<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ADDINGTON RESOURCES, INC.
-------------------------
(NAME OF ISSUER)
COMMON STOCK, $0.01 PAR VALUE
------------------------------
(TITLE OF CLASS OF SECURITIES)
006516108
--------------
(CUSIP NUMBER)
RICHARD L. HANDLEY
REPUBLIC INDUSTRIES, INC.
200 EAST LAS OLAS BLVD., SUITE 1400
FORT LAUDERDALE, FL 33301
(954) 627-6000
----------------------------
(NAME, ADDRESS AND TELEPHONE
NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS)
JUNE 25, 1996
-----------------------------
(DATE OF EVENT WHICH REQUIRES
FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with this statement. [x] (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
<PAGE> 2
SCHEDULE 13D
<TABLE>
<S> <C> <C>
CUSIP NO. 006516108 PAGE 2 OF _____ PAGES
-------------------------
NAME OF REPORTING PERSONS
1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
REPUBLIC INDUSTRIES, INC.; I.R.S. IDENTIFICATION NO. 73-1105145
- --------------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
2 (b)[ ]
- --------------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS
4
OO (SEE ITEM 3)
- --------------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
5
- --------------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- --------------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 6,867,615
SHARES ------------------------------------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
OWNED BY 8
EACH 0
REPORTING ------------------------------------------------------------------------------------------
PERSON SOLE DISPOSITIVE POWER
WITH 9
0
------------------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- --------------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
6,867,615
- --------------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- --------------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
45.3%
- --------------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
This statement relates to common stock, par value $1.00 per share
(the "Issuer Common Stock"), of Addington Resources, Inc., a
Delaware corporation (the "Issuer"). The principal executive offices
of the Issuer are located at 771 Corporate Drive, Suite 1000,
Lexington, Kentucky 40503.
ITEM 2. IDENTITY AND BACKGROUND
Republic Industries, Inc., a corporation organized under the laws
of the State of Delaware ("Republic"), is a diversified service
company primarily engaged in (i) integrated solid waste collection,
disposal and recycling business, (ii) electronic security services
businesses and (iii) used automobile sales business. Republic's
principal office is located at 200 East Las Olas Blvd., Suite 1400,
Ft. Lauderdale, Florida 33301.
The following table sets forth the name and position of each of
the officers (collectively, the "Officers") of Republic:
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
H. Wayne Huizenga Chief Executive Officer
Harrris W. Hudson President
Donald E. Koogler Executive Vice President
J. Ronald Castell Senior Vice President
Robert A. Guerin Senior Vice President
Richard L. Handley Senior Vice President and
General Counsel
Thomas W. Hawkins Senior Vice President
Robert J. Henninger Senior Vice President
</TABLE>
The business address of each of the Officers is 200 East Las Olas
Blvd., Suite 1400, Ft. Lauderdale, Florida 33301.
<PAGE> 4
The following table sets forth the name and address of each of the
directors (collectively, the "Directors") of Republic:
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
H. Wayne Huizenga 200 East Las Olas Blvd.
(Chairman of the Board) Suite 1400
Ft. Lauderdale, Florida 33301
Michael G. DeGroote (1) Victoria Hall
(Vice Chairman of the Board) 11 Victoria Street
P.O. Box HM 1065
Hamilton, HMEX Bermuda
Harris W. Hudson 200 East Las Olas Blvd.
Suite 1400
Ft. Lauderdale, Florida 33301
J.P. Bryan 401 9th Avenue, S.W.
Calgary, Alberta, Canada T2P2H7
Rick Burdick (3) 1900 Pennzoil Place - South Tower
711 Louisiana Street
Houston, Texas 77002
George P. Johnson, Jr. (4) 500 East Broward Blvd.
Suite 950
Fort Lauderdale, Florida 33394
John J. Melk (5) 676 North Michigan Ave.
Suite 4000
Chicago, Illinois 60611
</TABLE>
___________________
(1) Mr. DeGroote serves as Chairman, President and Chief
Executive Officer of Republic Environmental Systems, Inc.,
a hazardous waste services company.
(2) Mr. Bryan serves as President and Chief Executive Officer
of Gulf Canada Resources Ltd., which is engaged in oil and
gas exploration and production.
(3) Mr. Burdick is a partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P.
(4) Mr. Johnson serves as President and Chief Executive
Officer of Extended Stay America, Inc., an economy
extended-stay lodging chain.
(5) Mr. Melk serves as Chairman and Chief Executive Officer of
H2O Plus Inc., a bath and skin care product manufacturer
and rental distributor.
During the past five years, Republic and its Officers and
Directors (i) have not been named as defendants to any criminal
proceeding, and (ii) have not been parties to any civil proceeding
of judicial or administrative body of competent jurisdiction which
resulted in Republic and/or its Officers and Directors being subject
to any judgment, decree or final order enjoining future violation
of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such
laws.
<PAGE> 5
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to that certain Merger Agreement, dated as of June 25,
1996 (the "Merger Agreement"), by and among Republic, RI/AR Merger
Corp. and the Issuer, each share of Issuer Common Stock will be
converted into right to receive 9/10 of one share of common stock,
par value $.01 (the"Republic Common Stock"), of Republic. See Item
4.
ITEM 4. PURPOSE OF TRANSACTION
As part of its overall strategy to acquire all of the outstanding
shares of Issuer Common Stock, Republic obtained beneficial
ownership of 6,867,615 shares (the "Shares") of Issuer Common Stock
pursuant to a Voting Agreement, dated as of June 25, 1996 (the
"Voting Agreement"), by and among HPB Associates, L.P., Harold
Blumenstein, James Grosfeld, Larry Addington, Robert Addington and
Bruce Addington (collectively, the "Stockholders") and Republic.
Under the terms of the Voting Agreement, the Stockholders have
granted a proxy to Republic to vote the Shares (i) in favor of a
transaction in which the Issuer will become a wholly-owned
subsidiary of Republic (the "Merger"), the Merger Agreement and the
transactions contemplated by the Merger Agreement, and (ii) against
any other proposal for any merger, sale of substantial assets, sale
of shares of Issuer Common Stock or other securities,
recapitalization, or other business combination transactions between
the Issuer or any of the Issuer's subsidiaries and any person or
entity (other than the Merger) or any corporate action or agreement
that would result in breach of any covenant, representation or
warranty or any other obligation or agreement of the Issuer under
the Merger Agreement or which could result in any of the conditions
to the Issuer's obligations under the Merger Agreement not being
fulfilled.
Upon consummation of the Merger, (i) the Issuer will become a
wholly-owned subsidiary of Republic; (ii) a new board of directors
of the Issuer will be appointed by Republic; (iii) the Issuer Common
Stock will be delisted from The Nasdaq National Market; and (iv) the
Issuer will file a Form 15 Certification of Notice of Termination of
Registration under Section 12(g) of the Securities and Exchange Act
of 1934, as amended, with the Securities and Exchange Commission.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Republic beneficially owns 6,867,615 shares of Issuer Common
Stock, constituting approximately 45.3% of all the outstanding
shares of Issuer Common Stock as of May 1, 1996. The Officers
and Directors do not benefically own any shares of Issuer
Common Stock.
(b) Republic has sole power to direct the vote of the 6,867,615
shares of Issuer Common Stock in connection with certain
matters pertaining to the Merger. Republic and its Officers
and Directors do not have shared power to vote or direct the
vote, or sole or shared power to dispose or to direct the
disposition, of any other shares of Issuer Common Stock.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Republic and the Stockholders are parties to that certain Voting
Agreement pursuant to which the Stockholders have granted a proxy to
Republic to vote the Shares (i) in favor of the Merger, the Merger
Agreement and the transactions contemplated by the Merger Agreement,
and (ii) against any other proposal for merger, sale of substantial
assets, sale of shares of Issuer Common Stock or other securities,
recapitalization, or other business combination transactions between
the Issuer or any of the Issuer's subsidiaries and any person or
entity (other than the Merger) or any corporate action or agreement
that would result in breach of any covenant, representation or
warranty or any obligation or agreement of the
<PAGE> 6
Issuer under the Merger Agreement or which could result in any of
the conditions to Issuer's obligation under the Merger Agreement not
being fulfilled. Republic and the Stockholders entered into the
Voting Agreement in connection with the Merger Agreement, pursuant
to which the Issuer will merge with and into Republic (with Republic
being the surviving corporation) and each share of the Issuer Common
Stock will be converted into right to receive 9/10 of one share of
Republic Common Stock. The Voting Agreement will remain in effect as
long as the Merger Agreement is not terminated.
There are no other contracts, arrangements or relationships
between Republic and the Issuer relating to the Issuer Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 99.1 -- Merger Agreement, dated as of June 25, 1996, by and
among Republic, RI/AR Merger Corp. and the Issuer
Exhibit 99.2 -- Voting Agreement, dated as of June 25, 1996, by and
among the Stockholders and Republic.
<PAGE> 7
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
REPUBLIC INDUSTRIES, INC.
July 5, 1996 By: /s/ Richard L. Handley
-----------------------------------------
Richard L. Handley
Senior Vice President and General Counsel
<PAGE> 1
Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 25, 1996 (this
"Agreement"), by and among REPUBLIC INDUSTRIES, INC., a Delaware corporation
("Republic"), RI/AR MERGER CORP., a Delaware corporation and wholly-owned
subsidiary of Republic ("Mergersub"), and ADDINGTON RESOURCES, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), the parties desire to enter into a business
combination transaction pursuant to which Mergersub will be merged with and
into the Company (the "Merger');
WHEREAS, the Board of Directors of the Company has determined that the
Merger is fair to, and in the best interests of, the Company and its
stockholders, has approved and adopted this Agreement and the Merger, and has
recommended approval and adoption of this Agreement and the Merger by the
stockholders of the Company;
WHEREAS, the Board of Directors of Republic has determined that the
Merger is fair to, and in the best interests of, Republic and its stockholders,
and has approved and adopted this Agreement and the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling-of-interests business combination.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
<PAGE> 2
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as defined in Section 1.3), Mergersub shall be merged with and
into the Company, with the Company being the surviving corporation in the
Merger (the "Surviving Corporation") and thereby becoming a wholly-owned
subsidiary of Republic, and the separate corporate existence of Mergersub shall
cease.
SECTION 1.2. CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VIII, the closing of the Merger (the "Closing") will take
place at a date and time determined by the parties as promptly as practicable
(and in any event within two business days) after satisfaction or waiver of the
conditions precedent set forth in Article VIII at the offices of Akerman,
Senterfitt & Eidson, P.A., One S.E. Third Avenue, Miami, Florida, unless
another date, time or place is agreed to in writing by the parties hereto.
SECTION 1.3. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing, or such later date or time as set forth therein, being the
"Effective Time").
SECTION 1.4. EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in Section 259 of the Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all property, rights, privileges,
powers and franchises of the Company and Mergersub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Mergersub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5. CERTIFICATE OF INCORPORATION: BY-LAWS. At the Effective
Time, the Certificate of Incorporation and the By-Laws of the Company, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the By-Laws of the Surviving Corporation thereafter, unless
and until amended in accordance with their terms and as provided by law.
SECTION 1.6. DIRECTORS AND OFFICERS. At the Effective Time, the
directors of Mergersub at such time shall be the directors of the Surviving
Corporation, and the officers of the Company at such time shall be the officers
of the Surviving Corporation, each to hold a directorship
2
<PAGE> 3
or office in accordance with the Certificate of Incorporation and By-Laws of
the Surviving Corporation, until their respective successors are duly elected
and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company,
Mergersub or the stockholders of the Company or Mergersub:
(a) Each share of common stock, par value $1.00 per share, of
the Company ("Company Common Stock") issued and outstanding immediately prior
to the Effective Time (other than any shares of Company Common Stock to be
canceled pursuant to Section 2.1(b)) shall be converted, subject to Section
2.2(d), into the right to receive 9/10 of one share (the "Exchange Ratio") of
common stock, par value $0.01 per share, of Republic ("Republic Common Stock");
provided, however, that if between the date of this Agreement and the Effective
Time the outstanding shares of Company Common Stock or Republic Common Stock
shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange Ratio
shall be correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
Nothing stated in the immediately preceding sentence shall be construed as
providing the holders of Company Common Stock any preemptive or antidilutive
rights other than in the case of a stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
and there shall be no adjustment to the Exchange Ratio in the event that
Republic issues or agrees to issue any shares of Republic Common Stock between
the date hereof and the Effective Time, whether for cash, through option
grants, option or warrant exercises, in acquisitions, or in other transactions.
At the Effective Time, all shares of Company Common Stock issued and
outstanding immediately prior thereto shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares shall thereafter represent
the right to receive, upon the surrender of such certificate in accordance with
the provisions of Section 2.2, certificates evidencing such number of whole
shares of Republic Common Stock into which such Company Common Stock was
converted in accordance with the Exchange Ratio and any cash in lieu of
fractional shares of Republic Common Stock paid in consideration therefor
pursuant to Section 2.2(d). The holders of such certificates previously
evidencing such shares of Company Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such shares
of Company Common Stock except as otherwise provided herein or by law.
(b) Each share of Company Common Stock held in the treasury
of the Company and each share of Company Common Stock owned by Republic or any
direct or indirect wholly
3
<PAGE> 4
owned subsidiary of Republic or of the Company immediately prior to the
Effective Time shall automatically be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(c) Each share of common stock of Mergersub issued and
outstanding at the Effective Time shall be converted into one share of the
common stock , $1.00 par value per share, of the Surviving Corporation.
SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Republic shall deposit, or shall cause to
be deposited, with Wells Fargo Bank (Texas), National Association or such other
bank or trust company as may be designated by Republic (the "Exchange Agent"),
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Article II, through the Exchange Agent, at the
Effective Time, (i) certificates evidencing the shares of Republic Common Stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of Company
Common Stock and (ii) upon the request of the Exchange Agent, cash in an amount
sufficient to make any cash payment in lieu of fractional shares of Republic
Common Stock pursuant to Section 2.2(d) (such certificates for shares of
Republic Common Stock, together with any dividends or distributions with
respect thereto, and cash in lieu of fractional shares of Republic Common Stock
being hereafter collectively referred to as the "Exchange Fund"). The Exchange
Agent shall, pursuant to irrevocable instructions, deliver the Republic Common
Stock contemplated to be issued pursuant to Section 2.1 out of the Exchange
Fund to holders of shares of Company Common Stock. Except as contemplated by
Section 2.2(e) hereof, the Exchange Fund shall not be used for any other
purpose. Any interest, dividends or other income earned on the investment of
cash or other property held in the Exchange Fund shall be for the account of
Republic.
(b) Exchange Procedures. Republic shall instruct the Exchange
Agent to mail, within five (5) business days after the Effective Time, to each
holder of record of a certificate or certificates which immediately prior to
the Effective Time evidenced outstanding shares of Company Common Stock (the
"Certificates") (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Republic may reasonably
specify) and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing shares of Republic Common Stock and
cash (if any). Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor
(A) certificates evidencing that number of whole shares of Republic Common
Stock that such holder has the right to receive in accordance with the Exchange
Ratio in respect of the shares of Company Common Stock formerly evidenced by
such Certificate, (B) any dividends or other distributions to which such holder
is entitled pursuant to Section 2.2(c), and (C) cash in lieu of fractional
shares of Republic Common Stock to which such holder is entitled pursuant to
Section 2.2(d) (the shares of
4
<PAGE> 5
Republic Common Stock, and the dividends, distributions and cash described in
clauses (A), (B) and (C) being, collectively, the "Merger Consideration"), and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of Company Common Stock that is not registered
in the transfer records of the Company, Merger Consideration may be issued and
paid in accordance with this Article II to a transferee if the Certificate
evidencing such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid or by the transferee requesting such payment paying to the Exchange Agent
any such transfer tax. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive upon such surrender the Merger
Consideration.
(c) Distributions with Respect to Unexchanged Shares of
Republic Common Stock. No dividends or other distributions declared or made
after the Effective Time with respect to Republic Common Stock with a record
date after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Republic Common Stock represented
thereby and no cash payment in lieu of fractional shares of Republic Common
Stock shall be paid to any such holder pursuant to Section 2.2(d), until the
holder of such Certificate shall surrender such Certificate. Upon such
surrender, there shall be paid to the person or entity (hereinafter, any person
or entity being referred to as a "Person") in whose name the certificates
representing the shares of Republic Common Stock into which such Certificates
were converted and registered, all dividends and other distributions payable in
respect of such Republic Common Stock on a date after, and in respect of a
record date after, the Effective Time.
(d) Fractional Shares. No fraction of a share of Republic
Common Stock shall be issued in the Merger and any such fractional share
interest shall not entitle the owner thereof to vote or to any other rights of
a stockholder of Republic. In lieu of any such fractional shares, each holder
of Company Common Stock upon surrender of a Certificate for exchange pursuant
to this Section 2.2 shall be paid an amount in cash (without interest), rounded
to the nearest cent, determined by multiplying (i) the per share closing price
on The Nasdaq Stock Market-National Market ("Nasdaq") of Republic Common Stock
on the date of the Effective Time (or, if shares of Republic Common Stock are
not quoted on the Nasdaq on such date, the first date of trading of such
Republic Common Stock on Nasdaq after the Effective Time) by (ii) the
fractional interest to which such holder would otherwise be entitled (after
taking into account all shares of Company Common Stock then held of record by
such holder).
(e) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Republic, upon demand,
and any holders of Company Common Stock who have not theretofore complied with
this Article II shall thereafter look only to Republic for the Merger
Consideration to which they are entitled pursuant to this Article II.
5
<PAGE> 6
(f) No Liability. Neither Republic nor the Company shall be
liable to any holder of shares of Company Common Stock for any such shares of
Republic Common Stock (or dividends or distributions with respect thereto) from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(g) Withholding Rights. Republic or the Exchange Agent shall
be entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Republic or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Republic or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by Republic or the Exchange Agent.
(h) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Republic Common Stock, any cash in lieu of fractional
shares and any unpaid dividends and distributions on shares of Republic Common
Stock deliverable in respect thereof, pursuant to this Agreement.
