<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
REPUBLIC INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(LOGO) REPUBLIC INDUSTRIES, INC.
March 31, 1998
Dear Stockholder:
We invite you to attend the 1998 Annual Meeting of Stockholders of Republic
Industries, Inc. to be held at 1:30 p.m. on Wednesday, May 20, 1998, at The
Broward Center for the Performing Arts, Au Rene Theater, 201 SW Fifth Avenue,
Fort Lauderdale, Florida 33312. The matters to be considered at the Annual
Meeting are described in the formal Notice and Proxy Statement on the following
pages.
In addition to the specific matters to be acted upon, there will be a
report on the progress of Republic Industries, Inc. and an opportunity to ask
questions of general interest to stockholders.
Whether or not you plan to attend in person, it is important that your
shares be represented at the Annual Meeting. The Board of Directors recommends
that stockholders vote FOR each of the matters described in the Proxy Statement
to be presented at the Annual Meeting. PLEASE DATE AND SIGN YOUR PROXY CARD AND
RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE. Thank you.
Sincerely,
/s/ WAYNE
---------------------
H. Wayne Huizenga
Chairman of the Board
<PAGE> 3
(LOGO) REPUBLIC INDUSTRIES, INC.
110 S.E. 6TH STREET
FORT LAUDERDALE, FLORIDA 33301
NOTICE OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF REPUBLIC INDUSTRIES, INC.:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of Republic
Industries, Inc. ("Republic") will be held at 1:30 p.m. on Wednesday, May 20,
1998, at The Broward Center for the Performing Arts, Au Rene Theater, 201 SW
Fifth Avenue, Fort Lauderdale, Florida 33312, for the following purposes:
(1) To elect directors to a term of office expiring at the 1999 Annual
Meeting of Stockholders or until a successor of each has been duly
elected and qualified;
(2) To consider and vote upon a proposal to amend Republic's Amended
and Restated 1995 Employee Stock Option Plan;
(3) To consider and vote upon a proposal to approve and adopt
Republic's 1998 Employee Stock Option Plan;
(4) To ratify the appointment of Arthur Andersen LLP as Republic's
independent public accountants for 1998; and
(5) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 27, 1998 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
You are cordially invited to attend the Annual Meeting in person. EVEN IF
YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO DATE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. You may revoke your proxy at any
time prior to its use.
By Order of the Board of Directors
/s/ JAMES O. COLE
-----------------------------
James O. Cole
Senior Vice President,
General Counsel and Secretary
Fort Lauderdale, Florida
March 31, 1998
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE> 4
REPUBLIC INDUSTRIES, INC.
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Republic Industries, Inc., a Delaware
corporation ("Republic"), for use at the 1998 Annual Meeting of Stockholders of
Republic, or any postponement or adjournment thereof (the "Annual Meeting"). The
Annual Meeting will be held at 1:30 p.m. on Wednesday, May 20, 1998, at The
Broward Center for the Performing Arts, Au Rene Theater, 201 SW Fifth Avenue,
Fort Lauderdale, Florida 33312.
This Proxy Statement, the Notice of Annual Meeting, the proxy card and
Republic's Annual Report to Stockholders were mailed to stockholders of Republic
on or about March 31, 1998.
RECORD DATE
Only stockholders of record at the close of business on March 27, 1998 (the
"Record Date") are entitled to vote at the Annual Meeting.
SHARES OUTSTANDING AND VOTING RIGHTS
The only voting stock of Republic outstanding is its common stock, $.01 par
value per share (the "Common Stock"). As of the close of business on the Record
Date, there were 447,084,338 shares of Common Stock outstanding. Each share of
Common Stock issued and outstanding is entitled to one vote in each of the
matters properly presented at the Annual Meeting.
A two-for-one stock split in the form of a 100% stock dividend was declared
by Republic in May 1996 and distributed in June 1996. All references in this
Proxy Statement to share and per share data for periods prior to such stock
split have been retroactively adjusted to reflect the stock split.
PROXY PROCEDURE
Proxies properly executed and returned in a timely manner will be voted at
the Annual Meeting in accordance with the directions noted thereon. If no
direction is indicated, they will be voted for the election as directors of the
nominees named herein, for the proposals set forth in the Notice of Annual
Meeting, and in accordance with the judgment of the persons acting under the
proxies on other matters presented for a vote. Any stockholder giving a proxy
has the power, at any time before it is voted, to revoke it in person at the
Annual Meeting, by written notice to the Secretary of Republic at the address
set forth above or by delivery to the Secretary of Republic of a later-dated
proxy.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of elections appointed for the meeting and will be counted in
determining whether or not a quorum is present. A proxy submitted by a
stockholder may indicate that all or a portion of the shares represented by such
proxy are not being voted by such stockholder with respect to a particular
matter ("non-voted shares"). This could occur, for example, when a broker is not
permitted to vote shares held in "street name" on certain matters in the absence
of instructions from the beneficial owner of the shares. Non-voted shares with
respect to a particular matter will not be considered shares present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for other purposes and will be counted for purposes of
determining the presence of a quorum. Shares voting to abstain as to a
particular matter and directions to "withhold authority" to vote for directors
will not be considered non-voted shares and will be considered present and
entitled to vote with respect to such matter.
VOTING REQUIREMENTS
Each director will be elected by the affirmative vote of a plurality of the
votes cast by the shares of Common Stock present at the Annual Meeting, in
person or by proxy and entitled to vote on the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required for the approval of each other matter brought to a vote at the Annual
Meeting. Non-voted shares will have no effect on the matters brought to a vote
at the
<PAGE> 5
Annual Meeting. Abstentions from voting on any of the proposals brought to a
vote at the Annual Meeting will have the effect of votes against the particular
proposal.
COSTS OF SOLICITATION
Proxies will be solicited by the Board of Directors through use of the
mails. Proxies may also be solicited by directors, officers and a small number
of other employees of Republic personally or by mail, telephone, or otherwise,
but such persons will not be compensated for such services. Brokerage firms,
banks, fiduciaries, voting trustees or other nominees will be requested to
forward the soliciting material to each beneficial owner of stock held of record
by them. Republic has hired Georgeson & Company Inc. to coordinate the
solicitation of proxies by and through such holders for a fee of approximately
$8,500 plus expenses. The entire cost of the solicitation will be borne by
Republic.
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS/NOMINEES
AND EXECUTIVE OFFICERS
DIRECTORS
Set forth below is biographical information for each member of Republic's
Board of Directors, each of whom is a nominee for election as a director at the
Annual Meeting.
