                                                                                                                   
Terrence E. Kelly                2000    $  193,727    $  125,000            --        $  115,000        50,000      $  2,550
 Vice President, Operations      1999       184,027       194,684            --           222,188            --         2,600
                                 1998       181,190            --            --                --         5,000         2,400
                                                                                                                   
Ana M. Menendez                  2000    $  112,181    $   30,000            --        $   98,000        15,000      $  2,146
 Treasurer and Assistant         1999       109,438        22,000            --            53,125        10,000           200
 Secretary                       1998        16,500            --            --                --        15,000            --
</TABLE>


         (1)      Incentive compensation in 2000 represents earned incentive for
                  performance in 1999 pursuant to an Incentive Plan approved by
                  shareholders in 1996. Incentive compensation is based on
                  certain criteria related to the Company's performance
                  including increases in earnings per share and stock price
                  appreciation and is paid annually during the year following
                  the attainment and certification of the performance criteria.

         (2)      The officers listed in this table receive certain personal
                  benefits; however, such additional benefits do not exceed the
                  lesser of $50,000 or 10% of such officer's salary and bonus
                  for any of the years reported.

         (3)      Mr. Nahmad was awarded 62,000 shares of Class B Common Stock
                  and Messrs. Logan and Kelly and Ms. Menendez were awarded
                  20,000, 10,000 and 10,000 shares of Common Stock,
                  respectively. Significant restriction periods apply to these
                  awards of restricted stock. With regard to the grants made in
                  2000 to Messrs. Nahmad, Logan and Kelly and Ms. Menendez, such
                  restrictions, absent the individuals' death or disability or a
                  change in control of the Company, lapse in 13 years, 23 years,
                  4 years and 25 years, respectively. Individuals are entitled
                  to voting rights and to receive dividends on restricted stock
                  awards. At December 31, 2000, the aggregate value of all
                  shares of restricted stock held by Messrs. Nahmad, Logan and
                  Kelly and Ms. Menendez was $3,341,250, $1,022,400, $288,000
                  and $172,800, respectively.

         (4)      These amounts represent the Company's contribution to the
                  Profit Sharing Plan. The Profit Sharing Plan is qualified
                  under Section 401(k) of the Internal Revenue Code of 1986, as
                  amended.

                        OPTION GRANTS IN FISCAL YEAR 2000

The following table sets forth certain information concerning grants of stock
options made during 2000 to the Named Executive Officers. All options were
granted at exercise prices equal to fair market value.



<TABLE>
<CAPTION>
                                                                                  POTENTIAL REALIZABLE
                                                                                    VALUE AT ASSUMED
                                          % OF TOTAL                                ANNUAL RATES OF
                                            OPTIONS                             STOCK PRICE APPRECIATION
                              NUMBER OF   GRANTED TO    EXERCISE                   FOR OPTION TERM(2)
                              OPTIONS    EMPLOYEES IN   PRICE PER  EXPIRATION   ------------------------
NAME                         GRANTED(1)      2000         SHARE       DATE          5%            10%
----                          -------       -----       --------     -------    ----------    ----------
<S>                           <C>           <C>         <C>          <C>        <C>           <C>       
Albert H. Nahmad ...........  200,000       17.8%       $   8.94     3/15/10    $1,124,149    $2,848,815
Barry S. Logan .............   75,000        6.7%           8.94     3/15/10       421,556     1,068,305
Terrence E. Kelly ..........   50,000        4.5%           8.38      3/1/10       283,711       699,801
Ana M. Menendez ............   15,000        1.3%           9.63     11/3/10        94,998       236,830
</TABLE>

                                                                
(1) Class B Common Stock as to Mr. Nahmad and Common Stock as to Messrs. Logan
and Kelly and Ms. Menendez.

                                       11

<PAGE>

(2) The dollar amounts set forth in these columns are the result of calculations
at the five percent and ten percent rates set forth by the Commission and,
therefore, are not intended to forecast possible future appreciation, if any, of
the market price of the common stock.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR END OPTION VALUES

The following table sets forth certain information concerning stock options
exercised in 2000 and unexercised stock options held by the Company's executive
officers as of December 31, 2000.


<TABLE>
<CAPTION>
                                                                         NUMBER OF                  VALUE OF UNEXERCISED
                                         NUMBER                 UNEXERCISED OPTIONS HELD AT       IN-THE-MONEY OPTIONS AT
                                       OF SHARES                      FISCAL YEAR END                 FISCAL YEAR END
                                      ACQUIRED ON    VALUE    --------------------------------  --------------------------
NAME                                    EXERCISE    REALIZED  EXERCISABLE(1)  UNEXERCISABLE(2)  EXERCISABLE  UNEXERCISABLE
----                                    --------    --------  --------------  ----------------  -----------  -------------
<S>                                           <C>         <C>      <C>                 <C>       <C>              <C>
Albert H. Nahmad....................          --          --       2,176,065           200,000   $9,181,825       $308,333
Barry S. Logan......................          --          --         122,958           120,167      390,825        193,688
Terrence E. Kelly...................          --          --          15,500            62,000           --        157,250
Ana M. Menendez.....................          --          --           8,000            32,000        3,040         40,510
</TABLE>


(1) Represents options as to 420,470 shares of Common Stock and 1,755,595 shares
of Class B Common Stock for Mr. Nahmad, 89,625 shares of Common Stock and 33,333
of Class B Common Stock for Mr. Logan and Common Stock for Mr. Kelly and Ms.
Menendez.

(2) Represents options as to Class B Common Stock for Mr. Nahmad, 103,500 shares
of Common Stock and 16,667 shares of Class B Common Stock for Mr. Logan and
Common Stock for Mr. Kelly and Ms. Menendez.

Employment Agreement

In March 2000 the Company renewed an employment agreement with Mr. Nahmad, dated
January 31, 1996. Under the terms of the employment agreement, Mr. Nahmad shall
be employed as President and Chairman of the Board of the Company at an annual
salary of not less than $675,000 and will be entitled to additional compensation
pursuant to an Incentive Plan. In January 2001, the Company amended its
employment agreement with Mr. Nahmad to increase Mr. Nahmad's annual salary to
no less than $750,000 and to provide an additional fringe benefit.

Reverse Split Dollar Agreement

Messrs. Nahmad and Logan participate in reverse split dollar insurance programs
which provide the Company limited interests in the insurance policies, including
death benefits aggregating approximately $6.8 million plus any prepaid and
unearned premiums. Under the insurance program, Messrs. Nahmad and Logan retain
all incidents of ownership in excess of the Company's limited interests.

Key Executive Deferred Compensation Agreement

The Company entered into a Key Executive Deferred Compensation Agreement (the
"Deferred Compensation Agreement") on January 31, 1983 with Mr. Nahmad that
provides benefits to Mr. Nahmad or his family upon disability, death or
retirement or upon change in control of the Company. The minimum monthly benefit
payable under the plan is based on Mr. Nahmad's length of service to age 65 and
is the lesser of one-twelfth (1/12) of 10% of (i) $727,000 plus certain amounts
accrued for each year of service, or (ii) his maximum annual salary prior to the
event triggering payment of benefits. The estimated minimum annual benefits
payable to Mr. Nahmad upon retirement at age 65 and the service to the Company
that will have been completed by him are $72,700 and 33 years, respectively.

                       COMMITTEES' REPORT TO SHAREHOLDERS

The Company's executive compensation programs are based on three components:
base salary, annual incentives and long-term compensation; each intended as an
important piece of the overall compensation philosophy.

Base salary is used to attract and retain the Company's key executives and is
calculated using comparisons with the Company's industry competitors and/or
companies of similar market value. Salaries are reviewed by the Compensation
Committee on an annual basis.

Annual incentives are a significant component of executive compensation,
reflecting the Company's belief that management's contribution to long-term
shareholder returns (via increasing stock prices and dividends) comes from
maximizing earnings and the potential of the Company. The Company's Chief
Executive Officer has an annual incentive opportunity based upon the increase in
the 

                                       12

<PAGE>

earnings per share and stock price or, in earlier years, the pre-tax earnings of
the Company. By its extensive reliance on this incentive compensation system,
which has been employed by the Company for the Chief Executive Officer for more
than nine years, the Company links a substantial portion of the Chief Executive
Officer's annual pay directly to profits. As a result of this approach, the
Company's Chief Executive Officer's total compensation is likely to vary from
year to year more significantly than the pay of executives of many of the
Company's competitors. This philosophy is essential to an entrepreneurial
business such as the Company's business. Certain other executive officers and
employees have their pay levels set primarily in relation to comparisons to
similar executives of competitors, with additional annual incentives based on
the attainment of specific objectives supporting the overall goals of the
Company.

As discussed in more detail below, Mr. Nahmad and other key executives of the
Company received a significant portion of their total compensation through
incentive and other forms of long-term compensation. In January 2001, the
Compensation Committee renewed and amended the employment agreement between the
Company and Mr. Nahmad.

In order to promote an increase in net worth of the Company, maximize the return
to shareholders and effectively motivate senior management, the executive
compensation philosophy of the Company has been to link compensation with
Company performance. Therefore, Mr. Nahmad has received 51% of his aggregate
cash compensation during the last three years from incentives. The Committee
believes that this represents evidence of the strong and explicit link between
executive compensation and the creation of long-term shareholder value.

In terms of long-term compensation, management incentives generally are provided
to the Company's executives through annual grants of stock options and awards of
restricted stock to retain and motivate executives to improve the Company's
stock value. Stock options have been granted at an exercise price equal to the
closing price of the Company's Common Stock or Class B Common Stock as reported
by the New York Stock Exchange and the American Stock Exchange, respectively, on
the day prior to the date of grant. Accordingly, grants of stock options will
produce value only if there are increases in the underlying stock price. In
2000, Mr. Nahmad received options to acquire 200,000 shares of the Company's
Class B Common Stock at an exercise price equal to the then market value of
$8.94 per share. The Company provides no defined benefit pension plan or
supplemental executive retirement plan but does provide a 401(k) plan for all of
its employees employed for at least one year.

The Company provides certain executives awards of restricted stock that are
designed to focus such executives on the long-term performance of the Company
for the duration of their careers. Grants of restricted stock are subject to
forfeiture until certain specified dates (generally, the employees' retirement
age), death, disability or a change in control. These features result in the
Company's ability to retain, throughout their entire careers, those individuals
who are key to the creation of shareholder value. During 2000, there were 6
employees who were granted restricted stock. During 2000, Mr. Nahmad was granted
62,000 shares of restricted Class B Common Stock.

Decisions with regard to compensation of the Company's executives are made by
the two-member Compensation Committee, which has meetings at least once a year
and is called upon to meet more often when the need arises. Decisions with
regard to awards of restricted stock and stock options for all employees of the
Company are made by the two-member Stock Option Committee, which is called upon
to meet when the need arises. Each member of the Committees is a non-employee
director. The executive compensation practices of the Company are constantly
re-evaluated to ensure their relevance, their support of the strategic goals of
the Company and their contribution to the creation of long-term shareholder
value.

The above Committees' Report to Shareholders of the Compensation and Stock
Option Committees and the Company's Common Stock Price Performance Graph which
follows shall not be deemed to be incorporated by reference by any general
statement incorporating this Proxy Statement by reference into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference.

Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
generally disallows a public company's deduction for compensation to any one
employee in excess of $1 million per year unless the compensation is pursuant to
a plan approved by the public company's shareholders.

                    COMPENSATION AND STOCK OPTION COMMITTEES

                               COMPENSATION COMMITTEE:
                               Paul F. Manley, Chairman
                               David B. Fleeman

                               STOCK OPTION COMMITTEE:
                               Bob L. Moss, Chairman
                               Cesar L. Alvarez

                                       13

<PAGE>

                                 April 30, 2001

                   WATSCO, INC. COMMON STOCK PRICE PERFORMANCE

The following graph compares the cumulative total shareholder return of Watsco,
Inc. Common Stock and Class B Common Stock, based on their market prices and
assuming reimbursement of dividends, with (i) the S & P Small-Cap 600 Index,
(ii) the AMEX Market Index and (iii) a Peer Group Index.