SECTION 2.3. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
recordation of transfers of shares of the Company Common Stock thereafter on
the stock transfer books of the Company. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Republic in accordance with
Section 2.2(b) shall be converted into the Merger Consideration.
SECTION 2.4. STOCK OPTIONS . At the Effective Time, the Company's
obligations with respect to each outstanding Company Stock Option (as defined
in Section 3.3) to purchase shares of Company Common Stock, as amended in the
manner described in the following sentence, shall be assumed by Republic. The
Company Stock Options so assumed by Republic shall continue to have, and be
subject to, the same terms and conditions as set forth in the stock option
plans and agreements pursuant to which such Company Stock Options were issued
and any other agreements evidencing such options, as in effect immediately
prior to the Effective Time, except that from and after the Effective Time each
such Company Stock Option shall be exercisable for that number of whole shares
of Republic Common Stock equal to the product of the number of shares of
Company Common Stock covered by such option immediately prior to the Effective
Time multiplied by the Exchange Ratio and rounded up to the nearest whole
number of shares of Republic Common Stock, with an exercise price per share
equal to the exercise price per share of such option immediately prior to the
Effective Time divided by the Exchange Ratio; provided, however, that in the
case of any option to which Section 421 of the Code applies by reason of its
qualification under any of the
6
<PAGE> 7
requirements of Section 421 of the Code, the option price, the number of shares
purchasable pursuant thereto and the terms and conditions of exercise thereof
shall be determined in order to comply with Section 424(a) of the Code.
Republic shall (i) reserve for issuance the number of shares of Republic Common
Stock that will become issuable upon the exercise of such Company Stock Options
pursuant to this Section 2.4 and (ii) promptly after the Effective Time issue
to each holder of an outstanding Company Stock Option a document evidencing the
assumption by Republic of the Company's obligations with respect thereto under
this Section 2.4. Nothing in this Section 2.4 shall affect the schedule of
vesting with respect to the Company Stock Options to be assumed by Republic as
provided in this Section 2.4, except to the extent vesting is accelerated at
the Effective Time as a result of the Merger pursuant to the existing terms and
conditions of certain of the Company Stock Options as is indicated on Schedule
3.3.
SECTION 2.5. STOCK GRANTS. At the Effective Time, the Company's
obligations with respect to each outstanding Stock Grant (as defined in Section
3.3) to deliver shares of Company Common Stock, as amended in the manner
described in the following sentence, shall be assumed by Republic. The Stock
Grants so assumed by Republic shall continue to have, and be subject to, the
same terms and conditions as set forth in the stock grant plans and agreements
pursuant to which such Stock Grants were issued and any other agreements
evidencing such Stock Grants (all of which are set forth on Schedule 3.3), as
in effect on the date hereof, except that from and after the Effective Time
each such Stock Grant shall be exercisable for that number of whole shares of
Republic Common Stock equal to the product of the number of shares of Company
Common Stock covered by such grant immediately prior to the Effective Time
multiplied by the Exchange Ratio and rounded up to the nearest whole number of
shares of Republic Common Stock. Republic shall (a) reserve for issuance the
number of shares of Republic Common Stock that will become issuable upon the
exercise of such Stock Grants pursuant to this Section 2.5 and (b) promptly
after the Effective Time issue to each holder of an outstanding Stock Grant a
document evidencing the assumption by Republic of the Company's obligations
with respect thereto under this Section 2.5. Nothing in this Section 2.5 shall
affect the schedule of vesting with respect to any of the Stock Grants to be
assumed by Republic as provided in this Section 2.5.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Republic that:
SECTION 3.1. ORGANIZATION AND GOOD STANDING. Each of the Company
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of the Company and its subsidiaries is duly qualified
or licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed or to be in
7
<PAGE> 8
good standing (individually or in the aggregate) would not have a Company
Material Adverse Effect (as defined in Section 8.3(b)). The Company has
delivered to Republic complete and correct copies of its Certificate of
Incorporation and By-Laws and the certificates of incorporation and by-laws (or
similar organizational documents) of its subsidiaries, in each case as amended
to the date hereof.
SECTION 3.2. SUBSIDIARIES. Schedule 3.2 lists each subsidiary of the
Company, together with its jurisdiction of incorporation or organization.
Except as set forth on Schedule 3.2, all the outstanding shares of capital
stock of each such subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company or by another subsidiary of the
Company, free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively,
"Liens"). Except for the capital stock of its subsidiaries set forth on
Schedule 3.2, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, joint
venture or other entity.
SECTION 3.3. CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 30,000,000 shares of Company Common Stock. At the close of
business on May 31, 1996, (i) 15,172,984 shares of Company Common Stock were
issued and outstanding, (ii) 1,000,000 shares of Company Common Stock were held
by the Company in its treasury, (iii) 378,700 shares of Company Common Stock
were reserved for issuance upon the exercise of outstanding stock options
("Company Stock Options") granted pursuant to the Company Restated Stock Option
Plan, and (iv) 24,000 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding and vested stock grants (the "Stock Grants").
Except as set forth above, as of the date of this Agreement, no shares of
capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. A list of the names of the holders of all
outstanding Company Stock Options and Stock Grants, with the respective amounts
of shares, exercise prices (in the case of Company Stock Options), vesting
dates and expiration dates thereof, is set forth on Schedule 3.3, and a copy of
the Company Restated Stock Option Plan, and of all plans and agreements related
to the Stock Grants, is attached thereto. All outstanding shares of capital
stock of the Company are, and all shares which may be issued pursuant to the
Company Stock Options and Stock Grants will be, when issued against payment
therefor in accordance with the terms thereof, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except as set forth
above and except for the matters listed on Schedule 3.3, as of the date of this
Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound,
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or of any of its subsidiaries, or
obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date hereof, there are no
outstanding contractual obligations which require or will require or obligate
the
8
<PAGE> 9
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries.
SECTION 3.4. AUTHORITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to approval of this Agreement by the holders of a majority of the
outstanding shares of the Company Common Stock, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action, subject to approval of this Agreement by the holders of a
majority of the outstanding shares of the Company Common Stock. This Agreement
has been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
generally and general equitable principles. Except as set forth on Schedule
3.4, the execution and delivery of this Agreement by the Company does not, and
performance of the Company's obligations hereunder will not, conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its subsidiaries under, any provision of (a)
the Certificate of Incorporation or By-laws of the Company or any provision of
the comparable charter or organizational documents of any of its subsidiaries,
(b) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, or license to which
the Company or any of its subsidiaries is a party or by which their respective
properties or assets are bound, or (c) subject to the governmental filings and
other matters referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree applicable to
the Company or any of its subsidiaries or their respective properties or
assets, other than, in the case of clause (b) and clause (c), any such
conflicts, violations, defaults, rights, losses or Liens that individually or
in the aggregate would not (x) have a Company Material Adverse Effect, (y)
impair in any material respect the ability of the Company to perform its
obligations under this Agreement, or (z) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Authority"), is required by or with
respect to the Company or any of its subsidiaries in connection with the
execution, delivery and performance of this Agreement by the Company, except
for: (i) the filing of a premerger notification and report form by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"); (ii) the filing with the Securities and Exchange Commission (the
"SEC") of a proxy statement relating to the approval by the Company's
stockholders of this Agreement and the Merger and other transactions
contemplated hereby (as amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement; (iii) the filing
9
<PAGE> 10
of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business; (iv) the consents set
forth on Schedule 3.4; and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Company
Material Adverse Effect or prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement.
SECTION 3.5. SEC DOCUMENTS AND FINANCIAL STATEMENTS. The Company
has filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1995 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied as to form in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and none of the SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent that information
contained in any SEC Document has been revised or superseded by a later-filed
SEC Document, filed and publicly available prior to the date of this Agreement,
as of the date of this Agreement, none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents complied as of their
respective dates of filing with the SEC as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q) applied on a consistent basis during the
period involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position, results of operations and cash
flows as at the dates and for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth in the SEC Documents and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice, neither the
Company nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a consolidated
balance sheet of the Company and its consolidated subsidiaries or in the notes
thereto which individually or in the aggregate, could reasonably be expected to
have a Company Material Adverse Effect.
SECTION 3.6. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Republic in connection with the issuance of Republic Common Stock in the
Merger (the "Registration Statement") will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements
10
<PAGE> 11
therein, in light of the circumstances under which they are made, not
misleading, and (ii) the Proxy Statement will, at the date it is first mailed
to the Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval of this Agreement, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Proxy
Statement will comply in all material respects with the requirements of the
Exchange Act, and the rules and regulations thereunder. No representation is
made by the Company in this Section 3.6 with respect to statements made or
incorporated by reference in the Proxy Statement based on information supplied
by Republic or Mergersub specifically for inclusion or incorporation by
reference in the Proxy Statement.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of this
Agreement, and except as expressly contemplated by this Agreement, since the
date of the most recent audited financial statements included in such SEC
Documents, the Company has conducted its business only in the ordinary course,
and there has not been: (i) any material adverse change in the business,
assets, results of operations, customer and employee relations, or business
prospects of the Company and its subsidiaries, taken as a whole; (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock; (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; (iv) any granting by the Company or any of its subsidiaries to
any officer of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the
date of the most recent audited financial statements included in such SEC
Documents; (v) any granting by the Company or any of its subsidiaries to any
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in such SEC
Documents; (vi) an entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any officer; (vii) any
damage, destruction or loss, whether or not covered by insurance, that has had
or is likely to have a Company Material Adverse Effect; (viii) any change in
accounting methods, principles or practices by the Company materially affecting
its assets, liabilities or business, except insofar as may have been required
by a change in generally accepted accounting principles; or (ix) except as set
forth on Schedule 3.7, any adoption or amendment in any material respect by the
Company or any of its subsidiaries of any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
in each case maintained or contributed to, or required to be maintained or
contributed to, by the Company or its subsidiaries for the benefit of any
current or former employee, officer or director of the Company or any of its
subsidiaries (each, a "Benefit Plan" and, collectively, "Benefit Plans").
11
<PAGE> 12
SECTION 3.8. LITIGATION. Except as disclosed on Schedule 3.8 or in the
SEC Documents filed and publicly available prior to the date of this Agreement,
there is no suit, action or proceeding pending or threatened in writing against
the Company or any of its subsidiaries challenging the acquisition by Republic
or Mergersub of any shares of the Company Common Stock or any provision of this
Agreement or seeking to restrain or prohibit the consummation of the Merger, or
that, individually or in the aggregate, could reasonably be expected to have a
Company Material Adverse Effect, nor is there any judgment, decree, injunction,
rule or order of any Governmental Authority or arbitrator outstanding against
the Company or any of its subsidiaries having, or which could reasonably be
expected to have, any such Company Material Adverse Effect.
SECTION 3.9. COMPLIANCE WITH LAWS; PERMITS. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this Agreement,
the Company and its subsidiaries are in compliance with all applicable
statutes, laws, ordinances, regulations, rules, judgments, decrees and orders
of any Governmental Authority applicable to its business or operations, except
for instances of possible noncompliance that, individually or in the aggregate,
would not have a Company Material Adverse Effect. Each of the Company and its
subsidiaries has in effect all federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights ("Permits"), necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the absence of Permits and for defaults under Permits which, individually or in
the aggregate, would not have a Company Material Adverse Effect. None of such
Permits is or will be impaired or in any way affected by the execution and
delivery of this Agreement, or consummation of the transactions contemplated
hereby, provided that the consents or filings referred to in Section 3.4 are
obtained or made prior to the Closing.
SECTION 3.10. ENVIRONMENTAL MATTERS.
(a) Except where the failure to comply could not reasonably
be expected to have a Company Material Adverse Effect, the Company and each of
its subsidiaries is and has at all times been in full compliance with all
Environmental Laws (as defined in clause (h) below) governing its business,
operations, properties and assets, including, without limitation: (i) all
requirements relating to the Discharge (as defined in clause (h) below) and
Handling (as defined in clause (h) below) of Hazardous Substances (as defined
in clause (h) below) or other Wastes (as defined in clause (h) below); (ii) all
requirements relating to notice, record keeping and reporting; (iii) all
requirements relating to obtaining and maintaining Licenses (as defined in
clause (h) below) for the ownership of its properties and assets and the
operation of its business as presently conducted, including Licenses relating
to the Handling and Discharge of Hazardous Substances and other Wastes; or (iv)
all applicable writs, orders, judgements, injunctions, governmental
communications, decrees, informational requests or demands issued pursuant to,
or arising under, any Environmental Laws.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation (collectively
"Notices"), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations or proceedings (collectively
"Proceedings") pending
12
<PAGE> 13
or threatened against or involving the Company or any of its subsidiaries, or
any of their respective businesses, operations, properties, or assets, issued
by any Governmental Authority or third party with respect to any Environmental
Laws or Licenses issued to the Company or any of its subsidiaries thereunder in
connection with, related to or arising out of the ownership by the Company or
any of its subsidiaries of their properties or assets or the operation of their
businesses, which have not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not impose any
obligation, burden or continuing liability on Republic or the Surviving
Corporation in the event that the transactions contemplated by this Agreement
are consummated, or which could have a Company Material Adverse Effect,
including, without limitation: (i) Notices or Proceedings related to the
Company or any of its subsidiaries being a potentially responsible party for a
federal or state environmental cleanup site or for corrective action under any
applicable Environmental Laws; (ii) Notices or Proceedings in connection with
any federal or state environmental cleanup site, or in connection with any of
the real property or premises where the Company or any of its subsidiaries has
transported, transferred or disposed of other Wastes; (iii) Notices or
Proceedings relating to the Company or any of its subsidiaries being
responsible to undertake any response or remedial actions or clean-up actions
of any kind; or (iv) Notices or Proceedings related to the Company or any of
its subsidiaries being liable under any Environmental Laws for personal injury,
property damage, natural resource damage, or clean up obligations.
(c) Except as set forth on Schedule 3.10, neither the Company
nor any of its subsidiaries has Handled or Discharged, nor have any of them
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances or other Waste to, at or upon: (i) any location other than a site
lawfully permitted to receive such Hazardous Substances or other Waste; (ii)
any of the Owned Properties (as defined in Section 3.16(a)) or Leased Premises
(as defined in Section 3.16(b)); or (iii) any site which, pursuant to CERCLA
(as defined in clause (h) below) or any similar state law (x) has been placed
on the National Priorities List or its state equivalent; or (y) the
Environmental Protection Agency or the relevant state agency or other
Governmental Authority has notified the Company or any of its subsidiaries that
such Governmental Authority has proposed or is proposing to place on the
National Priorities List or its state equivalent. There has not occurred, nor
is there presently occurring, a Discharge, or threatened Discharge, of any
Hazardous Substance on, into or beneath the surface of, or adjacent to, any of
the Owned Properties or Leased Premises in an amount or otherwise requiring a
notice or report to be made to a Governmental Authority or in violation of any
applicable Environmental Laws.
(d) Schedule 3.10 identifies the operations and activities,
and locations thereof, which have been conducted and are being conducted by the
Company on any of the Owned Properties or Leased Premises which have involved
the Handling or Discharge of Hazardous Substances.
(e) Schedule 3.10 identifies the locations to which the
Company has transferred, transported, hauled, moved, or disposed of Waste over
the past five (5) years and the types and volumes of Waste transferred,
transported, hauled, moved, or disposed of to each such location.
13
<PAGE> 14
(f) Except as set forth on Schedule 3.10, neither the Company
nor any of its subsidiaries uses, nor has any of them used, any Aboveground
Storage Tanks (as defined in clause (h) below) or Underground Storage Tanks (as
defined in clause (h) below), and there are not now nor have there ever been
any Underground Storage Tanks beneath any of the Owned Properties or Leased
Premises that are required to be registered under applicable Environmental
Laws.
(g) Schedule 3.10 identifies (i) all environmental audits,
assessments or occupational health studies undertaken since January 1, 1994 by
the Company or its agents or, to the knowledge of the Company, undertaken by
any Governmental Authority, or any third party, relating to or affecting the
Company or any of the Owned Properties or Leased Premises; (ii) the results of
any ground, water, soil, air or asbestos monitoring undertaken by the Company
or its agents or, to the knowledge of the Company, undertaken by any
Governmental Authority or any third party, relating to or affecting the Company
or any of the Owned Properties or Leased Premises which indicate the presence
of Hazardous Substances at levels requiring a notice or report to be made to a
Governmental Authority or in violation of any applicable Environmental Laws;
(iii) all material written communications between the Company and any
Governmental Authority arising under or related to Environmental Laws; and (iv)
all outstanding citations issued under OSHA, or similar state or local
statutes, laws, ordinances, codes, rules, regulations, orders, rulings, or
decrees, relating to or affecting either the Company or any of the Owned
Properties or Leased Premises.
(h) For purposes of this Section 3.10, the following terms
shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further
be defined in any Environmental Law, into any medium including,
without limitation, ground water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial
or administrative interpretations thereof, or similar laws of foreign
jurisdictions where the Company or any of its subsidiaries conducts
business, whether currently in existence or hereafter enacted or
promulgated, any of which govern (or purport to govern) or relate to
pollution, protection of the environment, public health and safety,
air emissions, water discharges, hazardous or toxic substances, solid
or hazardous waste or occupational health and safety, as any of these
terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendment and Reauthorization Act of 1986, 42
U.S.C. Section 9601,
14
<PAGE> 15
et seq. (collectively "CERCLA"); the Solid Waste Disposal Act, as
amended by the Resource Conversation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Section 6901 et seq. (collectively "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the
Clean Water Act, as amended, 33 U.S.C. Section 1311, et seq.; the
Clean Air Act, as amended (42 U.S.C. Section 7401-7642); the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.;
the Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C. Section 136-136y ("FIFRA"); the Emergency Planning and
Community Right-to-Know Act of 1986 as amended, 42 U.S.C. Section
11001, et seq. (Title III of SARA) ("EPCRA"); and the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et
seq. ("OSHA").
