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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act 0f 1934
Date of Report (Date of earliest event reported) May 8, 1996
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REPUBLIC INDUSTRIES, INC.
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(Exact name or registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-9787 73-1105145
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(Commission (IRS Employer
File Number) Identification No.)
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (954) 627-6000
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N.A.
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On May 8, 1996, Republic Industries, Inc. (the "Registrant" or
"Republic") announced that it had entered a definitive agreement (the "Merger
Agreement") with AutoNation Incorporated ("AutoNation") and AutoNation's
principal shareholders which provides for the acquisition of AutoNation by the
Registrant in a merger transaction (the "Merger") valued at approximately $250
million. The Merger Agreement provides that the Registrant will issue 8,733,624
shares of its common stock in exchange for all of the outstanding shares of
common stock of AutoNation. In connection with the execution of the Merger
Agreement, the parties also entered into a Loan Agreement, dated May 8, 1996,
whereby Republic will provide a line of credit to AutoNation pending the
closing of the Merger.
The Merger Agreement, the Loan Agreement and the transactions contemplated
thereby were approved by a special committee of the Registrant's Board of
Directors, comprised of disinterested outside Directors of the Registrant, after
review and negotiation of such agreements and receipt by such committee of an
opinion from its financial advisor that the Merger is fair to the
Registrant from a financial point of view.
Consummation of the Merger is subject to the approval of Republic's
stockholders at a special meeting to be called in the near future, and other
customary conditions, including regulatory approvals.
Upon closing of the transaction, it is expected that Steven R. Berrard,
Chief Executive Officer of AutoNation, and formerly Chief Executive Officer of
Blockbuster Entertainment Group, will be named President and Chief Operating
Officer of Republic and will be appointed to Republic's Board of Directors.
James M. Moran, founder and Chairman of JM Family Enterprises, Inc., a
corporation with more than 20 automotive businesses, including the world's
largest independent distributor of Toyota vehicles, is also expected to be
appointed to Republic's Board of Directors. Harris W. "Whit" Hudson, currently
President of Republic, is expected to be elevated to the office of Vice Chairman
of Republic. Mr. Berrard will continue to serve as Chief Executive Officer of
AutoNation and will devote the majority of his time to the development of
AutoNation's megastore concept and related businesses; Mr. Hudson will continue
to handle his present responsibilities with respect to Republic's existing
operations.
AutoNation is developing a chain of megastores ("AutoNation USA
Megastores") that will sell reconditioned-to-be-like-new automobiles in a
customer friendly, no haggle environment. It is intended that each
AutoNation USA Megastore will stock more than 1,000 late-model, low-mileage,
previously-owned vehicles, each of which will have undergone extensive
reconditioning and safety inspections by certified technicians. The AutoNation
USA Megastores will also offer vehicle financing, service centers and automobile
accessory sales. Each AutoNation USA Megastore will be located on approximately
20-acre sites situated in high-visibility, metropolitan areas with convenient
access. AutoNation will also operate a wholesale division for purposes of
inventory procurement and control, as well as reconditioning centers for the
processing of vehicles prior to display.
Currently, the used car market is quite large and highly fragmented, with
approximately 75,000 independent used car dealers and 23,000 new car dealers
generating annual sales which have been estimated at $250 - $350 billion in
1995. Further, at this time, there appears to be no dominant regional or
national retailer in the used car market. The success of AutoNation's aggressive
development plans are dependent upon a number of factors, including adequate
capital, accurate site selection and the building of brand recognition.
AutoNation's management team is comprised of individuals with extensive
automotive, retail and marketing experience.
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The descriptions contained herein of the Merger, the Merger Agreement and
the Loan Agreement are qualified in their entirety by reference to the Merger
Agreement and the Loan Agreement, which are attached hereto as Exhibits 99.1 and
99.2, respectively, and to the Press Release, dated May 8, 1996, attached hereto
as Exhibit 99.3, which are incorproated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set
forth elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REPUBLIC INDUSTRIES, INC.
By: /s/ Gregory K. Fairbanks
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Gregory K. Fairbanks
Executive Vice President and
Chief Financial Officer
Date: May 9, 1996
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REPUBLIC INDUSTRIES, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER AND
DESCRIPTION OF EXHIBIT
- ----------------------
<C> <S>
1. None
2. None
4. None
16. None
17. None
21. None
23. None
24. None
27. None
99.1 Merger Agreement, dated May 8, 1996, by and among the Registrant, RI/ANI Merger
Corp., AutoNation Incorporated, H. Wayne Huizenga, Steven R. Berrard and JM Family
Enterprises, Inc.
99.2 Loan Agreement, dated May 8, 1996, by and between the Registrant and AutoNation
Incorporated.
99.3 Press Release, dated May 8, 1996.
</TABLE>
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EXHIBIT 99.1
MERGER AGREEMENT
This MERGER AGREEMENT (this "Agreement") is entered into as of May 8,
1996 by and among REPUBLIC INDUSTRIES, INC., a Delaware corporation
("Republic"); RI/ANI MERGER CORP., a Florida corporation and wholly-owned
subsidiary of Republic ("Republic Merger Sub," and together with Republic, the
"Republic Companies"); AUTONATION INCORPORATED., a Florida corporation
("AutoNation"); and H. Wayne Huizenga ("Huizenga"), and Steven R. Berrard
("Berrard"), each a resident of the State of Florida, and JM Family
Enterprises, Inc. ("JMFE"), a Delaware corporation (Huizenga, Berrard and JMFE
hereinafter collectively referred to as the "Control Shareholders"). Certain
other capitalized terms used herein are defined in Article VIII and throughout
this Agreement.
RECITALS
The parties have determined that it is in their respective best
interests, and that of the respective stockholders of Republic and of
AutoNation, for Republic to acquire AutoNation upon the terms and subject to
the conditions set forth in this Agreement. In order to effectuate the
transaction, Republic has organized Republic Merger Sub as a wholly-owned
subsidiary, and the parties have agreed, subject to the terms and conditions
set forth in this Agreement, to merge Republic Merger Sub with and into
AutoNation, so that AutoNation continues as the surviving corporation (the
"Surviving Corporation") and as a wholly-owned subsidiary of Republic, and each
of the Shareholders of AutoNation will be issued common stock of Republic, in
exchange for their shares of the capital stock of AutoNation.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 PLAN OF MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below) Republic Merger Sub shall
be merged with and into AutoNation (the "Merger") on the terms and conditions
set forth in the Plan of Merger and Reorganization annexed hereto as Exhibit A
(the "Plan of Merger"). The terms and conditions of the Plan of Merger are
incorporated herein by reference as if fully set forth herein. As a result of
the Merger, the
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separate corporate existence of Republic Merger Sub shall cease and AutoNation
shall continue as the Surviving Corporation under the provisions of the Florida
Business Corporation Act ("FBCA").
1.2 THE CLOSING. Subject to the satisfaction or waiver of all
the conditions in Article VI, the consummation of the Merger (the "Closing")
shall take place as promptly as practicable (and in any event within three (3)
business days) after satisfaction of the conditions set forth in Section 6.1,
at the offices of AutoNation's counsel, Atlas, Pearlman, Trop & Borkson, P.A.,
200 East Las Olas Boulevard, Fort Lauderdale, Florida, or such other time and
place as the parties may otherwise agree.
1.3 MERGER CONSIDERATION. Pursuant to the Plan of Merger, an
aggregate of 8,733,624 shares of common stock, $0.01 par value per share, of
Republic ("Republic Common Stock") will be issued in the Merger in exchange for
all of the issued and outstanding shares of common stock of AutoNation (the
"AutoNation Common Stock"). Based on 80,200,000 shares of AutoNation Common
Stock issued and outstanding as of the Closing (which is the amount issued and
outstanding as of the date hereof), each share of AutoNation Common Stock will
be converted into a 0.108898 fractional share of Republic Common Stock (the
"Exchange Ratio"). In lieu of issuance of fractional shares of Republic
Common Stock in the Merger, each holder of AutoNation Common Stock as of the
Effective Time shall receive a cash payment without interest equal to the fair
market value of the fractional share of Republic Common Stock to which such
holder otherwise would be entitled (collectively, the "Fractional Payments").
For purposes of calculating the Fractional Payments, the fair market value of a
fraction of a share of Republic Common Stock shall be such fraction multiplied
by the average of the daily closing prices of a share of Republic Common Stock
on The Nasdaq Stock Market - National Market as reported in the Wall Street
Journal for the five consecutive trading days that end on the second trading
day prior to the Effective Date.
1.4 FILING OF ARTICLES OF MERGER. At the time of the Closing,
the parties shall cause the Merger to be consummated by filing duly executed
Articles of Merger (with the completed Plan of Merger annexed thereto) with the
Department of State of the State of Florida, in such form as Republic and
AutoNation determine is required by and is in accordance with the relevant
provisions of the FBCA (the date and time of such filing is referred to herein
as the "Effective Date" or "Effective Time").
1.5 ISSUANCE OF REPUBLIC SHARES. At the Effective Time, by
virtue of the Merger and without any further action on the part of the parties
hereto, Republic shall issue to each Shareholder duly executed certificates, in
valid form registered in such Shareholder's name, evidencing that number of
shares of Republic Common Stock determined pursuant to the Exchange Ratio as
set forth in the Plan of Merger based on the number of shares of capital stock
of AutoNation owned by each Shareholder on the Effective Date.
1.6 DELIVERY OF CERTIFICATES. At the Closing, all certificates
representing all the issued and outstanding shares of AutoNation Common Stock
shall be cancelled, and Republic shall deliver one or more certificates
representing the shares of Republic Common Stock issued pursuant to
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Section 1.5 to each Shareholder. The shares of Republic Common Stock issuable
by Republic in exchange for the AutoNation Common Stock in the Merger are
sometimes referred to herein as the "Republic Shares."
1.7 ACCOUNTING AND TAX TREATMENT. The parties hereto
acknowledge and agree that the transactions contemplated hereby shall be
treated as a purchase by Republic for accounting purposes, and as a tax-free
reorganization under Section 368 of the Code.
1.8 STOCK OPTIONS. At the Effective Time, Republic shall assume
all of AutoNation's rights and obligations under the AutoNation 1995 Employee
Stock Option Plan (the "AutoNation Plan") with respect to each outstanding
option to acquire shares of AutoNation Common Stock (the "AutoNation Stock
Options"), and the AutoNation Plan shall continue with the same force and
effect as existed immediately prior to the Effective Time, except (a) that each
AutoNation Stock Option granted under the AutoNation Plan shall be converted
into an option to acquire a 0.108898 fractional share of Republic Common Stock
for each share of AutoNation Common Stock subject to such AutoNation Stock
Option, rounded to the nearest whole share of Republic Common Stock for all
options held by each such optionholder, and (b) that the exercise price per
share of Republic Common Stock for all such converted options shall be equal to
the product of the exercise price of each AutoNation Stock Option as of the
date of grant thereof multiplied by 9.1829. As of the date hereof, there are
an aggregate of 1,340,000 AutoNation Stock Options outstanding which are
(subject to the terms and conditions of the AutoNation Plan) exercisable at
$1.00 per share of AutoNation Common Stock, which will be converted into
options to purchase an aggregate of 145,927 shares of Republic Common Stock at
an exercise price of $9.1829 per share, and there are an aggregate of 265,566
AutoNation Stock Options outstanding which are (subject to the terms and
conditions of the AutoNation Plan) exercisable at $3.00 per share of AutoNation
Common Stock, which will be converted into options to purchase an aggregate of
28,920 shares of Republic Common Stock at an exercise price of $27.5487 per
share. Republic (i) has reserved for issuance an aggregate of 240,186 shares
of Republic Common Stock that will become issuable upon the exercise of such
AutoNation Stock Options, as adjusted pursuant to this Section 1.8 subject to
consummation of the Merger, and (ii) at the Effective Time will issue to each
holder of an outstanding AutoNation Stock Option a document evidencing the
assumption by Republic of AutoNation's obligations with respect thereto under
this Section 1.8. Nothing in this Section 1.8 shall affect the schedule of
vesting with respect to the AutoNation Stock Options.
1.9 ADJUSTMENTS TO EXCHANGE RATIO. If between the date of this
Agreement and the Effective Time the outstanding shares of Republic Common
Stock shall have been changed into a different number of shares or a different
class, by reason of any stock dividend, split, reclassification,
recapitalization, combination or exchange of shares, (i) the Exchange Ratio
shall be correspondingly adjusted to reflect such stock dividend, split,
reclassification, recapitalization, combination or exchange of shares, and (ii)
corresponding adjustments will be made to the provisions of Section 1.8 to
effect an equitable conversion of AutoNation Stock Options into options to
acquire Republic Common Stock. Nothing stated in this Section 1.9 shall be
construed as providing the Shareholders any preemptive or anti-dilutive
rights, and there shall be no adjustment to the Exchange Ratio in the
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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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE REPUBLIC COMPANIES
As a material inducement to the Control Shareholders and AutoNation to
enter into this Agreement and to consummate the transactions contemplated
hereby, each of the Republic Companies jointly and severally make the following
representations and warranties to the Control Shareholders and AutoNation:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to own or lease its properties and to
carry on its business as now being conducted. Republic Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. Republic Merger Sub is a wholly-owned subsidiary
of Republic.