The Peer Group Index is comprised of the following publicly traded companies:
Pameco Corporation, Hughes Supply, Inc., Noland Company and ACR Group, Inc. The
Company believes that this information demonstrates that the compensation earned
by its executive officers compares consistently with increased shareholder
value.


<TABLE>
<CAPTION>
                                                 1/1/96   12/31/96   12/31/97   12/31/98   12/31/99   12/31/00
                                                 ------   --------   --------   --------   --------   --------
<S>                                                <C>       <C>        <C>        <C>       <C>        <C>
Watsco, Inc. Common Stock.....................     100       242        215        217       151        152
Watsco, Inc. Class B Common Stock.............     100       239        211        213       150        151
Peer Group Index..............................     100       153        182        154       111         92
S&P Small-Cap 600 Index.......................     100       121        152        157       176        197
AMEX Market Index ............................     100       102        127        136       174        179
</TABLE>


The line graph assumes that $100 was invested on January 1, 1996 in the
Company's Common Stock and Class B Common Stock, Peer Group Index, the S&P
Small-Cap 600 Index and the AMEX Market Index.

The closing price of the Company's Common Stock and Class B Common Stock was
$11.52 and $11.25, respectively, at December 31, 2000. As of the Record Date,
the closing price of the Company's Common Stock and Class B Common Stock was
$11.20 and $11.65 per share, respectively. The stock price performance of
Watsco, Inc. Common Stock and Class B Common Stock depicted in the graph above
represents past performance only and is not necessarily indicative of future
performance.

                              CERTAIN TRANSACTIONS

Mr. Cesar L. Alvarez, a director, is the Chief Executive Officer and Managing
Shareholder of Greenberg Traurig, P.A., which serves as the Company's principal
outside counsel and receives customary fees for legal services. The Company
currently anticipates that such arrangement will continue.


                              INDEPENDENT AUDITORS

The Company's independent public accountants for the fiscal year ended December
31, 2000 were and for the fiscal year 2001 will be the firm of Arthur Anderson
LLP. It is expected that representatives of such firm will (i) attend the annual
meeting, (ii) have an opportunity to make a statement if they desire to do so,
and (iii) be available to respond to appropriate questions.

Aggregate fees billed for Arthur Andersen LLP's audit of the Company's annual
financial statements for the year ended December 31, 2000 and for its reviews of
the financial statements included in Forms 10-Q for the year ended December 31,
2000, were approximately $380,000. Of this amount, approximately $195,000 had
been billed as of December 31, 2000.

There were no fees billed for any financial information systems design and
implementation services rendered by Arthur Andersen LLP for the year ended
December 31, 2000.


Aggregate fees billed by Arthur Andersen, LLP in connection with due diligence
services were approximately $11,000.

                                       II.

      PROPOSAL TO AMEND THE AMENDED AND RESTATED ARTICLES OF INCORPORATION

The Company's Amended and Restated Articles of Incorporation presently
authorizes 40,000,000 shares of Common Stock, par value of $.50 per share, and
4,000,000 shares of Class B Common Stock, par value of $.50 per share. The
Company's Board of Directors has approved an amendment to Article III, paragraph
A. of the Company's Amended and Restated Articles of Incorporation, which, if
adopted by the shareholders, will increase the number of authorized shares of
Common Stock of the Company from 40,000,000 to 60,000,000 and increase the
number of authorized shares of Class B Common Stock of the Company from
4,000,000 to 10,000,000.

                                       14

<PAGE>

The Board of Directors believes that it is in the best interest of the Company
to increase the number of authorized shares of Common Stock to 60,000,000 and to
increase the number of authorized shares of Class B Common Stock to 10,000,000
so that there will be a substantial number of authorized but unissued shares of
Common Stock and Class B Common Stock that may be issued, at the discretion of
the Board of Directors, and in such amounts, for such purposes and on such terms
as the Board of Directors may determine, without further shareholder approval
except as may be required by applicable laws, rules or regulations. The Board of
Directors believes that, although no future transactions involving the issuance
of Common Stock or Class B Common Stock are presently contemplated, the increase
in the number of authorized shares of the Company's Common Stock and Class B
Common Stock will give the Company added flexibility to act in the future with
respect to equity offerings, acquisitions, financing programs, stock dividends
or splits, corporate planning, incentive compensation and other corporate
transactions without the delay and expense of shareholder action each time an
opportunity requiring the issuance of shares arises. No holder of the Company's
Common Stock or Class B Common Stock has any preemptive right to subscribe for
any securities of the Company. Future issuance of Common Stock or Class B Common
Stock could result in dilution of voting power to existing shareholders at the
time of issuance.

In addition to the aforementioned purposes, an increase in the number of shares
of Common Stock and Class B Common Stock could also be used to make a change in
control of the Company more difficult. Furthermore, the existence of such
additional authorized shares of Common Stock or Class B Common Stock might have
the effect of discouraging any attempt by a person or entity, through the
acquisition of a substantial number of shares of Common Stock or Class B Common
Stock to acquire control of the Company since the issuance of additional shares
could dilute the Common Stock or Class B Common Stock ownership of such person
or entity. The Company is not aware of any such action that may be proposed or
pending.

The following is Article III, paragraph A. of the Company's Amended and Restated
Articles of Incorporation as proposed to be in effect upon the adoption of the
Proposal to amend the Company's Amended and Restated Articles of Incorporation:

                                   Article III

                  A.       The aggregate number of shares of Capital Stock which
                           the Corporation shall have the authority to issue is
                           70,000,000 shares, of which 60,000,000 shares, at the
                           par value of $.50 per share, shall be designated as
                           Common Stock and 10,000,000 shares, at the par value
                           of $.50 per share, shall be designated as Class B
                           Common Stock.

Holders of Common Stock and Class B Common Stock vote as separate classes on the
proposals to approve the amendment to the Amended and Restated Articles of
Incorporation. The amendment to the Amended and Restated Articles of
Incorporation will be approved if the votes of Common Stock cast in favor of the
proposal exceed the votes of Common Stock cast opposing the proposal and if the
votes of Class B Common Stock cast in favor of the proposal exceed the votes of
Class B Common Stock cast opposing the proposal.

If the amendment to the Amended and Restated Articles of Incorporation is
approved at the Annual Meeting, it will become effective upon filing of the
amendment with the Secretary of the State of Florida, which is expected to be
accomplished as promptly as practicable after such approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS AMENDMENT TO THE
COMPANY'S AMENDED AND RESTATED ARTICLES OF INCORPORATION.

                                      III.

       PROPOSAL TO APPROVE THE COMPANY'S 2001 INCENTIVE COMPENSATION PLAN

The Company's Board of Directors adopted, subject to approval by the Company's
shareholders, the Company's 2001 Incentive Compensation Plan, the current text
of which is attached hereto as Appendix B (the "2001 Plan"). The material
features of the 2001 Plan are discussed below, but the description is subject
to, and is qualified in its entirety by, the full text of the 2001 Plan.

The purpose of the 2001 Plan is to assist the Company and its subsidiaries in
attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, Directors and independent contractors, enabling such
persons to acquire or increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the Company's
stockholders, and providing such persons with annual and long-term performance
incentives to expend their maximum efforts in the creation of shareholder value.

                                       15

<PAGE>


Shares Available for Awards & Limitations

Under the 2001 Plan, the total combined number of shares of the Company's Common
Stock and/or the Company's Class B Common Stock (Common Stock and Class B Common
Stock referred to as "Stock") that may be subject to the granting of Awards
under the 2001 Plan at any time during the term of the Plan shall be equal to
3,000,000 shares, plus the number of shares with respect to which Awards
previously granted under the 2001 Plan that terminate without being exercised,
and the number of shares that are surrendered in payment of any Awards or any
tax withholding requirements.

The 2001 Plan limits the number of shares which may be issued pursuant to
incentive stock options to 3,000,000 shares.

In addition, the 2001 Plan imposes individual limitations on the amount of
certain Awards in part to comply with Code Section 162(m). Under these
limitations, during any fiscal year the number of options, Stock Appreciation
Rights ("SARs"), restricted shares of Stock, deferred shares of Stock, shares as
a bonus or in lieu of other Company obligations, and other stock-based awards
(collectively, the "Awards") granted to any one participant may not exceed
1,500,000 for each type of such Award, subject to adjustment in certain
circumstances. The maximum amount that may be paid out as an annual incentive
Award or other cash Award in any fiscal year to any one participant is
$5,000,000, and the maximum amount that may be earned as a performance Award or
other cash Award in respect of a performance period by any one participant is
$12,500,000.

The Committee is authorized to adjust the limitations described in the two
preceding paragraphs and is authorized to adjust outstanding Awards (including
adjustments to exercise prices of options and other affected terms of Awards) in
the event that a dividend or other distribution (whether in cash, shares of
Stock or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange or other similar corporate transaction or event affects the Stock so
that an adjustment is appropriate. The Committee is also authorized to adjust
performance conditions and other terms of Awards in response to these kinds of
events or in response to changes in applicable laws, regulations or accounting
principles.


Eligibility

The persons eligible to receive Awards under the 2001 Plan are the officers,
directors, employees and independent contractors of the Company and its
subsidiaries, which includes approximately 2,900 persons. An employee on leave
of absence may be considered as still in the employ of the Company or a
subsidiary for purposes of eligibility for participation in the 2001 Plan.


Administration

The 2001 Plan is to be administered by the Compensation Committee of the
Company's Board of Directors consisting of not less than two directors (the
"Committee"), each member of which must be a "non-employee director" as defined
under Rule 16b-3 under the Exchange Act and an "outside director" for purposes
of Section 162(m) of the Code. However, except as otherwise required to comply
with Rule 16b-3 of the Exchange Act, or Section 162(m) of the Code, the Board
may exercise any power or authority granted to the Committee. Subject to the
terms of the 2001 Plan, the Committee or the Board is authorized to select
eligible persons to receive Awards, determine the type and number of Awards to
be granted and the number of shares of Stock to which Awards will relate,
specify times at which Awards will be exercisable or settleable (including
performance conditions that may be required as a condition thereof), set other
terms and conditions of Awards, prescribe forms of Award agreements, interpret
and specify rules and regulations relating to the 2001 Plan, and make all other
determinations that may be necessary or advisable for the administration of the
2001 Plan.


Stock Options and SARs

The Committee or the Board is authorized to grant stock options, including both
incentive stock options ("ISOs"), which can result in potentially favorable tax
treatment to the participant, and non-qualified stock options, and SARs
entitling the participant to receive the amount by which the fair market value
of a share of the Stock on the date of exercise (or defined "change in control
price" following a change in control) exceeds the grant price of the SAR. The
exercise price per share subject to an option and the grant price of an SAR are
determined by the Committee, but in the case of an ISO must not be less than the
fair market value of a share of Stock on the date of grant. For purposes of the
2001 Plan, the term "fair market value" means the fair market value of the
Stock, Awards or other property as determined by the Committee or the Board or
under procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the fair market value of the Stock as
of any given date shall be the closing sales price per share of the Stock as
reported on the principal stock exchange or market on which Stock is traded on
the date as of which such value is being determined or, if there is no sale on
that date, then on the last previous day on which a sale was reported. The
maximum term of each option or SAR, the times at which each option or SAR will
be exercisable, and provisions requiring forfeiture of unexercised options or
SARs at or following termination of employment generally are fixed by the
Committee or the Board, except 

                                       16

<PAGE>

that no option or SAR may have a term exceeding ten years. Options may be
exercised by payment of the exercise price in cash, shares that have been held
for at least 6 months, outstanding Awards or other property having a fair market
value equal to the exercise price, as the Committee or the Board may determine
from time to time. Methods of exercise and settlement and other terms of the
SARs are determined by the Committee or the Board. SARs granted under the 2001
Plan may include "limited SARs" exercisable for a stated period of time
following a change in control of the Company, as discussed below.