H. WAYNE HUIZENGA, age 60, has served as the Chairman of the Board since
August 1995. He also served as Chief Executive Officer of Republic from August
1995 until October 1996, and has served as Co-Chief Executive Officer of
Republic since October 1996. Since September 1996, Mr. Huizenga has been
Chairman of the Board of Florida Panthers Holdings, Inc. ("Panthers Holdings"),
a sports, entertainment and leisure company which owns and operates the Florida
Panthers professional sports franchise and certain luxury resort hotels and
other facilities. Since January 1995, Mr. Huizenga also has been Chairman of the
Board of Extended Stay America, Inc. ("Extended Stay America"), an operator of
extended stay lodging facilities. Mr. Huizenga served as the Vice Chairman of
Viacom Inc. ("Viacom"), a diversified entertainment and communications company,
from September 1994 until October 1995. Mr. Huizenga also served as the Chairman
of the Board of Blockbuster Entertainment Group, a division of Viacom, from
September 1994 until October 1995. From April 1987 through September 1994, Mr.
Huizenga served as the Chairman of the Board and Chief Executive Officer of
Blockbuster Entertainment Corporation ("Blockbuster"), during which time he
helped build Blockbuster from a 19-store chain into the world's largest video
and music retailer. In September 1994, Blockbuster merged into Viacom. In 1971,
Mr. Huizenga co-founded Waste Management, Inc., ("Waste Management"), which he
helped build into the world's largest integrated solid waste services company,
and he served in various capacities, including the President, the Chief
Operating Officer and a director from its inception until 1984. Mr. Huizenga
also owns or controls the ownership of the Miami Dolphins and Florida Marlins
professional sports franchises, as well as Pro Player Stadium, in South Florida.
STEVEN R. BERRARD, age 43, has served as Co-Chief Executive Officer,
President and a director of Republic since October 1996. From March 1996 until
January 1997, Mr. Berrard served as Chief Executive Officer of AutoNation
Incorporated ("AutoNation"), which owned and operated a developing national
chain of used vehicle retailing megastores, and which was acquired by Republic
in January 1997. While the acquisition of AutoNation by Republic was pending,
from May 1996 until October 1996, Mr. Berrard also served as a Vice President of
Republic. From September 1994 through March 1996, Mr. Berrard served as
President and Chief Executive Officer of Blockbuster Entertainment Group. Mr.
Berrard joined Blockbuster in June 1987 as Senior Vice President, Treasurer and
Chief Financial Officer and became a director of Blockbuster in May 1989, during
which time he helped build Blockbuster from a 19-store chain into the world's
largest video and music retailer. He became Vice Chairman of the Board of
Blockbuster in November 1989 and served as Blockbuster's President and Chief
Operating Officer from January 1993 until September 1994. In addition, Mr.
Berrard served as President and Chief Executive Officer and a director of
Spelling Entertainment Group Inc., a television and filmed entertainment
producer and distributor, from March 1993 through March 1996,
2
<PAGE> 6
and served as a director of Viacom from September 1994 until March 1996. Mr.
Berrard also serves as a director of Panthers Holdings and is a limited partner
of the Florida Marlins.
HARRIS W. HUDSON, age 55, has served as a director of Republic since August
1995, and has served as Vice Chairman of Republic and as the Chairman of
Republic's Solid Waste Services Division since October 1996. From August 1995
until October 1996, Mr. Hudson served as President of Republic. From May 1995
until August 1995, Mr. Hudson had served as a consultant to Republic. Mr. Hudson
founded and, since its inception in 1983, has served as Chairman of the Board,
Chief Executive Officer and President of Hudson Management Corporation, a solid
waste collection company, which was acquired by Republic in August 1995. From
1964 to 1982, Mr. Hudson served as Vice President of Waste Management of
Florida, Inc., a subsidiary of Waste Management and its predecessor. Mr. Hudson
also serves as a director of Panthers Holdings and is a limited partner of the
Florida Marlins.
ROBERT J. BROWN, age 63, has served as a director of Republic since May
1997. Mr. Brown has served as President and Chief Executive Officer of B&C
Associates, Inc., a management consulting, marketing research and public
relations firm since 1973. Mr. Brown also serves as a director of Duke Energy
Corporation, First Union Corporation and Sonoco Products Company.
J.P. BRYAN, age 58, has served as a director of Republic since May 1991 and
also was a director of Republic from August 1990 until March 1991. From January
1995 to February 1998, Mr. Bryan served as President and Chief Executive Officer
of Gulf Canada Resources, Ltd., which is engaged in oil and gas exploration and
production. Since 1981, Mr. Bryan has served as the Chairman of the Board of
Torch Energy Advisors, Inc., a subsidiary of Torchmark Corporation, engaged in
the management of institutional holdings in energy-related fields and served as
its Chief Executive Officer from 1981 to 1996. From 1990 to 1995 and from 1990
to 1996 Mr. Bryan served as Chairman and Chief Executive Officer, respectively
of Nuevo Energy Company, a company involved in the oil and gas industry. Mr.
Bryan also serves on the Board of Directors of Bellweather Exploration Company,
an oil and gas exploration company.
RICK L. BURDICK, age 46, has been a director of Republic since May 1991.
Since 1988, Mr. Burdick has been a partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., a limited liability partnership including
professional corporations. Mr. Burdick also serves as a director of J. Ray
McDermott, S.A. and of Century Business Services, Inc.
MICHAEL G. DEGROOTE, age 64, has been a director of Republic since 1991 and
served as the Vice Chairman of the Board of Directors of Republic from August
1995 until October 1996. Mr. DeGroote had served as the Chairman of the Board
and President of Republic from August 1991 until August 1995, and as the Chief
Executive Officer of Republic from May 1991 until August 1995. Since April 1995,
Mr. DeGroote has served as Chairman of the Board of Century Business Services,
Inc. (formerly known as Republic Environmental Systems, Inc. and as
International Alliance Services, Inc.), a diversified services company, and from
April 1995 until October 1996, he also served as Chief Executive Officer and
President of Century Business Services, Inc. Since November 1997, Mr. DeGroote
has served as Chairman, President and Chief Executive Officer of Century
Business Services, Inc. Mr. DeGroote owned a controlling interest in Laidlaw
Inc. ("Laidlaw") from 1959 until he sold his interest in 1988, and he served as
the Chairman of the Board and Chief Executive Officer of Laidlaw from 1959 until
1990. During his tenure, Laidlaw became the third largest waste service company
in North America and the largest operator of school buses with over 28,000
vehicles.