2.2 CORPORATE POWER AND AUTHORITY. Each of the Republic
Companies has the corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to consummate
the transactions contemplated hereby. Republic Merger Sub has taken all action
necessary to authorize its execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby. Republic's Board of Directors has appointed,
and delegated its full power to, a special committee of disinterested
non-employee directors for the purpose of considering the transactions
contemplated hereby (the "Special Committee"), and the Special Committee has,
pursuant to such delegated power and authority, approved the execution and
delivery of this Agreement by Republic, the performance of its obligations
hereunder and, subject to the approval of a majority of the outstanding shares
of Republic Common Stock, the consummation of the transactions contemplated
hereby, and the Special Committee as of the date hereof intends to recommend
the transactions contemplated hereby to the stockholders of Republic. The
Special Committee has received an opinion of Merrill Lynch, Pierce, Fenner &
Smith Incorporated to the effect that the aggregate consideration to be paid by
Republic to the AutoNation Shareholders in connection with the transactions
contemplated hereby is fair to Republic and to Republic's stockholders from a
financial point of view as of the date hereof.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Republic Companies and constitutes a legal, valid and
binding obligation of each of the Republic Companies, enforceable against each
of the Republic Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
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similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4 REPUBLIC COMMON STOCK. Upon consummation of the Merger and
the issuance and delivery of certificates representing the Republic Shares to
the Shareholders, the Republic Shares will be (i) duly authorized and validly
issued, fully paid and non-assessable shares of Republic Common Stock, (ii)
free and clear of any Liens, other than Liens on any particular Shareholder's
Republic Shares that may be created or permitted to exist by such Shareholder's
actions, and (iii) approved for trading on The Nasdaq Stock Market. After
consummation of the Merger, the shares of Republic Common Stock to be issued
upon exercise of the converted AutoNation Stock Options, will, when such
converted stock options are duly exercised and paid for in accordance with the
terms thereof, be duly authorized and validly issued, fully paid and
non-assessable shares of Republic Common Stock.
2.5 NO COMMISSIONS. Neither of the Republic Companies has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
2.6 CAPITALIZATION. The authorized capital stock of Republic
consists of 350,000,000 shares of Republic Common Stock and 5,000,000 shares of
preferred stock. As of April 5, 1996, (i) 83,224,706 shares of Republic Common
Stock were validly issued and outstanding, fully paid and nonassessable and not
issued in violation of any preemptive or similar right of any stockholder of
Republic, and (ii) no shares of preferred stock were issued and outstanding.
The Republic Shares to be issued in the Merger will be "voting stock" within
the meaning of the Code and will not be subject to any preemptive or any
similar right of any stockholder of Republic. All issued and outstanding
shares of capital stock of the Republic Merger Sub are owned beneficially and
of record by Republic. No other shares of capital stock of the Republic Merger
Sub or any rights, options, warrants, convertible securities, subscription
rights or other agreements or commitments of any kind obligating the Republic
Merger Sub to issue or sell any other such shares are outstanding or have been
authorized. The Republic Merger Sub was formed solely for the purpose of
engaging in the Merger with AutoNation and has engaged in no other business
activities and has conducted its operations only as contemplated hereby.
2.7 NO VIOLATION. Except as set forth on Schedule 2.7, the
execution and delivery of this Agreement by the Republic Companies, the
performance by the Republic Companies of their respective obligations hereunder
and the consummation by the Republic Companies of the transactions contemplated
by this Agreement will not, except as would not have a Material Adverse Effect
on Republic, (i) contravene any provision of the articles of incorporation or
bylaws of Republic, (ii) violate or conflict with any law, statute, ordinance,
rule, regulation, decree, writ, injunction, judgment, ruling or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon or enforceable against Republic, (iii) conflict with, result
in any breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default) under,
or give rise to a right to terminate, amend,
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modify, abandon or accelerate, any material Contract which is applicable to,
binding upon or enforceable against Republic, (iv) result in or require the
creation or imposition of any Lien upon or with respect to any of the property
or assets of Republic, or (v) require the consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, any
court or tribunal or any other Person, except (i) pursuant to the Exchange Act
and the Securities Act and applicable NASD inclusion requirements, (ii) filings
required under the securities or blue sky laws of the various states, (iii)
filings required under the HSR Act, or any filings required to be made by
AutoNation or the Control Shareholders. Republic has taken all actions
necessary to ensure its continued inclusion in, and the continued eligibility
of the Republic Common Stock for trading on, the Nasdaq Stock Market under all
currently effective inclusion requirements.
2.8 REPORTS AND FINANCIAL STATEMENTS. Within the last three
years, except where failure to have done so did not and would not have a
Material Adverse Effect on Republic, Republic has filed all reports,
registrations and statements, together with any required amendments thereto,
that it was required to file with the SEC, including, but not limited to Forms
10-K, Forms 10-Q, Forms 8-K and proxy statements (collectively, the "Republic
Reports"). Republic has previously furnished to AutoNation and made available
to the Control Shareholders copies of all Republic Reports filed with the SEC
since January 1, 1996, and with respect to Republic Reports filed after the
date of this Agreement until the Effective Date, will promptly furnish to
AutoNation and to the Control Shareholders, copies of each of the Republic
Reports filed with the SEC during such period. As of their respective dates
(but taking into account any amendments filed prior to the date of this
Agreement), the Republic Reports complied, or, with respect to Republic Reports
filed after the date of this Agreement, will comply, in all material respects
with all the rules and regulations promulgated by the SEC and did not contain,
or, with respect to Republic Reports filed after the date of this Agreement,
will not contain, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Republic included, or to be included,
in the Republic Reports comply 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, or will be, prepared in accordance
with GAAP consistently applied during the periods presented (except, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC) and, or
will, fairly present (subject, in the case of the unaudited statements, to
normal audit adjustments) the financial position of Republic and its
consolidated subsidiaries as of the date thereof and the results of their
operations and their cash flows for the periods then ended. Except as set
forth in the Republic Reports and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice,
Republic has no material liabilities or obligations of any nature required by
GAAP 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 would have a Material Adverse Effect on Republic.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Republic Reports filed by Republic with the SEC prior to the date of this
Agreement, since December 31, 1995 to the date of this Agreement, there has not
been any change in the financial condition, results of operations
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or business of Republic that either individually or in the aggregate would have
a Material Adverse Effect on Republic.
2.10 TAX MATTERS. Republic warrants that it has no present
intention of disposing of any of the capital stock of AutoNation to be received
by Republic in the Merger.
2.11 GOVERNING DOCUMENTS. Republic has delivered to the Control
Shareholders true, accurate and complete copies of the Certificate of
Incorporation and Bylaws of Republic in effect as of the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE CONTROL SHAREHOLDERS
As a material inducement to Republic to enter into this Agreement and
to consummate the transactions contemplated hereby, the Control Shareholders
jointly and severally make the following representations and warranties to
Republic, provided, that JMFE makes no representation or warranty as to any
matter described in Sections 3.4, 3.8 through 3.20, 3.22, 3.24, and 3.25, and
further provided that any representation or warranty which relates to a
particular Control Shareholder is made severally only by such Control
Shareholder:
3.1 CORPORATE STATUS. AutoNation and each of its subsidiaries
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Florida and has the requisite power and authority to
own or lease its properties and to carry on its business as now being
conducted. JMFE is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. Except as set forth on
Schedule 3.1, AutoNation and each of its subsidiaries is not qualified to
transact business as a foreign corporation in any other jurisdiction and the
present conduct of their business does not require any such qualification.
There is no pending proceeding for the dissolution, liquidation, insolvency or
rehabilitation of AutoNation or any of its subsidiaries or JMFE.
3.2 POWER AND AUTHORITY. AutoNation and JMFE each has the
corporate power and authority to execute and deliver this Agreement, to perform
its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of Huizenga and Berrard is an individual residing in
the State of Florida with the requisite competence and authority to execute and
deliver this Agreement, to perform his respective obligations hereunder and to
consummate the transactions contemplated hereby. AutoNation and JMFE each has
taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its respective obligations hereunder and the
consummation of the transactions contemplated hereby, including, with respect
to AutoNation, having obtained the approval of this Agreement and the Merger
and other transactions contemplated hereby by all of the shareholders of
AutoNation Common Stock by action taken by
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written consent in lieu of a meeting. As of the date hereof, Huizenga, JMFE
and the board of directors of AutoNation hold irrevocable proxies from all of
the Shareholders of AutoNation, other than the Control Shareholders. From the
date hereof until the Effective Date, Huizenga, JMFE and the board of directors
of AutoNation will not revoke or terminate any of the voting proxies which they
hold with respect to the outstanding shares of AutoNation Common Stock, and
will not exercise their rights to vote such proxies other than in favor of the
Merger and the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by AutoNation and the Control Shareholders, and constitutes the
legal, valid and binding obligation of AutoNation and the Control Shareholders,
enforceable against AutoNation and the Control Shareholders in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4 CAPITALIZATION. Schedule 3.4 sets forth, with respect to
AutoNation and each of its subsidiaries, (a) the number of authorized shares of
each class of its capital stock, and (b) the number of issued and outstanding
shares of each class of its capital stock. Except as set forth on Schedule
3.4, all of the issued and outstanding shares of capital stock of AutoNation
and each of its subsidiaries (i) have been duly authorized and validly issued
and are fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, and (iii) were not issued in
violation of any preemptive rights or rights of first refusal, and no
preemptive rights or rights of first refusal exist, and no such rights arise by
virtue of or in connection with the transactions contemplated hereby. Except
as set forth on Schedule 3.4, which sets forth a true and correct copy of the
AutoNation Plan and a list of all options granted thereunder as of the date
hereof, there are no outstanding or authorized rights, options, warrants,
convertible securities, subscription rights, conversion rights, exchange rights
or other agreements or commitments of any kind that would require AutoNation or
any of its subsidiaries to issue or sell any shares of its capital stock (or
securities convertible into or exchangeable for shares of its capital stock).
Except as set forth on Schedule 3.4, there are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the capital stock of AutoNation or any of its subsidiaries or with
respect to voting or transfer of such capital stock. Neither AutoNation nor
any of its subsidiaries is obligated to redeem or otherwise acquire any of its
outstanding shares of capital stock.
3.5 SHAREHOLDERS OF THE COMPANY. AutoNation has previously
provided to Republic a true, correct and complete list which sets forth, with
respect to AutoNation and each of its subsidiaries, (a) the name, address and
social security (or federal employer identification) number of, and the number
of outstanding shares of each class of its capital stock owned by each
Shareholder of record as of the close of business on the date of this
Agreement; and (b) the name, address and social security (or federal employer
identification) number of, and number of shares of each class of its capital
stock beneficially owned by each beneficial owner of outstandingf shares of
capital stock (to the extent that beneficial ownership of any such shares is
different than record ownership).
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At the Effective Time, each of the Control Shareholders will own its respective
shares of AutoNation Common Stock, and AutoNation will own the shares of
capital stock of its subsidiaries, free and clear of all Liens.
3.6 NO VIOLATION. Except as set forth on Schedule 3.6, the
execution and delivery of this Agreement by AutoNation and the Control
Shareholders, the performance by AutoNation and the Control Shareholders of
their respective obligations hereunder and the consummation by AutoNation and
the Control Shareholders of the transactions contemplated by this Agreement
will not, except as would not have a Material Adverse Effect on AutoNation, (i)
contravene any provision of the articles of incorporation or bylaws of
AutoNation or any of its subsidiaries, (ii) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment,
ruling or order of any Governmental Authority or of any arbitration award which
is either applicable to, binding upon or enforceable against AutoNation or any
of its subsidiaries or the Control Shareholders, (iii) conflict with, result in
any breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default) under,
or give rise to a right to terminate, amend, modify, abandon or accelerate, any
material Contract which is applicable to, binding upon or enforceable against
AutoNation, any of its subsidiaries or the Control Shareholders, (iv) result in
or require the creation or imposition of any Lien upon or with respect to any
of the property or assets of AutoNation, any of its subsidiaries or the Control
Shareholders, or (v) require the consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any applicable filings required under the
HSR Act and any filings required to be made by the Republic Companies.
3.7 NO COMMISSIONS. Neither AutoNation nor any Control
Shareholder has incurred any obligation for any finder's or broker's or agent's
fees or commissions or similar compensation in connection with the transactions
contemplated hereby.
3.8 SUBSIDIARIES. Except as set forth on Schedule 3.8,
AutoNation does not own, directly or indirectly, any outstanding voting
securities of or other interests in, or control, any corporation, partnership,
joint venture or other business entity.
3.9 FINANCIAL STATEMENTS. AutoNation has delivered to Republic
the financial statements of AutoNation, consisting of a Consolidated Balance
Sheet as of December 31, 1995 with accompanying notes thereto, audited by
Arthur Andersen LLP, and of an unaudited balance sheet and statements of
operations and cash flows as of and for the period ended March 31, 1996
(collectively, the "Financial Statements"), a copy of which is attached to
Schedule 3.9 hereto. The balance sheet dated as of December 31, 1995 of
AutoNation included in the Financial Statements is referred to herein as the
"Current Balance Sheet". The Financial Statements fairly present the
consolidated financial position of AutoNation at each of the balance sheet
dates and the results of operations for the periods covered thereby, and, other
than the interim unaudited financial statements, have been prepared in
accordance with GAAP consistently applied throughout the periods indicated.
The books and records of AutoNation fully and fairly reflect all material
transactions, properties, assets and liabilities of AutoNation. The balance
sheets included in the
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Financial Statements do not reflect any material writeup or revaluation
increasing the book value of any assets, except as specifically disclosed in
the notes thereto. The Financial Statements reflect all material adjustments
necessary for a fair presentation of the financial information contained
therein, other than the interim financial statements which are subject to
normal year end audit adjustments. Except as set forth on Schedule 3.9,
AutoNation does not have any material liabilities or obligations of any nature
required by GAAP to be set forth on a consolidated balance sheet of AutoNation
and its consolidated subsidiaries or in the notes thereto which individually or
in the aggregate would have a Material Adverse Effect on AutoNation, and except
(a) to the extent reflected or taken into account in the Current Balance Sheet
and not heretofore paid or discharged, (b) to the extent specifically set forth
in or incorporated by express reference in any of the Schedules attached
hereto, (c) liabilities incurred in the ordinary course of business consistent
with the Business Plan (as defined below), none of which relates to breach of
contract, breach of warranty, tort, infringement or violation of law, or which
arose out of any action, suit, claim, governmental investigation or arbitration
proceeding, (d) normal accruals, reclassifications, and audit adjustments which
would be reflected on an audited financial statement and which would not be
material in the aggregate, and (e) liabilities incurred in the ordinary course
of business prior to the date of the Current Balance Sheet which, in accordance
with GAAP consistently applied, were not recorded thereon.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Since the
date of the Current Balance Sheet, there has been no Material Adverse Change to
AutoNation and its subsidiaries taken as a whole. Since the date of the
Current Balance Sheet, there has not been any redemption, purchase or other
acquisition by AutoNation of any shares of its capital stock, or any
declaration, setting aside or payment of any dividend or other distribution by
AutoNation, or any of its subsidiaries, in respect of its capital stock.