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law, of any Hazardous Substances or
Waste.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental Laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental Laws,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, FIFRA, EPCRA and OSHA, or any similar state
statute, or any future amendments to, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders,
rulings, or decrees, or which has been or shall be determined or
interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order, code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits,
approvals and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Underground Storage
Tanks.
"Waste" shall be construed broadly to include agricultural
wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes,
industrial solid wastes, liquid wastes, recyclable materials, sludge,
solid wastes, special wastes, used oils, white goods, and yard trash
as those terms are defined under any applicable Environmental Laws.
15
<PAGE> 16
SECTION 3.11. BENEFIT PLAN COMPLIANCE.
(a) Schedule 3.11 contains a list and brief description of
all "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Pension Plans"), "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other Benefit Plans
maintained, or contributed to, or required to be contributed to, by the Company
or any of its subsidiaries or any other Person that, together with the Company,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (the Company and each such other Person, a "Commonly Controlled Entity")
for the benefit of any current or former employees, officers or directors of
the Company or any of its subsidiaries. The Company has delivered or made
available to Republic true, complete and correct copies of (i) each Benefit
Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof),
(ii) the most recent annual report on Form 5500 filed with the Internal Revenue
Service with respect to each Benefit Plan (if any such report was required),
(iii) the most recent summary plan description for each Benefit Plan for which
such summary plan description is required, and (iv) each trust agreement and
group annuity contract relating to any Benefit Plan. Each Benefit Plan has been
administered in all material respects in accordance with its terms and is in
compliance with the applicable provisions of ERISA, the Code, all other
applicable laws and all applicable collective bargaining agreements except
where the failure to comply would not be reasonably expected to result in a
Company Material Adverse Effect.
(b) All Pension Plans have been the subject of determination
letters from the Internal Revenue Service, or have filed a timely application
therefor, to the effect that such Pension Plans are qualified and exempt from
federal income taxes under Section 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor has any such
Pension Plan been amended since the date of its most recent determination
letter or application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(c) Neither the Company nor any Commonly Controlled Entity
has adopted any "defined benefit pension plan" as defined in Section 3(35) of
ERISA subject to Title IV of ERISA in the five years preceding the date hereof.
(d) No Commonly Controlled Entity has been required at any
time within the five calendar years preceding the date hereof or is required
currently to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) that has not been fully paid.
(e) With respect to any Benefit Plan that is an employee
welfare benefit plan, (i) no such Benefit Plan is funded through a "welfare
benefits fund", as such term is defined in Section 419(e) of the Code, and (ii)
each such Benefit Plan that is a "group health plan", as such term is defined
in Section 5000(b)(1) of the Code, complies substantially with the applicable
requirements of Section 4980B(f) of the Code.
16
<PAGE> 17
(f) Except with respect to the certain of the Company Stock
Options as indicated on Schedule 3.3 and severance benefits as indicated on
Schedule 3.4, no employee of the Company or any of its subsidiaries will be
entitled to any additional compensation or benefits or any acceleration of the
time of payment or vesting of any compensation or benefits under any Benefit
Plan as a result of the transactions contemplated by this Agreement.
(g) Except as set forth on Schedule 3.4, neither the Company
or any of its subsidiaries nor any Person acting on behalf of the Company or
any of its subsidiaries has, in contemplation of any corporate transaction
involving Republic, issued any written communication to, or otherwise made or
entered into any legally binding commitment with, any employees of the Company
or of any of its subsidiaries to the effect that, following the date hereof,
(i) any benefits or compensation provided to such employees under existing
Benefit Plans or under any other plan or arrangement will be enhanced, (ii) any
new plans or arrangements providing benefits or compensation will be adopted,
(iii) any Benefit Plans will be continued for any period of time, or (iv) any
plans or arrangements provided by Republic or Mergersub will be made available
to such employees.
SECTION 3.12. TAXES. As used in this Section 3.12, "Taxes" shall
include all federal, state, local and foreign income, property, sales, payroll,
employee withholding, excise and other taxes, tariffs or governmental charges
of any nature whatsoever, including any interest, penalties or additions with
respect thereto. The Company and each of its subsidiaries, and each affiliated,
consolidated, combined or unitary group of which the Company or any of its
subsidiaries is a member (an "Affiliated Group"), has filed timely all material
tax returns and reports required to be filed by the Company and its
subsidiaries (or requests for extensions have been filed timely), each such tax
return is true and correct in all material respects and has been prepared in
material compliance with all applicable laws and regulations, and the Company
and each of its subsidiaries has paid (or the Company has paid on their behalf)
all Taxes required to be paid by it and them in accordance with such tax
returns. The most recent financial statements contained in the SEC Documents
filed and publicly available prior to the date of this Agreement reflect an
adequate reserve for all material Taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements. Except as set forth on Schedule 3.12, as of the date
hereof, no material deficiency or proposed adjustment which has not been
settled or otherwise resolved for any Taxes has been asserted or assessed by
any taxing authority against the Company or any of its subsidiaries or any
Affiliated Group. Except as set forth on Schedule 3.12, the Company and each of
its subsidiaries has not consented to extend the time in which any Taxes may be
assessed or collected by any taxing authority. None of the assets or properties
of the Company or any of its subsidiaries is subject to any material tax lien
except for taxes not yet due and payable. Except as set forth on Schedule 3.12,
neither the Company nor any of its subsidiaries is a party to or bound by any
material tax allocation or tax sharing agreement and has no current or
potential material contractual obligation to indemnify any other Person with
respect to Taxes. Since January 1, 1994, no material claim has been made by a
taxing authority in a jurisdiction where the Company or any of its subsidiaries
do not file tax returns that the Company or any such subsidiary is or may be
subject to Taxes assessed by such jurisdiction. As of the date hereof, the
federal income
17
<PAGE> 18
tax returns of the Company and each of its subsidiaries consolidated in such
returns have been examined or audited by the Internal Revenue Service for all
years through December 31, 1992, and the Company has not received notice of any
proposed tax audit. True, correct and complete copies of all federal and state
income tax returns filed by or with respect to the Company and each of its
subsidiaries for the past three years have been made available to Republic.
SECTION 3.13. NO EXCESS PARACHUTE PAYMENTS. Except as set forth on
Schedule 3.13, neither the Company nor any of its affiliates has made any
payments, is obligated to make any payments, or is a party to any agreement
that could obligate it to make any payments that will not be deductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign law).
SECTION 3.14. CONTRACTS.
(a) Neither the Company nor any of its subsidiaries is a
party to or bound by, and neither they nor their properties are subject to, any
contracts, agreements or arrangements required to be disclosed in a Form 10-K
or 10-Q under the Exchange Act which is not filed as an exhibit to one or more
of the SEC Documents filed and publicly available prior to the date of this
Agreement.
(b) Schedule 3.14 sets forth as of the date hereof (x) a list
of all written and oral contracts, agreements or arrangements to which the
Company or any of its subsidiaries is a party or by which the Company or such
subsidiary or any of their respective assets is bound which would be required
to be filed as exhibits to the Company's Annual Report on Form 10-K for the
year ending December 31, 1996 and (y) the following written and oral
arrangements (all such written or oral agreements, arrangements or commitments
as are required to be set forth on Schedule 3.14 or filed as exhibits to any
SEC Document, collectively the "Designated Contracts"), which schedule further
identifies each of the Designated Contracts which contain change of control
provisions:
(i) each partnership, joint venture or similar agreement
of the Company or any of its subsidiaries with another Person;
(ii) each contract or agreement under which the Company
or any of its subsidiaries have created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness of
more than $1,000,000 in principal amount or under which the Company or
any of its subsidiaries have imposed (or may impose) a security
interest or lien on any of their respective assets, whether tangible
or intangible securing indebtedness in excess of $1,000,000;
(iii) each contract or agreement to which the Company or
any of its subsidiaries is a party which involves an obligation or
commitment to pay or be paid an amount in excess of $1,000,000 per
year;
18
<PAGE> 19
(iv) each contract or agreement which involves or
contributes to the Company or any of its subsidiaries aggregate annual
remuneration which exceeds 5% of the Company's and its subsidiaries'
consolidated annual net revenues for the twelve months ended December
31, 1994 or December 31, 1995;
(v) each contract or agreement relating to employment or
consulting which provides for annual compensation in excess of
$100,000 and each severance, termination, confidentiality,
non-competition or indemnification agreement or arrangement with any
of the directors, officers, consultants or employees of the Company or
any of its subsidiaries;
(vi) each contract or agreement to which the Company or
any of its subsidiaries or affiliates is a party limiting, in any
material respect, the right of the Company or any of its subsidiaries
prior to the Effective Time, or the Surviving Corporation or any of
its subsidiaries or affiliates at or after the Effective Time (i) to
engage in, or to compete with any Person in, any business, including
each contract or agreement containing exclusivity provisions
restricting the geographical area in which, or the method by which,
any business may be conducted by the Company or any of its
subsidiaries or affiliates prior to the Effective Time, or the
Surviving Corporation or any of its subsidiaries or affiliates after
the Effective Time or (ii) to solicit any customer or client;
(vii) all contracts or agreements between the Company or
any of its subsidiaries, and any Person controlling, controlled by or
under common control with the Company;
(viii) each contract, agreement and franchise with any
municipality, county or city for waste collection, disposal, recycling
or other services which is for a term of one year or longer;
(ix) all other contracts or agreements which are
material to the Company and its subsidiaries taken as a whole, or the
conduct of their respective business, other than those made in the
ordinary course of business or those which are terminable by the
Company or any of its subsidiaries upon no greater than 60 days prior
notice and without penalty or other adverse consequence.
(c) All the Designated Contracts are valid, subsisting, in
full force and effect, binding upon the Company or one of its subsidiaries in
accordance with their terms, and to the knowledge of the Company binding upon
the other parties thereto in accordance with their terms. The Company and its
subsidiaries have paid in full or accrued all amounts now due from them under
the Designated Contracts and have satisfied in full or provided for all of
their liabilities and obligations under the Designated Contracts which are
presently required to be satisfied or provided for, and are not (with or
without notice or lapse of time or both) in default in any material respect
under any of the Designated Contracts nor to the knowledge of the Company is
any other party to
19
<PAGE> 20
any such Designated Contract (with or without notice or lapse of time or both)
in default in any material respect thereunder, except for any defaults that
could not be reasonably expected to have a Company Material Adverse Effect.
SECTION 3.15. VOTING REQUIREMENTS. The affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the Merger.
SECTION 3.16. REAL ESTATE.
(a) The Company and each of its subsidiaries does not own any
real property or any interest therein except as set forth on Schedule 3.16(a)
(the "Owned Properties"), which Schedule sets forth the location and size of,
and principal improvements and buildings on, the Owned Properties, together
with a list of all title insurance policies relating to such properties, all of
which policies have previously been delivered or made available to Republic by
the Company. With respect to each such parcel of Owned Property, except as set
forth on Schedule 3.16(a): (i) the Company has good and marketable title to the
parcel of Owned Property, free and clear of any Lien other than (w) Liens for
real estate taxes not yet due and payable, (x) recorded easements, covenants,
encumbrances and other restrictions which do not materially impair the current
use, occupancy or value of the property subject thereto, (y) the matters
described in the title insurance policies listed on Schedule 3.16(a), including
the mortgages in favor of The First National Bank of Boston noted therein, and
(z) any matters disclosed on the surveys of certain of the parcels of the Owned
Properties included in Schedule 3.16(a) and any matters that would be disclosed
by an accurate and current survey of each of the other parcels of the Owned
Properties which would not materially impair the current use, occupancy or
value of the property so surveyed; (ii) there are no pending or threatened
condemnation proceedings, suits or administrative actions relating to the Owned
Properties materially affecting adversely the current use, occupancy or value
thereof; (iii) the legal descriptions for the parcels of Owned Property
contained in the deeds thereof describe such parcels fully and adequately, and
the Owned Properties are not located within any flood plain (such that a
mortgagee would require a mortgagor to obtain flood insurance) for which any
permits or licenses necessary to the use thereof have not been obtained; (iv)
there are no outstanding options or rights of first refusal to purchase the
parcels of Owned Property, or any portion thereof or interest therein; and (v)
there are no parties (other than the Company and its subsidiaries) in
possession of the parcels of Owned Property except pursuant to written leases
entered into by the Company or a subsidiary thereof with respect thereto in the
capacity as landlord.
(b) Schedule 3.16(b) sets forth a list of all material
leases, licenses or similar agreements to which the Company or its subsidiaries
is a party, which are for the use or occupancy of real estate owned by a third
party and which are material to the operations or the business of the Company
and its subsidiaries taken as a whole ("Leases")(copies of which have
previously been furnished to Republic), in each case, setting forth (A) the
lessor and lessee thereof and the date and term of each of the Leases, (B) the
street address of each property covered thereby, and (C) a brief
20
<PAGE> 21
description (including size and function) of the principal improvements and
buildings thereon (the "Leased Premises"). The Leases are in full force and
effect and have not been amended, and neither the Company or its subsidiaries
nor, to the knowledge of the Company, any other party thereto is in material
default or material breach under any such Lease. No event has occurred which,
with the passage of time or the giving of notice or both, would cause a breach
of or default under any of such Leases, except for breaches or defaults which
in the aggregate could not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.17. GOOD TITLE TO, CONDITION AND ADEQUACY OF ASSETS. Except
as set forth on Schedule 3.17, the Company and its subsidiaries have good title
to all of their respective Assets (as hereinafter defined), free and clear of
any Liens or restrictions on use. The Assets constitute, in the aggregate, all
of the assets and properties necessary for the conduct of the business of the
Company and its subsidiaries in the manner in which and to the extent to which
such business is currently being conducted. All vehicles, machinery, equipment,
tools, supplies, leasehold improvements, furniture and fixtures constituting
part of the Assets and which are used by or located on the premises of the
Company or its subsidiaries, and which are currently in use or necessary for
the business and operations of the Company or its subsidiaries, are in
operating condition, normal wear and tear excepted. For purposes of this
Agreement, the term "Assets" means all of the properties and assets owned by
the Company and its subsidiaries, whether personal or mixed, tangible or
intangible, wherever located.
SECTION 3.18. LABOR AND EMPLOYMENT MATTERS. Schedule 3.18 sets forth
the name, address, and social security number of each of the officers and key
employees of the Company and its subsidiaries. The current rate of compensation
of each of the officers and key employees of the Company and its subsidiaries
has been previously provided to Republic. Neither the Company nor any of its
subsidiaries is a party to or bound by any collective bargaining agreement or
any other agreement with a labor union, and there has been no effort by any
labor union during the 24 months prior to the date hereof to organize any
employees of the Company or any of its subsidiaries into one or more collective
bargaining units. There is no pending or threatened labor dispute, strike or
work stoppage which affects or which may affect the business of the Company or
any of its subsidiaries. As of the date hereof, the Company is not aware that
any officer, key employee or group of employees has any plans to terminate his
or their employment with the Company or any of its subsidiaries as a result of
the Merger or otherwise.
SECTION 3.19. INSURANCE. Section 3.19 sets forth a list of all
insurance policies maintained as of the date hereof by the Company and its
subsidiaries. There are valid and enforceable policies of insurance covering
the respective properties, assets and businesses of the Company and its
subsidiaries against risks of the nature normally insured against by entities
in the same or similar lines of business and in coverage amounts typically and
reasonably carried by such entities. Such policies are in full force and
effect, and all premiums due thereon have been paid. None of such policies will
lapse or terminate as a result of the transactions contemplated by this
Agreement. The Company has not failed to give, in a timely manner, any notice
required under any of such policies to preserve its material rights thereunder.
21
<PAGE> 22
SECTION 3.20. RELATED PARTY TRANSACTIONS. Except as set forth in the
SEC Documents, since January 1, 1996, none of the officers or directors of the
Company or any of its subsidiaries, and no Person owning of record or
beneficially more than 5% of the Company Common Stock, or any members of their
immediate families, has been a party to any transaction, or series of similar
transactions, with the Company or any of its subsidiaries, in which the amount
involved exceeds $60,000 per annum, and in which any such Persons had or will
have a direct or indirect material interest.
SECTION 3.21. NAMES; PRIOR ACQUISITIONS. All names under which the
Company and its subsidiaries do business as of the date hereof are specified on
Schedule 3.21. Except as set forth on Schedule 3.21, neither the Company nor
any of its subsidiaries has changed its name or used any assumed or fictitious
name, or been the surviving entity in a merger, acquired any business or
changed its principal place of business or chief executive office, within the
past three years.
SECTION 3.22. STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Merger and this Agreement, and such approval is
sufficient to render inapplicable to this Agreement, the Merger and the other
transactions contemplated by this Agreement, the provisions of Section 203 of
the Delaware Law, to the extent, if any, such provisions of Section 203 are
applicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement.
SECTION 3.23. BROKERS. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company, except that the Company has retained Oppenheimer & Co., Inc. as a
financial advisor to render a fairness opinion with respect to the Merger. A
true and correct copy of the Company's retainer agreement with Oppenheimer &
Co., Inc. has been delivered to Republic.
SECTION 3.24. ACCOUNTING MATTERS. Neither the Company nor any of its
affiliates has taken or agreed to take any action that (without regard to any
action taken or agreed to be taken by Republic or any of its affiliates) would
prevent Republic from accounting for the business combination to be effected by
the Merger as a pooling of interests.
SECTION 3.25. TAX MATTERS. Neither the Company nor any of its
affiliates has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be taken
by Republic or any of its affiliates) would prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a)(2)(E) of the Code.
22
<PAGE> 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REPUBLIC
Republic hereby represents and warrants to the Company that:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. Each of Republic and
Mergersub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of Republic and Mergersub is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed or to be in good standing
(individually or in the aggregate) would not have a Republic Material Adverse
Effect (as defined in Section 8.2(b)). Republic has delivered to the Company
complete and correct copies of the Certificate of Incorporation and By-Laws of
Republic and of Mergersub, in each case as amended to the date hereof.
Mergersub is controlled by Republic within the meaning of Section 368(a)(2)(E)
of the Code.