GEORGE D. JOHNSON, JR., age 55, has served as a director of Republic since
November 1995. Since January 1995, Mr. Johnson has served as President and Chief
Executive Officer of Extended Stay America. From August 1993 until January 1995,
Mr. Johnson served in various executive positions with Blockbuster Entertainment
Group and, prior to its merger with Viacom, with Blockbuster, including as
President of the Consumer Products Division, and also as a director of
Blockbuster. From July 1987 until August 1993, Mr. Johnson was the managing
general partner of WJB Video Limited Partnership, which became the largest
Blockbuster franchisee with over 200 video stores prior to its merger with
Blockbuster in August 1993. Mr. Johnson serves as Chairman of the Board of
Alrenco, Inc. and serves as a director of Extended Stay America, Duke Energy
Corporation and Panthers Holdings.
3
<PAGE> 7
JOHN J. MELK, age 61, has served as a director of Republic since August
1995. Mr. Melk has been Chairman and Chief Executive Officer of H(2)O Plus,
Inc., a bath and skin care product manufacturer and retail distributor, since
1988. Mr. Melk also serves as a director of Psychemedics Corporation
("Psychemedics") and of Extended Stay America. Mr. Melk has been a private
investor in various businesses since March 1984 and prior to March 1984, he held
various positions with Waste Management and its subsidiaries, including
President of Waste Management International, plc., a subsidiary of Waste
Management. From February 1987 until March 1989 and from May 1993 until
September 1994, Mr. Melk served as a director of Blockbuster. He also served as
the Vice Chairman of Blockbuster from February 1987 until March 1989.
Mr. Hudson is married to Mr. Huizenga's sister. Otherwise, there is no
family relationship between any of the directors of Republic.
EXECUTIVE OFFICERS
Set forth below is biographical information for each of Republic's
executive officers who is not a nominee for director.
ROBERT J. THOMAS, age 53, joined Republic in November 1997 as Executive
Vice President -- Strategic Marketing. Prior to that, from April 1993 to
November 1997, Mr. Thomas served as President and Chief Executive Officer of
Nissan Motor Company, a subsidiary of Nissan North America ("Nissan") and from
1992 until April 1993 as Vice President -- Finance and Strategic Planning of
Nissan.
JAMES O. COLE, age 57, joined Republic in June 1997 as Senior Vice
President, General Counsel and Secretary. Mr. Cole formerly served as an
Associate General Counsel and Assistant Secretary of The Clorox Company
("Clorox"), a diversified manufacturer of household grocery products from 1979
to 1993. From 1993 to 1997, Mr. Cole served as Vice President-Corporate Affairs
of Clorox while retaining certain of his responsibilities with respect to
Clorox's legal affairs department. Prior to joining Clorox, Mr. Cole was a
lawyer in private practice in Chicago, Illinois.
THOMAS W. HAWKINS, age 36, joined Republic in June 1996 as Senior Vice
President -- Corporate Development. From September 1994 until June 1996, Mr.
Hawkins served as Executive Vice President -- Administration of Blockbuster
Entertainment Group. Prior to that, at Blockbuster, Mr. Hawkins served as Senior
Vice President, General Counsel and Secretary from February 1994 to September
1994 and as Vice President, General Counsel and Secretary from February 1993 to
February 1994. He joined Blockbuster as Senior Corporate Counsel in November
1989 and became Associate General Counsel and Secretary in August 1991. Prior to
November 1989, Mr. Hawkins was a lawyer in private practice in Chicago,
Illinois.
MICHAEL S. KARSNER, age 39, has served as Senior Vice President and Chief
Financial Officer of Republic since October 1996. Prior to joining Republic, Mr.
Karsner served from May 1996 until September 1996 as Senior Vice President and
Chief Financial Officer of Dole Food Company, Inc. ("Dole"), a multinational
packaged food company, from February 1995 until May 1996 as Vice President,
Chief Financial Officer and Treasurer of Dole, and from January 1994 until
February 1995 as Vice President and Treasurer of Dole. From January 1990 through
December 1993, Mr. Karsner served as Vice President and Treasurer of the Black &
Decker Corporation, a multinational consumer products company.
BOARD OF DIRECTORS
The Board of Directors develops Republic's business strategy and oversees
Republic's operations. It establishes the overall policies and standards for
Republic and reviews the performance of management in executing the business
strategy. The directors are kept informed of Republic's operations at meetings
of the
4
<PAGE> 8
Board and committees of the Board, through reports and analyses presented to the
Board, and by discussions with management. Significant communications between
the directors and management also occur apart from meetings of the Board and
committees of the Board.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Republic's Board of Directors held eleven meetings and took two actions by
unanimous written consent in lieu of meeting during 1997. Each incumbent
director attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which he served except for Rick L.
Burdick.
The Board of Directors has established three standing committees: the
Executive Committee, the Audit Committee and the Compensation Committee.
The Executive Committee consists of Messrs. Huizenga, Berrard and Hudson.
The Executive Committee has full authority to exercise all the powers of the
Board of Directors between meetings of the Board of Directors, except as
reserved by the Board of Directors. The Executive Committee does not have the
power to elect or remove executive officers, approve a merger of Republic,
recommend a sale of substantially all of Republic's assets, recommend a
dissolution of Republic, amend Republic's Certificate of Incorporation or By-
laws, declare dividends on Republic's outstanding securities, or, except as
authorized by the Board of Directors, issue any Common Stock or preferred stock.
The Board of Directors has given the Executive Committee authority to approve
acquisitions, borrowings, guarantees or other transactions not involving more
than $100 million in cash, securities or other consideration. The Executive
Committee is also charged with addressing Year 2000 systems issues and corporate
compliance matters. The Executive Committee took 26 actions by unanimous written
consent in lieu of meeting during 1997.
The Audit Committee consists of Messrs. Bryan, Burdick and Melk. The Audit
Committee has the power to oversee the retention, performance and compensation
of the independent public accountants for Republic, and the establishment and
oversight of such systems of internal accounting and auditing control as it
deems appropriate. The Audit Committee held two meetings during 1997.
The Compensation Committee consists of Messrs. Bryan, Johnson and Melk. The
Compensation Committee reviews Republic's compensation philosophy and programs,
exercises authority with respect to the payment of salaries and incentive
compensation to directors and executive officers, and administers Republic's
employee stock option plans. The Compensation Committee held two meetings and
took one action by unanimous written consent during 1997.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following statement made by the Compensation Committee shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall not otherwise be deemed filed under
either of such Acts.