Except as set forth on Schedule 3.10, as of the date hereof, there are no
material Contracts entered into by or binding upon AutoNation or any of its
subsidiaries to acquire any assets or securities of, or to merge, acquire or
consolidate with, any other Person, other than Contracts for the purchase or
lease of real property, entered into in the ordinary course of business
consistent with the Business Plan as set forth on Schedule 3.13.
3.11 LITIGATION. Except as set forth on Schedule 3.11, as of the
date hereof, there is no action, suit, or legal, administrative or other
proceeding or governmental investigation pending, or to the best of the Control
Shareholders' knowledge, threatened by or against AutoNation or any of the
properties or assets of AutoNation, which, in any single case or in the
aggregate, (i) challenge or question the validity of, or would seek to enjoin
the consummation of, the transactions contemplated by this Agreement, or (ii)
would result in a Material Adverse Effect on AutoNation.
3.12 ENVIRONMENTAL MATTERS. Except as set forth on Schedule
3.12,
(a) AutoNation has at all times been in compliance in
all material respects with all Environmental Laws (as defined herein) governing
its business, operations, properties and assets, including, without limitation,
Environmental Laws with respect to discharges into the ground water, surface
water and soil, emissions into the ambient air, and generation, accumulation,
storage, treatment, transportation, labeling or disposal of solid and hazardous
waste materials and substances
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or process by-products, in each case, for which failure to comply would have a
Material Adverse Effect on AutoNation. AutoNation is in compliance in all
material respects with all notice, record keeping and reporting requirements of
all Environmental Laws, and has complied with all material informational
requests or demands arising under the Environmental Laws, where failure to
comply would have a Material Adverse Effect on AutoNation.
(b) AutoNation has not received any notice and otherwise
has no knowledge of any material enforcement order or notice of violation
issued or given by any federal, state or local judicial or administrative
authority or private party in which order or notice AutoNation has been named
as a potentially responsible party pursuant to which AutoNation may be
(contingently or otherwise) liable, which would have a Material Adverse Effect
on AutoNation.
(c) As used in this Agreement, "Environmental Laws"
means all federal, state or local laws, rules, regulations, orders or
ordinances or judicial or administrative interpretations thereof, any of which
govern (or purport to govern) or relate to air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste and occupational health
and safety, as any of these terms are or may be defined in such laws, rules,
regulations, orders, or ordinances, or judicial or administrative
interpretations thereof, including, without limitation, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, by the Superfund Amendments and
Reauthorization Act, the Hazardous Materials Transportation Act, the Toxic
Substances Control Act, the Clean Air Act, the Clean Water Act and the
Occupational Safety and Health Act.
(d) For purposes of this Section 3.12, the term
"AutoNation" means AutoNation and each of its subsidiaries.
3.13 REAL PROPERTY. Schedule 3.13 sets forth a list which is
true and correct as of the date hereof of (i) all leases of real property which
AutoNation or each of its subsidiaries is a party to, (ii) all real property
owned by AutoNation or each of its subsidiaries, and (iii) all pending
contracts, including letters of intent, by AutoNation or any of its
subsidiaries to purchase any interest in any real property (collectively, the
"Real Property"). Except as set forth on Schedule 3.13, as of the date hereof,
AutoNation's and each of its subsidiaries' actual use of the Real Property
which it currently owns or leases is in compliance with all applicable zoning
ordinances and building codes and environmental, land use, health and safety
and other laws, permits, rules, regulations and orders, except where failure to
comply would not have a Material Adverse Effect on AutoNation.
3.14 COMPLIANCE. AutoNation and each of its subsidiaries has
complied in all material respects with all requirements of law relating to the
business conducted by it or relating to the properties and assets owned or used
by it now or in the past.
3.15 LABOR AND EMPLOYMENT MATTERS. Except as set forth on
Schedule 3.15, neither AutoNation nor any of its subsidiaries (a) is a party to
any collective bargaining agreement or discussions or negotiations with any
individual or group looking toward any such agreement, or (b)
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has experienced any actual, or to the knowledge of the Control Shareholders,
threatened strike, grievance or unfair labor practice claim, suit or
administrative proceeding. Schedule 3.15 lists each material contract,
agreement or plan of the following nature, whether formal or informal, and
whether or not in writing, to which AutoNation is a party or under which
AutoNation or any of its subsidiaries has an obligation as of the date hereof
(true and correct copies of which have been furnished to Republic): (i)
employment agreements, (ii) noncompetition agreements and (iii) consulting
agreements.
3.16 EMPLOYEE BENEFIT PLANS. Schedule 3.16 lists each employee
benefit plan or arrangement, including, but not limited to, pension and
profit-sharing plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), in which employees of
AutoNation or any of its subsidiaries participate, true and correct copies of
which have been provided to Republic ("Employee Benefit Plans"). To
AutoNation's knowledge, with respect to each Employee Benefit Plan: (i) each
has been administered in all material respects in compliance with its terms and
with all applicable laws, including, but not limited to, ERISA and the Code;
and (ii) no actions, suits, claims or disputes are pending or threatened.
3.17 TAX MATTERS.
(a) Tax Returns and Tax Payment. (i) Except as
set forth on Schedule 3.17, all Tax Returns required to be filed by AutoNation
and each of its subsidiaries for any period ending on or before the Effective
Date, taking into account any extension or waiver of time to file granted or
obtained by AutoNation or any of its subsidiaries, have been or will be timely
filed, except where the failure to file would not have a Material Adverse
Effect on AutoNation, (ii) all Taxes shown as due on those Tax Returns as
well as all Taxes due to federal, state, local or foreign taxing authorities,
with respect to periods ending on or before the Effective Date, have been or
will be paid or adequate provision has been made or will be made therefor, and
(iii) the filed Tax Returns are complete and correct in all material respects
and neither AutoNation nor any of its subsidiaries is required to pay, for the
periods represented by such Tax Returns, any Taxes other than those shown in
those Tax Returns or otherwise disclosed in the Schedules.
(b) Audits. The Tax Returns of AutoNation
and each of its subsidiaries have never been audited by the Internal Revenue
Service, (ii) there are no pending unresolved issues with respect to any Taxes
payable to any federal, state or local taxing authority, and (iii) AutoNation
and each of its subsidiaries have not been notified by any taxing authority
that it is to be the subject of an impending tax audit.
(c) Tax Liens. There are no material liens for Taxes
imposed by any federal, state or local taxing authorities outstanding against
any assets of AutoNation or any of its subsidiaries.
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3.18 INSURANCE. AutoNation and each of its subsidiaries is
covered by valid policies of insurance covering its properties, assets and
business. AutoNation and its subsidiaries are in compliance in all material
respects with the material requirements of their respective insurance policies.
To the knowledge of the Control Shareholders, neither AutoNation nor any of its
subsidiaries has been denied coverage by any insurer for material claims
submitted by AutoNation or its subsidiaries.
3.19 PERMITS. AutoNation and each of its subsidiaries has, or
has applied for, all material permits, licenses, registrations, filings,
authorizations, consents, approvals or other indicia of authority ("Permits")
necessary for the conduct of its business and the operation of its facilities
as presently conducted and operate, all Permits which have been issued are in
full force and effect and there is no condition, nor has any event occurred
which constitutes, or with the giving of notice or the passage of time (or
both) would constitute, a violation of the terms of any Permit, and, to the
knowledge of AutoNation, no pending application for any Permit has been denied,
except to the extent that any of the foregoing would not have a Material
Adverse Effect on AutoNation. All applications for renewal of the Permits have
been timely filed (except to the extent that the failure to file would not have
a Material Adverse Effect on AutoNation).
3.20 INTELLECTUAL PROPERTY. AutoNation and each of its
subsidiaries has full legal right, title and interest in and to all trademarks,
servicemarks, tradenames, copyrights, know-how, trade secrets and other
material intellectual property used in the conduct of its business (the
"Intellectual Property"), and Schedule 3.20 sets forth a list of all such
Intellectual Property. To the knowledge of the Control Shareholders, the
unrestricted use and exploitation and intended use of the Intellectual Property
does not and will not infringe or misappropriate any material rights held or
asserted by any Person, except to the extent that such would not have a
Material Adverse Effect on AutoNation. No payments (other than governmental
fees) are required for the continued use of the Intellectual Property. Except
as set forth in Schedule 3.20, none of the Intellectual Property has ever been
declared invalid or unenforceable, or is the subject of any pending or, to
AutoNation's knowledge, threatened action for opposition, cancellation,
declaration or invalidity, unenforceability or misappropriation or like claim,
action or proceeding.
3.21 TRANSACTIONS WITH INSIDERS. Except as set forth on Schedule
3.21, none of the officers, directors or shareholders (owning of record or
beneficially more than 5%) of AutoNation (or any of their spouses or children)
has been a party to any transaction, or series of similar transactions, with
AutoNation or any of its subsidiaries, in which the amount involved exceeds
$60,000 and in which any such persons had or will have a direct or indirect
material interest.
3.22 GOOD TITLE TO ASSETS. AutoNation and each of its
subsidiaries has good and marketable title to all of its Assets (as hereinafter
defined), free and clear of any Liens or restrictions on use other than
Permitted Liens, except to the extent that such would not have a Material
Adverse Effect on AutoNation. For purposes of this Agreement, the term
"Assets" means all of the material properties and assets owned by AutoNation
and each of its subsidiaries, whether personal or mixed, tangible or
intangible, wherever located.
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3.23 SECURITIES LAW MATTERS. Each Control Shareholder is
acquiring the Republic Shares hereunder for his own account for investment and
not with a view to, or for the sale in connection with, any distribution of any
of the Republic Shares, except in compliance with applicable state and federal
securities laws. Each Control Shareholder has had the opportunity to discuss
the transactions contemplated hereby with Republic and has had the opportunity
to obtain such information pertaining to the Republic Companies as has been
requested, including but not limited to filings made by Republic with the SEC
under the Exchange Act. Each Control Shareholder has such knowledge and
experience in business or financial matters that he or it is capable of
evaluating the merits and risks of an investment in the Republic Shares.
3.24 BUSINESS LOCATIONS; BANK ACCOUNTS. AutoNation has no office
or place of business other than as identified on Schedule 3.24 and AutoNation's
principal place of business and chief executive office (as such terms are used
in subsection 9-401 of the Uniform Commercial Code as enacted in the State of
Florida as of the date hereof) are indicated on Schedule 3.24. Schedule 3.24
also lists each account of AutoNation with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from
each such account.
3.25 NAMES. All names under which AutoNation does business as of
the date hereof or has previously conducted business are specified on Schedule
3.25.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY AUTONATION PENDING THE MERGER.
AutoNation covenants and agrees that, between the date of this Agreement and
the Effective Time, except as otherwise required under applicable law or as
otherwise consented to in writing by Republic (such consent not to be
unreasonably withheld) the business of AutoNation and each of its subsidiaries
shall be conducted only in, and AutoNation and each of its subsidiaries shall
not take any action except in, the ordinary course of business consistent with
AutoNation's 1996 Business Plan, a copy of which has been provided to Republic
(the "Business Plan"). AutoNation and each of its subsidiaries shall use its
reasonable best efforts to preserve intact its business organization and
goodwill, to keep available the services of its current officers, employees and
consultants, to preserve its present relationships with customers, suppliers
and other persons with which it has significant business relations, and to
operate its business in compliance with all applicable laws in all material
respects. By way of amplification and not limitation, except as contemplated
by this Agreement or as otherwise required under applicable law, AutoNation and
each of its subsidiaries shall not, between the date of this Agreement and the
Effective Time, directly or indirectly, do or propose or agree to do any of the
following without the prior written consent of Republic (such consent not to be
unreasonably withheld):
(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents;
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(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or encumbrance of any
shares of its capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, except that AutoNation may grant options to purchase up to an aggregate
of 600,000 shares of AutoNation Common Stock pursuant to the AutoNation Plan to
employees hired by AutoNation after the date of this Agreement, provided that
(i) no individual employee shall be granted options to purchase more than
50,000 shares of AutoNation Common Stock; (ii) the exercise price per share of
AutoNation Common Stock is not less than the quotient of (x) the closing bid
price per share of Republic Common Stock as quoted on the Nasdaq Stock Market
on the last trading date before the date such employee is hired by AutoNation,
divided by (y) 9.1812; and (iii) such options are subject to a four year
vesting schedule pursuant to which 25% of the aggregate amount of options
granted to each such new employee shall vest and first become exercisable on
the first four succeeding anniversaries of such employee's date of hire;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock;
(e) acquire (including, without limitation, for cash or
shares of stock), by merger, consolidation, or acquisition of securities, any
interest in any Person, or make any investment in any Person either by purchase
of securities, contributions of capital or property transfer, or make any
loans or advances to any Person except advances to employees not in excess of
$5,000;
(f) except in the ordinary course of business, and
consistent with the Business Plan, purchase any property or assets of any other
Person for a purchase price of $100,000 or more;
(g) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or otherwise as an accommodation
become responsible for, the obligations of any Person, except for "floor plan"
financings of vehicle inventories on commercially reasonable terms and
conditions;
(h) enter into any material Contract other than in the
ordinary course of business consistent with the Business Plan;
(i) mortgage, pledge, or otherwise subject to any Lien
any asset, tangible or intangible, or real property, except for Permitted
Liens;
(j) increase the compensation payable or to become
payable to its existing officers or employees, or, except as presently bound to
do, grant any severance or termination pay in excess of $5,000 per individual
to, or enter into any employment or severance agreement with,
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any of its directors, officers or other employees, or establish, adopt, enter
into or amend or take any action to accelerate any rights or benefits which any
collective bargaining, bonus, profit sharing, trust, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees,
except in the ordinary course of business consistent with the Business Plan.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry out
and comply with all of the terms of this Agreement and the transactions
contemplated hereby. AutoNation and Republic each agree to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
requirement of law or the rules of any exchange on which the Republic Common
Stock is traded or The Nasdaq Stock Market in connection with the transactions
contemplated by this Agreement. Except as may be specifically required
hereunder, neither of the parties hereto or their respective Affiliates shall
be required to agree to take any action that in the reasonable opinion of such
party would result in or produce a Material Adverse Effect on such party.