SECTION 4.2. CAPITAL STRUCTURE. The authorized capital stock of
Republic consists 500,000,000 shares of Republic Common Stock and 5,000,000
shares of preferred stock, par value $0.01 per share ("Republic Preferred
Stock"). At the close of business on June 19, 1996, (i) 184,023,886 shares of
Republic Common Stock were issued and outstanding, (ii) no shares of Republic
Common Stock were held by Republic in its treasury, (iii) 15,735,194 shares of
Republic Common Stock were reserved for issuance upon the exercise of
outstanding stock options granted pursuant to Republic's various stock option
plans, (iv) 34,853,900 shares of Common Stock were reserved for issuance upon
the exercise of outstanding and vested warrants, and (v) no shares of Republic
Preferred Stock were issued or outstanding. All outstanding shares of capital
stock of Republic are, and all shares which may be issued pursuant to
outstanding options and warrants will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of Republic having the right to vote (or convertible into
securities having the right to vote) on any matters on which stockholders of
Republic may vote. Except as set forth above and except in connection with
other acquisitions of businesses and business combinations by Republic and its
subsidiaries, as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Republic or any of its subsidiaries is a
party or by which any of them is bound, obligating Republic or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of Republic
or of any of its subsidiaries, or obligating Republic or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. As of
the date of this Agreement, there are not any outstanding contractual
obligations which require or will require or
23
<PAGE> 24
obligate Republic or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of Republic or any of its subsidiaries.
SECTION 4.3. AUTHORITY; NONCONTRAVENTION. Republic and Mergersub have
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Republic and Mergersub has been
duly authorized by all necessary corporate action on the part of Republic and
Mergersub, respectively. This Agreement has been duly executed and delivered by
Republic and Mergersub and constitutes a valid and binding obligation of
Republic and Mergersub, enforceable against Republic and Mergersub in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and general equitable principles. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or constitute
a default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Republic or any of its subsidiaries
under, any provision of (a) the Certificate of Incorporation or By-laws of
Republic or any provision of the comparable charter or organizational documents
of any of its subsidiaries, (b) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise, or license applicable to Republic or any of its subsidiaries or
their respective properties or assets, or (c) subject to the governmental
filings and other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or decree to
which Republic or any of its subsidiaries is a party or by which their
respective properties or assets are bound, other than, in the case of clause
(b) and clause (c), any such conflicts, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not (x) have a Republic
Material Adverse Effect, (y) impair in any material respect the ability of
Republic or Mergersub to perform its obligations under this Agreement, or (z)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Authority, is
required by or with respect to Republic or any of its subsidiaries in
connection with the execution, delivery and performance of this Agreement by
Republic or Mergersub, except for: (i) the filing of a premerger notification
and report form by Republic under the HSR Act; (ii) the filing with the SEC of
the Registration Statement and such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement; (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Republic Material Adverse Effect or prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
SECTION 4.4. SEC DOCUMENTS AND FINANCIAL STATEMENTS. Republic has
filed all required reports, schedules, forms, statements and other documents
with the SEC since
24
<PAGE> 25
January 1, 1995 (the "Republic SEC Documents"). As of their respective dates,
the Republic SEC Documents complied as to form in all material respects with
the requirements of Securities Act, or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Republic SEC Documents, and none of the Republic SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Republic SEC
Document has been revised or superseded by a later-filed Republic SEC Document,
filed and publicly available prior to the date of this Agreement, as of the
date of this Agreement, none of the Republic SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of Republic included in the Republic SEC Documents complied as of
their respective dates of filing with the SEC as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q or 8-K) applied on a consistent basis
during the period involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position, results of operations
and cash flows as at the dates and for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the Republic SEC Documents and except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, neither Republic nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be set forth on a
consolidated balance sheet of Republic and its consolidated subsidiaries or in
the notes thereto which individually or in the aggregate, could reasonably be
expected to have a Republic Material Adverse Effect.
SECTION 4.5. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Republic specifically for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders
and at the time of the meeting of the Company's stockholders held to vote on
approval of this Agreement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statement therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement will comply as to
form in all material respects with the requirements of the Exchange Act, and
the rules and regulations thereunder. No representation is made by Republic in
this Section 4.5 with respect to statements made or incorporated by reference
in the Registration Statement based on information supplied by the Company
specifically for inclusion or incorporation by reference in the Registration
Statement.
25
<PAGE> 26
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Republic SEC Documents filed and publicly available prior to the date of
this Agreement, and except as expressly contemplated by this Agreement, since
the date of the most recent audited financial statements included in such
Republic SEC Documents, Republic has conducted its business only in the
ordinary course, and there has not been: (i) any material adverse change in the
business, results of operations, or business prospects of Republic and its
subsidiaries taken as a whole; (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of Republic's capital stock; (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any insurance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; (iv) any damage,
destruction or loss, whether or not covered by insurance, that has had or is
likely to have a Republic Material Adverse Effect; or (v) any change in
accounting methods, principles or practices by Republic materially affecting
its assets, liabilities or business, except insofar as may have been required
by a change in generally accepted accounting principles.
SECTION 4.7. LITIGATION. Except as disclosed in the Republic SEC
Documents filed and publicly available prior to the date of this Agreement,
there is no suit, action or proceeding pending or threatened against Republic
or any of its subsidiaries challenging the acquisition by Republic or Mergersub
of any shares of Company Common Stock or any provision of this Agreement or
seeking to restrain or prohibit the consummation of the Merger, or that,
individually or in the aggregate, could reasonably be expected to have a
Republic Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Authority or arbitrator
outstanding against Republic or any of its subsidiaries having, or which could
reasonably by expected to have, a Republic Material Adverse Effect.
SECTION 4.8. COMPLIANCE WITH LAWS. Except as disclosed in the Republic
SEC Documents filed and publicly available prior to the date of this Agreement,
Republic and its subsidiaries are in compliance with all applicable statutes,
laws, ordinances, regulations, rules, judgments, decrees and orders of any
Governmental Authority applicable to its business or operations, except for
instances of possible noncompliance that, individually or in the aggregate,
would not have a Republic Material Adverse Effect. Each of Republic and its
subsidiaries has in effect all Permits, necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults under Permits which, individually or in
the aggregate, would not have a Republic Material Adverse Effect. None of such
Permits is or will be impaired or in any way affected by the execution and
delivery of this Agreement, or the consummation of the transactions
contemplated hereby.
SECTION 4.9. CONTRACTS. Neither Republic nor any of its subsidiaries
is a party to or bound by, and neither they nor their properties are subject
to, any contracts, agreements or arrangements required to be disclosed in its
most recently filed Form 10-K, 10-Q or 8-K under the Exchange Act which has not
been filed as an exhibit to one or more of the Republic SEC Documents
26
<PAGE> 27
filed and publicly available prior to the date of this Agreement ("Republic
Designated Contracts"). Republic and its subsidiaries have satisfied in full or
provided for all of their liabilities and obligations under the Republic
Designated Contracts which are presently required to be satisfied or provided
for, and are not (with or without notice or lapse of time or both) in default
in any material respect under any of the Republic Designated Contracts nor to
the knowledge of Republic is any other party to any such Republic Designated
Contract (with or without notice or lapse of time or both) in default in any
material respect thereunder, except for any defaults that could not reasonably
be expected to have a Republic Material Adverse Effect.
SECTION 4.10. BROKERS. No broker, investment banker, financial
advisory or other Person, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Republic.
SECTION 4.11. ACCOUNTING MATTERS. Neither Republic nor any of its
affiliates has taken or agreed to take any action that (without regard to any
action taken or agreed to be taken by the Company or any of its affiliates)
would prevent Republic from accounting for the business combination to be
effected by the Merger as a pooling of interests.
SECTION 4.12. TAX MATTERS. Neither Republic nor any of its affiliates
has taken or agreed to take any action, or knows of any circumstances, that
(without regard to any action taken or agreed to be taken by the Company or any
of its affiliates) would prevent the Merger from qualifying as a reorganization
within the meaning of Sections 368(a)(2)(E) of the Code.
SECTION 4.13. OWNERSHIP OF COMPANY COMMON STOCK. As of the date
hereof, except for the voting proxies granted to Republic as described in
Section 5.8, neither Republic nor any of its affiliates or associates (as such
terms are defined under the Exchange Act), (i) beneficially owns, directly or
indirectly, or (ii) is party to any agreement, arrangement or understanding
providing for the acquisition, holding, voting or disposition of, in each case,
shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for capital stock of the Company, which in the
aggregate represent 10% or more of the outstanding shares of the Company Common
Stock after giving effect to the conversion, exercise or exchange of all such
securities beneficially owned by Republic and its affiliates and associates
which are convertible into or exercisable or exchangeable for capital stock of
the Company.
SECTION 4.14. INTERIM OPERATIONS OF MERGERSUB. Mergersub was formed
solely for the purpose of engaging in a business combination transaction with
the Company and has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
27
<PAGE> 28
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as may be
agreed to in writing by Republic, from the date hereof to the Effective Time,
the Company shall, and shall cause its subsidiaries to, (i) use its and their
best efforts to conduct its and their operations according to its and their
ordinary and usual course of business, consistent with past practice, (ii) use
its and their best efforts to preserve intact its and their business
organization, (iii) keep or cause to be kept in full force and effect all of
its and their material rights, contracts and agreements, (iv) maintain all of
its and their property in good operating condition and repair, (v) use its and
their best efforts to maintain satisfactory relationships with licensors,
licensees, supplies, contractors, distributors, customers and others having
business relationships with any of them, consistent with the Company's past
practices, and (vi) maintain continuously insurance coverage substantially
equivalent to the insurance coverage in existence on the date of this
Agreement. Subject to the exercise of the applicable fiduciary duties of the
Board of Directors of the Company as set forth in Section 5.2(a), the Company
and its subsidiaries shall not take any action that would, or that could
reasonably be expected to, result in any of the conditions to the obligations
of the Company or Republic to consummate the Merger set forth in Article VIII
not being satisfied. Without limiting the generality of the foregoing and
except as provided above, the Company shall not, and shall not permit any of
its subsidiaries to:
(a) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
additional employee or other options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any options or
rights to acquire, or any securities convertible into, shares of stock of any
class; provided that the Company shall be entitled to issue shares of the
Company Common Stock upon exercise of Company Stock Options and Stock Grants
against payment therefor in accordance with their terms;
(b) split, combine or reclassify any shares of its or any of
its subsidiaries' capital stock; declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) to its stockholders whether or not in respect of its capital stock; or
redeem, purchase or otherwise acquire any shares of, or rights to acquire
shares of, its or any of its subsidiaries' capital stock;
(c) amend its charter or by-laws;
(d) voluntarily sell, transfer, surrender, abandon or dispose
of any of its material assets or property rights (tangible or intangible),
other than in the ordinary course of business consistent with past practices;
(e) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or acquisitions of stock or assets)
any interest in any corporation, partnership or other
28
<PAGE> 29
business organization or division thereof, or make any investment in any such
entity either by purchase of securities, contributions of capital or transfer
of property, or make any loans or advances to any Person;
(f) grant or make any mortgage or pledge or subject itself or
any of its material properties or assets to any lien, charge or encumbrance of
any kind, except liens for taxes not currently due;
(g) create, incur or assume any indebtedness for borrowed
money (contingent or otherwise), in an amount exceeding $1,000,000 individually
or $2,500,000 in the aggregate, except borrowings under the Company's credit
facilities with Bank of Boston to the extent such borrowings are in the
ordinary course of business consistent with past practices;
(h) make or commit to make any capital expenditures in excess
of $1,000,000 individually or $2,500,000 in the aggregate, other than as set
forth on the capital expenditure budget provided by the Company to Republic, a
copy of which is attached as Schedule 5.1;
(i) grant any increase in the compensation payable or to
become payable to directors, officers or employees (including, without
limitation, any such increase pursuant to any Benefit Plan or otherwise), other
than merit increases to employees of the Company or its subsidiaries who are
not directors or officers of the Company, in the ordinary course of business
and consistent with past practices;
(j) alter the manner of keeping its books, accounts or
records, or change in any manner the accounting practices therein reflected;
(k) enter into any material commitment, transaction or
agreement, other than in the ordinary course of business consistent with past
practices and other than commitments, transactions or agreements that are
terminable by the Company without cost or penalty on no more than 60 days prior
notice;
(l) apply any of its assets to the direct or indirect
payment, discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of any affiliate of the Company or any of its
subsidiaries except in the ordinary course of business consistent with past
practices;
(m) modify any provision of any Benefit Plan, any stock
option plans of the Company or the terms of any stock options granted
thereunder;
(n) modify any of the Designated Contracts other than in the
ordinary course of business consistent with past practices;
29
<PAGE> 30
(o) enter into any agreement or transaction with any Person
controlling, controlled by or under common control with the Company; or
(p) agree, whether in writing or otherwise, to do any of the
foregoing.
SECTION 5.2. NO SOLICITATION; COMPETING TRANSACTIONS.
(a) From the date hereof until the earlier of (A) the
Effective Time, or (B) the date this Agreement shall terminate in accordance
with its terms (the "Non-Solicitation Period"), the Company shall not, directly
or indirectly, solicit or initiate discussion with, enter into negotiations or
agreements with, or furnish any information about the Company that is not
publicly available to, or otherwise assist, facilitate or encourage, any Person
or group (other than Republic, an affiliate of Republic or their authorized
representatives) concerning any proposal for a merger, sale of substantial
assets, sale of shares of capital stock or other securities, recapitalization
or other business combination transactions involving the Company or any of the
subsidiaries of the Company (a "Competing Transaction"). The Company will
instruct the respective officers, directors, employees, advisors, affiliates,
counsel and agents of the Company and its subsidiaries (collectively, the
"Representatives") not to take any action contrary to the provisions of the
previous sentence; provided, however, that the Company and the Representatives
shall not be prohibited from furnishing confidential information to, entering
into discussions with or entering into any negotiations (or entering into an
agreement resulting from such negotiations) which were not so solicited or
initiated to the extent such action is taken by, or upon the authority of, the
Board of Directors of the Company due to the applicable fiduciary duties of
such Board of Directors to the stockholders of the Company, as determined by
such directors in the exercise of good faith judgment based upon the written
advice of independent, outside legal counsel that a failure of the Board of
Directors of the Company to take such action would be likely to constitute a
breach of its fiduciary duties to the stockholders of the Company; and
provided, further, that for a period of thirty (30) days following the date
hereof, if the Company receives an offer or proposal involving a Competing
Transaction it may furnish all information pertaining to the Company and its
subsidiaries as the Board of Directors of the Company believes in good faith to
be appropriate, if the Board of Directors of the Company (after consultation
with its independent, outside legal counsel) determines in good faith that such
action is required due to the applicable fiduciary duties of the directors. The
Company will notify Republic immediately in writing if the Company becomes
aware that any inquiries or proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated
with, the Company or its subsidiaries with respect to a Competing Transaction.
Each time, if any, that the Board of Directors of the Company determines, upon
written advice of such legal counsel and in the exercise of its good faith
judgment as to its fiduciary duties to the Company's stockholders, that it must
enter into negotiations with, or furnish any information that is not publicly
available to, any Person or other entity or group (other than Republic, an
affiliate of Republic or their authorized representatives) concerning any
Competing Transaction, the Company will give Republic prompt notice of such
determination (which shall include a copy of the written advice of such legal
counsel), the Company will promptly provide
30
<PAGE> 31
Republic copies of the information provided to such other Person or group, and
the Company will fully inform Republic of the status and substance of such
negotiations in a prompt manner.
(b) To induce Republic to enter into this Agreement, the
Company agrees that should it or any of the Representatives during the
Non-Solicitation Period either (i) receive an unsolicited proposal for a
Competing Transaction (an "Acquisition Proposal"), other than from Republic or
an affiliate of Republic or their authorized representatives, and, during the
Non-Solicitation Period or, provided that this Agreement has not been
terminated by the Company pursuant to Section 9.1(j), within one (1) year after
the date hereof, consummate a transaction of a kind that would constitute a
Competing Transaction with (x) the offeror or any affiliate of the offeror who
made the Acquisition Proposal (the "Original Offeror") or (y) another party who
makes an Acquisition Proposal prior to the termination of negotiations with the
Original Offeror, or (ii) solicit or initiate any discussions for a Competing
Transaction (regardless of whether it is consummated); then, in either
instance, the Company shall pay to Republic, as liquidated damages (and not as
a penalty) to compensate Republic for the effort and expense which Republic
will be expending in entering into and performing this Agreement and for its
lost opportunity, the sum of $1,000,000 (which shall be paid contemporaneously
with consummation of the Competing Transaction if the Acquisition Proposal was
not solicited, or contemporaneously with the solicitation or initiation of any
discussion if the Acquisition Proposal was solicited).
SECTION 5.3. APPROVAL BY THE COMPANY'S STOCKHOLDERS. The Company
shall, as soon as practicable following the date hereof, establish a record
date for, duly call, give notice of, convene and hold a meeting of its
stockholders, to be held as promptly as practicable after the date of this
Agreement, for the purpose of voting upon the Merger and this Agreement (the
"Company Special Meeting"). Subject to the exercise of its applicable fiduciary
duties under Delaware Law to the stockholders of the Company, the Board of
Directors of the Company (i) shall recommend that the Company's stockholders
approve this Agreement and the Merger, and include such recommendation in the
Proxy Statement, provided that the Board of Directors shall not be obligated to
make such recommendation if the Company shall have received an offer for a
Competing Transaction that the Board of Directors determines in good faith is
more favorable to the stockholders of the Company from a financial point of
view than the transactions contemplated by this Agreement, and (ii) shall use
its reasonable best efforts to solicit from stockholders of the Company votes
in favor of the Merger and the transactions contemplated hereby. The parties
will use their respective best efforts to cause the Company Special Meeting to
be held and to close the transactions contemplated hereby on or before August
12, 1996.