Formula Grants to Outside Directors

The Committee or the Board is authorized to grant stock options to Outside
Directors in accordance with the following conditions:

(1)      Each Outside Director that, prior to 1998, was not granted an Option
         under a previous plan to purchase shares of Common Stock shall receive
         an Option to purchase shares of Common Stock as may be determined by
         the Committee or the Nominating Committee upon election to the Board.
         All such Options shall become fully exercisable at 20% per year
         commencing on the first anniversary of the date of grant. Commencing on
         the sixth anniversary of the date of their election to the Board, and
         thereafter on each anniversary that such Outside Director is a member
         of the Board, he or she shall receive an Option to purchase 3,375
         shares of Common Stock becoming fully exercisable on the first
         anniversary of the date of grant.

(2)      Each Outside Director that, prior to 1998, was granted an Option under
         a previous plan to purchase shares of Common Stock prior to 1998 shall
         receive, commencing on the sixth anniversary of the date of the last
         grant of an Option to such Outside Director and thereafter on each
         anniversary that such Outside Director is a member of the Board, an
         Option to purchase 3,375 shares of Common Stock becoming fully
         exercisable on the first anniversary of the date of grant.

(3)      The per share exercise price of all Options granted to Outside
         Directors pursuant to the above paragraphs (1) and (2) will be equal to
         the Fair Market Value of the Common Stock underlying such Option on the
         date such Option is granted. The unexercised portion of any Option
         granted pursuant to the above paragraphs (1) and (2) shall become null
         and void three months after the date on which such Outside Director
         ceases to be a Director for any reason.

(4)      The Board may also grant Options to Outside Directors as described in
         the above section entitled "Stock Options and SARs".


Restricted and Deferred Stock

The Committee or the Board is authorized to grant restricted stock and deferred
stock. Restricted stock is a grant of shares of Stock which may not be sold or
disposed of, and which may be forfeited in the event of certain terminations of
employment, prior to the end of a restricted period specified by the Committee
or the Board. A participant granted restricted stock generally has all of the
rights of a stockholder of the Company, unless otherwise determined by the
Committee or the Board. An Award of deferred stock confers upon a participant
the right to receive shares of Stock at the end of a specified deferral period,
subject to possible forfeiture of the Award in the event of certain terminations
of employment prior to the end of a specified restricted period. Prior to
settlement, an Award of deferred stock carries no voting or dividend rights or
other rights associated with share ownership, although dividend equivalents may
be granted, as discussed below.


Dividend Equivalents

The Committee or the Board is authorized to grant dividend equivalents
conferring on participants the right to receive, currently or on a deferred
basis, cash, shares of Stock, other Awards or other property equal in value to
dividends paid on a specific number of shares of Stock or other periodic
payments. Dividend equivalents may be granted alone or in connection with
another Award, may be paid currently or on a deferred basis and, if deferred,
may be deemed to have been reinvested in additional shares of Stock, Awards or
otherwise as specified by the Committee or the Board.


Bonus Stock and Awards in Lieu of Cash Obligations

The Committee or the Board is authorized to grant shares of Stock as a bonus
free of restrictions, or to grant shares of Stock or other Awards in lieu of
Company obligations to pay cash under the 2001 Plan or other plans or
compensatory arrangements, subject to such terms as the Committee or the Board
may specify.


Other Stock-Based Awards

The Committee or the Board is authorized to grant Awards that are denominated or
payable in, valued by reference to, or otherwise based on or related to shares
of Stock. Such Awards might include convertible or exchangeable debt securities,
other rights convertible or exchangeable into shares of Stock, purchase rights
for shares of Stock, Awards with value and payment contingent upon performance
of the Company or any other factors designated by the Committee or the Board,
and Awards valued by reference to the 

                                       17

<PAGE>

book value of shares of Stock or the value of securities of or the performance
of specified subsidiaries or business units. The Committee or the Board
determines the terms and conditions of such Awards.

Performance Awards, Including Annual Incentive Awards

The right of a participant to exercise or receive a grant or settlement of an
Award, and the timing thereof, may be subject to such performance conditions
(including subjective individual goals) as may be specified by the Committee or
the Board. In addition, the 2001 Plan authorizes specific annual incentive
Awards, which represent a conditional right to receive cash, shares of Stock or
other Awards upon achievement of certain preestablished performance goals and
subjective individual goals during a specified fiscal year. Performance Awards
and annual incentive Awards granted to persons whom the Committee expects will,
for the year in which a deduction arises, be "covered employees" (as defined
below) will, if and to the extent intended by the Committee, be subject to
provisions that should qualify such Awards as "performance-based compensation"
not subject to the limitation on tax deductibility by the Company under Code
Section 162(m). For purposes of Section 162(m), the term "covered employee"
means the Company's chief executive officer and each other person whose
compensation is required to be disclosed in the Company's filings with the SEC
by reason of that person being among the four highest compensated officers of
the Company as of the end of a taxable year. If and to the extent required under
Section 162(m) of the Code, any power or authority relating to a performance
Award or annual incentive Award intended to qualify under Section 162(m) of the
Code is to be exercised by the Committee and not the Board.

Subject to the requirements of the 2001 Plan, the Committee or the Board will
determine performance Award and annual incentive Award terms, including the
required levels of performance with respect to specified business criteria, the
corresponding amounts payable upon achievement of such levels of performance,
termination and forfeiture provisions and the form of settlement. In granting
annual incentive or performance Awards, the Committee or the Board may establish
unfunded award "pools," the amounts of which will be based upon the achievement
of a performance goal or goals based on one or more of certain business criteria
described in the 2001 Plan (including, for example, total stockholder return,
net income, pretax earnings, EBITDA, earnings per share, return on investment
and increases in the Company's Stock price). During the first 90 days of a
fiscal year or performance period, the Committee or the Board will determine who
will potentially receive annual incentive or performance Awards for that fiscal
year or performance period, either out of the pool or otherwise.

After the end of each fiscal year or performance period, the Committee or the
Board will determine (i) the amount of any pools and the maximum amount of
potential annual incentive or performance Awards payable to each participant in
the pools and (ii) the amount of any other potential annual incentive or
performance Awards payable to participants in the 2001 Plan. The Committee or
the Board may, in its discretion, determine that the amount payable as an annual
incentive or performance Award will be reduced from the amount of any potential
Award.

Other Terms of Awards

Awards may be settled in the form of cash, shares of Stock, other Awards or
other property, in the discretion of the Committee or the Board. The Committee
or the Board may require or permit participants to defer the settlement of all
or part of an Award in accordance with such terms and conditions as the
Committee or the Board may establish, including payment or crediting of interest
or dividend equivalents on deferred amounts, and the crediting of earnings,
gains and losses based on deemed investment of deferred amounts in specified
investment vehicles. The Committee or the Board is authorized to place cash,
shares of Stock or other property in trusts or make other arrangements to
provide for payment of the Company's obligations under the 2001 Plan. The
Committee or the Board may condition any payment relating to an Award on the
withholding of taxes and may provide that a portion of any shares of Stock or
other property to be distributed will be withheld (or previously acquired shares
of Stock or other property be surrendered by the participant) to satisfy
withholding and other tax obligations. Awards granted under the 2001 Plan
generally may not be pledged or otherwise encumbered and are not transferable
except by will or by the laws of descent and distribution, or to a designated
beneficiary upon the participant's death, except that the Committee or the Board
may, in its discretion, permit transfers for estate planning or other purposes
subject to any applicable restrictions under Rule 16b-3.

Awards under the 2001 Plan are generally granted without a requirement that the
participant pay consideration in the form of cash or property for the grant (as
distinguished from the exercise), except to the extent required by law. The
Committee or the Board may, however, grant Awards in exchange for other Awards
under the 2001 Plan, awards under other Company plans, or other rights to
payment from the Company, and may grant Awards in addition to and in tandem with
such other Awards, rights or other awards.

Acceleration of Vesting; Change in Control

The Committee or the Board may, in its discretion, accelerate the
exercisability, the lapsing of restrictions or the expiration of deferral or
vesting periods of any Award, and such accelerated exercisability, lapse,
expiration and if so provided in the Award agreement, vesting shall occur
automatically in the case of a "change in control" of the Company, as defined in
the 2001 Plan (including the cash settlement of SARs and "limited SARs" which
may be exercisable in the event of a change in control). In addition, the
Committee or 

                                       18

<PAGE>

the Board may provide in an Award agreement that the performance goals relating
to any performance based Award will be deemed to have been met upon the
occurrence of any "change in control." Upon the occurrence of a change in
control, if so provided in the Award agreement, stock options and limited SARs
(and other SARs which so provide) may be cashed out based on a defined "change
in control price," which will be the higher of (i) the cash and fair market
value of property that is the highest price per share paid (including
extraordinary dividends) in any reorganization, merger, consolidation,
liquidation, dissolution or sale of substantially all assets of the Company, or
(ii) the highest fair market value per share (generally based on market prices)
at any time during the 60 days before and 60 days after a change in control. For
purposes of the 2001 Plan, the term "change in control" generally means (a)
approval by shareholders of any reorganization, merger or consolidation or other
transaction or series of transactions if persons who were shareholders
immediately prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of the combined
voting power of the reorganized, merged or consolidated company's then
outstanding, voting securities, or a liquidation or dissolution of the Company
or the sale of all or substantially all of the assets of the Company (unless the
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned), (b) a change in the
composition of the Board such that the persons constituting the current Board,
and subsequent directors approved by the current Board (or approved by such
subsequent directors), cease to constitute at least a majority of the Board, or
(c) the acquisition (other than from the Company) by any person or group of
people of more than 50% (a "Controlling Interest") of the outstanding shares or
combined voting power of the Company's Stock or outstanding securities entitled
to vote generally in the election of Directors (other than acquisitions by the
Company or its Subsidiaries, any person who owns a Controlling Interest on the
effective date of the Plan, or any employee benefit plan of the Company or its
Subsidiaries).

Federal Income Tax Consequences of Awards of Options:

The 2001 Plan is not qualified under the provisions of section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and is not subject to
any of the provisions of the Employee Retirement Income Security Act of 1974, as
amended.

         Nonqualified Stock Options. On exercise of a nonqualified stock option
granted under the 2001 Plan, an Optionee will recognize ordinary income equal to
the excess, if any, of the fair market value on the date of exercise of the
shares of Stock acquired on exercise of the Option over the exercise price. If
the Optionee is an employee of the Company, that income will be subject to the
withholding of Federal income tax. The Optionee's tax basis in those shares will
be equal to their fair market value on the date of exercise of the Option, and
his holding period for those shares will begin on that date.

         If an Optionee pays for shares of Stock on exercise of an Option by
delivering shares of the Company's Stock, the Optionee will not recognize gain
or loss on the shares delivered, even if their fair market value at the time of
exercise differs from the Optionee's tax basis in them. The Optionee, however,
otherwise will be taxed on the exercise of the Option in the manner described
above as if he had paid the exercise price in cash. If a separate identifiable
stock certificate is issued for that number of shares equal to the number of
shares delivered on exercise of the Option, the Optionee's tax basis in the
shares represented by that certificate will be equal to his tax basis in the
shares delivered, and his holding period for those shares will include his
holding period for the shares delivered. The Optionee's tax basis and holding
period for the additional shares received on exercise of the Option will be the
same as if the Optionee had exercised the Option solely in exchange for cash.

         The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the Optionee,
provided that amount constitutes an ordinary and necessary business expense for
the Company and is reasonable in amount, and either the employee includes that
amount in income or the Company timely satisfies its reporting requirements with
respect to that amount.

         Incentive Stock Options. The 2001 Plan provides for the grant of stock
options that qualify as "incentive stock options" as defined in section 422 of
the Code. Under the Code, an Optionee generally is not subject to tax upon the
grant or exercise of an incentive stock option. In addition, if the Optionee
holds a share received on exercise of an incentive stock option for at least two
years from the date the Option was granted and at least one year from the date
the Option was exercised (the "Required Holding Period"), the difference, if
any, between the amount realized on a sale or other taxable disposition of that
share and the holder's tax basis in that share will be long-term capital gain or
loss.