5.2 STOCKHOLDER'S MEETING; PROXIES. As soon as practicable
after the date of this Agreement, Republic shall establish a record date, duly
call, give notice of, convene and hold a special meeting of its stockholders
for the purpose of voting upon the approval of this Agreement and the
transactions contemplated hereby including the issuance of the Republic Shares
in the Merger. Republic shall comply with all requirements of law applicable
to such meeting. Republic shall use its reasonable best efforts to solicit
from its stockholders proxies in favor of approval of this Agreement and the
transactions contemplated hereby including the issuance of the Republic Shares,
and shall take all other action necessary or advisable to obtain the vote or
consent of its stockholders required by Delaware law to obtain such approvals;
provided, however, that nothing contained in this Section will require the
board of directors of Republic to take any action or refrain from taking any
action which the board of directors of Republic (or the Special Committee
thereof) determines in good faith based upon advice of counsel and financial
advisors would result in a breach of its fiduciary duties under applicable law.
In connection with the foregoing, AutoNation shall cooperate and consult with
Republic.
5.3 PROXY STATEMENT. As promptly as practicable after the
execution of this Agreement, Republic shall prepare and file with the SEC, in
compliance with applicable law and regulations, (i) a proxy statement relating
to the special meeting of Republic's stockholders to be held in connection with
approving the transactions contemplated hereby (the "Proxy Statement") and (ii)
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a registration statement on form S-4 in connection with the issuance of
Republic Common Stock in the Merger (the "Form S-4") in which the Proxy
Statement will be included as a prospectus. Republic shall use its reasonable
best efforts to have the Proxy Statement and the Form S-4 and/or any amendments
or supplements thereto declared effective by the SEC. Each of AutoNation and
the Control Shareholders shall furnish all information concerning itself and
its affiliates to Republic as necessary in connection with such actions and the
preparation of the Proxy Statement and Form S-4. As promptly as practicable
after the Form S-4 is declared effective by the SEC, Republic shall mail the
Proxy Statement to its stockholders and to the Shareholders of AutoNation. The
Proxy Statement shall include the recommendation of the board of directors of
Republic (or of the Special Committee) to the stockholders of Republic in favor
of approving this Agreement and the transactions contemplated hereby including
the issuance of the Republic shares; provided, however, that nothing contained
in this Section will require the board of directors of Republic to take any
action or refrain from taking any action which the board of directors of
Republic (or the Special Committee thereof) determines in good faith based upon
advice of counsel and financial advisors would result in a breach of its
fiduciary duties under applicable law. If the Merger is consummated, Republic
agrees to file a post-effective amendment to the Form S-4 to allow Affiliates
of AutoNation and/or Republic to resell and offer for resale from time to time
on a continuous basis (so long as they remain Affiliates) the Republic Shares
they receive in the Merger. Republic agrees that the Form S-4, the Proxy
Statement, and any other documents to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby
(excluding in each case any information supplied in writing by AutoNation or
the Control Shareholders specifically for use therein) will not, at the
respective times such documents are filed, and, in the case of the Form S-4,
when it becomes effective, and, with respect to the Proxy Statement, when first
mailed to the stockholders of Republic, be false or misleading with respect to
any material fact, or omit to state any material fact necessary in order to
make the statements therein not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Republic stockholders' meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading. None of the information that has been or will be supplied by
AutoNation or the Control Shareholders in writing specifically for use in the
Form S-4, the Proxy Statement, or any other documents to be filed with the SEC
or any other regulatory authority in connection with the transactions
contemplated hereby will, at the respective times such documents are filed,
and, in the case of the Form S-4, when it becomes effective, and, with respect
to the Proxy Statement, when first mailed to the stockholders of Republic, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading,
or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Republic stockholders' meeting, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein in light of the circumstances
under which they were made not misleading.
5.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly its respective filings, and thereafter make any other
required submissions, under the HSR Act, with respect to the transactions
contemplated hereby, and will request early termination of the waiting
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period thereunder and (ii) use its reasonable best efforts to take, or cause to
be taken, all appropriate actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, and to
overcome any objections of any Governmental Authority to the consummation of
the transactions contemplated hereby. The parties also agree to use reasonable
best efforts to defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby and to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby. The parties also shall use their reasonable best efforts
to obtain the consent of any third party, including lenders, whose consent is
required under any contract to avoid a termination or other adverse
consequences under such contract.
5.5 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, AutoNation and Republic shall (and each shall cause its
subsidiaries and its and their directors, officers, employees, auditors,
counsel and agents) to afford the other party and its employees, counsel and
agents reasonable access at all reasonable times to its properties, offices,
and other facilities, to its officers, and to all books and records, and shall
furnish such persons with all financial, operating and other data and
information as may be reasonably requested.
5.6 NOTIFICATION OF CERTAIN MATTERS. Republic shall give prompt
notice to AutoNation, and AutoNation shall give prompt notice to Republic, of
the occurrence or non-occurrence of any event which would likely cause any
covenant or condition contained herein not to be complied with or satisfied.
Each party hereto shall give prompt notice to every other party hereto if any
such party is served with, or is threatened (in writing) with, any lawsuit
seeking to enjoin, or recover damages allegedly arising out of, the
transactions contemplated hereby, or otherwise becomes aware that any such
lawsuit has been filed in any court.
5.7 TAX TREATMENT. Republic, Republic Merger Sub, AutoNation
and the Control Shareholders will use their respective best efforts to cause
the Merger to qualify as a "reorganization" under the provisions of Section 368
of the Code and shall not take any action prior to or after the Merger is
effected to cause the Merger to lose its tax-free status. From and after the
Effective Date, Republic shall cause the Surviving Corporation to continue
AutoNation's historic business to use a significant portion of AutoNation's
historic business assets in a business within the meaning of Treasury
Regulation Section 1.368-1(d). Republic agrees to file the Plan of Merger with
their respective federal income tax returns of Republic and the Surviving
Corporation for the year in which the Merger is effective, and to comply with
the reporting requirements of Treasury Regulation 1.368-3. The parties agree
to use their respective best efforts to challenge any objections of any
Governmental Authority seeking to disqualify the Merger as a "reorganization"
under Section 368 of the Code or to appeal any order to that effect.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no press
release or other public announcement related to this Agreement or the
transactions contemplated hereby shall be issued by any party hereto
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without the prior approval of the other parties, except that Republic may make
such public disclosure which it believes in good faith to be required by law or
by the regulations of the Nasdaq Stock Market or the terms of any listing
agreement with a securities exchange (in which case Republic will consult with
AutoNation prior to making such disclosure).
5.9 NO OTHER DISCUSSIONS. AutoNation, the Control Shareholders,
and their respective Affiliates, employees, agents and representatives will not
(i) initiate, solicit, encourage the initiation by others of discussions or
negotiations with third parties or, in the case of AutoNation, the Control
Shareholders and their respective Affiliates, respond to solicitations by third
persons relating to any merger, sale or other disposition of any substantial
part of the assets, business or properties of AutoNation or any of its
subsidiaries (whether by merger, consolidation, sale of stock or otherwise), or
(ii) enter into any agreement or commitment (whether or not binding) with
respect to any of the foregoing transactions. AutoNation will immediately
notify Republic if any third party attempts to initiate any solicitation,
discussion or negotiation with respect to any of the foregoing transactions.
5.10 SALE OF AUTONATION COMMON STOCK. Except as otherwise
expressly consented to by Republic, from the date of this Agreement until the
Effective Time, none of the Control Shareholders (nor any Affiliates thereof)
will directly or indirectly sell, transfer or otherwise dispose of any shares
of AutoNation Common Stock or permit the sale, transfer or other disposition of
any shares of AutoNation Common Stock by any of the other Shareholders of
AutoNation.
5.11 CREDIT FACILITY. From the date hereof until October 31,
1996, Republic agrees to (or to cause a third party to) loan to AutoNation cash
in amounts necessary to meet AutoNation's projected requirements for capital
expenditures and corporate overhead in furtherance of and consistent with its
Business Plan as set forth in the budget provided by AutoNation to Republic, on
such terms and conditions as is set forth in that certain Loan Agreement and
Note executed and delivered by AutoNation as of the date hereof, and repayment
of which is secured by that certain Stock Pledge and Assignment Agreement
executed and delivered by AutoNation and Republic as of the date hereof.
Republic agrees and acknowledges that no additional contributions to AutoNation
by the Shareholders will be required as a condition to such loans or otherwise
under this Agreement, provided that in the event the Merger is not consummated
on or before September 30, 1996, the making of such contributions by the
Shareholders may thereafter be required by Republic as security for repayment
of such loans in accordance with the Stock Pledge and Assignment Agreement.
5.12 NON-DISCLOSURE LETTER AGREEMENTS. On or before May 10,
1996, each of the directors and executive officers of Republic shall have
entered into an agreement with Republic containing certain confidentiality and
non-disclosure covenants with respect to AutoNation, reasonably acceptable to
AutoNation.
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<PAGE> 20
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF AUTONATION, THE CONTROL
SHAREHOLDERS AND THE REPUBLIC COMPANIES. The obligations of AutoNation, the
Control Shareholders and the Republic Companies to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This agreement shall have
been approved and adopted by the vote of the holders of a majority of the
voting power of the shares of Republic Common Stock entitled to vote in
accordance with the Certificate of Incorporation and Bylaws of Republic and
applicable Delaware law.
(b) HSR Act Waiting Period. Any applicable HSR Act
waiting period, including any extension thereof, shall have expired or been
terminated.
6.2 CONDITIONS TO OBLIGATIONS OF THE REPUBLIC COMPANIES. The
obligations of the Republic Companies to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
any or all of which may be waived in whole or in part by the Republic
Companies:
(a) Accuracy of Representations and Warranties and
Compliance with Obligations. The representations and warranties of the Control
Shareholders contained in this Agreement shall be true and correct in all
material respects at and as of the Effective Time with the same force and
effect as though made at and as of that time except (i) for changes
specifically permitted by or disclosed pursuant to this Agreement, and (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, except in any
event for such failures to be true and correct which would not, individually or
in the aggregate, have a Material Adverse Effect on AutoNation. Each of
AutoNation and the Control Shareholders shall have performed and complied in
all material respects with all of their respective obligations required by
this Agreement to be performed or complied with at or prior to the Effective
Time. Each of AutoNation and the Control Shareholders shall have delivered to
the Republic Companies a certificate, dated as of the Effective Time, duly
signed by an executive officer of AutoNation, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with in all material respects.
(b) No Material Adverse Change. Between the date hereof
and the Effective Date, there shall have been no Material Adverse Change of
AutoNation, and each of AutoNation and the Control Shareholders shall have
delivered to the Republic Companies a certificate to that effect, dated the
Effective Time and signed by an executive officer of AutoNation.
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<PAGE> 21
(c) Corporate Certificate. AutoNation shall have
delivered to the Republic Companies (i) copies of the articles of incorporation
and bylaws of AutoNation as in effect immediately prior to the Effective Time,
(ii) copies of resolutions or consents adopted by the Board of Directors of
AutoNation authorizing the transactions contemplated by this Agreement, (iii)
copies of the written consents of the Shareholders approving the Merger and the
other transactions contemplated hereby, and (iv) a certificate of good standing
of AutoNation and its subsidiaries issued by the Department of State of the
State of Florida as of a date not more than ten days prior to the Effective
Time, certified in each case as of the Effective Time by the Secretary of
AutoNation as being true, correct and complete.
(d) Rule 145 Undertakings. At or prior to the Closing,
each of the Shareholders who is an Affiliate of AutoNation and/or Republic as
listed on Schedule 6.2(d) hereto (and any of the Shareholders who becomes an
Affiliate of AutoNation and/or Republic between the date hereof and the
Effective Date) shall have delivered to Republic a letter agreement relating to
Rule 145 under the Securities Act, in form and substance satisfactory to
Republic.
(e) Shareholder Letter Agreements. At or prior to the
Closing, each of the Control Shareholders shall have delivered to Republic a
letter agreement relating to a two-year restriction on the sale, transfer or
other disposition of the shares of Republic Common Stock to be received by each
such Shareholders hereunder, and each of the other Shareholders shall have
delivered to Republic a letter agreement relating to a six month restriction
(except for James M. Moran, who shall be subject to a one-year restriction) on
the sale, transfer or other disposition of the shares of Republic Common Stock
to be received by each such Shareholder hereunder, in the form of Exhibit B
hereto. Such letter agreements will also contain confidentiality provisions
and covenants not to compete reasonably acceptable to Republic, provided that
no such provisions or covenants will be more favorable to Republic than the
existing similar provisions and covenants running in favor of AutoNation.
(f) No 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 vacated or to have any such
injunction lifted).
6.3 CONDITIONS TO OBLIGATIONS OF AUTONATION AND THE CONTROL
SHAREHOLDERS. The obligations of AutoNation and the Control Shareholders to
effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions, any or all of which may be waived
in whole or in part by AutoNation and the Control Shareholders:
(a) Accuracy of Representations and Warranties and
Compliance with Obligations. The representations and warranties of each of the
Republic Companies contained in this Agreement shall be true and correct in all
material respects at and as of the Effective Time with the same force and
effect as though made at and as of that time except (i) for changes
specifically permitted by or disclosed pursuant to this Agreement, and (ii)
that those representations and
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<PAGE> 22
warranties which address matters only as of a particular date shall remain true
and correct as of such date, except in any event for such failures to be true
and correct which would not, individually or in the aggregate, have a Material
Adverse Effect on Republic. Each of the Republic Companies shall have
performed and complied in all material respects with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Effective Time. Each of the Republic Companies shall have delivered to
AutoNation a certificate, dated as of the Effective Time, and signed by an
executive officer thereof, certifying that such representations and warranties
are true and correct, and that all such obligations have been performed and
complied with, in all material respects.