SECTION 5.4. ACCESS TO INFORMATION. From the date of this Agreement to
the Effective Time, the Company shall, and shall cause its subsidiaries and its
and their representatives, officers, directors, employees, auditors and agents
to, afford the representatives, officers, employees and agents of Republic
reasonable access at all reasonable times to its representatives, officers,
employees, agents, properties, offices, and other facilities and to all books
and records, and shall furnish Republic with all financial, operating and other
data and information Republic, through its representatives, officers, employees
or agents, may reasonably request. Republic shall be entitled
31
<PAGE> 32
to conduct, at its own cost and expense, an environmental assessment of the
Owned Properties and, to the extent permitted under the terms of the Leases, of
the Leased Premises (hereinafter referred to as the "Environmental
Assessment"). The Environmental Assessment may include, but not be limited to,
a physical examination of such real property, and any structures, facilities,
or equipment located thereon, soil samples, ground and surface water samples,
storage tank testing, review of pertinent records, documents, and licenses of
the Company. The Company shall fully cooperate with Republic's conduct of the
Environmental Assessment. Any such Environmental Assessment shall be conducted
with a view to their completion as promptly as practicable, but in any event
prior to the date of first mailing of the Proxy Statement to stockholders of
the Company. Any Environmental Assessment by Republic will be conducted in a
manner that does not cause any meaningful interruption to the business or
operations of the Company and its subsidiaries. Republic shall indemnify and
hold the Company and its subsidiaries harmless against, and agrees to promptly
reimburse them for, any losses, costs, penalties, injuries, or damages to their
respective assets or to any third parties resulting from the conduct (but not
the results or discoveries) of the Environmental Assessment. Republic shall
hold, and will cause its directors, officers, employees, agents, advisors
(including attorneys, auditors, and representatives) to hold in confidence, all
documents and information concerning the Company and its subsidiaries furnished
to Republic in connection with the transactions contemplated in this Agreement,
to the extent required by, and in accordance with, the provisions of the letter
dated November 9, 1995 between Republic and the Company.
SECTION 5.5. AFFILIATE LETTERS.
(a) Schedule 5.5 sets forth a list of names and addresses of
those Persons who may be deemed "affiliates" of the Company within the meaning
of Rule 145 under the Securities Act ("Rule 145"), including the Principal
Stockholders (as defined in Section 5.7) and all officers and directors of the
Company (each an "Affiliate"). The Company shall provide Republic such
information and documents as Republic shall reasonably request for purposes of
reviewing the accuracy and completeness of such list. There shall be added to
such list the names and addresses of any other Person who becomes an Affiliate
of the Company at any time after the date hereof up to and including the time
of the Company Special Meeting or who Republic reasonably identifies (by
written notice to the Company) as being a Person who may be deemed to be an
Affiliate of the Company. The Company shall deliver or cause to be delivered to
Republic, concurrent herewith, from each of the Affiliates identified on
Schedule 5.5 (as the same may be supplemented as aforesaid), a letter in the
form of Exhibit A hereto (the "Affiliate Letter"), which shall contain (i) a
representation that on the date hereof, such Affiliate had no plan or intention
to sell, exchange or otherwise dispose of the Republic Common Stock received by
it pursuant to the Merger, (ii) a covenant that such Affiliate shall not sell
or otherwise dispose of any shares of Republic Common Stock issued to it in the
Merger until such time as final results of operations of Republic covering at
least thirty (30) days of combined operations of Republic and the Company have
been published and (iii) a covenant that such Affiliate will not sell or
otherwise dispose of any shares of Republic Common Stock issued to it in the
Merger, except pursuant to an effective registration statement under the
Securities Act or in accordance with the provisions of paragraph (d) of Rule
145 or another exemption from registration under the Securities Act.
32
<PAGE> 33
(b) Republic shall be entitled to place appropriate legends
on the certificates evidencing the Republic Common Stock to be received by such
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stock transfer instructions to the transfer agent for the Republic Common
Stock, to the effect that the shares of the Republic Common Stock received or
to be received by such Affiliates pursuant to the terms of this Agreement may
only be sold, transferred or otherwise conveyed, and the holder thereof may
only reduce his interest in or risks relating to such shares of Republic Common
Stock, pursuant to an effective registration statement under the Securities Act
or in accordance with the provisions of paragraph (d) of Rule 145 or another
exemption from registration under the Securities Act and, in any event, only
after financial results covering at least 30 days of combined operations of
Republic and the Company after the Effective Time shall have been published.
The foregoing restrictions on the transferability of the Republic Common Stock
shall apply to all purported sales, transfers and other conveyances of the
shares of Republic Common Stock received or to be received by such Affiliates
pursuant to this Agreement and to all purported reductions in the interest in
or risks relating to such shares of the Republic Common Stock whether or not
such Affiliate has exchanged the certificates previously evidencing such
Affiliate's shares of the Company Common Stock for certificates evidencing the
shares of Republic Common Stock into which such shares of the Company Common
Stock were converted. The Proxy Statement and the Registration Statement shall
disclose the foregoing in a reasonably prominent manner.
SECTION 5.6. LETTER OF COMPANY'S ACCOUNTANTS. The Company shall cause
to be delivered to Republic a letter of Arthur Andersen LLP, the Company's
independent public accountants, dated a date within two business days before
(a) the date on which the Registration Statement shall become effective, (b)
the date of the Company Special Meeting, and (c) the Effective Time, and
addressed to Republic in form and substance reasonably satisfactory to Republic
and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement. In connection with the Company's efforts to obtain such
letter, if requested by Arthur Andersen LLP, Republic shall provide a
representation letter to Arthur Andersen LLP complying with SAS 72 (as
amended), if then required.
SECTION 5.7. COVENANT NOT TO COMPETE. On the date hereof, each of HPB
Associates, L.P., Larry Addington, Robert Addington, Bruce Addington, Harold
Blumenstein, and James Grosfeld (collectively, the "Principal Stockholders")
shall execute and deliver to Republic a covenant not to compete and
non-disclosure agreement in the form of Exhibit B hereto (the "Covenant
Letter").
SECTION 5.8. VOTING AGREEMENT. On the date hereof, the Principal
Stockholders shall execute and deliver to Republic a voting agreement and
voting proxy in the form of Exhibit C hereto (the "Voting Agreement").
33
<PAGE> 34
ARTICLE VI
COVENANTS OF REPUBLIC AND MERGERSUB
SECTION 6.1. CERTAIN ACTIONS. Republic and its subsidiaries shall not
take any action that would, or that could reasonably be expected to, result in
any of the conditions to the obligations of Republic to consummate the Merger
set forth in Article VIII not being satisfied.
SECTION 6.2. ACCESS TO INFORMATION. From the date of this Agreement to
the Effective Time, Republic shall furnish the Company with all publicly
available information relating to Republic and allow Representatives of the
Company to engage in discussions with such senior management of Republic as the
parties mutually agree upon.
SECTION 6.3. LETTER OF REPUBLIC'S ACCOUNTANTS. Republic shall cause to
be delivered to the Company a letter of Arthur Andersen LLP, Republic's
independent public accountants, dated a date within two business days before
the date on which the Registration Statement shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with Republic's efforts to
obtain such letter, if requested by Arthur Andersen LLP, the Company shall
provide a representation letter to Arthur Andersen LLP complying with SAS 72
(as amended), if then required.
SECTION 6.4. COMPLIANCE WITH NASDAQ AND SEC REQUIREMENTS. From the
date hereof to the Effective Time, Republic shall comply in all material
respects with all applicable requirements of Nasdaq and the SEC with respect to
the filing of information and reports.
SECTION 6.5. BENEFIT PLANS. As soon as practicable after the Effective
Time but in no event later than January 1, 1997, Republic shall provide
benefits to employees of the Company and its subsidiaries which are
substantially similar to the benefits provided to similarly situated employees
of Republic and its subsidiaries (the date(s) on which employees of the Company
and its subsidiaries are provided such benefits is hereinafter referred to as
the "Benefit Plan Transition Dates"). Subject to requirements of applicable
law, after the Effective Time, Republic shall cause the Surviving Corporation
to maintain the Benefit Plans in substantially the same form as in effect on
the date of this Agreement until the applicable Benefit Plan Transition Date.
With respect to employee benefit plans and other benefit arrangements covering
employees of Republic and its subsidiaries ("Republic Benefit Plans"), Republic
shall grant all employees of the Company and its subsidiaries who become
participants in such plans after the applicable Benefit Plan Transition Date
credit for all service with the Company and its subsidiaries and their
respective predecessors prior to the applicable Benefit Plan Transition Date
for all purposes for which such service was recognized by the Company. To the
extent the Republic Benefit Plans provide medical or dental welfare benefits
after the applicable Benefit Plan Transition Date, for all employees who have
already met the pre-existing conditions and actively at work requirements under
the Benefit Plans that provide
34
<PAGE> 35
medical or dental welfare benefits, Republic shall cause all pre-existing
conditions exclusions and actively at work requirements to be waived. For all
other employees of the Company and its subsidiaries, Republic shall credit all
service with the Company and its subsidiaries that counted toward the
pre-existing conditions and actively at work requirements of such Benefit Plans
toward satisfying the pre-existing conditions and actively at work requirements
of the Republic Benefit Plans. Republic shall provide that any expenses
incurred on or before the applicable Benefit Plan Transition Date shall be
taken into account under the Republic Benefit Plans for purposes of satisfying
the applicable deductible, coinsurance and maximum out-of-pocket provisions for
such employees and their covered dependents. On and after the Effective Time,
Republic shall cause the Benefit Plans that provide medical or dental welfare
benefits to provide continuation coverage (within the meaning of Section 4980B
of the Code) to employees of the Company and its subsidiaries who terminated
employment prior to the Effective Time and their dependents.
ARTICLE VII
COVENANTS OF THE COMPANY, REPUBLIC AND MERGERSUB
SECTION 7.1. LEGAL CONDITIONS TO MERGER. Each of the Company, Republic
and Mergersub, shall use its best efforts to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger, this
Agreement and the transactions contemplated hereby. Such actions shall include,
without limitation, filing or causing to be filed under the HSR Act a premerger
notification and report form, with respect to the transactions contemplated
hereby, furnishing all additional information required under the HSR Act and in
connection with approvals of or filings with any Governmental Authority. Each
of the Company, Republic and Mergersub promptly shall cooperate with and
furnish information to each other in connection with any such requirements
imposed upon any of them or any of their subsidiaries in connection with such
transactions. Each of the Company, Republic and Mergersub shall, and shall
cause each of its subsidiaries to, use its best efforts to obtain (and shall
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Authority or other public or
private third party, required to be obtained or made by the Company, Republic
or any of their subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement. In connection with the filings
under the HSR Act, each party shall request early termination of the HSR
waiting period.
SECTION 7.2. PREPARATION OF PROXY STATEMENT AND REGISTRATION
STATEMENT.
(a) Republic promptly shall prepare, with the Company's
cooperation and assistance, and file with the SEC the Proxy Statement and
Republic promptly shall prepare and file with the SEC the Registration
Statement relating to the issuance of the Merger Consideration, in which the
Proxy Statement will be included as a prospectus. Each of Republic and the
Company shall use its best efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such
filing.
35
<PAGE> 36
(b) Republic shall use its best efforts to obtain, prior to
the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits or approvals in connection with the
issuance of Republic Common Stock in the Merger and under the Company Stock
Options, except that Republic shall not be required to execute or file any
general consent to service of process in any jurisdiction in which it is not
qualified to transact business or to register as a dealer in any jurisdiction.
Republic shall advise the Company (promptly after it receives notice thereof)
of the time when the Registration Statement has become effective, of any
supplement or amendment that has been filed, of the issuance of any stop order,
of the suspension of the qualification of the shares of Republic Common Stock
for offering or sale in any jurisdiction, or of any request by the SEC for
amendment of the Registration Statement or for additional information.
(c) If at any time prior to the Effective Time any event
relating to Republic or any of its subsidiaries or Mergersub should be
discovered which should be set forth in an amendment of, or a supplement to,
the Proxy Statement, Republic promptly shall so inform the Company and shall
furnish all necessary information to the Company relating to such event. If at
any time prior to the Effective Time any event relating to the Company or any
of its subsidiaries should be discovered which should be set forth in an
amendment of, or a supplement to, the Registration Statement, the Company
promptly shall so inform Republic and shall furnish all necessary information
to Republic relating to such event.
SECTION 7.3. BEST EFFORTS. Upon the terms and subject to the
conditions of this Agreement (including, without limitation, the provisions of
Section 5.2(a) relating to the exercise of the applicable fiduciary duties of
the Board of Directors of the Company), each of the parties to this Agreement
shall use its best efforts to take or cause to be taken all actions and to do
or cause to be done all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement, and shall use its best efforts to obtain all necessary waivers,
consents and approvals, including the actions described in Sections 7.1 and 7.2
above.
SECTION 7.4. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Republic and Republic shall give prompt notice to the Company,
of (a) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would, in the reasonable judgment of their respective
management, be likely to cause either (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement to the Effective Time or (ii) any
condition set forth herein to be unsatisfied in any material respect at any
time from the date of this Agreement to the Effective Time, and (b) any
material failure of the Company, Republic or Mergersub, as the case may be, or
any officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, provided that the delivery of any notice pursuant to this Section
7.4 shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
36
<PAGE> 37
SECTION 7.5. BROKERS OR FINDERS. Each of the Company and Republic
represents that no agent, broker, investment banker, financial advisor or other
firm or Person is or shall be entitled to any brokers' or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement (except as set forth in Section 3.23), and each
of the Company and Republic shall indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
other fees, commissions or expenses asserted by any Person on the basis of any
act or statement alleged to have been made by such party.
SECTION 7.6. PUBLIC ANNOUNCEMENTS. Neither the Company nor Republic
shall issue any press release or public announcement, including announcements
by any party for general reception by or dissemination to employees, agents or
customers, with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement without the prior written consent
of the other party (which consent shall not be withheld unreasonably), provided
that the Company or Republic may make any disclosure or announce with such
party, in the opinion of its counsel, is obligated to make pursuant to
applicable law or regulation of the Nasdaq or any national securities exchange,
as applicable, in which case the party desiring to make the disclosure shall
reasonably consult with the other party prior to making such disclosure or
announcement.
SECTION 7.7. TAX TREATMENT. Until the Effective Time, the Company and
Republic shall, and from and after the Effective Time Republic shall, use its
best efforts to qualify the Merger, and shall use best efforts not to take any
action to cause the Merger not to qualify, as a reorganization within Section
368(a) of the Code. From and after the Effective Time, (a) Republic shall cause
the Surviving Corporation to continue the Company's historic business or use a
significant portion of the Company's historic business assets in a business
within the meaning of the Treasury regulation Section 1.368-1(d), and (b)
Republic and Mergersub shall, and Republic shall cause the Surviving
Corporation to, treat the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code and shall file such information with their income
tax returns as may be required by Treasury regulation Section 1.368-3 or other
applicable law.
SECTION 7.8. INDEMNIFICATION AND INSURANCE OF COMPANY OFFICERS AND
DIRECTORS.
(a) The Company shall, and from and after the Effective Time
the Surviving Corporation shall, indemnify, defend and hold harmless each
Person who is now, or who becomes prior to the Effective Time, an officer or
director of the Company or any of its subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses, liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be withheld unreasonably) of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
Person is or was a director or officer of the Company or any of its
subsidiaries, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities"), and (ii) all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out
of, or
37
<PAGE> 38
pertaining to this Agreement or the transactions contemplated by this
Agreement, in each case to the full extent provided under the Certificate of
Incorporation and By-laws of the Company as in effect as of the date hereof or
permitted under Delaware Law, as applicable, to indemnify directors and
officers. As of the date hereof, the Company has no knowledge, after due
inquiry of its directors and executive offi ers, of any pending or threatened
claims, actions or other matters which reasonably could give rise to
Indemnified Liabilities.
(b) The Certificate of Incorporation and the Bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Company's Certificate of Incorporation and
Bylaws on the date of this Agreement, and such provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors or officers of
the Company, unless such modification is required by law.
(c) From and after the Effective Time, the Surviving
Corporation shall honor the terms and conditions of the various indemnification
agreements previously entered into by the Company.
(d) The Company shall, and from and after the Effective Time
the Surviving Corporation shall, obtain and maintain in effect an extended
reporting period under the Company's existing directors' and officers'
liability insurance policy for a period of at least five years from the
Effective Time.
(e) The provisions of this Section 7.8 are intended for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and executors after the Effective Time.
SECTION 7.9. FURTHER ASSURANCES. In the event that at any time after
the Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and/or directors of the
Company, Republic and Mergersub shall take such necessary action.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1. CONDITIONS TO OBLIGATIONS OF THE COMPANY, REPUBLIC AND
MERGERSUB. The obligations of the Company, Republic and Mergersub to consummate
the Merger and the other transactions contemplated by this Agreement are
subject to the fulfillment, on or before the Effective Time, of each of the
following conditions:
38
<PAGE> 39
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote at
the Company Special Meeting .
(b) Approvals of Governmental Authorities and Other Persons.
All authorizations, consents, orders or approvals of, or declarations or
filings with, or expiration or termination of any notice and waiting period
imposed by, any Governmental Authority or any other Person upon the
consummation of the transactions contemplated by this Agreement, the failure of
which to obtain could reasonably be expected to have a Company Material Adverse
Effect or a Republic Material Adverse Effect, shall have been filed or obtained
or shall have occurred. All of such authorizations, consents, orders or
approvals shall have been obtained without the imposition of any conditions
which would require the divestiture of any of the Company's or Republic's
assets or would otherwise materially adversely effect Republic's ability to
operate the businesses of the Company and its subsidiaries following the
Effective Time.
(c) Registration Statement. The Registration Statement shall
have been declared effective, and no stop order terminating the effectiveness
of the Registration Statement shall have been issued or threatened.
(d) No Order or Injunction. The consummation of the Merger
shall not be precluded, enjoined, prohibited or materially restricted by any
order or injunction of a court of competent jurisdiction (each party agreeing
to use its best efforts to have any such order reversed or injunction lifted),
and no litigation, arbitration, or other proceeding initiated by any
Governmental Authority shall be pending which seeks to enjoin prohibit or
materially restrict the consummation of the Merger.