The Compensation Committee is responsible for making recommendations to the
Board of Directors concerning executive compensation, including base salaries,
bonuses, awards of stock options and reimbursement of certain business related
costs and expenses. The Compensation Committee currently consists of Messrs.
John J. Melk, George D. Johnson, Jr. and J.P. Bryan, each of whom is a
non-employee director of Republic.
In determining the compensation of Republic's executive officers, the
Compensation Committee takes into account all factors which it considers
relevant, including business conditions in general and in Republic's lines of
business during the year, Republic's performance during the year in light of
such conditions, the market compensation for executives of similar background
and experience, and the performance of the specific executive officer under
consideration and the business area of Republic for which such executive officer
is responsible. The structure of each executive compensation package is weighted
towards incentive forms of compensation, including stock options, so that such
executive's interests are aligned with the interests of the stockholders of
Republic. The Compensation Committee believes that granting stock options
provides an
5
<PAGE> 9
additional incentive to executive officers to continue in the service of
Republic and gives them an interest similar to stockholders in the success of
Republic. The compensation program for the executive officers in 1997 consisted
of grants of stock options, in addition to base salaries, bonuses and
reimbursement of certain business related costs and expenses.
To the extent readily determinable, another factor the Compensation
Committee considers when determining compensation is the anticipated tax
treatment to Republic and to the executive officer of various payments and
benefits. For example, some types of compensation plans and their deductibility
by Republic depend upon the timing of an executive officer's vesting or exercise
of previously granted rights. Further interpretation of, and changes in, the tax
laws and other factors beyond the Compensation Committee's control also could
affect the deductibility of compensation.
Mr. Huizenga has been Republic's Chairman of the Board since August 1995,
was Chief Executive Officer from August 1995 until October 1996, and has been
Co-Chief Executive Officer of Republic since October 1996. Mr. Berrard has been
Co-Chief Executive Officer and President of Republic since October 1996.
Mr. Huizenga is not paid any cash salary or bonus. In January 1997, the
Compensation Committee approved a grant of options to Mr. Huizenga under
Republic's 1995 Employee Stock Option Plan to purchase 1,524,017 shares of
Common Stock exercisable at $28.625 per share. The total number of options
granted included a special grant of 1,000,000 options to purchase shares of
Common Stock and a formula grant of 524,017 options to purchase shares of Common
Stock. The formula grant was based upon a multiple of 15 times a deemed salary
of $1,000,000 divided by $28.625. In recommending the special grant and the
formula grant to the Board of Directors, the Compensation Committee considered
the services to be performed by Mr. Huizenga as Chairman and Co-Chief Executive
Officer of Republic, his past business accomplishments, and expected future
contribution to Republic. The number of shares subject to such options was
determined to be appropriate based upon the foregoing factors (with equal
consideration given to each), in addition to the fact that Mr. Huizenga would
not be receiving any cash salary or bonus. The options have a 10 year term,
vested immediately and are presently exercisable in full.
In January 1997, the Compensation Committee approved a grant of options to
Mr. Berrard to purchase 614,410 shares of Common Stock exercisable at a price of
$28.625 per share. The total number of options granted included a special grant
of 300,000 options to purchase shares of Common Stock and a formula grant of
314,410 options to purchase shares of Common Stock. The formula grant was based
upon a multiple of 12 times a deemed salary of $750,000 divided by $28.625.
These grants were determined at the discretion of the Compensation Committee to
be appropriate based on the services to be performed by Mr. Berrard as Co-Chief
Executive Officer and President, his past business accomplishments, and expected
future contribution to Republic. The number of shares subject to such options
was determined to be appropriate based upon the foregoing factors (with equal
consideration given to each), and to the fact that Mr. Berrard's salary is lower
than the market compensation for executives of similar background and
experience. All options granted to Mr. Berrard in 1997 have a term of 10 years
and vest over a four year period at the rate of 25% per year commencing on the
first anniversary date of grant. During 1997, Mr. Berrard's annual salary was
$400,000 plus a bonus of $100,000.
The Compensation Committee believes that tying the remuneration of Messrs.
Huizenga and Berrard to the performance of Republic's Common Stock will enhance
the long-term performance and stability of Republic by providing Messrs.
Huizenga and Berrard the incentive to expand the Company's businesses and bring
Republic to increased levels of profitability in future years. The Compensation
Committee believes that Mr. Berrard's annual salary and the grants of stock
options to Mr. Huizenga and Mr. Berrard, as described above, represent a fair
compensation structure for each of their annual services as the Co-Chief
Executive
6
<PAGE> 10
Officers of Republic and that the grant of such options to Messrs. Huizenga and
Berrard provides an incentive to each of them to maximize shareholder value.
Compensation Committee:
John J. Melk, Chairman
J.P. Bryan
George D. Johnson, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bryan, Johnson and Melk served as members of the Compensation
Committee in 1997. Mr. Johnson has served as the President and Chief Executive
Officer of Extended Stay America, and Mr. Huizenga has served as the Chairman of
the Board of Extended Stay America, since January 1995.
Mr. Johnson and Mr. Melk were issued 544,490 and 179,681 shares of Common
Stock, respectively, in connection with the acquisition by the Company of
AutoNation in January 1997, as further discussed under "Certain Relationships
and Related Transactions" below.
During 1997, Republic purchased approximately $280,000 of pre-employment
drug screening hair testing services from Psychemedics. Messrs. Huizenga and
Melk own approximately 10.6% and 9.9%, respectively, of Psychemedics outstanding
stock. Mr. Melk also serves as a director of Psychemedics. Republic expects that
it will continue to utilize Psychemedics to perform customary pre-employment
drug screenings in 1998.