(b) No Material Adverse Change. Between the date hereof
and the Effective Date, there shall have been no Material Adverse Change of
Republic and there shall have been delivered to AutoNation a certificate to
that effect, dated the Effective Time and signed by or on behalf of Republic.
(c) Corporate Certificate. Republic shall have
delivered to AutoNation (i) copies of the articles of incorporation and bylaws
of Republic as in effect immediately prior to the Effective Time, (ii) copies
of resolutions or consents adopted by the Board of Directors of Republic
authorizing the transactions contemplated by this Agreement, (iii) copies of
the certificate of the inspector of elections of the Special Meeting of the
Shareholders indicating the vote approving the Merger and the other
transactions contemplated hereby, and (iv) a certificate of good standing of
Republic and Republic Merger Sub issued by the Secretary of State of the State
of Delaware as of a date not more than ten days prior to the Effective Time,
certified in each case as of the Effective Time by the Secretary of Republic as
being true, correct and complete.
(d) Republic Shares. At the Closing, Republic shall
have issued all of the Republic Shares and shall have delivered to the
Shareholders certificates representing the Republic Shares required to be
issued to them hereunder, and the Republic Shares shall have been duly listed
for trading on The Nasdaq Stock Market, subject to official notice of issuance.
In addition, Republic shall have paid the Fractional Payments by checks
payable to the Shareholders.
(e) Registration Statement. The Form S-4 shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(f) No 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 vacated or to have any such
injunction lifted).
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<PAGE> 23
ARTICLE VII
INDEMNIFICATION
7.1 AGREEMENT BY THE CONTROL SHAREHOLDERS TO INDEMNIFY. The
Control Shareholders jointly and severally agree to indemnify and hold Republic
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by Republic
(collectively, "Indemnifiable Damages") resulting from or arising out of (i)
any breach of a representation or warranty made by AutoNation or the Control
Shareholders in or pursuant to this Agreement, or (ii) any inaccuracy in any
certificate delivered by AutoNation or the Control Shareholders pursuant to
this Agreement. Without limiting the generality of the foregoing, with respect
to the measurement of Indemnifiable Damages, Republic shall have the right to
be put in the same after-tax consolidated financial position as it would have
been in had each of the representations and warranties of the Control
Shareholders been true and correct.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Control Shareholders in this
Agreement or pursuant hereto shall survive until July 15, 1997. No claim for
the recovery of Indemnifiable Damages may be asserted by Republic against the
Control Shareholders after such representations and warranties shall thus
expire, provided, however, that claims for Indemnifiable Damages first asserted
within the applicable period shall not thereafter be barred. 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, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered in
connection herewith. Each representation, warranty, covenant and agreement of
the parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
7.3 INDEMNIFICATION DEDUCTIBLE; CAP ON INDEMNIFIABLE DAMAGES.
Notwithstanding anything to the contrary in this Article VII, the Control
Shareholders shall not be liable to Republic with respect to any claims for
Indemnifiable Damages unless all Indemnifiable Damages incurred by Republic
exceed an aggregate of $2,500,000 (the "Indemnification Deductible"), in which
case the Control Shareholders shall be liable only for the amount of such
Indemnifiable Damages in excess of such Indemnification Deductible, provided,
however, that the maximum liability of the Control Shareholders for
Indemnifiable Damages shall not exceed $50,000,000 in the aggregate. Republic
agrees to use its reasonable best efforts to attempt to mitigate any claim for
Indemnifiable Damages hereunder, including seeking recovery under applicable
insurance policies or from third parties.
7.4 NOTICE OF CLAIM FOR INDEMNIFIABLE DAMAGES. In the event
that Republic believes that it is entitled to a claim for any Indemnifiable
Damages hereunder, Republic shall promptly give written notice to the Control
Shareholders of such claim, the amount or the estimated amount of such claim,
and the basis for such claim. The Control Shareholders shall pay the amount of
the claim for
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<PAGE> 24
Indemnifiable Damages to Republic within fifteen (15) days. If, prior to the
expiration of such 15 day period, the Control Shareholders notify Republic in
writing of an intention to dispute the claim and if such dispute is not
resolved within 30 days thereafter, then such dispute shall be resolved by a
committee of three arbitrators (one appointed by the Control Shareholders, one
appointed by the Special Committee and one appointed by the two arbitrators so
appointed), which shall be appointed within 60 days thereafter. The
arbitrators shall abide by the rules of the American Arbitration Association
and their decision shall be made within 45 days of being appointed and shall be
final and binding on all parties, provided that the arbitrators shall have no
authority to award punitive damages.
7.5 NOTICE OF THIRD PARTY CLAIM. Promptly after receipt by
Republic of notice of the commencement of any action by a third party, which is
likely to give rise to Indemnifiable Damages, Republic shall promptly notify
the Control Shareholders of the commencement thereof; but the omission to so
notify the Control Shareholders will not relieve them from any liability which
they may have hereunder unless the Control Shareholders have been materially
prejudiced thereby nor will such failure to so notify the Control Shareholders
relieve them from any liability which they may have to Republic otherwise than
hereunder. In case such action is brought against Republic and it notifies the
Control Shareholders of the commencement thereof, the Control Shareholders
shall have the right to participate in, and, to the extent that they may wish,
to assume the defense thereof, with counsel reasonably satisfactory to
Republic; provided, however, if the defendants in any action include both
Republic and any of the Control Shareholders and there is a conflict of
interest which would prevent counsel for the Control Shareholders from also
representing Republic, Republic shall have the right to select a separate
counsel to participate in the defense of such action on behalf of Republic.
After notice from the Control Shareholders to Republic of their election to so
assume the defense thereof, the Control Shareholders will not be liable to
Republic for any legal or other expense subsequently incurred by Republic in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) Republic shall have employed counsel in accordance
with the provisions of the preceding sentence, (ii) the Control Shareholders
shall not have employed counsel satisfactory to Republic to represent Republic
within a reasonable time after the notice of the commencement of the action, or
(iii) the Control Shareholders have authorized the employment of counsel for
Republic at the expense of the Control Shareholders. Notwithstanding anything
to the contrary set forth in this Agreement, the Control Shareholders shall not
in the defense of any such claim, except with the prior written consent of
Republic, consent to the entry of any judgment or enter into any settlement
which (i) does not include as an unconditional term the release by the claimant
or plaintiff of Republic from all further liability in respect of such claim,
(ii) will not, in the reasonable judgment of Republic, result in or have a
Material Adverse Effect on Republic, and (iii) provides for injunctive or other
non-monetary relief.
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ARTICLE VIII
DEFINITIONS
8.1 DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or oral.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional sale
or other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in connection with such
mortgage, pledge, security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect), in
the financial condition, results of operations or business of a Person, and
with respect to any Person that is a corporation, means the financial condition
or results of operation of such corporation and its subsidiaries on a
consolidated basis and the business of the corporation and its subsidiaries
taken as a whole, which change (or effect)
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individually or in the aggregate, is materially adverse to such financial
condition, results of operations or business.
"Permitted Liens" means statutory liens for taxes or municipal
impositions not yet due and payable, and statutory liens of landlords,
construction, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due and payable.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association, joint
venture, Governmental Authority or other entity, of whatever nature.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholders" means all of the shareholders of AutoNation, including
the Control Shareholders.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
8.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of AutoNation and Republic
at any time prior to the Closing;
(b) by Republic, upon a breach of any material
representation, warranty, covenant or agreement on the part of AutoNation or
the Control Shareholders set forth in this Agreement, which cannot be, or has
not been, cured within 10 days after written notice thereof is given to the
party committing such breach, provided that the right to effect such cure shall
not extend beyond the date set forth in subparagraph (d) below;
(c) by AutoNation, upon a breach of any material
representation, warranty, covenant or agreement on the part of the Republic
Companies set forth in this Agreement, which cannot be, or has not been, cured
within 10 days after written notice thereof is given to the party committing
such breach, provided that the right to effect such cure shall not extend
beyond the date set forth in subparagraph (d) below;
(d) by either Republic or AutoNation if the Closing
shall not have been consummated before September 30, 1996;
(e) by Republic, if this Agreement and the transactions
contemplated hereby fail to receive the requisite vote for approval and
adoption by the stockholders of Republic;
(f) by AutoNation, if Republic shall not have received
the waiver or consent of its lenders under that certain Credit Facilities and
Reimbursement Agreement dated December 19, 1995 to the transactions
contemplated by this Agreement by May 31, 1996, which shall remain effective
until September 30, 1996, or otherwise modified such Credit Facilities and
Reimbursement Agreement to allow Republic to consummate the Merger as a
Permitted Acquisition thereunder and comply with its obligations under this
Agreement; or
(g) by Republic, if the Special Committee determines,
whether before or after Republic's stockholders vote at the special meeting to
be called to approve the Merger and transactions contemplated hereby, in good
faith based upon the advice of counsel and in consultation with its financial
advisors, that proceeding with the Merger and the other transactions
contemplated hereby would result in a breach of its fiduciary duties under
applicable law.
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9.2 EFFECT OF TERMINATION. Except for the provisions of Section
10.3 which will survive the termination of this Agreement, the event of
termination of this Agreement pursuant to Section 9.1, this Agreement and the
Plan of Merger shall forthwith become void; provided, however, that nothing
herein shall relieve any party from liability for the willful breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
<TABLE>
<S> <C>
(a) IF TO ANY OF THE REPUBLIC COMPANIES TO:
Republic Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Ft. Lauderdale, FL 33301
Attn: Richard L. Handley, Vice President and General Counsel
Telecopy: (954) 779-3884
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, Suite 2700
Miami, Florida 33131
Attention: Philip B. Schwartz, Esq.
Telecopy: (305) 374-5095
(b) IF TO AUTONATION OR THE CONTROL SHAREHOLDERS TO:
AutoNation Incorporated
One Financial Plaza, 17th Floor
Fort Lauderdale, FL 33301
Attn: Steven R. Berrard, President
Telecopy: (954) 764-0645
</TABLE>
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WITH COPIES TO:
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, FL 33301
Attn: Elliot P. Borkson, Esq.
Telecopy: (954) 766-7800
Eckert Seamans Cherin & Mellot
600 Grant Street, 42nd Floor
Pittsburgh, PA 15219
Attn: Bryan D. Rosenberger, Esq.
Telecopy: (412) 566-6099
JM Family Enterprises, Inc.
100 N.W. 12th Avenue
P.O. Box 1160
Deerfield Beach, FL 33443
Attn: Lawrence S. Rich
Telecopy: (954) 429-2549
and
Attn: Colin Brown, Esq.
Telecopy: (954) 429-2601
10.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire understanding of the parties in respect of
its subject matter and supersedes all prior agreements and understandings (oral
or written) between or among the parties with respect to such subject matter.
The Exhibits and Schedules constitute a part hereof as though set forth in full
above.
10.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby, provided that Republic agrees to pay all HSR fees for filings by any
party hereto with respect to the Merger, all fees of Merrill Lynch Pierce
Fenner & Smith in connection with their rendering a fairness opinion to the
Special Committee of the Board of Directors of Republic and all SEC and NASD
fees in connection with the issuance, registration and listing of the Republic
shares to be issued pursuant to the Merger.
10.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
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<PAGE> 30
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
10.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by AutoNation or the Shareholders without the
prior written consent of Republic.
10.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
10.7 REMEDIES.
(a) Each party acknowledges that the other parties would
not have an adequate remedy at law for money damages in the event that any of
the covenants or agreements of such party in this Agreement was not performed
in accordance with its terms, and it is therefore agreed that each party in
addition to and without limiting any other remedy or right such party may have,
shall have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach and enforcing specifically
the terms and provisions hereof, and each party hereby waives any and all
defenses such party may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief.
(b) All rights, powers and remedies under this Agreement
or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
10.8 INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement. Any
information disclosed by a party in any schedule hereto shall be deemed to be
disclosed in all of the Schedules of such party.
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10.9 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State.
10.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
REPUBLIC INDUSTRIES, INC., a Delaware corporation
By: /s/ Richard L. Handley
-------------------------------------------
Name: Richard L. Handley
Title: Senior Vice President
RI/ANI MERGER CORP., a Florida corporation
By: /s/ Richard L. Handley
-------------------------------------------
Name: Richard L. Handley
Title: Vice President
AUTONATION INCORPORATED, a Florida corporation
By: /s/ Steven R. Berrard
-------------------------------------------
Name: Steven R. Berrard
Title: President
/s/ H. Wayne Huizenga
-------------------------------------------
H. WAYNE HUIZENGA, individually
/s/ Steven R. Berrard
------------------------------------------
STEVEN R. BERRARD, individually
JM FAMILY ENTERPRISES, INC., a Delaware
corporation
By: /s/ Lawrence S. Rich
-------------------------------------
Name: Lawrence S. Rich
Title: President
32
<PAGE> 33
EXHIBIT A
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger (this "Plan") is entered into as of ____________,
1996 among RI/ANI Merger Corp., a Florida corporation ("Merger Corp."), and
AutoNation Incorporated, a Florida corporation ("AutoNation").
RECITALS
The boards of directors and shareholders of Merger Corp. and
AutoNation have determined that it is advisable and in the best interests of
each such corporation and its respective shareholders that Merger Corp. be
merged (the "Merger") with and into AutoNation on the terms and subject to the
conditions set forth herein.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Merger Corp.
shall be merged with and into AutoNation in accordance with the Florida
Business Corporation Act (the "FBCA"), and the separate existence of Merger
Corp. shall cease and AutoNation shall thereafter continue as the surviving
corporation (the "Surviving Corporation") under the laws of the State of
Florida.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of
AutoNation, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation.
B. At the Effective Time, the Bylaws of AutoNation, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation, until thereafter altered, amended or repealed in
accordance with the FBCA and the Articles of Incorporation and Bylaws of the
Surviving Corporation.