(e) Pooling Letters. The Company shall have received a letter
from Arthur Andersen LLP addressed to the Company, dated the date the Proxy
Statement is first mailed to the stockholders of the Company and confirmed in
writing as of the Effective Time, and Republic shall have received a letter
from Arthur Anderson LLP, addressed to Republic, dated the date the Proxy
Statement is first mailed to the stockholders of the Company and confirmed in
writing as of the Effective Time, stating that the Merger shall qualify as a
pooling of interests business combination under applicable accounting and SEC
rules.
(f) Accountants Letters. The Company and Republic shall have
received the letters of Arthur Andersen LLP described in Sections 5.6 and 6.3
above.
(g) Nasdaq Listing. The shares of Republic Common Stock
included in the Merger Consideration shall have been duly listed for trading on
Nasdaq, subject to official notice of issuance.
SECTION 8.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. Except as
otherwise provided below, the obligations of the Company to consummate the
Merger and the other
39
<PAGE> 40
transactions contemplated by this Agreement shall be subject to the fulfillment
on or prior to the Effective Time of the following additional conditions, any
one or more of which may be waived by the Company:
(a) Performance of Obligations of Republic and Mergersub.
Republic and Mergersub shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, and the Company shall
have received a certificate signed on behalf of each of Republic and Mergersub
by an executive officer of each such company to such effect.
(b) Representations and Warranties; Change in Condition. The
representations and warranties of Republic and Mergersub set forth in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Effective Time, with the same force and effect as through such
representations and warranties had been made on and as of the Effective Time,
and the Company shall have received a certificate signed on behalf of each of
Republic and Mergersub by an executive officer of each such company to such
effect. Since the date hereof, no event or condition shall have occurred (or
shall be discovered) that could reasonably be expected to have a material
adverse effect on the business, results of operations or business prospects of
Republic and its subsidiaries, taken as a whole (a "Republic Material Adverse
Effect"). Notwithstanding the foregoing, the Company acknowledges and agrees
that: (i) the enactment or proposal of any legislation relating to solid waste
flow control, (ii) the occurrence of any event (or series of events) which
materially effects solid waste companies and/or electronic security services
companies generally, or (iii) the commencement of any litigation by Republic
stockholders in the name of or against Republic or any of its subsidiaries or
affiliates arising as a result of the transactions contemplated by this
Agreement, shall in no event be deemed to have had or reasonably be expected to
have a Republic Material Adverse Effect.
(c) Corporate Action. The Company shall have received from
Republic (i) copies of the certificates of incorporation and bylaws of Republic
and Mergersub, (ii) copies of resolutions of Republic's and Mergersub's Boards
of Directors approving and adopting this Agreement and the transactions
contemplated hereby, certified on behalf of each of Republic and Mergersub by
the corporate secretary of each such company, and (iii) a certificate of good
standing from the Secretary of State of the State of Delaware for each of
Republic and Mergersub (dated as of a date not more than 10 days prior to the
Closing).
(d) Opinion of Counsel. The Company shall have received an
opinion of counsel to Republic and Mergersub, dated the Effective Time, in the
form of Exhibit C.
(e) Opinion of Financial Advisor. The Company shall have
received the opinion of Oppenheimer & Co., Inc., dated as of the date of this
Agreement and confirmed or updated in writing as of the date that the Proxy
Statement is first mailed to stockholders of the Company, to the effect that,
as of the date thereof, the consideration to be received in the Merger by the
Company's
40
<PAGE> 41
stockholders is fair to such stockholders from a financial point of view, and
such opinion shall not have been withdrawn prior to the Effective Time.
(f) Tax Opinion of Company's Counsel. The Company shall have
received the opinion, based on appropriate representations of the Company and
Republic, of Schulte Roth & Zabel, counsel to the Company, to the effect that
the Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that the Company,
Republic and Mergersub each will be a party to that reorganization within the
meaning of Section 368(b) of the Code, which opinion shall have been dated on
or about the date the Proxy Statement is first mailed to stockholders of the
Company.
(f) Tax Opinion of Republic's Counsel. Republic shall have
received the opinion, based on appropriate representations of the Company and
Republic, of Akerman, Senterfitt & Eidson, P.A., counsel to Republic, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that the
Company, Republic and Mergersub each will be a party to that reorganization
within the meaning of Section 368(b) of the Code, which opinion shall have been
dated on or about the date the Proxy Statement is first mailed to stockholders
of the Company.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF REPUBLIC AND MERGERSUB. The
obligations of Republic and Mergersub to consummate the Merger and the other
transactions contemplated by this Agreement shall be subject to the fulfillment
on or prior to the Effective Time of the following additional conditions, any
one or more of which may be waived by Republic and Mergersub:
(a) Performance of Obligations of the Company. The Company
shall have performed and complied in all material respects with all agreements
required by this Agreement to be performed or complied with by the Company at
or prior to the Effective Time, and Republic and Mergersub shall have received
a certificate of the Company, signed by the chief executive officer and the
chief financial officer of the Company, to such effect.
(b) Representations and Warranties; Change in Condition. The
representations and warranties of the Company set forth in this Agreement shall
be true and correct on and as of the date hereof and at and as of the Effective
Time, with the same force and effect as though such representations and
warranties had been made on and as of the Effective Time, and Republic and
Mergersub shall have received a certificate of the Company, signed by the chief
executive officer and the chief financial officer of the Company, to such
effect. Since the date hereof, no event or condition shall have occurred (or
shall be discovered) that could reasonably be expected to have a material
adverse effect on the business, assets, results of operations, customer and
employee relations, or business prospects of the Company and its subsidiaries,
taken as a whole (a "Company Material Adverse Effect"). Notwithstanding the
foregoing, each of Republic and Mergersub acknowledges and agrees that: (i) the
enactment or proposal of any legislation relating to solid waste flow control,
(ii) the occurrence of any event (or series of events) which materially effects
solid
41
<PAGE> 42
waste companies generally, or (iii) the commencement of any litigation by the
Company stockholders in the name of or against the Company or any of its
subsidiaries or affiliates arising as a result of the transactions contemplated
by this Agreement, shall in no event be deemed to have had or reasonably be
expected to have a Company Material Adverse Effect.
(c) Corporate Action. Republic and Mergersub shall have
received from the Company (i) copies of the certificates of incorporation and
bylaws of the Company and each of its subsidiaries, (ii) copies of resolutions
of the Company's Board of Directors approving and adopting this Agreement and
the transactions contemplated hereby, certified on behalf of the Company by its
corporate secretary, and (iii) a certificate of good standing from the
Secretary of State of the State of Delaware for the Company (dated as of a date
not more than 10 days prior to the Closing).
(d) Opinion of Counsel. Republic and Mergersub shall have
received an opinion of counsel to the Company, dated the Effective Time, in the
form of Exhibit E.
(e) Environmental Assessment. The Environmental Assessment
shall not have disclosed environmental conditions, which were not otherwise
disclosed to Republic in the SEC Documents or Schedule 3.10 prior to the date
of this Agreement, which individually or in the aggregate would reasonably be
expected to have a Company Material Adverse Effect; provided, that this Section
8.3(e) shall be of no further force or effect unless the Environmental
Assessment has been completed by the date of the first mailing of the Proxy
Statement to the stockholders of the Company and Republic shall have given
notice to the Company of the failure of this condition to be satisfied by such
mailing date.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated and the
Merger contemplated by this Agreement may be abandoned at any time after the
occurrence of any of the following events, but prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company);
(a) by mutual written consent of Republic and the Company;
(b) by either Republic or the Company, if any Governmental
Authority shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the Merger,
and such order, decree, ruling or other action shall have become final and
nonappealing;
(c) by either Republic or the Company, if the Merger has not
been consummated by December 31, 1996 (such date, or such later date mutually
agreed to in writing by the parties, hereto referred to as the "End Date")
(other than due to the failure of the party seeking to terminate
42
<PAGE> 43
this Agreement to perform its obligations under this Agreement required to be
performed at or prior to the Effective Time);
(d) by either Republic or the Company, if the Company's
Special Meeting shall have been held, and the stockholders of the Company shall
have failed to approve and adopt this Agreement and the Merger at the Company
Special Meeting (or any adjournment thereof);
(e) by Republic, if a tender offer or exchange offer for more
than 30% of the outstanding shares of the Company Common Stock is commenced,
and the Board of Directors of the Company, within ten business days after such
tender offer or exchange offer is so commenced, fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders or takes
no position with respect to such offer;
(f) by Republic, if any Person or group (as that term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder), other than the Principal Stockholders, shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
more than 50% of the then combined voting power of all classes of the capital
stock of the Company;
(g) by Republic, if the Board of Directors of the Company
does not recommend to its stockholders the approval of the Merger, this
Agreement and the transactions contemplated hereby, or withdraws, modifies or
changes its recommendation to approve the Merger, this Agreement and the
transactions contemplated hereby, or shall have resolved to do any of the
foregoing, except as permitted in accordance with the terms of Section 9.1(h)
below;
(h) by either Republic or the Company, if the Company or its
stockholders receives an offer for a Competing Transaction that the Board of
Directors of the Company determines in good faith is more favorable to the
stockholders of the Company from a financial point of view than the
transactions contemplated by this Agreement, and the Board of Directors of the
Company accepts, recommends or resolves to accept or recommend to the Company's
stockholders such a Competing Transaction;
(i) by Republic, if any of the representations and warranties
of the Company in this Agreement are not true and correct and could not
reasonably be expected to become true and correct prior to the End Date, or if
the Company breaches in any material respects any covenant of the Company
contained in this Agreement and such breach could not reasonably be expected to
be cured prior to the End Date; or
(j) by the Company, if any of the representations and
warranties of Republic in this Agreement are not true and correct and could not
reasonably be expected to become true and correct prior to the End Date, or if
Republic breaches in any material respect any covenant of Republic contained in
this Agreement and such breach could not reasonably be expected to be cured
prior to the End Date.
43
<PAGE> 44
SECTION 9.2. EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 9.1, this Agreement shall terminate and become
void and of no force and effect, the Merger shall be abandoned without further
action by any of the parties to this Agreement, and no party to this Agreement
shall have any liability or further obligation under this Agreement, except for
the agreements contained in Sections 5.2 (No Solicitations), 7.5 (Brokers or
Finders), 10.3 (Fees and Expenses) and 10.8 (Governing Law); provided that any
termination of this Agreement pursuant to Sections 9.1(i) or 9.1(j) of this
Agreement shall not relieve any party from any liability for the breach of any
material representation, warranty or covenant contained in this Agreement or be
deemed to constitute a waiver of any remedy available for such breach, and
further provided, that if Republic terminates this Agreement pursuant to
Section 9.1(i), then Republic shall be entitled to recover its reasonable
attorney's fees and costs incurred in any action brought by Republic against
the Company to recover its damages caused by such breach, or if the Company
terminates this Agreement pursuant to Section 9.1(j), then the Company shall be
entitled to recover its reasonable attorney's fees and costs incurred in any
action brought by the Company against Republic to recover its damages caused by
such breach. Upon termination of this Agreement, each party shall return all
documents and other materials of any other party which constitute confidential
or proprietary information or trade secrets, whether so obtained before or
after the execution of this Agreement, to the party furnishing the same.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified and supplemented only by written
agreement of the Company, on the one hand, and Republic and Mergersub, on the
other hand, at any time prior to the Effective Time with respect to any of the
terms contained herein; provided, however, that, after the adoption of this
Agreement by the Company's stockholders, no such amendment or modification
shall reduce the amount or change the form the consideration to be delivered to
the stockholders of the Company as contemplated by Article II of this
Agreement.
SECTION 10.2. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the
Company, or of Republic or Mergersub, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by Republic or
Mergersub, or by the Company, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 10.2.
SECTION 10.3. FEES AND EXPENSES. Except as otherwise provided in this
Agreement or by law, all fees and expenses incurred in connection with the
Merger, this Agreement and the
44
<PAGE> 45
transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, except that (i) the expenses payable in
connection with printing and mailing the Proxy Statement and the Registration
Statement, and all SEC filing fees relating to the transactions contemplated
herein, shall be borne by Republic and (ii) all HSR Act filing fees payable
with respect to the Merger shall be shared equally by Republic and the Company.
SECTION 10.4. NO THIRD-PARTY BENEFICIARIES. Except as provided in
Section 7.8, this Agreement is for the sole benefit of the parties hereto and
nothing herein expressed or implied shall give or be construed or is intended
to give to any Person, other than the parties hereto, any legal or equitable
rights hereunder.
SECTION 10.5. RELIANCE ON AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. Notwithstanding any knowledge of facts determined or determinable
by any party by investigation, each party shall have the right to fully rely on
the representations and warranties of the other parties contained in this
Agreement or in any other documents or certificates delivered in connection
herewith. Each representation and warranty contained in this Agreement is
independent of each other representation and warranty. None of the
representation, warranties, or covenants in this Agreement or in any Schedule,
certificate, or other document delivered pursuant to this Agreement shall
survive beyond the Effective Time, except for the agreements in Article I (The
Merger), Article II (Conversion of Securities; Exchange of Certificates),
Section 6.5 (Benefit Plans), Section 7.7 (Tax Treatment), Section 7.8
(Indemnification and Insurance of Company Officers and Directors), Section 7.9
(Further Assurances), and Section 10.8 (Governing Law), and for those set forth
in the Affiliate Letters, the Covenant Letters, and the Voting Agreements.
SECTION 10.6. NOTICES. All notice and other communications required or
permitted hereunder shall be in writing and shall be deemed duly given if
delivered by hand, faxed (provided a confirmation is sent by guaranteed
overnight delivery), guaranteed overnight delivery or mailed, first class
certified mail with postage prepaid, to the parties at the following addresses,
or such other addresses as such party shall furnish to the other in writing:
(a) If to Republic or Mergersub to:
Republic Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Fort Lauderdale, FL 33301
Attn: Richard L. Handley, General Counsel
Fax: (954) 522-8219
45
<PAGE> 46
with a copy to:
Akerman, Senterfitt & Eidson, P.A.
One S.E. Third Avenue, 28th Floor
Miami, FL 33131
Attn: Jonathan L. Awner, Esq.
Fax: (305) 374-5095
(b) If to the Company to:
Addington Resources, Inc.
771 Corporate Drive, Suite 1000
Lexington, Kentucky 40503
Attn: Howard P. Berkowitz
Fax: (212) 757-0577
with a copy to:
Schulte Roth & Zabel
900 Third Avenue, 23rd Floor
New York, NY 10022
Attn: Stuart D. Freedman, Esq.
Fax: (212) 593-5955
SECTION 10.7. ASSIGNMENT. This Agreement and all of its provisions
shall be binding upon and inure to the benefit of the parties to this
Agreement, but neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise.
SECTION 10.8. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
applicable to contracts executed and to be wholly performed within such State.
SECTION 10.9. HEADINGS. The table of contents and the article and
section headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made in this Agreement to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement (which term as used
throughout includes the Exhibits and Schedules hereto) and the other documents
and certificates contemplated herein embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter.
There are no
46
<PAGE> 47
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein.
SECTION 10.11. SEVERABILITY. Wherever possible, each provision or
portion of any provisions of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 10.12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
47
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement on the date set forth above.
REPUBLIC INDUSTRIES, INC., a Delaware
corporation
By: /s/ H. Wayne Huizenga
---------------------------------------
H. Wayne Huizenga
Chairman of the Board and
Chief Executive Officer
RI/AR MERGER CORP., a Delaware corporation
By: /s/ Richard L. Handley
---------------------------------------
Richard L. Handley
Vice President
ADDINGTON RESOURCES, INC., a Delaware
corporation
By: /s/ Howard P. Berkowitz
---------------------------------------
Howard P. Berkowitz
Chairman of the Board
48
<PAGE> 49
EXHIBIT A
June 25, 1996
Republic Industries, Inc.
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of June
25, 1996 (the "Merger Agreement"), among REPUBLIC INDUSTRIES, INC., a Delaware
corporation ("Republic"); RI/AR MERGER CORP., a Delaware corporation and
wholly-owned subsidiary of Republic ("Mergersub"); and ADDINGTON RESOURCES,
INC., a Delaware corporation (the "Company"); pursuant to which Mergersub is to
be merged with and into the Company (the "Merger"), with the Company continuing
as the surviving corporation and as a wholly-owned subsidiary of Republic
following the Merger. Upon consummation of the Merger, the undersigned, as a
stockholder of the Company, will receive shares (the "Shares") of common stock,
$0.01 par value per share, of Republic ("Republic Common Stock") in exchange
for the undersigned's shares of common stock of the Company ("Company Common
Stock"). Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Merger Agreement.
The undersigned may be deemed to be an "affiliate" of the Company within
the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and for purposes of qualifying the
Merger as a pooling of interests business combination under applicable
accounting and Securities and Exchange Commission ("SEC") rules and
regulations.
The undersigned hereby represents that on the date hereof, the undersigned
has no plan or intention to sell, exchange or otherwise dispose of the Shares.
As an affiliate of the Company the undersigned understands that any resale
of the Shares must be made in accordance with the then applicable provisions of
Rule 145, pursuant to an effective registration statement filed with the SEC
under the Securities Act or in a transaction exempt from registration under the
Securities Act. Accordingly, the undersigned agrees that the undersigned will
not sell, transfer or otherwise dispose of any of the Shares unless such sale,
transfer or disposition is (i) pursuant to an effective registration statement
under the Securities Act, (ii) in compliance with the provisions of Rule 145,
or (iii) in accordance with an opinion of counsel, in form and substance
satisfactory to Republic, that an exemption from the registration requirements
under the Securities Act is available.
The undersigned understands that it is Republic's intention that the
transactions contemplated by the Merger Agreement be accounted for as a pooling
of interests business combination. The
<PAGE> 50
Republic Industries, Inc.