PERFORMANCE GRAPH
CUMULATIVE TOTAL RETURN
BASED ON INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1992
WITH DIVIDENDS REINVESTED
(graph)
<TABLE>
<CAPTION>
RUSSELL 1000
MEASUREMENT PERIOD REPUBLIC INDUSTRIES PRODUCER DURABLES
(FISCAL YEAR COVERED) INC. S&P 500 INDEX
<S> <C> <C> <C>
DEC-92 $ 100 $ 100 $ 100
DEC-93 $ 64 $ 110 $ 117
DEC-94 $ 76 $ 112 $ 117
DEC-95 $ 818 $ 153 $ 154
DEC-96 $ 1,412 $ 189 $ 189
DEC-97 $ 1,055 $ 252 $ 220
</TABLE>
7
<PAGE> 11
COMPENSATION TABLES
The following tables set forth information with respect to those persons
who (i) served as the Co-Chief Executive Officers during the year ended December
31, 1997 and (ii) were the four other most highly compensated executive officers
of Republic at December 31, 1997 whose total annual salary and bonus exceeded
$100,000 for the year (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
---------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
--------------------------------------------- OPTIONS
OTHER ANNUAL TO PURCHASE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMMON STOCK COMPENSATION
- --------------------------- ---- -------- -------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
H. Wayne Huizenga........... 1997 -- -- -- 1,524,017 --
(Chairman and Co-Chief 1996 -- -- -- 465,117 --
Executive Officer)(2) 1995 -- -- -- 3,000,000 --
Steven R. Berrard........... 1997 $369,673 $100,000 -- 614,410 --
(President and Co-Chief 1996 $ 2,292 -- -- 928,572 --
Executive Officer)(3) 1995 -- -- -- -- --
Harris W. Hudson............ 1997 $395,769 $100,000 -- 324,672 --
(Vice Chairman)(4) 1996 $286,501 -- -- 186,047 --
1995 $115,804 -- -- 802,020 --
Michael S. Karsner.......... 1997 $337,820 $ 81,250 -- 10,000 $ 234,507(6)
(Senior Vice President and 1996 $104,167 $ 50,000 -- 250,000 --
Chief Financial 1995 -- -- -- -- --
Officer)(5)
Robert J. Thomas............ 1997 $ 69,231 $300,000(8) $211,130(9) 275,000 --
(Executive Vice 1996 -- -- -- -- --
President -- 1995 -- -- -- -- --
Strategic Marketing)(7)
Thomas W. Hawkins........... 1997 $285,192 $ 71,250 -- 100,000 --
(Senior Vice President 1996 $140,771 $ 62,500 -- 120,000 --
-- Corporate 1995 -- -- -- -- --
Development)(10)
</TABLE>
- ---------------
(1) The aggregate total value of perquisites and other personal benefits,
securities or property did not equal $50,000 or ten percent (10%) of the
annual salary and bonus for any Named Executive Officer during either 1995,
1996 or 1997.
(2) Mr. Huizenga's employment with Republic began in August 1995. He is not
paid any cash salary or bonus.
(3) Mr. Berrard's employment with Republic began in May 1996.
(4) Mr. Hudson's employment with Republic began in August 1995.
(5) Mr. Karsner's employment with Republic began in October 1996.
(6) Includes $136,803 of relocation expenses for Mr. Karsner and $97,704
reimbursed by Republic for the payment of taxes by Mr. Karsner incurred
thereon.
(7) Mr. Thomas' employment with Republic began in November 1997.
(8) Constitutes a bonus that is not part of a recurring arrangement.
(9) Constitutes amounts reimbursed by Republic for the payment of taxes by Mr.
Thomas incurred on his bonus payment.
(10) Mr. Hawkins' employment with Republic began in June 1996.
8
<PAGE> 12
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/WARRANTS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS/WARRANTS EMPLOYEES IN EXERCISE EXPIRATION --------------------------------------
NAME GRANTED FISCAL YEAR PRICE DATE(1) 0% 5% 10%
---- ---------------- ---------------- -------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
H. Wayne Huizenga.......... 1,524,017 9.3% $28.625 1/3/07 $2,000,272 $27,435,520 $69,526,994
(Chairman and Co-Chief
Executive Officer)
Steven R. Berrard.......... 614,410 3.7% $28.625 1/3/07 $ 806,413 $11,060,676 $28,029,924
(President and Co-Chief
Executive Officer)
Harris W. Hudson........... 324,672 2.0% $28.625 1/3/07 $ 426,132 $ 5,844,781 $14,811,822
(Vice Chairman)
Michael S. Karsner......... 10,000 * $28.625 1/3/07 $ 13,125 $ 180,021 $ 456,209
(Senior Vice President
and Chief Financial
Officer)
Robert J. Thomas........... 275,000 1.7% $ 29.50 11/3/07 $ -- $ 5,101,908 $12,929,236
(Executive Vice
President--
Strategic Marketing)
Thomas W. Hawkins.......... 100,000 * $28.625 1/3/07 $ 131,250 $ 1,800,211 $ 4,562,088
(Senior Vice President
-- Corporate Development)
</TABLE>
- ---------------
* Less than 1%
(1) Mr. Huizenga's option grant is immediately exercisable in full; the option
grants for the other Named Officers vest over a four year period at the rate
of 25% per year commencing on the first anniversary of the date of grant.
AGGREGATED OPTION EXERCISES IN YEAR ENDED DECEMBER 31, 1997 AND YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1997 DECEMBER 31, 1997
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. Wayne Huizenga................... -- -- 4,989,134 -- $38,405,528 --
(Chairman and Co-Chief Executive
Officer)
Steven R. Berrard................... -- -- 232,143 1,310,839 $ 622,769 $ 1,868,305
(President and Co-Chief Executive
Officer)
Harris W. Hudson.................... -- -- 297,522 815,217 $ 7,354,617 $ 5,885,820
(Vice Chairman)
Michael S. Karsner.................. -- -- 62,500 197,500 -- --
(Senior Vice President and
Chief Financial Officer)
Robert J. Thomas.................... -- -- -- 275,000 -- --
(Executive Vice President
-- Strategic Marketing)
Thomas W. Hawkins................... -- -- 30,000 190,000 $ 91,875 $ 275,625
(Senior Vice President
-- Corporate Development)
</TABLE>
9
<PAGE> 13
COMPENSATION OF DIRECTORS
1994 NON-EMPLOYEE DIRECTOR WARRANTS
In May 1994, the Board of Directors of Republic approved the issuance of
warrants to purchase 100,000 shares of Common Stock at an exercise price of
$1.35 per share (the quoted market price of the Common Stock at the date of
issuance) to each of Messrs. Bryan and Burdick, each a non-employee director of
Republic, as compensation for continuing service on the Board of Directors (the
"Non-Employee Director Warrants"). The Non-Employee Director Warrants vest over
a five year period in increments of 20%, commencing on May 31, 1995, are
exercisable for a period of four years after vesting and terminate on or about
the termination of the non-employee director's service as a director of
Republic. In November 1995, upon recommendation of the Board of Directors, the
stockholders of Republic approved an amendment to the Non-Employee Director
Warrants to accelerate the vesting of all of the Non-Employee Director Warrants
and make them immediately exercisable in full.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
The 1995 Non-Employee Director Stock Option Plan of Republic (the "Director
Plan") provides for an automatic grant of an option to purchase 100,000 shares
of Common Stock to each member of the Board of Directors who becomes or joins
the Board as a non-employee director, and further provide an additional
automatic grant of an option to purchase 20,000 shares of Common Stock at the
beginning of each fiscal year thereafter to each non-employee director
continuing to serve on the Board at such dates. All options granted under the
Director Plan are fully vested and immediately exercisable. Under the Director
Plan, each automatic grant of options to a non-employee director remains
exercisable for a term of ten years from the grant date so long as such Director
remains a member of the Board and are exercisable at a price per share equal to
the closing price of a share of Common Stock on The New York Stock Exchange, on
the date immediately prior to the automatic grant date. In accordance with the
Director Plan, on January 3, 1997, Messrs. Bryan, Burdick, DeGroote, Johnson and
Melk each received an automatic grant of options to purchase 20,000 shares of
Common Stock at an exercise price of $32.1875 per share, respectively and on
April 10, 1997 Mr. Brown received an automatic grant of an option to purchase
100,000 shares of Common Stock at an exercise price of $27.375 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain agreements and transactions between
or among Republic and certain related parties. It is Republic's policy that
transactions with related parties must be on terms that, on the whole, are no
less favorable than those that would be available from unaffiliated parties.