C. At the Effective Time, the officers and directors of
AutoNation shall be the officers and directors of the Surviving Corporation
until their successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of
AutoNation, $0.001 par value per share (the "AutoNation Common Stock"), which
shall be issued and outstanding (other than shares of AutoNation Common Stock
held in treasury) shall, by virtue of the Merger and
<PAGE> 34
without any action on the part of the holder thereof, be converted into the
right to receive a 0.108998 fractional share of common stock, $0.01 par value
per share, of Republic Industries, Inc., a Delaware corporation and the parent
corporation of Merger Corp. ("Republic Common Stock"); provided, however, that
in lieu of the issuance of any fractional share of Republic Common Stock, each
holder of AutoNation Common Stock as of the Effective Time shall receive a cash
payment without interest equal to the fair market value of the fractional share
of Republic Common Stock to which such holder otherwise would be entitled, with
the fair market value of a fraction of a share of Republic Common Stock
determined by multiplying such fraction by the average of the daily closing
prices of a share of Republic Common Stock on The Nasdaq Stock Market -
National Market as reported in the Wall Street Journal for the five consecutive
trading days that end on the second trading day prior to the Effective Time.
B. At the Effective Time, each share of AutoNation Common Stock
held in treasury shall be canceled and extinguished without any conversion
thereof.
C. At the Effective Time, each right to acquire shares of
AutoNation Common Stock, to the extent that any such rights exist, which shall
be issued and outstanding shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to acquire a
0.108998 fractional share of Republic Common Stock.
D. At the Effective Time, each share of common stock of Merger
Corp., $1.00 par value per share, issued and outstanding immediately prior to
the Effective Time, shall be automatically converted into one share of
AutoNation Common Stock, which shall be the only outstanding common stock of
the Surviving Corporation immediately following the Effective Time.
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of AutoNation and Merger Corp. shall vest in the Surviving
Corporation, and all liabilities and obligations of AutoNation and Merger Corp.
shall become liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Agreement, the term "Effective Time" shall mean the
date and time of filing of Articles of Merger with the Department of State of
the State of Florida.
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<PAGE> 35
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RI/ANI MERGER CORP.,
A FLORIDA CORPORATION
By:
-------------------------------
Name:
------------------------
Title:
-----------------------
AUTONATION INCORPORATED,
A FLORIDA CORPORATION
By:
-------------------------------
Name:
------------------------
Title:
-----------------------
3
<PAGE> 36
EXHIBIT B
__________, 1996
Republic Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Ft. Lauderdale, FL 33301
Re: Section 6.2(e) of Merger Agreement with AutoNation Incorporated
Gentlemen:
Reference is made to that certain Merger Agreement, dated as of May 8,
1996 (the "Agreement"), by and among Republic Industries, Inc., a Delaware
corporation ("Republic"); RI/ANI Merger Corp., a Florida corporation (the
"Republic Merger Sub"); AutoNation Incorporated, a Florida corporation
("AutoNation"); and H. Wayne Huizenga, Steven R. Berrard and JM Family
Enterprises, Inc., a Delaware corporation ("JMFE"). Pursuant to the Agreement,
Republic Merger Sub shall be merged with and into AutoNation (the "Merger"),
and as a result of such Merger, each shareholder of AutoNation, including the
undersigned, shall receive shares of common stock of Republic ("Republic Common
Stock") in exchange for the issued and outstanding shares of common stock of
AutoNation. Further reference is made to Section 6.2(e) of the Agreement which
provides that the consummation of the Merger and other transactions
contemplated by the Agreement are conditioned, in part, upon the execution of
and compliance with the terms of this Letter by the undersigned. Capitalized
terms used herein and not defined have the meanings assigned to them in the
Agreement.
1. Restrictions on Transfer. The undersigned hereby agrees not to
offer, sell, contract to sell, grant an option relating to, pledge or margin,
hypothecate or otherwise dispose of, directly or indirectly (except as provided
below), any shares of Republic Common Stock received by the undersigned
pursuant to the Merger, without the prior written consent of Republic, for a
period of [180 days/one year/two years] from the date that the Merger becomes
effective. The undersigned further acknowledges that Republic may cause its
transfer agent to place stop transfer instructions with respect to the shares
of Republic Common Stock received by the undersigned in the Merger on
Republic's stock transfer ledger in accordance with the foregoing agreement.
Notwithstanding the foregoing restrictions, Republic hereby agrees that
the undersigned may pledge or margin some or all of the shares of Republic
Common Stock received by the undersigned in the Merger pursuant to a bona fide
loan transaction with a third party lender who is not an officer, director or
other affiliate of Republic. Furthermore, Republic hereby consents to the
transfer, sale or other disposal of such securities to or by such third party
lender pursuant to a margin call or foreclosure of such pledged shares in
accordance with the terms of such bona fide loan after a default by the
undersigned thereunder.
<PAGE> 37
Republic Industries, Inc.
____________, 1996
Page 2
Notwithstanding the foregoing restrictions, Republic also hereby agrees
that the undersigned may, with the prior written consent of Republic, which
consent shall not be unreasonably withheld, transfer some or all of the shares
of Republic Common Stock received by the undersigned in the Merger to (i) a
corporation, trust or other entity which is controlled by the undersigned or
(ii) a member of the undersigned's immediate family, provided that (a) any such
transfer shall be made in compliance with all applicable federal and state
securities laws and (b) the transferee of such shares must agree to be bound by
the terms of this letter agreement.
To the extent that the undersigned is employed by AutoNation immediately
prior to the consummation of the Merger, Republic agrees that the foregoing
restrictions shall not be applicable to any shares of Republic Common Stock
received by the undersigned in the Merger if the undersigned's employment is
terminated by AutoNation after the consummation of the Merger without "cause."
For the purposes of this letter agreement, termination for "cause" shall mean
termination because of (a) the undersigned's breach of his covenants and
agreements contained herein, (b) gross misconduct by the undersigned in the
performance of his duties, (c) the commission by the undersigned of an act
constituting common law fraud or a felony, or (d) the commission by the
undersigned of an act resulting in material damage to Republic. Any
resignation or other voluntary termination of employment with AutoNation by the
undersigned shall be deemed a termination for "cause"; provided that the
undersigned's termination of employment solely as a result of a demotion or
other material adverse change by Republic in the duties or obligations incident
to his employment with AutoNation shall be deemed a termination by Republic
without "cause."
2. Non-Disclosure. The undersigned covenants and agrees that, except
as expressly permitted by this letter agreement, it shall not at any time use
for its own benefit, or for the benefit of any other person, or to the
detriment of Republic, or disclose to any person, firm or corporation, any
secret, private or confidential information or other proprietary knowledge of
and concerning the business or affairs of AutoNation which it may have acquired
in the course of, or as incident to, ownership of shares of capital stock of
AutoNation. The provisions of this paragraph shall not be applicable with
respect to information concerning the business and affairs of AutoNation which
is otherwise publicly available or which may be required to be disclosed by
law, provided that prior notice of any disclosure required by law, and an
opportunity to object to any such required disclosure, shall be given by the
undersigned to Republic.
3. Non-Competition. The undersigned recognizes and acknowledges
that, as a former shareholder of AutoNation, it is, and continues to be, privy
to confidential information of AutoNation, which is valuable and material to
the business and competitive position of Republic and that the covenants herein
contained are a material consideration and inducement to Republic to enter into
the Agreement. Accordingly, the undersigned agrees that for the period of 18
months immediately following the consummation of the Merger (unless the
undersigned also is an employee of AutoNation immediately prior to consummation
of the Merger, in which case during the period
<PAGE> 38
Republic Industries, Inc.
____________, 1996
Page 3
in which he or she continues to be employed by AutoNation and for a period of
18 months following the date of termination of such employment for any reason),
unless the business of AutoNation is discontinued or terminated, the
undersigned will not (and will not permit any affiliate over which it has
control to) without the prior written consent of Republic, own or control any
voting equity interest, directly or indirectly, in any company, the business of
which consists of selling previously-owned motor vehicles directly to consumers
in the continental United States (a "Retail Used Car Business"); provided, that
this prohibition will not apply to:
(a) ownership of 5% or less of the shares of any public company
that is primarily engaged in the Retail Used Car Business; or
(b) the acquisition of any company, if the gross profits of the
portion of its business engaged in the Retail Used Car Business is
10% or less of its total gross profits, so long as such portion of
its business is disposed of within 12 months after the acquisition of
such company.
For purposes of this letter agreement, an "affiliate" shall mean any person or
entity directly or indirectly controlling, controlled by, or under common
control with, the undersigned.
4. Remedies; Independent Covenants; Severability. The undersigned
agrees that upon a breach of the provisions of paragraphs 2 and 3 of this
letter agreement, Republic shall be entitled to an accounting and payment by
the undersigned of all damages caused as a result of any violation; and, in
addition, as a matter of right, Republic shall be entitled to injunctive relief
in any court of competent jurisdiction, all of which remedies Republic shall be
entitled to pursue simultaneously and cumulatively. The agreements contained
in paragraphs 2 and 3 of this letter agreement are to be construed as being
independent of any other agreements in this letter agreement; and the existence
of any cause of action in favor of the undersigned against Republic, whether
predicated on this agreement or otherwise, shall not constitute a defense to
the enforcement by Republic of the provisions of this letter agreement. The
activities, territories, times, customers, persons and institutions to which
the restrictions set forth in paragraphs 3 of this letter agreement are
applicable are separate and divisible covenants and agreements. If any
restriction is held by any court of competent jurisdiction to be unenforceable
as to any one activity, territory, time, customer, person or institution above
listed or a variation thereof, such restriction shall nonetheless be operative
as to all other activities, territories, times, customers, persons and
institutions.
<PAGE> 39
Republic Industries, Inc.
____________, 1996
Page 4
5. Governing Law. This letter agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida.
Very truly yours,
----------------------------
ACCEPTED AND AGREED:
REPUBLIC INDUSTRIES, INC.
By:
------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 99.2
LOAN AGREEMENT
THIS LOAN AGREEMENT is made this 8th day of May, 1996, by and between
AUTONATION INCORPORATED, a Florida corporation (the "Borrower"), and REPUBLIC
INDUSTRIES, INC., a Delaware corporation (the "Lender").
PRELIMINARY STATEMENT
WHEREAS, Borrower and Lender, and certain other parties, have entered
into that certain MERGER AGREEMENT dated as of the date hereof (the "Merger
Agreement"), pursuant to which Borrower shall become a wholly-owned subsidiary
of Lender; and
WHEREAS, the closing of the proposed transactions pursuant to the
Merger Agreement is scheduled to occur on or before September 30, 1996; and
WHEREAS, Borrower has requested Lender to extend a line of credit to
be used by Borrower between the date hereof and the Effective Date for
operational expenses and capital expenditures and other expenses as more fully
defined in this Agreement, and Lender has agreed to extend such a line of
credit to Borrower pursuant to the terms and conditions hereof;
NOW THEREFORE, in consideration of any and all advances made by
Lender, the mutual promises contained herein, and other good and valuable
considerations, the receipt and adequacy of which are hereby conclusively
acknowledged, the parties, intending to be legally bound, agree as follows:
ARTICLE I
PRELIMINARY STATEMENT, DEFINITIONS, RULES
OF CONSTRUCTION AND EXHIBITS
1.1 PRELIMINARY STATEMENT. The above Preliminary Statement is
true and correct and is hereby incorporated into and made a part of this
Agreement.
1.2 DEFINITIONS. In addition to the terms defined elsewhere
herein, as used in this Agreement and the Exhibits attached hereto, the
following terms shall have the following meanings unless the context clearly
requires otherwise:
<PAGE> 2
(a) "Additional Advance" means those Advances following
the Initial Advance.
(b) "Advance" means a disbursement of the Loan pursuant
to this Agreement.
(c) "Agreement" or "Loan Agreement" means this Loan
Agreement.
(d) "Borrower" means AUTONATION INCORPORATED, a Florida
corporation.
(e) "Borrower's Address" means One Financial Plaza, Suite
1700, Ft. Lauderdale, Florida 33301.
(f) "Business Day" means any day during which banks
located in the State of Florida are scheduled to be open for business.
(g) "Business Plan" means the Borrower's 1996 Business
Plan, a copy of which has been provided to the Lender.
(h) "Cash Flow Needs Projection" means the schedule and
budget of projected cash requirements of the Borrower, a copy of which has been
provided to the Lender.
(i) "Closing" or "Closing Date" means the time of the
execution and delivery hereof by Borrower and Lender.
(j) "Code" means the Uniform Commercial Code as enacted
in the State of Florida.
(k) "Collateral" means the stock of AutoNation USA
Corporation pledged by Borrower to Lender and Borrower's capital subscriptions
receivable, and, if Lender and Borrower agree that additional collateral is
required to secure the loan, all assets, whether real, personal or mixed, that
now or at any time hereafter are pledged by Borrower to secure any of the
Obligations.
(l) "Default" means any event, condition or state of
facts which, with the giving of notice, the passage of time, or both, may
constitute an Event of Default.
(m) "Default Rate" means the default rate of interest set
forth in the Note.
(n) "Effective Date" means the date of closing of the
Merger.
(o) "Event(s) of Default" means those events described in
Article VII hereof.
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<PAGE> 3
(p) "Governmental Requirement" means any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, writ, injunction,
franchise, permit, certificate, license, authorization, or other direction or
requirement of any Governmental Authority now existing or hereafter enacted,
adopted, promulgated, entered, or issued applicable to the Properties or the
Borrower.
(q) "Impositions" means all (i) real estate and personal
property taxes and other taxes and assessments, public or private; utility
rates and charges including those for water and sewer; all other governmental
and non-governmental charges and any interest, costs, fines or penalties with
respect to any of the foregoing; and charges for any public improvement,
easement or agreement maintained for the benefit of or involving any of the
Properties, general and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever that at any time prior to or
after the execution of the Loan Documents may be assessed, levied or imposed
upon the Properties or the rents or income received therefrom, or any use or
occupancy thereof, (ii) other taxes, assessments, fees and governmental and
non-governmental charges levied, imposed or assessed upon or against the
Borrower or any of the Properties and (iii) taxes levied or assessed upon the
Note, or any other Loan Documents.