         If, however, an Optionee disposes of a share acquired on exercise of an
incentive stock option before the end of the Required Holding Period (a
"Disqualifying Disposition"), the Optionee generally will recognize ordinary
income in the year of the Disqualifying Disposition equal to the excess, if any,
of the fair market value of the share on the date the incentive stock option was
exercised over the exercise price. If, however, the Disqualifying Disposition is
a sale or exchange on which a loss, if realized, would be recognized for Federal
income tax purposes, and if the sales proceeds are less than the fair market
value of the share on the date of exercise of the Option, the amount of ordinary
income recognized by the Optionee will not exceed the gain, if any, realized on
the sale. If the amount realized on a Disqualifying Disposition exceeds the fair
market value of the share on the date of exercise of the Option, that excess
will be short-term or long-term capital gain, depending on whether the holding
period for the share exceeds one year.

                                       19

<PAGE>



         An Optionee who exercises an incentive stock option by delivering
shares of Stock acquired previously pursuant to the exercise of an incentive
stock option before the expiration of the Required Holding Period for those
shares is treated as making a Disqualifying Disposition of those shares. This
rule prevents "pyramiding" the exercise of an incentive stock option (that is,
exercising an incentive stock option for one share and using that share, and
others so acquired, to exercise successive incentive stock options) without the
imposition of current income tax.

         For purposes of the alternative minimum tax, the amount by which the
fair market value of a share of Stock acquired on exercise of an incentive stock
option exceeds the exercise price of that Option generally will be an adjustment
included in the Optionee's alternative minimum taxable income for the year in
which the Option is exercised. If, however, there is a Disqualifying Disposition
of the share in the year in which the Option is exercised, there will be no
adjustment with respect to that share. If there is a Disqualifying Disposition
in a later year, no income with respect to the Disqualifying Disposition is
included in the Optionee's alternative minimum taxable income for that year. In
computing alternative minimum taxable income, the tax basis of a share acquired
on exercise of an incentive stock option is increased by the amount of the
adjustment taken into account with respect to that share for alternative minimum
tax purposes in the year the Option is exercised.

         The Company is not allowed an income tax deduction with respect to the
grant or exercise of an incentive stock option or the disposition of a share
acquired on exercise of an incentive stock option after the Required Holding
Period. However, if there is a Disqualifying Disposition of a share, the Company
is allowed a deduction in an amount equal to the ordinary income includible in
income by the Optionee, provided that amount constitutes an ordinary and
necessary business expense for the Company and is reasonable in amount, and
either the employee includes that amount in income or the Company timely
satisfies its reporting requirements with respect to that amount.

         Stock Awards. Generally, the recipient of a stock award will recognize
ordinary compensation income at the time the stock is received equal to the
excess, if any, of the fair market value of the stock received over any amount
paid by the recipient in exchange for the stock. If, however, the stock is
non-vested when it is received under the 2001 Plan (e.g., if the employee is
required to work for a period of time in order to have the right to sell the
stock), the recipient generally will not recognize income until the stock
becomes vested, at which time the recipient will recognize ordinary compensation
income equal to the excess, if any, of the fair market value of the stock on the
date it becomes vested over any amount paid by the recipient in exchange for the
stock. A recipient may, however, file an election with the Internal Revenue
Service, within thirty (30) days of his or her receipt of the stock award, to
recognize ordinary compensation income, as of the date the recipient receives
the award, equal to the excess, if any, of the fair market value of the stock on
the date the award is granted over any amount paid by the recipient in exchange
for the stock.

         The recipient's basis for the determination of gain or loss upon the
subsequent disposition of shares acquired as stock awards will be the amount
paid for such shares plus any ordinary income recognized either when the stock
is received or when the stock becomes vested. Upon the disposition of any stock
received as a stock award under the 2001 Plan, the difference between the sale
price and the recipient's basis in the shares will be treated as a capital gain
or loss and generally will be characterized as long-term capital gain or loss if
the shares have been held for more the one year from the date as of which he or
she would be required to recognize any compensation income.

         Stock Appreciation Rights. The Company may grant SARs separate from any
other Award ("Stand-Alone SARs") or in tandem with Options ("Tandem SARs") under
the 2001 Plan. Generally, the recipient of a Stand-Alone SAR will not recognize
any taxable income at the time the Stand-Alone SAR is granted.

         With respect to Stand-Alone SARs, if the recipient receives the
appreciation inherent in the SARs in cash, the cash will be taxable as ordinary
compensation income to the recipient at the time that the cash is received. If
the recipient receives the appreciation inherent in the SARs in shares of Stock,
the recipient will recognize ordinary compensation income equal to the excess of
the fair market value of the Stock on the day it is received over any amounts
paid by the recipient for the Stock.

         With respect to Tandem SARs, if the recipient elects to surrender the
underlying option in exchange for cash or shares of Stock equal to the
appreciation inherent in the underlying option, the tax consequences to the
recipient will be the same as discussed above relating to the Stand-Alone SARs.
If the recipient elects to exercise the underlying option, the holder will be
taxed at the time of exercise as if he or she had exercised a nonqualified stock
option (discussed above), i.e., the recipient will recognize ordinary income for
federal tax purposes measured by the excess of the then fair market value of the
shares of Stock over the exercise price.

         In general, there will be no federal income tax deduction allowed to
the Company upon the grant or termination of Stand-Alone SARs or Tandem SARs.
Upon the exercise of either a Stand-Alone SAR or a Tandem SAR, however, the
Company will be entitled to a deduction for federal income tax purposes equal to
the amount of ordinary income that the employee is required to recognize as a
result of the exercise, provided that the deduction is not otherwise disallowed
under the Code.

                                       20

<PAGE>

         Dividend Equivalents. Generally, the recipient of a dividend equivalent
award will recognize ordinary compensation income at the time the dividend
equivalent award is received equal to the fair market value dividend equivalent
award received. The Company generally will be entitled to a deduction for
federal income tax purposes equal to the amount of ordinary income that the
employee is required to recognize as a result of the dividend equivalent award,
provided that the deduction is not otherwise disallowed under the Code

         Section 162 Limitations. The Omnibus Budget Reconciliation Act of 1993
added Section 162(m) to the Code, which generally disallows a public company's
tax deduction for compensation to covered employees in excess of $1 million in
any tax year beginning on or after January 1, 1994. Compensation that qualifies
as "performance-based compensation" is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the company that
pays it. The Company intends that Options granted to employees whom the
Committee expects to be covered employees at the time a deduction arises in
connection with such Options, will qualify as such "performance-based
compensation," so that such Options will not be subject to the Section 162(m)
deductibility cap of $1 million. Future changes in Section 162(m) or the
regulations thereunder may adversely affect the ability of the Company to ensure
that Options under the 2001 Plan will qualify as "performance-based
compensation" that is fully deductible by the Company under Section 162(m).

         Importance of Consulting Tax Adviser. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current Federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any recipient may depend on his particular situation, each
recipient should consult his tax adviser as to the Federal, state, local and
other tax consequences of the grant or exercise of an Award or the disposition
of Stock acquired as a result of an Award.

Amendment and Termination

The Board of Directors may amend, alter, suspend, discontinue or terminate the
2001 Plan or the Committee's authority to grant Awards without further
stockholder approval, except stockholder approval must be obtained for any
amendment or alteration if such approval is required by law or regulation or
under the rules of any stock exchange or quotation system on which shares of
Stock are then listed or quoted. Thus, stockholder approval may not necessarily
be required for every amendment to the 2001 Plan which might increase the cost
of the 2001 Plan or alter the eligibility of persons to receive Awards.
Stockholder approval will not be deemed to be required under laws or
regulations, such as those relating to ISOs, that condition favorable treatment
of participants on such approval, although the Board may, in its discretion,
seek stockholder approval in any circumstance in which it deems such approval
advisable. Unless earlier terminated by the Board, the 2001 Plan will terminate
at such time as no shares of Stock remain available for issuance under the 2001
Plan and the Company has no further rights or obligations with respect to
outstanding Awards under the 2001 Plan.

Shareholder Approval

The affirmative vote of a majority of the votes cast at the Annual Meeting
(either in person or by proxy), with Common Stock and Class B Common Stock
voting together as a single class, with holders of Common Stock entitled to one
vote per share and holders of Class B Common Stock entitled to ten votes per
share, is required for approval of the 2001 Incentive Compensation Plan.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO
APPROVE THE COMPANY'S 2001 INCENTIVE COMPENSATION PLAN.

                                       IV.

                                 OTHER BUSINESS

The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote proxies as
in their discretion they may deem appropriate, unless they are directed by a
proxy to do otherwise.

                  INFORMATION CONCERNING SHAREHOLDER PROPOSALS

                                       21

<PAGE>

Shareholders interested in presenting a proposal for consideration at the
Company's 2002 annual meeting of shareholders may do so by following the
procedures prescribed in Rule 14a-8 promulgated by the Securities and Exchange
Act of 1934. To be eligible for inclusion in the proxy statement and form of
proxy relating to the meeting, shareholder proposals must be received by the
Corporate Secretary no later than January 1, 2002. Any shareholder proposal
submitted other than for inclusion in the proxy materials for that meeting must
be delivered to the Company no later than March 17, 2002, or such proposal will
be considered untimely. If a shareholder proposal is received after March 17,
2002, we may vote in our discretion as to the proposal all of the shares for
which the Company has received proxies for the 2002 annual meeting of the
shareholders.


                                             By Order of the Board of Directors

                                             BARRY S. LOGAN, Secretary

Coconut Grove, Florida
April 30, 2001

                                       22

<PAGE>

                                                                      APPENDIX A

                                  WATSCO, INC.
                             AUDIT COMMITTEE CHARTER

THE AUDIT COMMITTEE IS THE ARM OF THE BOARD OF DIRECTORS WHICH HAS BEEN
DELEGATED THE BOARD'S RESPONSIBILITY TO THE SHAREHOLDERS TO PROVIDE RELIABLE
FINANCIAL STATEMENTS.

                             SCOPE OF RESPONSIBILITY

THE AUDIT COMMITTEE'S RESPONSIBILITIES ARE AS FOLLOWS:

GENERAL

TO PROVIDE OVERSIGHT TO THE FINANCIAL REPORTING FUNCTION OF THE COMPANY BY:

1) INFLUENCING, AS NECESSARY, THE OVERALL "TONE" FOR QUALITY FINANCIAL
REPORTING, SOUND INTERNAL CONTROLS AND ETHICAL BEHAVIOR. 

2) OVERSEEING THE BUSINESS RISK MANAGEMENT PROCESS THAT IDENTIFIES, MEASURES AND
PRIORITIZES BUSINESS AND FINANCIAL REPORTING RISKS AND MONITORS THE
EFFECTIVENESS OF THE CONTROL AND RISK MANAGEMENT PROCESSES ESTABLISHED TO MANAGE
THOSE RISKS.

3) BEING INVOLVED WITH ALL OF THE PROFESSIONALS (MANAGEMENT ALONG WITH THE
INTERNAL AND EXTERNAL AUDITORS) RESPONSIBLE FOR FINANCIAL REPORTING AND INTERNAL
CONTROL; ACTIVELY REVIEWING AND ASSESSING THE SCOPE OF THEIR WORK AND THE
QUALITY OF THEIR PERFORMANCE.

4) ENGAGING IN MEANINGFUL DISCUSSIONS WITH THE AUDITORS AND WITH MANAGEMENT
ABOUT THE QUALITY, NOT JUST ACCEPTABILITY, OF FINANCIAL REPORTING DECISIONS AND
JUDGMENTS.

SPECIFIC

THE AUDIT COMMITTEE IS RESPONSIBLE EACH YEAR TO: 1) RECEIVE FROM THE INDEPENDENT
AUDITORS A WRITTEN STATEMENT REGARDING RELATIONSHIPS AND SERVICES WHICH MAY
AFFECT OBJECTIVITY AND INDEPENDENCE, 2) DISCUSS ANY RELEVANT MATTERS WITH THE
INDEPENDENT AUDITORS AND 3) RECOMMEND THAT THE FULL BOARD TAKE APPROPRIATE
ACTION TO ADDRESS THE AUDITOR'S INDEPENDENCE.