Based on Republic's experience in the industries in which it operates and the
terms of its transactions with unaffiliated parties, it is Republic's belief
that all of the transactions described below involving Republic met that
standard at the time such transactions were effected.
In January 1997, Republic acquired AutoNation in a transaction in which the
former owners of AutoNation were issued an aggregate of approximately 17.4
million shares of Common Stock. AutoNation was beneficially owned, in part,
directly or indirectly by Messrs. Huizenga, Berrard, Johnson, Melk and Hawkins,
and they (or their spouses or entities they beneficially owned) respectively
were issued 65,337, 3,158,042, 544,490, 179,681 and 95,830 shares of Common
Stock in the acquisition transaction. During the period between entering into
the definitive agreement with respect to the acquisition of AutoNation in May
1996 (the "AutoNation Merger Agreement") and December 31, 1996, Republic loaned
to AutoNation the aggregate sum of approximately $243,400,000 pursuant to a loan
agreement entered into in accordance with the AutoNation Merger Agreement for
AutoNation to buy real property and develop AutoNation USA megastores pending
the closing of the acquisition. These transactions were approved by the
stockholders of Republic on January 16, 1997 at a Special Meeting called for the
express purpose of seeking such approval. The AutoNation Merger Agreement was
negotiated and approved by a Special Committee of the Board of Directors,
consisting of the outside directors who had no ownership interest in AutoNation.
The Special Committee obtained a fairness opinion from an investment banking
firm with regard to the transaction, which was set forth in the proxy statement
sent to stockholders before the Special Meeting.
10
<PAGE> 14
In May 1996, at the time the AutoNation Merger Agreement was entered into,
Republic entered into an employment agreement with Mr. Berrard. Pursuant to such
agreement, Mr. Berrard became a non-executive officer of Republic and performed
certain services for Republic, and Republic compensated Mr. Berrard through a
grant of options under Republic's 1995 Employee Stock Option Plan to purchase
428,572 shares of Common Stock exercisable at a price of $17.50 per share (the
quoted market price of Republic's Common Stock at the time of grant). These
options have a term of 10 years and vest over a four year period at the rate of
25% per year commencing on the first anniversary of the date of grant. This
employment agreement terminated pursuant to its terms upon the closing of the
acquisition of AutoNation by Republic. The stock options granted to Mr. Berrard
remain outstanding notwithstanding the termination of this employment agreement,
and continue to vest in accordance with the 1995 Employee Stock Option Plan so
long as Mr. Berrard remains employed by Republic.
The Miami Dolphins, a professional football team owned and controlled by
Mr. Huizenga, and the Florida Marlins, a professional baseball team owned in
part by Messrs. Huizenga, Hudson and Berrard and controlled by Mr. Huizenga,
each play their home games at Pro Player Stadium, a professional sports stadium
in South Florida which is owned and controlled by Mr. Huizenga (collectively,
the Miami Dolphins, the Florida Marlins and Pro Player Stadium are referred to
as the "Stadium Entities"). The Stadium Entities license the use of over 200
executive suites, also known as skyboxes, and several thousand club seats
principally to South Florida-based businesses pursuant to license agreements
which generally have terms of up to ten years. The Stadium Entities also provide
sponsorship, marketing and advertising services principally to such businesses
pursuant to agreements which generally have terms of one to four years, and
typically include signage at Pro Player Stadium, tickets to games, program and
other advertising, and other benefits. In addition, each year the Stadium
Entities sell hundreds of thousands of tickets for admission to games and other
events in various full or partial season subscriptions, individual game sales,
and group packages. Three South Florida-based companies acquired by Republic,
namely, Alamo Rent-A-Car, Inc. ("Alamo"), AutoNation, and Hudson Management
Corporation (collectively, the "Acquired Subsidiaries"), had existing agreements
and/or ticket subscriptions with the Stadium Entities at the time they were
acquired by Republic. In addition, in March 1996, Republic entered into similar
agreements with the Stadium Entities and, in April 1997, several subsidiaries of
Republic entered into similar agreements with the Stadium Entities. In 1997,
Republic (including its subsidiaries) paid an aggregate of approximately
$590,000 to the Stadium Entities pursuant to these agreements and subscriptions,
in exchange for the use of executive suites and club seats, and for various
tickets and sponsorship, marketing and advertising services. Certain
subsidiaries of Republic collected solid waste from and leased roll-off waste
containers to the Stadium Entities and also rented vehicles to the Stadium
Entities, pursuant to standard agreements under which the Stadium Entities paid
an aggregate of approximately $383,000 to Republic's subsidiaries in 1997. In
addition, the Stadium Entities provided subsidiaries of Republic signage within
Pro Player Stadium in 1997 with a fair market value of approximately $250,000,
at no cost to such subsidiaries. Also, the Florida Marlins paid approximately
$57,000 to Republic Media, a subsidiary of Republic, for billboard
advertisements. Republic expects most of the foregoing agreements and
arrangements to continue in 1998.
In 1997, AutoNation entered into a license agreement with Panthers Holdings
for the use of an executive suite at the Broward County Arena, which is operated
by Panthers Holdings. The license agreement has a term of five years and
provides for the payment of $120,000 per year by AutoNation commencing in 1998.