(r) "Indebtedness" means indebtedness for borrowed money,
except debt incurred to finance leases of operating equipment used in
Borrower's business not in excess of $250,000.
(s) "Initial Advance" means the first Advance.
(t) "Lender" means REPUBLIC INDUSTRIES, INC., a Delaware
corporation, and its successors, participants and assigns.
(u) "Lender's Address" means 200 East Las Olas Boulevard,
Suite 1400, Fort Lauderdale, Florida 33301.
(v) "Loan" or "Loan Amount" means the principal
obligation of up to the amount specified in the Cash Flow Needs Projection, as
evidenced by the Note.
(w) "Loan Documents" mean, collectively, the (i) Note,
(ii) Loan Agreement, (iii) Stock Pledge Agreement, (iv) Financing Statements,
(v) Certificate of Corporate Resolutions and other Certificates of the
Borrower, and (vi) any and all amendments or supplements to any of the
foregoing.
(x) "Material Adverse Effect" has the meaning assigned to
such term in the Merger Agreement.
(y) "Maturity Date" means March 31, 1997.
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<PAGE> 4
(z) "Note" means a promissory note of even date herewith
from the Borrower to the Lender in the face amount of the Loan, any renewals,
supplements, and amendments thereto and any other note given to the Lender in
connection with the Loan.
(aa) "Obligations" means, collectively, (i) the unpaid
principal amount of and accrued interest on the Note; (ii) all liabilities and
other obligations of payment and performance under any of the Loan Documents,
or under any other agreement creating a lien to secure any Obligation; and
(iii) all other obligations and liabilities in favor of the Lender or its
successor or assigns (primary, secondary, direct, contingent, sole, joint or
several, whether similar or dissimilar or related or unrelated) of the
Borrower, due or to become due, now existing or hereafter incurred, contracted
or acquired, whether arising under, out of or in connection with the Loan
Documents.
(bb) "Permitted Liens" means statutory liens of landlords,
contractors, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due and payable.
(cc) "Properties" means all land and improvements owned,
leased or operated by Borrower or any of its Subsidiaries.
(dd) "Stock Pledge Agreement" means the Stock Pledge and
Assignment Agreement of even date herewith from Borrower as Pledgor in favor of
Lender as Pledgee which secures the Note and other Obligations.
(ee) "Subsidiaries" means all corporations or other
entities with respect to which Borrower owns or controls, directly or
indirectly, 50% or more of the capital stock of any class, beneficial interest
or similar rights and interests, including without limitation, AutoNation USA
Corporation, a Florida corporation.
1.3 RULES OF CONSTRUCTION
(a) a capitalized term shall have the meaning assigned to
it in Section 1.2, or as specifically defined in any other Section or
Subsection hereof;
(b) an accounting term not otherwise defined shall have
the meaning assigned to it in accordance with generally accepted accounting
principles in the United States of America;
(c) words that are defined in the Code and not otherwise
defined herein shall have the meanings ascribed to them in the Code;
(d) words in the singular include the plural and the
plural include the singular, and reference to any gender shall include all
other genders, as the sense of the context requires;
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<PAGE> 5
(e) "or" is not exclusive;
(f) "and" may be conjunctive or disjunctive in the sole
and absolute discretion of Lender;
(g) captions of Articles, Sections and Subsections are
for convenient reference only, and shall not affect the construction or
interpretation of any of the terms or provisions of this Agreement.
ARTICLE II
THE LOAN AND COLLATERAL
2.1 DESCRIPTION OF LOAN. Subject to all of the terms,
representations, warranties, covenants and conditions in this Agreement, Lender
agrees to lend to Borrower and Borrower agrees to borrow from and repay to
Lender a principal amount not to exceed the amount set forth on the Cash Flow
Needs Projection.
2.2 EVIDENCE OF AND SECURITY FOR THE LOAN. The Loan shall be
evidenced by the Note, which Note shall be secured by the Stock Pledge
Agreement and by such other security instruments and documents as may be
reasonably required by Lender, including but not limited to those mentioned in
this Agreement.
2.3 CROSS-COLLATERAL. The Collateral and each item thereof shall
serve as cross-collateral for all of the Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lender that (except as set forth in, or on a
Schedule to, the Merger Agreement):
(a) REPRESENTATIONS AND WARRANTIES IN LOAN DOCUMENTS AND
MERGER AGREEMENT. All of the representations and warranties of Borrower
contained in the Stock Pledge Agreement and all of the other Loan Documents and
all representations and warranties of the Control Shareholders (as defined in
the Merger Agreement) in the Merger Agreement are true and correct and are
incorporated herein by reference as if fully set forth herein.
(b) GOVERNMENTAL REQUIREMENTS AND OTHER REQUIREMENTS.
All improvements constructed or to be constructed on the Properties, do and
shall comply with all
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<PAGE> 6
covenants, conditions and restrictions affecting the Properties or any portion
thereof and do and shall comply in all material respects with all Governmental
Requirements except where failure to comply would not have a Material Adverse
Effect on Borrower.
(c) POWER AND AUTHORITY. The corporate officers
executing the Loan Documents on behalf of Borrower have full power and
authority to execute any and all Loan Documents on behalf of Borrower and have
obtained the required consents from the board of directors and shareholders of
Borrower. The Borrower has all requisite corporate power and authority to
execute and deliver, and to perform all of its Obligations under, the Loan
Documents.
(d) AUTHORIZATION OF BORROWING, ETC.; NO VIOLATION. The
execution, delivery and performance of this Agreement and the other Loan
Documents, the borrowings hereunder and the execution and delivery of the Note
and the Stock Pledge Agreement, (i) have been duly authorized by all requisite
corporate action, (ii) except as would not have a Material Adverse Effect on
the Borrower, do not and will not violate, or require any consent, approval or
other action under, any Governmental Requirement or provision of applicable
law, any governmental rule or regulation, any order of any court or other
agency of government to which Borrower is subject or the certificate of
incorporation or by-laws of Borrower, and (iii) except as would not have a
Material Adverse Effect on the Borrower, does not violate any provision of any
indenture, agreement or other instrument to which Borrower is a party or by
which Borrower or any of its properties or assets is bound, or be in conflict
with, result in a breach of or constitute (with due notice or lapse of time or
otherwise) a default under any provision of such indenture, agreement or other
instruments, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of
Borrower, other than liens in favor of the Lender as provided in the Loan
Documents. Each of the Loan Documents to which Borrower is a party is the
legal, valid and binding agreement and obligation of Borrower enforceable
against it in accordance with the terms thereof.
(e) FEDERAL RESERVE REGULATIONS. The Borrower is not
engaged principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
"margin security" (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System of the United States). No part of the proceeds
of any of the Loans under this Agreement will be used for the purpose, directly
or indirectly, whether immediate, or ultimate, of purchasing or carrying,
within the meaning of such Regulation U, any such "margin security."
(f) INVESTMENT COMPANY ACT. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940
and any amendments thereto.
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<PAGE> 7
(g) TITLE TO COLLATERAL/PRIORITY OF SECURITY INTEREST.
(i) The Collateral is, and so long as the
Borrower is obligated to the Lender, will be, owned solely by Borrower. No
other person or party has or will have any right, title, interest, options to
purchase or lien therein, thereto or thereon, other than (i) liens or interests
approved by the Lender in writing, (ii) Impositions, and (iii) Permitted Liens.
(ii) Subject (1) to filing and recordation of the
appropriate instruments in the appropriate offices of the proper jurisdictions,
(2) to the enforcement of remedies, to bankruptcy, insolvency, and other laws
affecting creditors' rights generally and to moratorium laws, from time to time
in effect, and (3) to general equitable principles which may limit the right to
obtain the remedy of specific performance, each of the security interests
granted to the Lender in the Collateral pursuant to the Stock Pledge Agreement
and other Loan Documents constitutes a valid first priority security interest
or lien in and on the Collateral covered thereby, granting the rights and
remedies inuring to a secured party under applicable law.
(h) TITLE TO SUBSIDIARIES' PROPERTIES. AutoNation USA
Corporation is the sole owner or lessee of the Properties, and no other person
or party has or will have any right, title, interest, lien or options to
purchase therein, thereto or thereon, other than (i) liens or interests
approved by the Lender in writing, (ii) Impositions, or (iii) Permitted Liens.
ARTICLE IV
AFFIRMATIVE COVENANTS
4.1 USE OF LOAN PROCEEDS. Borrower shall use all Advances
exclusively for payments of the items set forth on the Cash Flow Needs
Projection or for similar items arising in the ordinary course of business
consistent with the Business Plan.
4.2 CONSTRUCTION OF IMPROVEMENTS. Borrower shall cause all
improvements to be constructed upon the Properties in a good and workmanlike
manner in accordance with the Business Plan, and all Governmental Requirements,
the rules and regulations now existing or hereafter adopted by every
appropriate Board of Fire Underwriters or its equivalent having jurisdiction
over the Properties, and any and all covenants, conditions, restrictions,
easements or similar matters affecting the Properties, except to the extent
failure to do so would not have a Material Adverse Effect on Borrower.
4.3 NOTICES. Borrower shall give prompt written notice to
Lender of (i) any action or proceeding instituted by or against Borrower or any
of its Subsidiaries in any court or by any Governmental Authority, or of any
such proceedings threatened against Borrower or any
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<PAGE> 8
of its Subsidiaries which might result in a judgment or judgments, and (ii) any
other action, event or condition of any nature known to Borrower or any of its
Subsidiaries which constitutes an Event of Default, or a default of Borrower or
any of its Subsidiaries under any contract, instrument or agreement to which
Borrower or any of its Subsidiaries is a party or by which Borrower or any of
its Subsidiaries or any of their properties or assets may be bound or to which
any may be subject, which default would have a Material Adverse Effect on
Borrower.
4.4 FURTHER ASSURANCES. Borrower shall deliver to Lender all
items, documents, writings, reports and information reasonably required by
Lender to consummate the Loan or to make Advances.
4.5 OBLIGATIONS, TAXES AND LAWS. Borrower shall pay all
indebtedness and obligations promptly and in accordance with their respective
terms, and pay and discharge promptly all taxes, assessments, and governmental
charges or levies imposed upon it, any of its Subsidiaries or in respect of
their Properties, when the same shall become due, as well as all lawful
material claims for labor, materials, and supplies or otherwise which, if
unpaid, would become a lien or charge upon such Properties or any part thereof,
and timely comply with all applicable laws and governmental rules and
regulations, except if disputed in good faith by appropriate proceedings and
except where failure to do so would not have a Material Adverse Effect on
Borrower.
4.6 INSURANCE. Borrower shall or shall cause its Subsidiaries to
maintain hazard and fire insurance on all of their Properties in amounts at
least equal to the full replacement cost of all buildings and other
improvements located on such Properties, and in connection with the acquisition
of any new real property, shall obtain title insurance thereon in an amount
equal to the acquisition cost thereof.
4.7 CONTINUED ASSISTANCE. Promptly, from time to time as the
Lender may reasonably request, perform such acts and execute, acknowledge,
deliver, file, register, deposit or record any and all further instruments,
agreements and documents, including without limitation, Uniform Commercial Code
Continuation Statements, as may be reasonably necessary to continue, preserve,
renew, record or perfect interests conferred by this Agreement or the other
Loan Documents, as well as the priority thereof.
4.8 COMPLIANCE. Borrower shall pay and perform all of the
Obligations in accordance in all material respects with the provisions of all
of the Loan Documents, and shall use its reasonable efforts to insure that all
of the representations and warranties set forth in this Agreement and in the
other Loan Documents remain true and correct in all material respects until all
Obligations are fully paid, performed and discharged.
4.9 DELIVERIES TO LENDER. Borrower and its Subsidiaries shall
provide Lender, at Lender's request, with copies and/or originals of all
documents related to the acquisition, development, operation and management of
the Properties.
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4.10 PROPERTY ACQUIRED. All land and other property whether real
or personal acquired with use of any of the proceeds of this Loan shall be
owned or leased solely by AutoNation USA Corporation and no other individual or
entity will have any right, title, interest, options to purchase or lien
therein, thereto or thereon, other than (i) liens and interests approved by the
Lender in writing, (ii) Impositions, and (iii) Permitted Liens.
4.11 FINANCIAL STATEMENTS. Borrower shall deliver to Lender its
quarterly financial statements within fifteen (15) Business Days after the end
of each quarter.
ARTICLE V
NEGATIVE COVENANTS
5.1 LIENS OR ENCUMBRANCES. Borrower shall not cause, permit or
allow to remain any lien or encumbrance upon any of the Properties or any of
the other Collateral for more than fifteen (15) days after it has become
effective or filed, whichever is sooner other than (i) liens consented to in
writing by Lender, (ii) Impositions, and (iii) Permitted Liens.
5.2 OTHER INDEBTEDNESS. Neither Borrower nor any of its
Subsidiaries shall procure or obtain any other Indebtedness whether for any of
the activities identified on the Cash Flow Needs Projection or otherwise except
that Lender shall not object to (i) financings used to pay outstanding sums due
under this Loan, (ii) Borrower obtaining stand-by credit facilities to be used
upon termination of Lender's obligation to make Advances hereunder, or (iii)
"floor plan" financings of vehicle inventories on commercially reasonable terms
and conditions. If other financings are obtained by Borrower or any of its
Subsidiaries, all of the proceeds of such financings shall be applied to the
Obligations until they are satisfied in full.
5.3 COMPLIANCE WITH COVENANTS IN MERGER AGREEMENT. From the date
hereof until all of the Obligations of Borrower hereunder are satisfied and
repaid in full, Borrower shall not take any action which would conflict with or
violate any of the covenants and agreements of Borrower contained in Section
4.1 of the Merger Agreement, which covenants and agreements are incorporated by
reference herein as if fully set forth herein, notwithstanding the termination
of the Merger Agreement for any reason.