                                       1

<PAGE>

                          INDEPENDENT AUDITOR SELECTION

THE AUDIT COMMITTEE SHALL HAVE THE AUTHORITY AND RESPONSIBILITY TO SELECT,
EVALUATE AND REPLACE THE INDEPENDENT AUDITOR.

                                 ACCOUNTABILITY

ASSURE THAT THE INDEPENDENT AUDITORS ARE AWARE THAT THEY ARE ULTIMATELY
RESPONSIBLE TO THE AUDIT COMMITTEE AND TO THE BOARD OF DIRECTORS.

                                    STRUCTURE

THE AUDIT COMMITTEE OF THE BOARD SHALL BE MADE UP OF THE NUMBER OF MEMBERS
SPECIFIED, FORM TIME TO TIME, BY THE NEW YORK STOCK EXCHANGE, INC. ("NYSE")
AND/OR THE SECURITIES AND EXCHANGE COMMISSION.

                                     PROCESS

THE AUDIT COMMITTEE SHALL CARRY OUT ITS RESPONSIBILITIES BY USE OF BOTH THE
INTERNAL AUDIT DEPARTMENT OF THE COMPANY AND THE COMPANY'S EXTERNAL AUDITORS TO
DETERMINE BOTH THE ADEQUACY OF THE COMPANY'S INTERNAL CONTROL SYSTEMS AND THE
INTERNAL CONTROL ENVIRONMENT AT THE COMPANY INCLUDING ITS VARIOUS SUBSIDIARIES.
IT IS RECOGNIZED THAT BECAUSE THIS IS A CONTINUING PROCESS, THE AUDIT COMMITTEE
CANNOT MEET EACH TIME A DECISION MUST BE MADE IN DEALING WITH THE INTERNAL OR
EXTERNAL AUDITORS OR MANAGEMENT. THE AUTHORITY TO MAKE SUCH DECISIONS IS,
THEREFORE, DELEGATED TO THE CHAIRMAN OF THE AUDIT COMMITTEE. IT SHALL BE THE
CHAIRPERSON'S RESPONSIBILITY TO INVOLVE THE OTHER MEMBERS OF THE AUDIT COMMITTEE
IN ANY ACTIONS HE OR SHE DEEMS MATERIAL. THE FULL AUDIT COMMITTEE SHALL MEET AS
NEEDED, BY TELEPHONE OR IN PERSON, BUT AT LEAST TWICE PER YEAR.

                                 DOCUMENT REVIEW

THE AUDIT COMMITTEE SHALL REVIEW ALL NYSE AND PROXY STATEMENT DISCLOSURES
RELATING TO THE AUDIT COMMITTEE BEFORE SUCH STATEMENTS ARE FILED.

                             MEMBERSHIP REQUIREMENTS

ALL MEMBERS OF THE AUDIT COMMITTEE SHALL BE FINANCIALLY LITERATE AND MEET THE
INDEPENDENCE REQUIREMENTS ESTABLISHED FROM TIME TO TIME BY THE NYSE.


                                                            ADOPTED JUNE 5, 2000

                                       2

<PAGE>

                                                                      APPENDIX B





                                  WATSCO, INC.

                        2001 INCENTIVE COMPENSATION PLAN






<PAGE>

                                  WATSCO, INC.

                        2001 INCENTIVE COMPENSATION PLAN

<TABLE>
<CAPTION>
<S>                                                                                                              <C>
1.       Purpose..................................................................................................1
2.       Definitions..............................................................................................1
3.       Administration...........................................................................................4
         (a)      Authority of the Committee......................................................................4
         (b)      Manner of Exercise of Committee Authority.......................................................5
         (c)      Limitation of Liability.........................................................................5
4.       Stock Subject to Plan....................................................................................5
         (a)      Limitation on Overall Number of Shares Subject to Awards........................................5
         (b)      Application of Limitations......................................................................6
5.       Eligibility; Per-Person Award Limitations................................................................6
6.       Specific Terms of Awards.................................................................................6
         (a)      General.........................................................................................6
         (b)      Options.........................................................................................6
         (c)      Stock Appreciation Rights.......................................................................9
         (d)      Restricted Stock................................................................................9
         (e)      Deferred Stock.................................................................................10
         (f)      Bonus Stock and Awards in Lieu of Obligations..................................................11
         (g)      Dividend Equivalents...........................................................................11
         (h)      Other Stock-Based Awards.......................................................................12
7.       Certain Provisions Applicable to Awards.................................................................12
         (a)      Stand-Alone, Additional, Tandem, and Substitute Awards.........................................12
         (b)      Term of Awards.................................................................................12
         (c)      Form and Timing of Payment Under Awards; Deferrals.............................................13
         (d)      Exemptions from Section 16(b) Liability........................................................13
8.       Performance and Annual Incentive Awards.................................................................13
         (a)      Performance Conditions.........................................................................13
         (b)      Performance Awards Granted to Designated Covered Employees.....................................14
         (c)      Annual Incentive Awards Granted to Designated Covered Employees................................15
         (d)      Written Determinations.........................................................................16
         (e)      Status of Section 8(b) and Section 8(c) Awards Under Code Section 162(m).......................16
9.       Change in Control.......................................................................................17
         (a)      Effect of "Change in Control.".................................................................17
         (b)      Definition of "Change in Control...............................................................17
         (c)      Definition of "Change in Control Price.".......................................................18
10.      General Provisions......................................................................................18
         (a)      Compliance With Legal and Other Requirements...................................................18
         (b)      Limits on Transferability; Beneficiaries.......................................................19
         (c)      Adjustments....................................................................................19
         (d)      Taxes..........................................................................................20
         (e)      Changes to the Plan and Awards.................................................................20
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
         <S>                                                                                                     <C>
         (f)      Limitation on Rights Conferred Under Plan......................................................20
         (g)      Unfunded Status of Awards; Creation of Trusts..................................................20
         (h)      Nonexclusivity of the Plan.....................................................................21
         (i)      Payments in the Event of Forfeitures; Fractional Shares........................................21
         (j)      Governing Law..................................................................................21
         (k)      Plan Effective Date and Stockholder Approval; Termination of Plan..............................21
</TABLE>



<PAGE>

                                  WATSCO, INC.

                        2001 INCENTIVE COMPENSATION PLAN

         1. Purpose. The purpose of this 2001 INCENTIVE COMPENSATION PLAN (the
"Plan") is to assist Watsco, Inc., a Florida corporation (the "Company") and its
subsidiaries in attracting, motivating, retaining and rewarding high-quality
executives and other employees, officers, directors and independent contractors
by enabling such persons to acquire or increase a proprietary interest in the
Company in order to strengthen the mutuality of interests between such persons
and the Company's stockholders, and providing such persons with annual and long
term performance incentives to expend their maximum efforts in the creation of
shareholder value. The Plan is intended to qualify certain compensation awarded
under the Plan for tax deductibility under Section 162(m) of the Code (as
hereafter defined) to the extent deemed appropriate by the Committee (or any
successor committee) of the Board of Directors of the Company.

         2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.

                  (a) "Annual Incentive Award" means a conditional right granted
to a Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.

                  (b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest, granted to a
Participant under the Plan.

                  (c) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

                  (d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.

                  (e) "Board" means the Company's Board of Directors.

                  (f) "Cause" shall, with respect to any Participant, have the
equivalent meaning (or the same meaning as "cause" or "for cause") set forth in
any employment agreement between the Participant and the Company or Parent
Corporation or Subsidiary or, in the absence of any such agreement, such term
shall mean (i) the failure by the Participant to perform his or her duties as
assigned by the Company (or Parent Corporation or Subsidiary) in a reasonable


<PAGE>

manner, (ii) any violation or breach by the Participant of his or her employment
agreement with the Company (or Parent Corporation or Subsidiary), if any, (iii)
any violation or breach by the Participant of his or her non-competition and/or
non-disclosure agreement with the Company (or Parent Corporation or Subsidiary),
if any, (iv) any act by the Participant of dishonesty or bad faith with respect
to the Company (or Parent Corporation or Subsidiary), (v) chronic addiction to
alcohol, drugs or other similar substances affecting the Participant's work
performance, or (vi) the commission by the Participant of any act, misdemeanor,
or crime reflecting unfavorably upon the Participant or the Company. The good
faith determination by the Committee of whether the Participant's employment was
terminated by the Company for "Cause" shall be final and binding for all
purposes hereunder.

                  (g) "Change in Control" means a Change in Control as defined
with related terms in Section 9 of the Plan.

                  (h) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.

                  (i) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

                  (j) "Committee" means the Compensation Committee designated by
the Board; provided, however, that the Committee shall consist of at least two
directors, each member of which shall be (i) a "non-employee director" within
the meaning of Rule 16b-3 under the Exchange Act, unless administration of the
Plan by "non-employee directors" is not then required in order for exemptions
under Rule 16b-3 to apply to transactions under the Plan, and (ii) an "outside
director" within the meaning of Section 162(m) of the Code, unless
administration of the Plan by "outside directors" is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.

                  (k) "Corporate Transaction" means a Corporate Transaction as
defined in Section 9(b)(i) of the Plan.

                  (l) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 8(e) of the Plan.

                  (m) "Deferred Stock" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral period.

                  (n) "Director" means a member of the Board.

                  (o) "Disability" means a permanent and total disability
(within the meaning of Section 22(e) of the Code), as determined by a medical
doctor satisfactory to the Committee.

                  (p) "Dividend Equivalent" means a right, granted to a
Participant under Section 6(g) hereof, to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

                                       2

<PAGE>

                  (q) "Effective Date" means the effective date of the Plan,
which shall be June 1, 2001.

                  (r) "Eligible Person" means each Executive Officer of the
Company (as defined under the Exchange Act) and other officers, Directors, and
employees of the Company or of any Subsidiary, and independent contractors with
the Company or any Subsidiary. The foregoing notwithstanding, only employees of
the Company or any Subsidiary shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An employee on leave of absence may be
considered as still in the employ of the Company or a Subsidiary for purposes of
eligibility for participation in the Plan.

                  (s) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.

                  (t) "Executive Officer" means an executive officer of the
Company as defined under the Exchange Act.

                  (u) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or market on
which Stock is traded on the date as of which such value is being determined or,
if there is no sale on that date, then on the last previous day on which a sale
was reported.

                  (v) "Incentive Stock Option" or "ISO" means any Option
intended to be designated as an incentive stock option within the meaning of
Section 422 of the Code or any successor provision thereto.

                  (w) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.

                  (x) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.

                  (y) "Option" means a right granted to a Participant under
Section 6(b) hereof, to purchase Stock or other Awards at a specified price
during specified time periods.

                  (z) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.

                  (aa) "Outside Director" means a member of the Board who
qualifies as an "outside director" under Section 162(m) of the Code and as a
"Non-Employee Director" under Rule 16b-3 promulgated under the Exchange Act.

                  (bb) "Parent Corporation" means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company, if
each of the corporations in the 

                                       3

<PAGE>

chain (other than the Company) owns stock possessing 50% or more of the combined
voting power of all classes of stock in one of the other corporations in the
chain.

                  (cc) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.

                  (dd) "Performance Award" means a right, granted to an Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.

                  (ee) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.

                  (ff) "Publicly Held Corporation" shall mean a publicly held
corporation as that term is used under Section 162(m)(2) of the Code.

                  (gg) "Restricted Stock" means Stock granted to a Participant
under Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.

                  (hh) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and
Rule 16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

                  (ii) "Stock" means the Company's Common Stock, par value $.50
per share (the "Common Stock") and/or the Company's Class B Common Stock, par
value $.50 per share (the "Class B Common Stock"), and such other securities as
may be substituted (or resubstituted) for Stock pursuant to Section 10(c)
hereof.

                  (jj) "Stock Appreciation Rights" or "SAR" means a right
granted to a Participant under Section 6(c) hereof.

                  (kk) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities or interests
of such corporation or other entity entitled to vote generally in the election
of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.