June 25, 1996
Page 2
_________________________
undersigned further understands that in order to accommodate this accounting
treatment, affiliates of the Company must comply with certain rules of the SEC
restricting their resale of Republic Common Stock received pursuant to the
Merger Agreement or otherwise acquired. Accordingly, the undersigned represents
that the undersigned has not, within the preceding 30 days, sold, transferred or
otherwise disposed of any shares of Company Common Stock held by the undersigned
and agrees that the undersigned will not sell, transfer, dispose of or otherwise
part with any interest in or with respect to, or in any other manner reduce the
undersigned's investment risk with respect to, any of the Shares until such time
as Republic publishes financial results covering at least 30 days of combined
operations of Republic and the Company.
The undersigned understands that the certificates evidencing the Shares
will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE
HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER THE ACT WITH RESPECT THERETO, (B) IN ACCORDANCE WITH RULE 145(D)
UNDER THE ACT, OR (C) IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE, AND ALSO MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE
SECURITIES AND EXCHANGE COMMISSION'S ACCOUNTING SERIES RELEASES 130 AND
135.
The undersigned further understands that Republic will instruct its stock
transfer agent not to effect any transfer of the Shares unless such transfer is
made in compliance with said restrictions. In connection with any sale,
transfer or other disposition of the Shares in accordance with Rule 145, the
undersigned will be required to deliver to Republic's transfer agent, Wells
Fargo Bank (Texas), National Association, the undersigned's restricted stock
certificate(s), instructions for transfer and a representation letter which
confirms that the Shares are being sold in a manner that complies with the
requirements of Rule 145(d) promulgated under the Securities Act, specifically,
Rules 144(f) and (g) thereunder relating to the manner of sale of such shares.
A form of the representation letter is attached hereto as Annex I.
The undersigned hereby acknowledges and agrees that any breach of this
letter may result in special damage and injury to Republic not readily
recoverable as money damages and therefore the undersigned consents to, and
covenants that he or it will not oppose, any application by Republic,
2
<PAGE> 51
Republic Industries, Inc.
June 25, 1996
Page 3
- ----------------------------
for equitable relief from any such breach by way of injunction or decree of
specific performance on the basis that Republic has an adequate remedy at law.
This Letter shall terminate if the Agreement is terminated.
----------------------------------
[NAME]
ACCEPTED AND AGREED TO AS OF THE
DATE FIRST ABOVE WRITTEN:
- --------------------------------
REPUBLIC INDUSTRIES, INC.
By:__________________________________
Name: ____________________________
Title:____________________________
3
<PAGE> 52
ANNEX I
[FORM OF REPRESENTATION LETTER TO BE
COMPLETED BY BROKER OR OTHER APPROPRIATE PARTY]
Well Fargo Bank (Texas), National Association.
Corporate Trust Department
1000 Louisiana, Suite 700
Houston, TX 77002
Telephone: (713) 250-4020
Facsimile: (713) 250-7929
Attn: Ms. Deri Ward
RE: SALE OF SHARES OF COMMON STOCK OF REPUBLIC
INDUSTRIES, INC. ("REPUBLIC")
Dear Ms. Ward:
The undersigned hereby certifies that, in connection with the sale of
shares of Common Stock of Republic described below issued to the Record Holder
pursuant to the Company's Prospectus, dated _________, 1996, as filed on a
Registration Statement on Form S-4 with the Securities and Exchange Commission,
the undersigned is selling such shares in a manner that complies with the
requirements of Rule 145(d) under the Securities Act of 1933, as amended,
specifically Rules 144(f) and (g) thereunder relating to the manner of sale of
such shares.
Record Holder: _______________________________________
Stock Certificate No(s). _______________________________
Number of Shares Sold: _________________________________
Date of Sale: __________________________________________
In the event that you receive stock certificates representing more shares
of Common Stock than has been sold by the undersigned, then you should return
to the undersigned a newly issued certificate for such excess shares in the
name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer order on your records with regard to such
certificate.
Very truly yours,
cc: Republic Industries, Inc.
Facsimile: (954) 522-8219
Attn: Corporate Secretary
4
<PAGE> 53
EXHIBIT B
---------
June 25, 1996
Republic Industries, Inc.
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of June
25, 1996 (the "Merger Agreement"), among REPUBLIC INDUSTRIES, INC., a Delaware
corporation ("Republic"); RI/AR MERGER CORP.,a Delaware corporation and
wholly-owned subsidiary of Republic ("Mergersub"); and ADDINGTON RESOURCES,
INC., a Delaware corporation (the "Company"); pursuant to which Mergersub is to
be merged with and into the Company (the "Merger"), with the Company continuing
as the surviving corporation and a wholly-owned subsidiary of Republic.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Merger Agreement.
The undersigned agrees that for a period of three (3) years following the
Effective Time, the undersigned shall not, directly or indirectly:
(1) alone or as a partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor, or security holder,
of any Person, engage in any business activity in any State in which
Republic, the Company or any of their subsidiaries (the "Republic
Companies") are doing business, which is directly or indirectly in
competition with the business engaged in by the Republic Companies in
such States (a "Competing Business"); provided, however, that (A) the
beneficial ownership by the undersigned of less than five percent (5%)
(provided that the collective beneficial ownership of the Management
Stockholders does not exceed ten percent (10%)) of any class of
securities of any entity having a class of equity securities actively
traded on a national securities exchange or The Nasdaq Stock Market shall
not be deemed, in and of itself, to violate the prohibitions of this
Section, and (B) the continuation of the current operations of the
business (if any) owned by the undersigned, as identified herein on the
line below the signature line of the undersigned, shall not be deemed to
be a Competing Business;
(2) (i) induce any Person which is known by the undersigned to be a
customer of the Republic Companies to patronize any Competing Business;
(ii) solicit or accept for or on behalf of any Competing Business any
Person which is known by the undersigned customer of the Republic
Companies; or (iii) request or advise any person which is known by the
undersigned to be a customer of the Republic Companies to withdraw,
curtail or cancel any such customer's business with the Republic
Companies;
<PAGE> 54
Republic Industries, Inc.
June 25, 1996
Page 2
- --------------------------
(3) employ any person who was employed by the Republic Companies
within six months prior to the date being employed by the undersigned, or
in any manner seek to induce any employee of the Republic Companies to
leave his or her employment;
(4) in any way utilize, disclose, copy, reproduce or retain in his
possession any of the proprietary rights, records or trade secrets of the
Republic Companies, including, but not limited to, any customer lists and
non-public financial data; provided that the foregoing shall not restrict
the retention by the undersigned of non-public financial data received by
the undersigned in his capacity as a director of the Company.
The undersigned agrees and acknowledges that the restrictions contained in
this letter are reasonable in scope and duration, and are necessary to protect
Republic. If any provision of this letter is adjudged by a court of competent
jurisdiction to be invalid or unenforceable, the same will in no way affect the
validity or enforceability of the remainder of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or otherwise, then the
parties agree that the court making such determination shall have the power to
reduce the duration, area or scope of such provision, and/or to delete specific
words or phrases, and in its reduced or modified form, such provision shall
then be enforceable and shall be enforced. The undersigned further agrees and
acknowledges that any breach of this letter will cause irreparable injury to
Republic and upon any breach or threatened breach of any provision of this
letter, Republic shall be entitled to injunctive relief, specific performance
or other equitable relief, without the necessity of posting bond; provided,
however, that this shall in no way limit any other remedies which Republic may
have as a result of such breach, including the right to seek monetary damages.
This Letter shall terminate if the Agreement is terminated.
--------------------------------------------
NAME:
Other Business (if any):____________________
ACCEPTED AND AGREED TO AS OF THE
DATE FIRST ABOVE WRITTEN:
- --------------------------------
REPUBLIC INDUSTRIES, INC.
By: ___________________________________
2
<PAGE> 55
Republic Industries, Inc.
June 25, 1996
Page 3
- ----------------------------
Name:______________________________
Title:_______________________________
3
<PAGE> 56
Exhibit C
VOTING AGREEMENT
VOTING AGREEMENT, dated as of June 25, 1996 (this "Agreement"), by HPB
ASSOCIATES, L.P., HAROLD BLUMENSTEIN, JAMES GROSFELD, LARRY ADDINGTON, ROBERT
ADDINGTON and BRUCE ADDINGTON (collectively, the "Stockholders") with REPUBLIC
INDUSTRIES, INC., a Delaware corporation ("Acquiror").
WHEREAS, Acquiror and RI/AR Merger Corp., a Delaware corporation and a
wholly owned subsidiary of Acquiror ("Acquiror Sub"), propose to enter into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), with Addington Resources, Inc., a Delaware corporation (the
"Company"), which provides, among other things, that the Company will merge
with Acquiror Sub pursuant to the merger contemplated by the Merger Agreement
(the "Merger");
WHEREAS, as of the date hereof, the Stockholders own 6,867,615 shares
of common stock, par value $1.00 per share, of the Company ("Company Common
Stock"), which represent in the aggregate approximately 45% of the total issued
and outstanding Company Common Stock; and
WHEREAS, as a condition to the willingness of Acquiror to enter into
the Merger Agreement, Acquiror has required that the Stockholders agree, and in
order to induce Acquiror to enter into the Merger Agreement, the Stockholders
have agreed, to enter into this Agreement with respect to all the shares of
Company Common Stock now owned and which may hereafter be acquired by the
Stockholders (the "Shares") and any other securities, if any, which the
Stockholders are entitled to vote at any meeting of stockholders of the Company
(the "Other Securities").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
PROXY OF THE STOCKHOLDERS
SECTION 1.01. Voting Agreement. Each Stockholder hereby agrees that
during the time this Agreement is in effect, at any meeting of the shareholders
of the Company, however called, and in any action by consent of the
shareholders of the Company, each of the Stockholders shall vote the Shares and
the Other Securities: (a) in favor of the Merger, the Merger Agreement (as
amended from time to time) or any of the transactions contemplated by the
Merger Agreement; and (b) against any proposal for any merger, sale of
substantial assets, sale of shares of Company Common Stock or other securities,
recapitalization, or other business combination transactions between the
Company or any of the subsidiaries of the Company and any person or entity
(other than the Merger) or any other corporate action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or
<PAGE> 57
agreement of the Company under the Merger Agreement or which could result in
any of the conditions to the Company's obligations under the Merger Agreement
not being fulfilled. Each Stockholder acknowledges receipt and review of a
copy of the Merger Agreement.
SECTION 1.02. Irrevocable Proxy. Each Stockholder hereby irrevocably
appoints Acquiror, until termination of the Merger Agreement, as his or its
attorney and proxy pursuant to the provisions of Section 212(c) of the General
Corporation Law of the State of Delaware, with full power of substitution, to
vote and otherwise act (by written consent or otherwise) with respect to the
Shares and the Other Securities, which such Stockholder is entitled to vote at
any meeting of stockholders of the Company (whether annual or special and
whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise, on the matters and in the manner specified in
Section 1.01 hereof. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND
COUPLED WITH AN INTEREST. The Stockholders hereby revoke all other proxies and
powers of attorney with respect to the Shares and the Other Securities which
they may have heretofore appointed or granted, and no subsequent proxy or power
of attorney shall be given or written consent executed (and if given or
executed, shall not be effective) by the Stockholders with respect to the
matters specified in Section 1.01 hereof. All authority herein conferred or
agreed to be conferred shall survive the death or incapacity of any Stockholder
and any obligation of any Stockholder under this Agreement shall be binding
upon the heirs, personal representatives and successors of such Stockholder.
SECTION 1.03. Waiver of Restrictions. HPB Associates, L.P. and Robert
Addington, Bruce Addington and Larry Addington agree hereby to waive any
restrictions placed on the granting of proxies pursuant to the Stock Purchase
Agreement, dated August 4, 1995, by and between HPB Associates, L.P. and Robert
Addington, Bruce Addington and Larry Addington. ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants, severally but not
jointly, to Acquiror as follows:
SECTION 2.01. Authority Relative to This Agreement. Each Stockholder
has all necessary power and authority to execute and deliver this Agreement, to
perform his or its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
such Stockholder and constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
SECTION 2.02. No Conflict. (a) The execution and delivery of this
Agreement by such Stockholder do not, and the performance of this Agreement by
such Stockholder shall not, (i) conflict with or violate any federal, state or
local law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to such Stockholder or by which the Shares or the Other
2
<PAGE> 58
Securities owned by such Stockholder are bound or affected or (ii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Shares or the Other Securities
owned by such Stockholder pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which such Stockholder is a party or by which such Stockholder or
the Shares or Other Securities owned by such Stockholder are bound or affected.
(b) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of this Agreement by such Stockholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity (as such term is defined in
the Merger Agreement) except for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended, or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
SECTION 2.03. Title to the Shares. As of the date hereof, each
Stockholder is the record and beneficial owner of the number of shares of
Company Common Stock set forth opposite such Stockholder's name on Appendix A
hereto, which Shares represent on the date hereof the percentage of the
outstanding Company Common Stock set forth on such Appendix. Such Shares are
all the securities of the Company owned, either of record or beneficially, by
such Stockholder. Except as set forth on Appendix A, such Shares are owned
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on such Stockholder's voting
rights, charges and other encumbrances of any nature whatsoever. Except as
provided in this Agreement, no Stockholder has appointed or granted any proxy,
which appointment or grant is still effective, with respect to the Shares or
Other Securities owned by such Stockholder.
ARTICLE III
COVENANTS OF THE STOCKHOLDERS
SECTION 3.01. No Disposition or Encumbrance of Shares. Each
Stockholder hereby covenants and agrees that, except as contemplated by this
Agreement, such Stockholder shall not offer or agree to sell, transfer, tender,
assign, hypothecate or otherwise dispose of, grant a proxy or power of attorney
with respect to, or create or permit to exist any security interest, lien,
claim, pledge, option, right of first refusal, agreement, limitation on any
Stockholder's voting rights, charge or other encumbrance of any nature
whatsoever with respect to the Shares or, directly or indirectly, initiate,
solicit or encourage, subject to the provisions of Section 5.2 of the Merger
Agreement, any person to take actions which could reasonably be expected to
lead to the occurrence of any of the foregoing.
SECTION 3.02. No Solicitation of Transactions. Each Stockholder
hereby agrees, jointly and severally, to be bound and to comply with the
obligations of the Company set
3
<PAGE> 59
forth in Section 5.2(a) of the Merger Agreement as if such obligations were set
forth in their entirety in this Section 3.02 as obligations of such
Stockholder.
SECTION 3.03. No Profit From Competing Transaction. Each Stockholder
hereby covenants and agrees that should the Company or the Representatives (as
defined in Section 5.2(a) of the Merger Agreement) during the Non-Solicitation
Period (as defined in Section 5.2(a) of the Merger Agreement) either (i)
receive an unsolicited proposal for a Competing Transaction (an "Acquisition
Proposal"), other than from Acquiror or an affiliate of Acquiror or their
authorized representatives, and, during the Non-Solicitation Period or within
one (1) year after the date hereof, consummate a transaction of a kind that
would constitute a Competing Transaction with (x) the offeror or any affiliate
of the offeror who made the Acquisition Proposal (the "Original Offeror") or
(y) another party who makes an Acquisition Proposal prior to the termination of
negotiations with the Original Offeror, or (ii) solicit or initiate any
discussions for a Competing Transaction (regardless of whether it is
consummated); then, in either instance, each Stockholder shall pay to Acquiror
an amount in cash (or if the consideration to be received in such Competing
Transaction is securities of the acquiror, an amount of such securities, or
payment in such form, as permitted by the Competing Transaction) equal to the
consideration paid by the acquiror (the "Third Party Acquisition
Consideration") on a per share of Company Common Stock basis in excess of (1)
$21.50 (in the case of proposals noted in (i) above) or (2) $15.00 (in the case
of solicitations under (ii) above) (in either case, the "Base Amount")
multiplied by the number of shares beneficially owned by each such Stockholder
(which amounts shall be paid contemporaneously with consummation of the
acquisition, whether or not such Acquisition Proposal was solicited); provided
that the number of shares and the Base Amount shall be appropriately adjusted
for stock splits, stock dividends, stock combinations, recapitalizations,
reclassifications and other similar transactions; provided further that no
payments shall be required pursuant to the terms of this Section 3.03 if the
Merger Agreement is terminated as a result of the breach of any of the terms of
the Merger Agreement by Acquiror. The Third Party Acquisition Consideration
shall be deemed to include both cash and any securities or other property
received in the transaction, as well as debts of the Stockholders assumed in
the transaction. In the event that any Third Party Acquisition Consideration
shall be payable in securities; debt securities shall be valued at market value
on the day of delivery; preferred stock shall be valued at market value on the
day of delivery; and common stock shall be valued by its market value on the
day of delivery based on the ten day average closing price of such common stock
on the principal stock exchange or Nasdaq market on which it is traded or
quoted for the period prior to the consummation of such acquisition. In the
event that any Third Party Acquisition Consideration shall be payable in other
property, such other property shall be valued at an amount to be reasonably
determined by Acquiror.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Termination. This Agreement (except for Section 3.03
and Article IV of this Agreement) shall terminate upon the termination of the
Merger Agreement in
4
<PAGE> 60
accordance with its terms. Section 3.03 and Article IV of this Agreement shall
survive termination of this Agreement.
SECTION 4.02. Further Assurances. Each Stockholder and Acquiror will
execute and deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate the transactions
contemplated hereby.
SECTION 4.03. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity. Acquiror shall be entitled to its reasonable
attorneys' fees in any action brought to enforce this Agreement in which it is
the prevailing party.
SECTION 4.04. Entire Agreement. This Agreement constitutes the entire
agreement between Acquiror and the Stockholders with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between Acquiror and the Stockholders with respect to the
subject matter hereof.
SECTION 4.05. Amendment. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
SECTION 4.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the terms of this Agreement remain as originally contemplated to the
fullest extent possible.
SECTION 4.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any Delaware state or federal court.
5
<PAGE> 61
IN WITNESS WHEREOF, each Stockholder has duly executed this Agreement.
HPB ASSOCIATES, L.P.