During 1997, Republic and its subsidiaries made payments totaling approximately
$180,000 to the Hyatt Regency Pier 66 and approximately $80,000 to the Radisson
Bahia Mar Resort and Yachting Center for hotel lodging accomodations. The Hyatt
Regency Pier 66 and the Radisson Bahia Mar Resort and Yachting Center are owned
by Panthers Holdings. In 1995, Alamo entered into a sponsorship agreement for a
term expiring in June 1997 with Florida Panthers Hockey Club, Ltd. (the "Florida
Panthers"), which is wholly-owned by Panthers Holdings and operates a National
Hockey League franchise. Alamo was acquired by Republic in November 1996. Since
January 1, 1997, Alamo has paid the Florida Panthers the sum of approximately
$138,000, in exchange for dasherboard advertising signage, tickets, program
advertising and other sponsorship
11
<PAGE> 15
benefits provided to Alamo. Mr. Huizenga is the Chairman of the Board of
Panthers Holdings, beneficially owns 21.3% of its outstanding stock and controls
a majority of its voting interests.
During 1997, Republic engaged the law firm of Akin, Gump, Strauss, Hauer &
Feld, L.L.P. for certain legal services. Mr. Burdick is a partner in that law
firm. Republic expects this relationship to continue in 1998.
During 1997, Republic engaged the management consulting, marketing research
and public relations firm of B&C Associates, Inc. for certain management
consulting services in exchange for the payment of approximately $355,000. Mr.
Brown is the President, Chief Executive Officer and principal owner of B&C
Associates, Inc. Republic expects this relationship to continue in 1998.
During 1997, Republic purchased approximately $280,000 of pre-employment
drug screening hair testing services from Psychemedics. Messrs. Huizenga and
Melk own approximately 10.6% and 9.9%, respectively, of Psychemedics outstanding
stock. Mr. Melk also serves as a director of Psychemedics. Republic expects that
it will continue to utilize Psychemedics to perform customary pre-employment
drug screenings in 1998.
In July 1997, Republic assumed responsibility for an agreement between
Viacom Inc. and Butler's Pantry Food Service, Inc., in connection with
Republic's purchase of an office building from Viacom. Butler's Pantry provides
food service for Republic's employees who for the most part are located in the
building complex where the food services are provided. William Butler, President
and principal owner of Butler's Pantry, is the brother-in-law of Mr. Berrard.
Republic paid Butler's Pantry $120,144 in management fees and reimbursements to
cover losses from operations in 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of (1) Forms 3 and 4 and amendments thereto
furnished to Republic pursuant to Rule 16a-3(e) under the Exchange Act during
Republic's fiscal year ended December 31, 1997, (2) any Forms 5 and amendments
thereto furnished to Republic with respect to Republic's fiscal year ended
December 31, 1997, and (3) any written representations referred to in
subparagraph (b)(2)(i) of Item 405 of Regulation S-K under the Exchange Act, no
person who at any time during the fiscal year ended December 31, 1997 was a
director, officer or, to the knowledge of Republic, a beneficial owner of more
than 10% of Republic's Common Stock failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act during the fiscal year ended
December 31, 1997 or prior fiscal years.
12
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 10, 1998
with respect to the beneficial ownership of Common Stock by (1) each stockholder
of Republic who is known by Republic to be a beneficial owner of more than 5% of
the Common Stock outstanding, (2) each director of Republic, (3) each Named
Officer, and (4) all current directors and executive officers of Republic as a
group. Share amounts and percentages shown for each individual, entity or group
in the table are adjusted to give effect to shares of Common Stock that are not
outstanding but may be acquired by such individual, entity of group upon
exercise of all options and warrants exercisable within 60 days of March 10,
1998. However, such shares of Common Stock are not deemed to be outstanding for
the purpose of computing the percentage of outstanding shares beneficially owned
by any other person.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME AND ADDRESS -------------------------
OF BENEFICIAL OWNER NUMBER PERCENT
------------------- ----------- --------
<S> <C> <C>
Subsidiaries of The Equitable Companies Incorporated(1)..... 35,743,799 8.1%
1290 Avenue of the Americas
New York, New York 10104
H. Wayne Huizenga(2)........................................ 31,801,912 7.0%
110 S.E. 6th Street
Fort Lauderdale, Florida 33301
Huizenga Investments Limited Partnership(3)................. 25,019,219 5.6%
P.O. Box 50102
Henderson, NV 89106
Michael G. DeGroote(4)...................................... 27,225,000 6.1%
Victoria Hall
11 Victoria Street
P.O. Box HM 1065
Hamilton, HMEX Bermuda
Westbury (Bermuda) Ltd.(5).................................. 27,065,000 6.1%
Victoria Hall
11 Victoria Street
P.O. Box HM 1065
Hamilton, HMEX Bermuda
Steven R. Berrard(6)........................................ 4,500,931 1%
Harris W. Hudson(7)......................................... 19,421,981 4.4%
Robert J. Brown(8).......................................... 120,200 *
J.P. Bryan(9)............................................... 110,000 *
Rick L. Burdick(10)......................................... 160,000 *
George D. Johnson, Jr.(11).................................. 1,359,321 *
John J. Melk(12)............................................ 4,657,001 1%
Thomas W. Hawkins(13)....................................... 340,830 *
Michael S. Karsner(14)...................................... 65,000 *
Robert J. Thomas(15)........................................ 4,000 *
All directors and executive officers as a group
(13 persons).............................................. 89,766,176 19.4%
</TABLE>
- ---------------
* Less than 1 percent
(1) Includes: (i) 8,384,000 shares owned by The Equitable Life Assurance
Society of the United States ("Equitable Life"); (ii) 26,726,961 shares
owned by Alliance Capital Management L.P. ("Alliance"); (iii) 242,434
shares owned by Donaldson, Lufkin & Jenrette Securities Corporation
("Donaldson") and
13
<PAGE> 17
(iv) 390,404 shares owned by Wood, Struthers and Winthrop Management Corp.
("Wood"). Equitable Life, Alliance, Donaldson and Wood are subsidiaries of
The Equitable Companies Incorporated ("Equitable Companies"). This
information is based on a Schedule 13G filed by Equitable Companies;
AXA-UAP, a French entity, which beneficially owns a majority interest in
Equitable Companies; and Alpha Assurances Vie Mutuelle, AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle and AXA Courtage Assurance
Mutuelle as a group (collectively, "Mutuelles AXA"). Mutuelles AXA
beneficially owns a majority interest in AXA-UAP. Each of Mutuelles AXA, as
a group and AXA-UAP expressly disclaim to be beneficial owners of shares
owned by Equitable Life, Alliance, Donaldson and/or Wood.