         3. Administration.

                  (a) Authority of the Committee. The Plan shall be administered
by the Committee; provided, however, that except as otherwise expressly provided
in this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under
the Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules 

                                       4

<PAGE>

and regulations for the administration of the Plan, construe and interpret the
Plan and Award agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee or the Board may deem necessary or advisable for the
administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

                  (b) Manner of Exercise of Committee Authority. The Committee,
and not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding on
all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate
to officers or managers of the Company or any subsidiary, or committees thereof,
the authority, subject to such terms as the Committee or the Board shall
determine, (i) to perform administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange Act, to perform such
other functions as the Committee or the Board may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other functions
of the Committee or the Board as the Committee or the Board may determine to the
extent performance of such functions will not result in the loss of an exemption
under Rule 16b-3 otherwise available for transactions by such persons, in each
case to the extent permitted under applicable law and subject to the
requirements set forth in Section 8(d). The Committee or the Board may appoint
agents to assist it in administering the Plan.

                  (c) Limitation of Liability. The Committee and the Board, and
each member thereof, shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any executive officer,
other officer or employee of the Company or a Subsidiary, the Company's
independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any
officer or employee of the Company or a subsidiary acting at the direction or on
behalf of the Committee or the Board, shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action or determination.

         4. Stock Subject to Plan.

                  (a) Limitation on Overall Number of Shares Subject to Awards.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 3,000,000, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with

                                       5

<PAGE>

regard thereto. Any shares of Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury shares. Subject
to adjustment as provided in Section 10(c) hereof, in no event shall the
aggregate number of shares of Stock which may be issued pursuant to ISOs exceed
3,000,000 shares.

                  (b) Application of Limitations. The limitation contained in
Section 4(a) shall apply not only to Awards that are settleable by the delivery
of shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.

         5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 1,500,000 shares of Stock, subject to adjustment as
provided in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f),
6(g), 6(h), 8(b) and 8(c). In addition, the maximum amount that may be earned as
an Annual Incentive Award or other cash Award in any fiscal year by any one
Participant shall be $5,000,000, and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by any
one Participant shall be $12,500,000.

         6. Specific Terms of Awards.

                  (a) General. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee or the Board may impose
on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 10(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee or the Board
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award. The Committee or the Board shall
retain full power and discretion to accelerate, waive or modify, at any time,
any term or condition of an Award that is not mandatory under the Plan. Except
in cases in which the Committee or the Board is authorized to require other
forms of consideration under the Plan, or to the extent other forms of
consideration must be paid to satisfy the requirements of Delaware law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award.

                  (b) Options. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:

                           (i) Exercise Price. The exercise price per share of
                  Stock purchasable under an Option shall be determined by the
                  Committee or the Board, provided that such exercise price
                  shall not, in the case of Incentive Stock Options, be less
                  than 100% of the Fair Market Value of the Stock on the date of
                  grant of the Option and shall not, in any event, be less than
                  the par value of a share of Stock on the date of grant of such
                  Option. If an employee owns or is deemed to own (by reason of
                  the attribution rules applicable under Section 424(d) of the
                  Code) 

                                       6

<PAGE>

                  more than 10% of the combined voting power of all classes of
                  stock of the Company or any Parent Corporation or Subsidiary
                  and an Incentive Stock Option is granted to such employee, the
                  option price of such Incentive Stock Option (to the extent
                  required by the Code at the time of grant) shall be no less
                  than 110% of the Fair Market Value of the Stock on the date
                  such Incentive Stock Option is granted.

                           (ii) Time and Method of Exercise. The Committee or
                  the Board shall determine the time or times at which or the
                  circumstances under which an Option may be exercised in whole
                  or in part (including based on achievement of performance
                  goals and/or future service requirements), the time or times
                  at which Options shall cease to be or become exercisable
                  following termination of employment or upon other conditions,
                  the methods by which such exercise price may be paid or deemed
                  to be paid (including in the discretion of the Committee or
                  the Board a cashless exercise procedure), the form of such
                  payment, including, without limitation, cash, Stock, other
                  Awards or awards granted under other plans of the Company or
                  any subsidiary, or other property (including notes or other
                  contractual obligations of Participants to make payment on a
                  deferred basis), and the methods by or forms in which Stock
                  will be delivered or deemed to be delivered to Participants.

                           (iii) ISOs. The terms of any ISO granted under the
                  Plan shall comply in all respects with the provisions of
                  Section 422 of the Code. Anything in the Plan to the contrary
                  notwithstanding, no term of the Plan relating to ISOs
                  (including any SAR in tandem therewith) shall be interpreted,
                  amended or altered, nor shall any discretion or authority
                  granted under the Plan be exercised, so as to disqualify
                  either the Plan or any ISO under Section 422 of the Code,
                  unless the Participant has first requested the change that
                  will result in such disqualification. Thus, if and to the
                  extent required to comply with Section 422 of the Code,
                  Options granted as Incentive Stock Options shall be subject to
                  the following special terms and conditions:

                                    (A) the Option shall not be exercisable more
                  than ten years after the date such Incentive Stock Option is
                  granted; provided, however, that if a Participant owns or is
                  deemed to own (by reason of the attribution rules of Section
                  424(d) of the Code) more than 10% of the combined voting power
                  of all classes of stock of the Company or any Parent
                  Corporation and the Incentive Stock Option is granted to such
                  Participant, the term of the Incentive Stock Option shall be
                  (to the extent required by the Code at the time of the grant)
                  for no more than five years from the date of grant; and

                                    (B) The aggregate Fair Market Value
                  (determined as of the date the Incentive Stock Option is
                  granted) of the shares of stock with respect to which
                  Incentive Stock Options granted under the Plan and all other
                  option plans of the Company or its Parent Corporation during
                  any calendar year exercisable for the first time by the
                  Participant during any calendar year shall not (to the extent
                  required by the Code at the time of the grant) exceed
                  $100,000.

                                       7

<PAGE>

                           (iv) Repurchase Rights. The Committee and the Board
                  shall have the discretion to grant Options which are
                  exercisable for unvested shares of Common Stock. Should the
                  Optionee cease to be employed with or perform services to the
                  Company (or a Parent Corporation or Subsidiary) while holding
                  such unvested shares, the Company shall have the right to
                  repurchase, at the exercise price paid per share, any or all
                  of those unvested shares. The terms upon which such repurchase
                  right shall be exercisable (including the period and procedure
                  for exercise and the appropriate vesting schedule for the
                  purchased shares) shall be established by the Committee or the
                  Board and set forth in the document evidencing such repurchase
                  right.

                           (v) Formula Grants to Outside Directors. The
                  Committee and the Board each is authorized to grant Options to
                  Participants who are Outside Directors on the following terms
                  and conditions:

                                    (1) Each Outside Director who, prior to
                                    1998, was not granted an option under any
                                    prior plan to purchase shares of Common
                                    Stock shall receive an Option to purchase
                                    shares of Common Stock upon his or her
                                    initial election to the Board as may be
                                    determined by the Compensation Committee or
                                    Nominating Committee. All such Options shall
                                    become fully exercisable at 20% per year
                                    commencing on the first anniversary of the
                                    date of grant. Commencing on the sixth
                                    anniversary of the date of his or her
                                    initial election to the Board, and
                                    thereafter on each anniversary that such
                                    Outside Director is a member of the Board,
                                    each such Outside Director shall receive an
                                    Option to purchase 3,375 shares of Common
                                    Stock, which option shall become fully
                                    exercisable on the first anniversary of the
                                    date of grant.

                                    (2) Each Outside Director who, prior to
                                    1998, was granted an option to purchase
                                    under any prior plan shares of Common
                                    Stock shall receive, commencing on the sixth
                                    anniversary of the date of the last grant of
                                    an Option to such Outside Director and
                                    thereafter on each anniversary that such
                                    Outside Director is a member of the Board,
                                    an Option to purchase 3,375 shares of Common
                                    Stock which Option shall become fully
                                    exercisable on the first anniversary of the
                                    date of grant.

                                    (3) The per share exercise price of all
                                    Options granted to Outside Directors
                                    pursuant to paragraphs (1) and (2) of this
                                    Section 6(b)(v) will be equal to the Fair
                                    Market Value of the Common Stock underlying
                                    such Option on the date such Option is
                                    granted. The unexercised portion of any
                                    Option granted pursuant to paragraphs (1) or
                                    (2) of this Section 6(b)(v) shall become
                                    null and void three months after the date on
                                    which such Outside Director ceases to be a
                                    Director for any reason.

                                       8

<PAGE>

                                    (4) The Board may also grant Options to
                                    Outside Directors pursuant to the other
                                    provisions of this Section 6(b), subject to
                                    the provisions of the Plan generally
                                    applicable to Options granted pursuant to
                                    Section 6(b).

                  (c) Stock Appreciation Rights. The Committee and the Board
each is authorized to grant SAR's to Participants on the following terms and
conditions:

                           (i) Right to Payment. A SAR shall confer on the
                  Participant to whom it is granted a right to receive, upon
                  exercise thereof, the excess of (A) the Fair Market Value of
                  one share of stock on the date of exercise (or, in the case of
                  a "Limited SAR" that may be exercised only in the event of a
                  Change in Control, the Fair Market Value determined by
                  reference to the Change in Control Price, as defined under
                  Section 9(c) hereof), over (B) the grant price of the SAR as
                  determined by the Committee or the Board. The grant price of
                  an SAR shall not be less than the Fair Market Value of a share
                  of Stock on the date of grant except as provided under Section
                  7(a) hereof.

                           (ii) Other Terms. The Committee or the Board shall
                  determine at the date of grant or thereafter, the time or
                  times at which and the circumstances under which a SAR may be
                  exercised in whole or in part (including based on achievement
                  of performance goals and/or future service requirements), the
                  time or times at which SARs shall cease to be or become
                  exercisable following termination of employment or upon other
                  conditions, the method of exercise, method of settlement, form
                  of consideration payable in settlement, method by or forms in
                  which Stock will be delivered or deemed to be delivered to
                  Participants, whether or not a SAR shall be in tandem or in
                  combination with any other Award, and any other terms and
                  conditions of any SAR. Limited SARs that may only be exercised
                  in connection with a Change in Control or other event as
                  specified by the Committee or the Board, may be granted on
                  such terms, not inconsistent with this Section 6(c), as the
                  Committee or the Board may determine. SARs and Limited SARs
                  may be either freestanding or in tandem with other Awards.

                  (d) Restricted Stock. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

                           (i) Grant and Restrictions. Restricted Stock shall be
                  subject to such restrictions on transferability, risk of
                  forfeiture and other restrictions, if any, as the Committee or
                  the Board may impose, which restrictions may lapse separately
                  or in combination at such times, under such circumstances
                  (including based on achievement of performance goals and/or
                  future service requirements), in such installments or
                  otherwise, as the Committee or the Board may determine at the
                  date of grant or thereafter. Except to the extent restricted
                  under the terms of the Plan and any Award agreement relating
                  to the Restricted Stock, a Participant granted Restricted
                  Stock shall have all of the rights of a stockholder, including
                  the right to vote the Restricted Stock and the right to
                  receive dividends thereon (subject to any mandatory
                  reinvestment or other requirement imposed by the 

                                       9

<PAGE>

                  Committee or the Board). During the restricted period
                  applicable to the Restricted Stock, subject to Section 10(b)
                  below, the Restricted Stock may not be sold, transferred,
                  pledged, hypothecated, margined or otherwise encumbered by the
                  Participant.

                           (ii) Forfeiture. Except as otherwise determined by
                  the Committee or the Board at the time of the Award, upon
                  termination of a Participant's employment during the
                  applicable restriction period, the Participant's Restricted
                  Stock that is at that time subject to restrictions shall be
                  forfeited and reacquired by the Company; provided that the
                  Committee or the Board may provide, by rule or regulation or
                  in any Award agreement, or may determine in any individual
                  case, that restrictions or forfeiture conditions relating to
                  Restricted Stock shall be waived in whole or in part in the
                  event of terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Restricted Stock.

                           (iii) Certificates for Stock. Restricted Stock
                  granted under the Plan may be evidenced in such manner as the
                  Committee or the Board shall determine. If certificates
                  representing Restricted Stock are registered in the name of
                  the Participant, the Committee or the Board may require that
                  such certificates bear an appropriate legend referring to the
                  terms, conditions and restrictions applicable to such
                  Restricted Stock, that the Company retain physical possession
                  of the certificates, and that the Participant deliver a stock
                  power to the Company, endorsed in blank, relating to the
                  Restricted Stock.