By: HPB GROUP LLC
By:
-----------------------
Dated: June __, 1996 Howard P. Berkowitz,
Managing Member
Dated: June __, 1996
Harold Blumenstein, individually
Dated: June __, 1996
James Grosfeld, individually
Dated: June __, 1996
Larry Addington, individually
Dated: June __, 1996
Robert Addington, individually
Dated: June __, 1996
Bruce Addington, individually
Agreed and Accepted
as of June __, 1996:
REPUBLIC INDUSTRIES, INC.
By:
--------------------------
Name:
Title:
6
<PAGE> 62
APPENDIX A
<TABLE>
<CAPTION>
Approximate Percentage of
Outstanding Company
Numbers of
Shares Shares Shares Pledged
------ ------ --------------
<S> <C> <C> <C>
HPB Associates, L.P. 2,455,285 16.2
Larry Addington 2,263,324 14.9 550,000(1)
Robert Addington 980,000 6.5 900,000(2)
Bruce Addington 914,006 6.0 910,006(3)
Harold Blumenstein 100,000 0.1
James Grosfeld 155,000 0.1
</TABLE>
- -------------------------
(1)250,000 shares are pledged to CIT; 200,000 shares are pledged to
National City Bank; and 100,000 shares are pledged to Nations Bank.
(2)Pledged to Nations Bank.
(3)560,006 shares are pledged to Prudential Securities; 250,000 shares are
pledged to CIT; and 100,000 shares are pledged to Bear Stearns.
<PAGE> 63
EXHIBIT D
OPINION OF COUNSEL FOR REPUBLIC INDUSTRIES, INC.
The following shall be addressed to Continental Waste Industries, Inc.
Capitalized terms used herein without definition shall have the meanings as set
forth in the Agreement and the Plan of Merger (the "Merger Agreement").
(1) Each of Republic and Mergersub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on the business as now being conducted.
(2) Each of Republic and Mergersub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed or to be in good standing
(individually or in the aggregate) would not have a material adverse effect on
Republic and its subsidiaries, taken as a whole.
(3) The shares of Republic Common Stock to be issued in the Merger, when
issued in accordance with the terms of the Merger Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
(4) Republic and Mergersub have the requisite corporate power and
authority to execute and deliver the Merger Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Merger
Agreement by Republic and Mergersub has been duly authorized by all necessary
corporate action on the part of Republic and Mergersub, respectively. The
Merger Agreement has been duly executed and delivered by Republic and Mergersub
and constitutes a valid and binding obligation of Republic and of Mergersub,
enforceable against Republic and Mergersub in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and general equitable
principles.
(5) The execution and delivery of the Merger Agreement does not, and the
consummation of the transactions contemplated by the Merger Agreement and
compliance with the provisions of the Merger Agreement will not, conflict with,
or result in any violation of, or constitute a default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Republic or any of its subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of Republic or any provision of the
comparable charter or organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit,
<PAGE> 64
concession, franchise, or license applicable to Republic or any of its
subsidiaries or their respective properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree to which Republic or any of its subsidiaries is a party or by which their
respective properties or assets are bound, other than, in the case of clause
(ii) and clause (iii), any such conflicts, violations, defaults, rights, losses
or Liens that individually or in the aggregate would not (1) have a Material
adverse effect on Republic and its subsidiaries, taken as a whole, (2) impair in
any material respect the ability of Republic or Mergersub to perform its
obligations under the Merger Agreement, or (3) prevent or materially delay the
consummation of any of the transactions contemplated by the Merger Agreement.
(6) Except as disclosed in the Republic SEC Documents filed and publicly
available immediately prior to the Merger, there is no suit, action or
proceeding pending or threatened against Republic or any of its subsidiaries
challenging the acquisition by Republic or Mergersub of any shares of Company
Common Stock or any provision of the Merger Agreement or seeking to restrain or
prohibit the consummation of the Merger, or that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Republic and its subsidiaries, taken as a whole, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority or arbitrator
outstanding against Republic or any of its subsidiaries having, or which could
reasonably by expected to have, a material adverse effect on Republic and its
subsidiaries, taken as a whole.
<PAGE> 65
EXHIBIT E
OPINION OF COUNSEL FOR ADDINGTON RESOURCES, INC.
The following opinion shall be addressed to Republic Industries, Inc. and
RI/AR Merger Corp. Capitalized terms used herein without definition shall have
the meanings set forth in the Agreement and Plan of Merger (the "Merger
Agreement").
(1) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted.
(2) Each of the Company and its subsidiaries is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed or to be in good standing
(individually or in the aggregate) would not have a Company Material Adverse
Effect.
(3) The Company has the requisite corporate power and authority to execute
and deliver the Merger Agreement and to consummate the transactions
contemplated by the Merger Agreement. The execution and delivery of the Merger
Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action. The Merger Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and general equitable
principles.
(4) All the outstanding shares of capital stock of each subsidiary of the
Company listed on Schedule 3.2 to the Merger Agreement are owned by the Company
or by another subsidiary of the Company, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever.
(5) Except as set forth on Schedule 3.4 of the Merger Agreement, the
execution and delivery of the Merger Agreement by the Company does not, and
performance of the Company's obligations thereunder will not, conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its subsidiaries under, any provision of (i)
the Certificate of Incorporation or By-laws of the Company or any provision of
the comparable charter or organizational documents of any of its subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, or license to which
the Company or any of its subsidiaries is a party or by which their respective
properties or assets are bound, or (iii) subject to the governmental filings
<PAGE> 66
and other matters referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree applicable to the
Company or any of its subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) and clause (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (1) have a Company Material Adverse Effect, (2) impair in
any material respect the ability of the Company to perform its obligations under
this Agreement, or (3) prevent or materially delay the consummation of any of
the transactions contemplated by the Merger Agreement.
(6) Except as disclosed on Schedule 3.8 to the Merger Agreement or in the
SEC Documents filed and publicly available prior to the Merger, there is no
suit, action or proceeding pending or threatened in writing against the Company
or any of its subsidiaries challenging the acquisition by Republic or Mergersub
of any shares of the Company Common Stock or any provision of the Merger
Agreement or seeking to restrain or prohibit the consummation of the Merger, or
that, individually or in the aggregate, could reasonably be expected to have a
Company Material Adverse Effect, nor is there any judgment, decree, injunction,
rule or order of any Governmental Authority or arbitrator outstanding against
the Company or any of its subsidiaries having, or which could reasonably be
expected to have, a Company Material Adverse Effect.
2
<PAGE> 1
Exhibit 99.2
VOTING AGREEMENT
VOTING AGREEMENT, dated as of June 25, 1996 (this "Agreement"), by HPB
ASSOCIATES, L.P., HAROLD BLUMENSTEIN, JAMES GROSFELD, LARRY ADDINGTON, ROBERT
ADDINGTON and BRUCE ADDINGTON (collectively, the "Stockholders") with REPUBLIC
INDUSTRIES, INC., a Delaware corporation ("Acquiror").
WHEREAS, Acquiror and RI/AR Merger Corp., a Delaware corporation and a
wholly owned subsidiary of Acquiror ("Acquiror Sub"), propose to enter into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), with Addington Resources, Inc., a Delaware corporation (the
"Company"), which provides, among other things, that the Company will merge
with Acquiror Sub pursuant to the merger contemplated by the Merger Agreement
(the "Merger");
WHEREAS, as of the date hereof, the Stockholders own 6,867,615 shares
of common stock, par value $1.00 per share, of the Company ("Company Common
Stock"), which represent in the aggregate approximately 45% of the total issued
and outstanding Company Common Stock; and
WHEREAS, as a condition to the willingness of Acquiror to enter into
the Merger Agreement, Acquiror has required that the Stockholders agree, and in
order to induce Acquiror to enter into the Merger Agreement, the Stockholders
have agreed, to enter into this Agreement with respect to all the shares of
Company Common Stock now owned and which may hereafter be acquired by the
Stockholders (the "Shares") and any other securities, if any, which the
Stockholders are entitled to vote at any meeting of stockholders of the Company
(the "Other Securities").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
PROXY OF THE STOCKHOLDERS
SECTION 1.01. Voting Agreement. Each Stockholder hereby agrees that
during the time this Agreement is in effect, at any meeting of the shareholders
of the Company, however called, and in any action by consent of the
shareholders of the Company, each of the Stockholders shall vote the Shares and
the Other Securities: (a) in favor of the Merger, the Merger Agreement (as
amended from time to time) or any of the transactions contemplated by the
Merger Agreement; and (b) against any proposal for any merger, sale of
substantial assets, sale of shares of Company Common Stock or other securities,
recapitalization, or other business combination transactions between the
Company or any of the subsidiaries of the Company and any person or entity
(other than the Merger) or any other corporate action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or
<PAGE> 2
agreement of the Company under the Merger Agreement or which could result in
any of the conditions to the Company's obligations under the Merger Agreement
not being fulfilled. Each Stockholder acknowledges receipt and review of a
copy of the Merger Agreement.
SECTION 1.02. Irrevocable Proxy. Each Stockholder hereby irrevocably
appoints Acquiror, until termination of the Merger Agreement, as his or its
attorney and proxy pursuant to the provisions of Section 212(c) of the General
Corporation Law of the State of Delaware, with full power of substitution, to
vote and otherwise act (by written consent or otherwise) with respect to the
Shares and the Other Securities, which such Stockholder is entitled to vote at
any meeting of stockholders of the Company (whether annual or special and
whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise, on the matters and in the manner specified in
Section 1.01 hereof. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND
COUPLED WITH AN INTEREST. The Stockholders hereby revoke all other proxies and
powers of attorney with respect to the Shares and the Other Securities which
they may have heretofore appointed or granted, and no subsequent proxy or power
of attorney shall be given or written consent executed (and if given or
executed, shall not be effective) by the Stockholders with respect to the
matters specified in Section 1.01 hereof. All authority herein conferred or
agreed to be conferred shall survive the death or incapacity of any Stockholder
and any obligation of any Stockholder under this Agreement shall be binding
upon the heirs, personal representatives and successors of such Stockholder.
SECTION 1.03. Waiver of Restrictions. HPB Associates, L.P. and Robert
Addington, Bruce Addington and Larry Addington agree hereby to waive any
restrictions placed on the granting of proxies pursuant to the Stock Purchase
Agreement, dated August 4, 1995, by and between HPB Associates, L.P. and Robert
Addington, Bruce Addington and Larry Addington. ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants, severally but not
jointly, to Acquiror as follows:
SECTION 2.01. Authority Relative to This Agreement. Each Stockholder
has all necessary power and authority to execute and deliver this Agreement, to
perform his or its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
such Stockholder and constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
SECTION 2.02. No Conflict. (a) The execution and delivery of this
Agreement by such Stockholder do not, and the performance of this Agreement by
such Stockholder shall not, (i) conflict with or violate any federal, state or
local law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to such Stockholder or by which the Shares or the Other
2
<PAGE> 3
Securities owned by such Stockholder are bound or affected or (ii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Shares or the Other Securities
owned by such Stockholder pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which such Stockholder is a party or by which such Stockholder or
the Shares or Other Securities owned by such Stockholder are bound or affected.
(b) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of this Agreement by such Stockholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity (as such term is defined in
the Merger Agreement) except for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended, or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
SECTION 2.03. Title to the Shares. As of the date hereof, each
Stockholder is the record and beneficial owner of the number of shares of
Company Common Stock set forth opposite such Stockholder's name on Appendix A
hereto, which Shares represent on the date hereof the percentage of the
outstanding Company Common Stock set forth on such Appendix. Such Shares are
all the securities of the Company owned, either of record or beneficially, by
such Stockholder. Except as set forth on Appendix A, such Shares are owned
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on such Stockholder's voting
rights, charges and other encumbrances of any nature whatsoever. Except as
provided in this Agreement, no Stockholder has appointed or granted any proxy,
which appointment or grant is still effective, with respect to the Shares or
Other Securities owned by such Stockholder.
ARTICLE III
COVENANTS OF THE STOCKHOLDERS
SECTION 3.01. No Disposition or Encumbrance of Shares. Each
Stockholder hereby covenants and agrees that, except as contemplated by this
Agreement, such Stockholder shall not offer or agree to sell, transfer, tender,
assign, hypothecate or otherwise dispose of, grant a proxy or power of attorney
with respect to, or create or permit to exist any security interest, lien,
claim, pledge, option, right of first refusal, agreement, limitation on any
Stockholder's voting rights, charge or other encumbrance of any nature
whatsoever with respect to the Shares or, directly or indirectly, initiate,
solicit or encourage, subject to the provisions of Section 5.2 of the Merger
Agreement, any person to take actions which could reasonably be expected to
lead to the occurrence of any of the foregoing.
SECTION 3.02. No Solicitation of Transactions. Each Stockholder
hereby agrees, jointly and severally, to be bound and to comply with the
obligations of the Company set
3
<PAGE> 4
forth in Section 5.2(a) of the Merger Agreement as if such obligations were set
forth in their entirety in this Section 3.02 as obligations of such
Stockholder.
SECTION 3.03. No Profit From Competing Transaction. Each Stockholder
hereby covenants and agrees that should the Company or the Representatives (as
defined in Section 5.2(a) of the Merger Agreement) during the Non-Solicitation
Period (as defined in Section 5.2(a) of the Merger Agreement) either (i)
receive an unsolicited proposal for a Competing Transaction (an "Acquisition
Proposal"), other than from Acquiror or an affiliate of Acquiror or their
authorized representatives, and, during the Non-Solicitation Period or within
one (1) year after the date hereof, consummate a transaction of a kind that
would constitute a Competing Transaction with (x) the offeror or any affiliate
of the offeror who made the Acquisition Proposal (the "Original Offeror") or
(y) another party who makes an Acquisition Proposal prior to the termination of
negotiations with the Original Offeror, or (ii) solicit or initiate any
discussions for a Competing Transaction (regardless of whether it is
consummated); then, in either instance, each Stockholder shall pay to Acquiror
an amount in cash (or if the consideration to be received in such Competing
Transaction is securities of the acquiror, an amount of such securities, or
payment in such form, as permitted by the Competing Transaction) equal to the
consideration paid by the acquiror (the "Third Party Acquisition
Consideration") on a per share of Company Common Stock basis in excess of (1)
$21.50 (in the case of proposals noted in (i) above) or (2) $15.00 (in the case
of solicitations under (ii) above) (in either case, the "Base Amount")
multiplied by the number of shares beneficially owned by each such Stockholder
(which amounts shall be paid contemporaneously with consummation of the
acquisition, whether or not such Acquisition Proposal was solicited); provided
that the number of shares and the Base Amount shall be appropriately adjusted
for stock splits, stock dividends, stock combinations, recapitalizations,
reclassifications and other similar transactions; provided further that no
payments shall be required pursuant to the terms of this Section 3.03 if the
Merger Agreement is terminated as a result of the breach of any of the terms of
the Merger Agreement by Acquiror. The Third Party Acquisition Consideration
shall be deemed to include both cash and any securities or other property
received in the transaction, as well as debts of the Stockholders assumed in
the transaction. In the event that any Third Party Acquisition Consideration
shall be payable in securities; debt securities shall be valued at market value
on the day of delivery; preferred stock shall be valued at market value on the
day of delivery; and common stock shall be valued by its market value on the
day of delivery based on the ten day average closing price of such common stock
on the principal stock exchange or Nasdaq market on which it is traded or
quoted for the period prior to the consummation of such acquisition. In the
event that any Third Party Acquisition Consideration shall be payable in other
property, such other property shall be valued at an amount to be reasonably
determined by Acquiror.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Termination. This Agreement (except for Section 3.03
and Article IV of this Agreement) shall terminate upon the termination of the
Merger Agreement in
4
<PAGE> 5
accordance with its terms. Section 3.03 and Article IV of this Agreement shall
survive termination of this Agreement.
SECTION 4.02. Further Assurances. Each Stockholder and Acquiror will
execute and deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate the transactions
contemplated hereby.
SECTION 4.03. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity. Acquiror shall be entitled to its reasonable
attorneys' fees in any action brought to enforce this Agreement in which it is
the prevailing party.
SECTION 4.04. Entire Agreement. This Agreement constitutes the entire
agreement between Acquiror and the Stockholders with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between Acquiror and the Stockholders with respect to the
subject matter hereof.
SECTION 4.05. Amendment. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
SECTION 4.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the terms of this Agreement remain as originally contemplated to the
fullest extent possible.
SECTION 4.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any Delaware state or federal court.
5
<PAGE> 6
IN WITNESS WHEREOF, each Stockholder has duly executed this Agreement.
HPB ASSOCIATES, L.P.
By: HPB GROUP LLC
By: /s/ Howard P. Berkowitz
-----------------------
Howard P. Berkowitz,
Managing Member
Dated: June __, 1996 Harold Blumenstein, individually
Dated: June __, 1996 James Grosfeld, individually
Dated: June __, 1996 Larry Addington, individually
Dated: June __, 1996 Robert Addington, individually
Dated: June __, 1996 Bruce Addington, individually
Agreed and Accepted
as of June __, 1996:
REPUBLIC INDUSTRIES, INC.
By:
--------------------------
Name:
Title:
6
<PAGE> 7
APPENDIX A
<TABLE>
<CAPTION>
Approximate Percentage of
Outstanding Company
Numbers of
Shares Shares Shares Pledged
------ ------ --------------
<S> <C> <C> <C>
HPB Associates, L.P. 2,455,285 16.2
Larry Addington 2,263,324 14.9 550,000(1)
Robert Addington 980,000 6.5 900,000(2)
Bruce Addington 914,006 6.0 910,006(3)
Harold Blumenstein 100,000 0.1
James Grosfeld 155,000 0.1
</TABLE>
- -------------------------
(1) 250,000 shares are pledged to CIT; 200,000 shares are pledged to
National City Bank; and 100,000 shares are pledged to Nations Bank.
(2) Pledged to Nations Bank.
(3) 560,006 shares are pledged to Prudential Securities; 250,000 shares
are pledged to CIT; and 100,000 shares are pledged to Bear Stearns.