ARTICLE VI
ADVANCES
6.1 LOAN ADVANCES. In the case of all Advances, Lender shall have
the right to make payment by check or wire transfer of immediately available
funds to the Borrower, either of which shall separately or in any combination
constitute proper disbursement. No Advances shall
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be made by Lender to Borrower after (the "Advance Cutoff Date") the earlier of
(i) October 31, 1996 or (ii) such date that is sixty (60) days following the
date of termination of the Merger Agreement in accordance with Section 9.1(e)
thereof. Any amount of the Loan not advanced by the Advance Cutoff Date shall
lapse as of the Advance Cutoff Date.
6.2 CONDITIONS PRECEDENT TO INITIAL ADVANCE. As conditions
precedent to the making of the Initial Advance hereunder the Borrower shall
satisfy to Lender's satisfaction the following conditions precedent:
(a) The Loan Documents shall have been executed and
delivered to Lender, together with any documents and instruments required in
order to establish and perfect a security interest in the Collateral as
contemplated by the Loan Documents.
(b) The Borrower's representations and warranties made
unto Lender herein and in the other Loan Documents shall be true and correct in
all material respects.
6.3 CONDITIONS PRECEDENT TO ADDITIONAL ADVANCES SUBSEQUENT TO THE
INITIAL ADVANCE. As conditions precedent to the making of each Additional
Advance subsequent to the Initial Advance, the Borrower shall satisfy to
Lender's satisfaction the following conditions precedent:
(a) The Borrower shall have delivered a Request for
Advance as provided in Section 6.4.
(b) The Borrower's representations and warranties
contained herein and in the other Loan Documents shall be true and correct in
all material respects.
(c) There shall not be a Material Adverse Change in the
Borrower.
(d) No Default or Event of Default shall have occurred.
6.4 REQUESTS FOR ADVANCE AND CERTIFICATES. Each request for
advance of the Loan (a "Request for Advance") by Borrower shall be submitted to
Lender at the Lender's Address and be in substantially the form attached hereto
as Schedule 6.4.
6.5 TIME OF ADVANCES. Borrower shall submit its Request for
Advance at least two (2) business days prior to the requested date for
disbursement of any Advance and will be funded on the second business day after
receipt of the Request for Advance. No individual Request for Advance may be
less than One Hundred Thousand Dollars ($100,000.00).
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ARTICLE VII
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. An "Event of Default", as used in this
Agreement, shall occur at any time or from time to time (regardless of the
reason therefor and whether voluntary or involuntary on the part of Borrower):
(a) PAYMENT DEFAULT. If the Borrower defaults in the
payment, when due (whether at maturity, by acceleration or otherwise), of any
principal of or interest on the Note, or any other amounts due in respect of
the Obligations hereunder or under any Loan Document which is not cured within
any applicable grace period provided for herein or therein.
(b) FAILURE TO PERFORM COVENANTS, TERMS AND AGREEMENTS.
If Borrower or any of its Subsidiaries fails to duly and promptly observe,
perform and discharge any covenant, term, condition or agreement contained in
this Loan Agreement or any other Loan Document (other than a covenant, term,
condition or agreement requiring the payment of money or otherwise specifically
provided for in this Article VII) or violates any negative covenant contained
in Article V hereof, and such failure or violation is not curable, or if
curable continues for a period of fifteen (15) days after written notice
thereof from Lender to Borrower.
(c) INACCURACY OF REPRESENTATION. If any representation
or warranty made by the Borrower in any Loan Document furnished at any time in
connection with the Loan Documents shall prove to be false or misleading in any
material respect as of the time when made.
(d) TERMINATION OF MERGER AGREEMENT DUE TO BORROWER'S
BREACH. If the Merger Agreement shall have been terminated by Lender pursuant
to Section 9.1(b) thereof and the Loan shall not have been repaid in full
within thirty (30) days of the date of such termination of the Merger
Agreement.
(e) VOLUNTARY LIQUIDATION OR BANKRUPTCY. If the Borrower
shall (i) voluntarily liquidate or terminate operations or apply for or consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of Borrower or of all or of a substantial part of its
assets, (ii) admit in writing its inability to pay its debts as the debts
become due, (iii) make a general assignment for the benefit of its creditors,
(iv) commence a voluntary case under the federal Bankruptcy Code (as now or
hereafter in effect), (v) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, (vi) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it
in an involuntary case under the Bankruptcy Code, or (vii) take any corporate
action for the purpose of effecting any of the foregoing.
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(f) INVOLUNTARY LIQUIDATION OR BANKRUPTCY. If without
Borrower's application, approval or consent, a proceeding shall be commenced,
in any court of competent jurisdiction, seeking in respect of Borrower, any
remedy under the federal Bankruptcy Code, the liquidation, reorganization,
dissolution, winding-up, or composition or adjustment of debt, the appointment
of a trustee, receiver, liquidator or the like of Borrower, or of all or any
substantial part of the assets of Borrower, or other like relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, which appointment or proceeding shall remain unvacated
or unstayed for an aggregate of sixty (60) days, whether or not consecutive.
ARTICLE VIII
REMEDIES
8.1 REMEDIES. If an Event of Default shall have occurred, Lender
may, at its option, use any, some or all of the following remedies, or any
other remedies available to it by law or pursuant to any of the other Loan
Documents:
(a) REMEDIES UNDER NOTE, STOCK PLEDGE AGREEMENT, AND
OTHER LOAN DOCUMENTS. Lender may exercise any and all of its rights and
remedies provided under the Note, Stock Pledge Agreement and any other Loan
Document.
(b) TERMINATION OF ADVANCES. Lender may cease making
Advances hereunder.
(c) ACCELERATION. Lender may declare the Obligations, or
any of them, to be forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which, to the extent permitted by
applicable law, are hereby expressly waived, anything contained herein or in
any Loan Document to the contrary notwithstanding.
8.2 REMEDIES CUMULATIVE AND CONCURRENT. No right, power or remedy
of Lender as provided in this Agreement is intended to be exclusive of any
other right, power, or remedy of Lender, but each and every such right, power
and remedy shall be cumulative and concurrent and in addition to any other
right, power or remedy available to Lender now or hereafter existing at law or
in equity and may be pursued separately, successively or concurrently at the
sole discretion of Lender. The failure of Lender to exercise any such right,
power or remedy shall in no event be construed as a waiver or release thereof.
8.3 WAIVER, DELAY OR OMISSION. No waiver of any Event of Default
hereunder shall extend to or affect any subsequent or any other Event of
Default then existing, or impair any rights, powers or remedies consequent
thereon, and no delay or omission of Lender to exercise
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any right, power or remedy shall be construed to waive any such Event of
Default or to constitute acquiescence therein.
8.4 INDEMNITY. Borrower shall indemnify Lender on demand for all
actual monetary losses and costs, which Lender may sustain as a consequence of
the occurrence of any Event of Default.
ARTICLE IX
MISCELLANEOUS
9.1 LENDER NOT PARTNER OF BORROWER. Notwithstanding anything to
the contrary herein contained or implied, Lender, by this Agreement or by any
action pursuant hereto, shall not be deemed a partner of or joint venturer with
the Borrower.
9.2 NOTICES. All notices, demands, requests and other
communications required under this Agreement must be given in writing, by
telecopy or delivered by hand during business hours or mail and shall be
conclusively deemed to have been received if delivered or attempted to be
delivered by United States first class mail, return receipt requested, postage
prepaid, addressed to the party for whom it is intended at its address set
forth in Article I hereof. Any party may designate a change of address by
written notice to the other party, received by such other party at least ten
(10) days before such change of address is to become effective.
9.3 ATTORNEYS' FEES AND EXPENSES. Wherever provision is made
herein for payment for attorneys' or counsel's fees or expenses incurred by the
Lender, said provision shall include, but not be limited to, reasonable
attorneys' or counsel's fees or expenses incurred in any and all judicial,
bankruptcy, insolvency, reorganization, administrative, investigative or other
proceedings, including appellate proceedings, whether such fees or expenses
arise before proceedings are commenced, or after entry of a final judgment and
whether suit be brought or not.
9.4 LIMITATION OF LIABILITY. Neither the Lender nor any assignee,
participant or affiliate of the Lender shall have any liability with respect
to, and the Borrower hereby waives, releases and agrees not to sue upon, any
claim for any special or punitive damages suffered by the Borrower in
connection with, arising out of, or in any way related to, this Agreement, the
Note or the other Loan Documents or the transactions contemplated and the
relationship established by this Agreement, the Note or the other Loan
Documents or any act, omission or event occurring in connection therewith.
9.5 MODIFICATION, WAIVER, CONSENT. Any modification or waiver of
any provision of this Agreement or any consent to any departure by Borrower
therefrom shall not be effective unless the same is in writing and signed by an
authorized officer of Lender, and then such
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modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose given. Any notice to or demand on
Borrower not specifically required of Lender hereunder shall not entitle
Borrower to any other or further notice or demand in the same, similar, or
other circumstances unless specifically required hereunder. Any Advance of
Loan proceeds hereunder shall not constitute a waiver of any of the conditions
of Lender's obligations to make further Advances nor, in the event Borrower is
unable to satisfy any such condition, shall any such waiver have the effect of
precluding Lender from thereafter declaring such inability to be an Event of
Default hereunder as elsewhere provided in this Agreement.
9.6 ENTIRE AGREEMENT. The Loan Documents contain the entire
agreement between the parties hereto and there are no promises, agreements,
conditions, undertakings, warranties and representations, whether written or
oral, express or implied, between the parties hereto other than as set forth in
the Loan Documents.
9.7 ASSIGNMENT BY LENDER. Any and all of the rights and
obligations of Lender under the Loan Documents may be assigned by Lender
provided that Lender remains liable under its obligations hereunder. In such
event, Borrower agrees to attorn to such assignee and to execute such consents
thereto and other documentation as may reasonably be required to facilitate
such assignment, provided such consents and documentation do not add to the
obligations of Borrower. Borrower shall not assign this Agreement, the Loan
proceeds to be advanced hereunder, or its rights hereunder.
9.8 STRICT PERFORMANCE. Time is of the essence as to all matters
provided for in this Agreement.
9.9 ACCRUAL OF INTEREST UNDER THE NOTE. Interest under the Note
shall commence to accrue as of the date of disbursal or wire transfer by
Lender, notwithstanding whether Borrower shall receive the benefit of such
monies as of such date and even if such monies are held in escrow pursuant to
the terms of any escrow arrangement or agreement. When monies are disbursed by
wire transfer, then such monies shall be considered advanced at the time of the
transmission of the wire rather than at the time of receipt thereof by the
receiving bank. Interest shall continue to accrue until Obligations are fully
and finally paid to Lender in immediately available funds.
9.10 GOVERNING LAW. The terms and conditions of this Agreement
shall be governed by the laws of the State of Florida, exclusive of its
conflict of laws principles.
9.11 INVALIDITY. If any one or more of the provisions contained in
this Agreement is declared or found by a court of competent jurisdiction to be
invalid, illegal or unenforceable, such provision or portion thereof shall be
deemed stricken and severed and the remaining provisions hereof shall continue
in full force and effect.
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9.12 BINDING EFFECT. This Agreement, subject to the provisions of
Section 9.9 above, shall be binding upon and shall inure to the benefit of the
respective permitted successors and assigns of Borrower and Lender.
9.13 ARBITRATION. Any and all disputes arising out of or in
connection with this Loan Agreement or any of the Loan Documents, which cannot
be resolved by the parties within thirty (30) days of notice thereof by one
party to the other, shall be resolved by a committee of three arbitrators (one
appointed by the Borrower, one appointed by the Lender and one appointed by the
two arbitrators so appointed), which shall be appointed within sixty (60) days
thereafter. The arbitrators shall abide by the rules of the American
Arbitration Association and their decision shall be made within forty-five (45)
days of being appointed and shall be final and binding on all parties, provided
that the arbitrators shall have no authority to award punitive damages.
IN WITNESS WHEREOF, this Agreement was executed and delivered the day
and year first above written.
BORROWER:
AUTONATION INCORPORATED, a Florida
corporation
By: /s/ Steven R. Berrard
---------------------------------
Name: Steven R. Berrard
Title: President
LENDER:
REPUBLIC INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Richard L. Handley
---------------------------------
Name: Richard L. Handley
Title: Senior Vice President
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Exhibit 99.3
REPUBLIC INDUSTRIES, INC.
- --------------------------------------------------------------------------------
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, Florida 33301
954-627-6000
954-524-2372 FAX
FOR IMMEDIATE RELEASE CONTACT: GREGORY K. FAIRBANKS
- --------------------- (954) 627-6000 - REPUBLIC
STEVEN R. BERRARD
(954) 627-5100 - AUTONATION
REPUBLIC INDUSTRIES, INC. SIGNS DEFINITIVE AGREEMENT WITH
AUTONATION INCORPORATED
Ft. Lauderdale, Florida (May 8, 1996) -- Republic Industries, Inc.
(NASDAQ:RWIN) today announced that is has signed a definitive agreement to
acquire AutoNation Incorporated. A special committee, composed of disinterested
outside members of Republic's Board of Directors, has evaluated the proposed
transaction, received a fairness opinion from its financial advisor, Merrill
Lynch & Co., and has approved the execution of the definitive agreement and
other related documents. The proposed transaction is subject to final approval
by the shareholders of Republic, and other customary closing conditions,
including regulatory approvals. The definitive agreement will be submitted to
Republic shareholders for final approval at a special meeting that is expected
to be held in July.
Upon closing of the transaction, it is expected that Steven R. Berrard,
Chief Executive Officer of AutoNation Incorporated, and formerly Chief Executive
Officer of Blockbuster Entertainment Group, will be named President and Chief
Operating Officer of Republic and will be appointed to Republic's Board of
Directors. James M. Moran, founder and Chairman of JM Family Enterprises, Inc.,
is also expected to be appointed to Republic's Board of Directors. Harris W.
"Whit" Hudson. currently President of Republic, is expected to be elevated to
the office of Vice Chairman of Republic. Mr. Berrard will continue to serve as
CEO of AutoNation and will devote the majority of his time to the development of
AutoNation USA's Megastore concept and related businesses; Mr. Hudson will
continue to handle his present responsibilities with respect to Republic's
existing operations.
Republic is a diversified services company operating in the solid waste and
electronic security services industries.