                           (iv) Dividends and Splits. As a condition to the
                  grant of an Award of Restricted Stock, the Committee or the
                  Board may require that any cash dividends paid on a share of
                  Restricted Stock be automatically reinvested in additional
                  shares of Restricted Stock or applied to the purchase of
                  additional Awards under the Plan. Unless otherwise determined
                  by the Committee or the Board, Stock distributed in connection
                  with a Stock split or Stock dividend, and other property
                  distributed as a dividend, shall be subject to restrictions
                  and a risk of forfeiture to the same extent as the Restricted
                  Stock with respect to which such Stock or other property has
                  been distributed.

                  (e) Deferred Stock. The Committee and the Board each is
authorized to grant Deferred Stock to Participants, which are rights to receive
Stock, cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:

                           (i) Award and Restrictions. Satisfaction of an Award
                  of Deferred Stock shall occur upon expiration of the deferral
                  period specified for such Deferred Stock by the Committee or
                  the Board (or, if permitted by the Committee or the Board, as
                  elected by the Participant). In addition, Deferred Stock shall
                  be subject to such restrictions (which may include a risk of
                  forfeiture) as the Committee or the Board may impose, if any,
                  which restrictions may lapse at the expiration of the deferral
                  period or at earlier specified times (including based on
                  achievement of performance goals and/or future service
                  requirements), separately 

                                       10

<PAGE>

                  or in combination, in installments or otherwise, as the
                  Committee or the Board may determine. Deferred Stock may be
                  satisfied by delivery of Stock, cash equal to the Fair Market
                  Value of the specified number of shares of Stock covered by
                  the Deferred Stock, or a combination thereof, as determined by
                  the Committee or the Board at the date of grant or thereafter.
                  Prior to satisfaction of an Award of Deferred Stock, an Award
                  of Deferred Stock carries no voting or dividend or other
                  rights associated with share ownership.

                           (ii) Forfeiture. Except as otherwise determined by
                  the Committee or the Board, upon termination of a
                  Participant's employment during the applicable deferral period
                  thereof to which forfeiture conditions apply (as provided in
                  the Award agreement evidencing the Deferred Stock), the
                  Participant's Deferred Stock that is at that time subject to
                  deferral (other than a deferral at the election of the
                  Participant) shall be forfeited; provided that the Committee
                  or the Board may provide, by rule or regulation or in any
                  Award agreement, or may determine in any individual case, that
                  restrictions or forfeiture conditions relating to Deferred
                  Stock shall be waived in whole or in part in the event of
                  terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Deferred Stock.

                           (iii) Dividend Equivalents. Unless otherwise
                  determined by the Committee or the Board at date of grant,
                  Dividend Equivalents on the specified number of shares of
                  Stock covered by an Award of Deferred Stock shall be either
                  (A) paid with respect to such Deferred Stock at the dividend
                  payment date in cash or in shares of unrestricted Stock having
                  a Fair Market Value equal to the amount of such dividends, or
                  (B) deferred with respect to such Deferred Stock and the
                  amount or value thereof automatically deemed reinvested in
                  additional Deferred Stock, other Awards or other investment
                  vehicles, as the Committee or the Board shall determine or
                  permit the Participant to elect.

                  (f) Bonus Stock and Awards in Lieu of Obligations. The
Committee and the Board each is authorized to grant Stock as a bonus, or to
grant Stock or other Awards in lieu of Company obligations to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of Stock or
other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Stock or Awards granted hereunder shall be subject to such other terms as shall
be determined by the Committee or the Board.

                  (g) Dividend Equivalents. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.

                                       11

<PAGE>

                  (h) Other Stock-Based Awards. The Committee and the Board each
is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration (including without
limitation loans from the Company or a Parent Corporation or a Subsidiary), paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards or other property, as the Committee or the
Board shall determine. The Committee and the Board shall have the discretion to
grant such other Awards which are exercisable for unvested shares of Common
Stock. Should the Optionee cease to be employed with or perform services to the
Company (or a Parent Corporation or Subsidiary) while holding such unvested
shares, the Company shall have the right to repurchase, at the exercise price
paid per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Committee or the Board and set forth in the document
evidencing such repurchase right. Cash awards, as an element of or supplement to
any other Award under the Plan, may also be granted pursuant to this Section
6(h).

         7. Certain Provisions Applicable to Awards.

                  (a) Stand-Alone, Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee or the
Board, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any subsidiary, or any business entity to be acquired by
the Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee or the
Board shall require the surrender of such other Award or award in consideration
for the grant of the new Award. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable under other plans
of the Company or any subsidiary, in which the value of Stock subject to the
Award is equivalent in value to the cash compensation (for example, Deferred
Stock or Restricted Stock), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an exercise
price "discounted" by the amount of the cash compensation surrendered).

                  (b) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee or the Board; provided that in no
event shall the term of any 

                                       12

<PAGE>

Option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under Section 422 of the Code).

                  (c) Form and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Award agreement, payments to
be made by the Company or a subsidiary upon the exercise of an Option or other
Award or settlement of an Award may be made in such forms as the Committee or
the Board shall determine, including, without limitation, cash, other Awards or
other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or the Board (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

                  (d) Exemptions from Section 16(b) Liability. If and to the
extent that the Company is or becomes a Publicly Held Corporation, it is the
intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure
that neither the grant of any Awards to nor other transaction by a Participant
who is subject to Section 16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions acknowledged in writing to be
non-exempt by such Participant). Accordingly, if any provision of this Plan or
any Award agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.

         8. Performance and Annual Incentive Awards.

                  (a) Performance Conditions. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the
Committee or the Board. The Committee or the Board may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections 8(b) and 8(c) hereof in the case of a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code Section 162(m), any
power or authority relating to a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m), shall be exercised by the
Committee and not the Board.

                                       13

<PAGE>

                  (b) Performance Awards Granted to Designated Covered
Employees. If and to the extent that the Committee determines that a Performance
Award to be granted to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Performance Award shall be contingent upon achievement of
preestablished performance goals and other terms set forth in this Section 8(b).

                           (i) Performance Goals Generally. The performance
                  goals for such Performance Awards shall consist of one or more
                  business criteria and a targeted level or levels of
                  performance with respect to each of such criteria, as
                  specified by the Committee consistent with this Section 8(b).
                  Performance goals shall be objective and shall otherwise meet
                  the requirements of Code Section 162(m) and regulations
                  thereunder including the requirement that the level or levels
                  of performance targeted by the Committee result in the
                  achievement of performance goals being "substantially
                  uncertain." The Committee may determine that such Performance
                  Awards shall be granted, exercised and/or settled upon
                  achievement of any one performance goal or that two or more of
                  the performance goals must be achieved as a condition to
                  grant, exercise and/or settlement of such Performance Awards.
                  Performance goals may differ for Performance Awards granted to
                  any one Participant or to different Participants.

                           (ii) Business Criteria. One or more of the following
                  business criteria for the Company, on a consolidated basis,
                  and/or specified subsidiaries or business units of the Company
                  (except with respect to the total stockholder return and
                  earnings per share criteria), shall be used exclusively by the
                  Committee in establishing performance goals for such
                  Performance Awards: (1) total stockholder return; (2) such
                  total stockholder return as compared to total return (on a
                  comparable basis) of a publicly available index such as, but
                  not limited to, the Standard & Poor's 500 Stock Index or the
                  S&P Small-Cap 600 Index; (3) increases in the Fair Market
                  Value of any Stock; (4) net income; (5) pretax earnings; (6)
                  earnings before interest expense, taxes, depreciation and
                  amortization; (7) pretax operating earnings after interest
                  expense and before bonuses, service fees, and extraordinary or
                  special items; (8) operating margin; (9) earnings per share;
                  (10) return on equity; (11) return on capital; (12) return on
                  investment; (13) operating earnings; (14) working capital or
                  inventory; (15) ratio of debt to stockholders' equity; and
                  (16) increases in the price of shares of Stock. One or more of
                  the foregoing business criteria shall also be exclusively used
                  in establishing performance goals for Annual Incentive Awards
                  granted to a Covered Employee under Section 8(c) hereof that
                  are intended to qualify as "performanced-based compensation
                  under Code Section 162(m).

                           (iii) Performance Period; Timing For Establishing
                  Performance Goals. Achievement of performance goals in respect
                  of such Performance Awards shall be measured over a
                  performance period of up to ten years, as specified by the
                  Committee. Performance goals shall be established not later
                  than 90 days after the beginning of any performance period
                  applicable to such Performance Awards, 

                                       14

<PAGE>

                  or at such other date as may be required or permitted for
                  "performance-based compensation" under Code Section 162(m).

                           (iv) Performance Award Pool. The Committee may
                  establish a Performance Award pool, which shall be an unfunded
                  pool, for purposes of measuring Company performance in
                  connection with Performance Awards. The amount of such
                  Performance Award pool shall be based upon the achievement of
                  a performance goal or goals based on one or more of the
                  business criteria set forth in Section 8(b)(ii) hereof during
                  the given performance period, as specified by the Committee in
                  accordance with Section 8(b)(iii) hereof. The Committee may
                  specify the amount of the Performance Award pool as a
                  percentage of any of such business criteria, a percentage
                  thereof in excess of a threshold amount, or as another amount
                  which need not bear a strictly mathematical relationship to
                  such business criteria.

                           (v) Settlement of Performance Awards; Other Terms.
                  Settlement of such Performance Awards shall be in cash, Stock,
                  other Awards or other property, in the discretion of the
                  Committee. The Committee may, in its discretion, reduce the
                  amount of a settlement otherwise to be made in connection with
                  such Performance Awards. The Committee shall specify the
                  circumstances in which such Performance Awards shall be paid
                  or forfeited in the event of termination of employment by the
                  Participant prior to the end of a performance period or
                  settlement of Performance Awards.

                  (c) Annual Incentive Awards Granted to Designated Covered
Employees. The Committee may, within its discretion, grant one or more Annual
Incentive Awards to any Eligible Person, subject to the terms and conditions set
forth in this Section 8(c).

                           (i) Annual Incentive Award Pool. The Committee may
                  establish an Annual Incentive Award pool, which shall be an
                  unfunded pool, for purposes of measuring Company performance
                  in connection with Annual Incentive Awards. In the case of
                  Annual Incentive Awards intended to qualify as
                  "performance-based compensation" for purposes of Code Section
                  162(m), the amount of such Annual Incentive Award pool shall
                  be based upon the achievement of a performance goal or goals
                  based on one or more of the business criteria set forth in
                  Section 8(b)(ii) hereof during the given performance period,
                  as specified by the Committee in accordance with Section
                  8(b)(iii) hereof. The Committee may specify the amount of the
                  Annual Incentive Award pool as a percentage of any such
                  business criteria, a percentage thereof in excess of a
                  threshold amount, or as another amount which need not bear a
                  strictly mathematical relationship to such business criteria.

                           (ii) Potential Annual Incentive Awards. Not later
                  than the end of the 90th day of each fiscal year, or at such
                  other date as may be required or permitted in the case of
                  Awards intended to be "performance-based compensation" under
                  Code Section 162(m), the Committee shall determine the
                  Eligible Persons who will potentially receive Annual Incentive
                  Awards, and the amounts potentially 

                                       15

<PAGE>

                  payable thereunder, for that fiscal year, either out of an
                  Annual Incentive Award pool established by such date under
                  Section 8(c)(i) hereof or as individual Annual Incentive
                  Awards. In the case of individual Annual Incentive Awards
                  intended to qualify under Code Section 162(m), the amount
                  potentially payable shall be based upon the achievement of a
                  performance goal or goals based on one or more of the business
                  criteria set forth in Section 8(b)(ii) hereof in the given
                  performance year, as specified by the Committee; in other
                  cases, such amount shall be based on such criteria as shall be
                  established by the Committee. In all cases, the maximum Annual
                  Incentive Award of any Participant shall be subject to the
                  limitation set forth in Section 5 hereof.

                           (iii) Payout of Annual Incentive Awards. After the
                  end of each fiscal year, the Committee shall determine the
                  amount, if any, of (A) the Annual Incentive Award pool, and
                  the maximum amount of potential Annual Incentive Award payable
                  to each Participant in the Annual Incentive Award pool, or (B)
                  the amount of potential Annual Incentive Award otherwise
                  payable to each Participant. The Committee may, in its
                  discretion, determine that the amount payable to any
                  Participant as an Annual Incentive Award shall be reduced from
                  the amount of his or her potential Annual Incentive Award,
                  including a determination to make no Award whatsoever. The
                  Committee shall specify the circumstances in which an Annual
                  Incentive Award shall be paid or forfeited in the event of
                  termination of employment by the Participant prior to the end
                  of a fiscal year or settlement of such Annual Incentive Award.

                  (d) Written Determinations. All determinations by the
Committee as to the establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under Section
8(b), and the amount of any Annual Incentive Award pool or potential individual
Annual Incentive Awards and the amount of final Annual Incentive Awards under
Section 8(c), shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards if
and to the extent required to comply with Code Section 162(m).

                  (e) Status of Section 8(b) and Section 8(c) Awards Under Code
Section 162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee 

                                       16

<PAGE>

with respect to that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not comply
or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

         9. Change in Control.

                  (a) Effect of "Change in Control." If and to the extent
provided in the Award, in the event of a "Change in Control," as defined in
Section 9(b):

                           (i) The Committee may, within its discretion,
                  accelerate the vesting and exercisability of any Award
                  carrying a right to exercise that was not previously vested
                  and exercisable as of the time of the Change in Control,
                  subject to applicable restrictions set forth in Section 10(a)
                  hereof;

                            (ii) The Committee may, within its discretion,
                  accelerate the exercisability of any limited SARs (and other
                  SARs if so provided by their terms) and provide for the
                  settlement of such SARs for amounts, in cash, determined by
                  reference to the Change in Control Price;

                           (iii) The Committee may, within its discretion, lapse
                  the restrictions, deferral of settlement, and forfeiture
                  conditions applicable to any other Award granted under the
                  Plan and such Awards may be deemed fully vested as of the time
                  of the Change in Control, except to the extent of any waiver
                  by the Participant and subject to applicable restrictions set
                  forth in Section 10(a) hereof; and

                           (iv) With respect to any such outstanding Award
                  subject to achievement of performance goals and conditions
                  under the Plan, the Committee may, within its discretion, deem
                  such performance goals and other conditions as having been met
                  as of the date of the Change in Control.

                  (b) Definition of "Change in Control. A "Change in Control"
shall be deemed to have occurred upon:

                           (i) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Company or the sale of
all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale (any such event being referred to as a
"Corporate Transaction") is subsequently abandoned);

                           (ii) Individuals who, as of the date on which the
Award is granted, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a 

                                       17

<PAGE>

majority of the Board, provided that any person becoming a director subsequent
to the date on which the Award was granted whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or

                           (iii) the acquisition (other than from the Company)
by any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of more than 50% of either the then
outstanding shares of the Company's Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in the
election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by (1) the
Company or its Subsidiaries, (2) any person, entity or "group" that as of the
date on which the Award is granted owns beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling
Interest (3) any employee benefit plan of the Company or its Subsidiaries or (4)
directly or indirectly by or for the benefit of Albert H. Nahmad and/or the 
members of his family.

                  (c) Definition of "Change in Control Price." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.

         10. General Provisions.

                  (a) Compliance With Legal and Other Requirements. The Company
may, to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.

                                       18

<PAGE>

                  (b) Limits on Transferability; Beneficiaries. No Award or
other right or interest of a Participant under the Plan, including any Award or
right which constitutes a derivative security as generally defined in Rule
16a-1(c) under the Exchange Act, shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party (other than the Company or a Subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such
Awards or rights that may be exercisable shall be exercised during the lifetime
of the Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs and SARs in
tandem therewith) may be transferred to one or more Beneficiaries or other
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers and exercises are permitted by the Committee or the Board
pursuant to the express terms of an Award agreement (subject to any terms and
conditions which the Committee or the Board may impose thereon, and further
subject to any prohibitions or restrictions on such transfers pursuant to Rule
16b-3). A Beneficiary, transferee, or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award agreement applicable to such Participant,
except as otherwise determined by the Committee or the Board, and to any
additional terms and conditions deemed necessary or appropriate by the Committee
or the Board.

                  (c) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that a substitution or adjustment is determined by the Committee or the
Board to be appropriate, then the Committee or the Board shall, in such manner
as it may deem equitable, substitute or adjust any or all of (i) the number and
kind of shares of Stock which may be delivered in connection with Awards granted
thereafter, (ii) the number and kind of shares of Stock by which annual
per-person Award limitations are measured under Section 5 hereof, (iii) the
number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 

                                       19

<PAGE>

8(c) hereof to Participants designated by the Committee as Covered Employees and
intended to qualify as "performance-based compensation" under Code Section
162(m) and the regulations thereunder to otherwise fail to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder.

                  (d) Taxes. The Company and any Subsidiary is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

                  (e) Changes to the Plan and Awards. The Board may amend,
alter, suspend, discontinue or terminate the Plan, or the Committee's authority
to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.

                  (f) Limitation on Rights Conferred Under Plan. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ of the Company or a Subsidiary; (ii) interfering in
any way with the right of the Company or a Subsidiary to terminate any Eligible
Person's or Participant's employment at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to be
treated uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

                  (g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are 

                                       20

<PAGE>

greater than those of a general creditor of the Company; provided that the
Committee may authorize the creation of trusts and deposit therein cash, Stock,
other Awards or other property, or make other arrangements to meet the Company's
obligations under the Plan. Such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant. The trustee of such
trusts may be authorized to dispose of trust assets and reinvest the proceeds in
alternative investments, subject to such terms and conditions as the Committee
or the Board may specify and in accordance with applicable law.

                  (h) Nonexclusivity of the Plan. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).

                  (i) Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

                  (j) Governing Law. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award agreement
shall be determined in accordance with the laws of the State of Florida without
giving effect to principles of conflicts of laws, and applicable federal law.

                  (k) Plan Effective Date and Stockholder Approval; Termination
of Plan. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable NASDAQ
requirements, and other laws, regulations, and obligations of the Company
applicable to the Plan. Awards may be granted subject to stockholder approval,
but may not be exercised or otherwise settled in the event stockholder approval
is not obtained. The Plan shall terminate at such time as no shares of Common
Stock remain available for issuance under the Plan and the Company has no
further rights or obligations with respect to outstanding Awards under the Plan.

                                       21

<PAGE>

                                  WATSCO, INC.

                       2001 ANNUAL MEETING OF SHAREHOLDERS

                                  REGENCY HOTEL
                                 540 PARK AVENUE
                            NEW YORK, NEW YORK 10021

                                  JUNE 4, 2001
                                    8:15 A.M.

                            - FOLD AND DETACH HERE -

                         PROXY FOR CLASS B COMMON STOCK
          SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WATSCO, INC.

The undersigned hereby appoints ALBERT H. NAHMAD, BARRY S. LOGAN and each of
them, the true and lawful attorneys, agents for and in the name of the
undersigned, with full power of substitution for and in the name of the
undersigned, to vote all shares the undersigned is entitled to vote at the 2001
Annual Meeting of Shareholders of WATSCO, INC. to be held on Monday, June 4,
2001, at 8:15 A.M., Eastern Daylight Time, in the Regency Hotel, 540 Park
Avenue, New York, New York, 10021, and at any and all adjournments thereof, on
the following matters:

         (1)      FOR [ ] WITHHOLD VOTE [ ] the election of David B. Fleeman and
                  Bob L. Moss as Class B Directors to serve until the Annual
                  Meeting of Shareholders in 2004 or until their successors are
                  duly elected and qualified, except vote withheld from the
                  following nominee __________________________ (if any);

         (2)      FOR [ ] AGAINST [ ] WITHHOLD VOTE [ ] the proposal to amend
                  the Amended and Restated Articles of Incorporation;

         (3)      FOR [ ] AGAINST [ ] WITHHOLD VOTE [ ] the proposal to approve
                  the Company's 2001 Incentive Compensation Plan; and

         (4)      In their discretion, on any other matters which may properly
                  come before the Annual Meeting or any adjournment or
                  postponements thereof.

                               (SEE REVERSE SIDE)


<PAGE>

                            - FOLD AND DETACH HERE -

                           (CONTINUED FROM OTHER SIDE)

THIS 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" ITEMS 1, 2 AND 3.

The undersigned hereby acknowledges receipt of (i) the Company's 2000 Annual
Report to Shareholders, (ii) the Proxy Statement and (iii) the Notice of Annual
Meeting dated April 30, 2001.


                                    Date:                   , 2001
                                         -------------------

                                    --------------------------------------------

                                    --------------------------------------------

                                    Please sign exactly as your name appears
                                    hereon. If stock is registered in more than
                                    one name, each holder should sign. When
                                    signing as an attorney, administrator,
                                    executor, guardian or trustee, please add
                                    your title as such. If executed by a
                                    corporation or partnership, the proxy should
                                    be signed in full corporate or partnership
                                    name by a duly authorized officer or partner
                                    as applicable.


<PAGE>

                                  WATSCO, INC.

                       2001 ANNUAL MEETING OF SHAREHOLDERS

                                  REGENCY HOTEL
                                 540 PARK AVENUE
                            NEW YORK, NEW YORK 10021

                                  JUNE 4, 2001
                                    8:15 A.M.

                            - FOLD AND DETACH HERE -

                        PROXY FOR COMMON STOCK SOLICITED
               ON BEHALF OF THE BOARD OF DIRECTORS OF WATSCO, INC.

The undersigned hereby appoints ALBERT H. NAHMAD, BARRY S. LOGAN and each of
them, the true and lawful attorneys, agents for and in the name of the
undersigned, with full power of substitution for and in the name of the
undersigned, to vote all shares the undersigned is entitled to vote at the 2001
Annual Meeting of Shareholders of WATSCO, INC. to be held on Monday, June 4,
2001, at 8:15 A.M., Eastern Daylight Time, in the Regency Hotel, 540 Park
Avenue, New York, New York, 10021,, and at any and all adjournments thereof, on
the following matters:

         (1)      FOR [ ] WITHHOLD VOTE [ ] the election of Charles Walker as a
                  Common Stock Director and David B. Fleeman and Bob L. Moss as
                  Class B Directors, to serve until the Annual Meeting of
                  Shareholders in 2004 or until his successor is duly elected
                  and qualified, except vote withheld from the following nominee
                  ________________________ (if any);

         (2)      FOR [ ] AGAINST [ ] WITHHOLD VOTE [ ] the proposal to amend
                  the Amended and Restated Articles of Incorporation;

         (3)      FOR [ ] AGAINST [ ] WITHHOLD VOTE [ ] the proposal to approve
                  the Company's 2001 Incentive Compensation Plan; and

         (4)      In their discretion, on any other matters which may properly
                  come before the Annual Meeting or any adjournment or
                  postponements thereof.

                               (SEE REVERSE SIDE)


<PAGE>

                            - FOLD AND DETACH HERE -

                           (CONTINUED FROM OTHER SIDE)

THIS 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" ITEMS 1, 2 AND 3.

The undersigned hereby acknowledges receipt of (i) the Company's 2000 Annual
Report to Shareholders, (ii) the Proxy Statement and (iii) the Notice of Annual
Meeting dated April 30, 2001.


                                    Date:                   , 2001
                                         -------------------

                                    --------------------------------------------

                                    --------------------------------------------

                                    Please sign exactly as your name appears
                                    hereon. If stock is registered in more than
                                    one name, each holder should sign. When
                                    signing as an attorney, administrator,
                                    executor, guardian or trustee, please add
                                    your title as such. If executed by a
                                    corporation or partnership, the proxy should
                                    be signed in full corporate or partnership
                                    name by a duly authorized officer or partner
                                    as applicable.