(2) The aggregate amount of Common Stock beneficially owned by Mr. Huizenga
consists of (a) 17,019,219 shares beneficially owned by Huizenga Investment
Limited Partnership, a Nevada limited partnership controlled by Mr.
Huizenga, (b) 1,043,559 shares owned indirectly by his wife, (c) presently
exercisable warrants owned by Huizenga Investment Limited Partnership to
purchase 8,000,000 shares, and (d) vested options to purchase 5,739,134
shares. Mr. Huizenga disclaims beneficial ownership of the shares owned by
his wife.
(3) The aggregate amount of Common Stock owned by Huizenga Investments Limited
Partnership, a Nevada limited partnership controlled by Mr. Huizenga,
consists of (a) 17,019,219 shares owned directly by it and (b) presently
exercisable warrants to purchase 8,000,000 shares.
(4) The aggregate amount of Common Stock beneficially owned by Mr. DeGroote
consists of (a) 24,365,000 shares owned by Westbury (Bermuda) Ltd., a
Bermuda corporation controlled by Mr. DeGroote (b) presently exercisable
warrants owned by Westbury (Bermuda) Ltd. to purchase 2,700,000 shares, and
(c) vested options to purchase 160,000 shares.
(5) The aggregate amount of Common Stock owed by Westbury (Bermuda) Ltd.
consists of (a) 24,365,000 shares owned directly by it and (b) presently
exercisable warrants directly owned by it to purchase a total of 2,700,000
shares.
(6) The aggregate amount of Common Stock owned by Mr. Berrard consists of (a)
3,333,042 shares owned by Berrard Holdings Limited Partnership, a Nevada
limited partnership controlled by Mr. Berrard ("Berrard Holdings"), (b) a
total of 25,000 shares held in trust for the benefit of Mr. Berrard's
daughters, (c) presently exercisable warrants to purchase 200,000 shares
owned by Berrard Holdings and (d) options exercisable within 60 days of
March 10, 1998 to purchase 942,889 shares.
(7) The aggregate amount of Common Stock beneficially owned by Mr. Hudson
consists of (a) 17,296,779 shares beneficially owned by Harris W. Hudson
Limited Partnership, a Nevada limited partnership controlled by Mr. Hudson,
(b) presently exercisable warrants owned by Harris W. Hudson Limited
Partnership to purchase 1,200,000 shares and (c) options exercisable within
60 days of March 10, 1998 to purchase 925,202 shares.
(8) The aggregate amount of Common Stock beneficially owned by Mr. Brown
consists of (a) 200 shares owned by Mr. Brown and his wife as joint tenants
and (b) vested options to purchase 120,000 shares.
(9) The aggregate amount of Common Stock beneficially owned by Mr. Bryan
consists of (a) presently exercisable warrants to purchase 50,000 shares
and (b) vested options to purchase 60,000 shares.
(10) The aggregate amount of Common Stock beneficially owned by Mr. Burdick
consists of (a) presently exercisable warrants to purchase 100,000 shares
and (b) vested options to purchase 60,000 shares.
(11) The aggregate amount of Common Stock beneficially owned by Mr. Johnson
consists of (a) 999,321 shares owned by GDJ, Jr. Investments Limited
Partnership, a Nevada limited partnership controlled by him, (b) presently
exercisable warrants to purchase 200,000 shares, owned by GDJ, Jr.
Investments Limited Partnership and (c) vested options to purchase 160,000
shares.
(12) The aggregate amount of Common Stock beneficially owned by Mr. Melk
consists of (a) 179,681 shares owned directly by him, (b) 2,050,002 shares
owned by JJM Republic Limited Partnership, of which Mr. Melk is the general
partner and his three adult children are limited partners, (c) 1,849,998
shares owned by JLM Republic Limited Partnership, of which Mr. Melk's wife
is the general partner and his three adult children are limited partners,
(d) presently exercisable warrants to purchase 200,000 shares, (e) vested
options to purchase 160,000 shares and (f) 217,320 shares owned by his
wife. Mr. Melk disclaims beneficial ownership of the shares owned by JLM
Republic Limited Partnership and of the shares owned by his wife.
14
<PAGE> 18
(13) The aggregate amount of Common Stock beneficially owned by Mr. Hawkins
consists of (a) 175,830 shares owned by Mr. Hawkins, (b) presently
exercisable warrants to purchase 80,000 shares and (c) options which are
exercisable within 60 days of March 10, 1998 to purchase 85,000 shares.
(14) The aggregate amount of Common Stock beneficially owned by Mr. Karsner
consists of options which are exercisable within 60 days of March 10, 1998
to purchase 65,000 shares.
(15) The aggregate amount of Common Stock beneficially owned by Mr. Thomas
consists of presently exercisable call options owned by Mr. Thomas and his
wife as joint tenants to purchase 4,000 shares of Common Stock.
(16) The aggregate amount of Common Stock beneficially owned by all directors
and executive officers as a group consists of (a) 68,554,951 shares, (b)
presently exercisable warrants to purchase 12,730,000 shares and (c)
options which are exercisable within 60 days of March 10 to purchase
8,481,225 shares.
15
<PAGE> 19
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members. The persons
named below have been designated by the Board of Directors as nominees for
election as directors, for a term expiring at the Annual Meeting of Stockholders
in 1999. All nominees are currently serving as Directors. Each director is
elected by the affirmative vote of a plurality of the votes cast by the shares
of Common Stock present at the Annual Meeting, in person or by proxy, and
entitled to vote thereon at the Annual Meeting. It is the intention of the
persons named in the enclosed form of proxy to vote the proxies received by them
for the election of the nominees named below, unless authorization to do so is
withheld or other contrary instructions are indicated on such proxy. Each of the
nominees has indicated that he is willing and able to serve as a director. If
prior to the Annual Meeting any nominee becomes unable to serve, an event which
is not anticipated by the Board of Directors, the proxies will be voted for the
election of such other person as the Board of Directors may designate.
NOMINEES FOR DIRECTOR
H. Wayne Huizenga
Steven R. Berrard
Harris W. Hudson
Robert J. Brown
J.P. Bryan
Rick L. Burdick
Michael G. DeGroote
George D. Johnson, Jr.
John J. Melk
Biographical information relating to each of these nominees for director
appears above starting on page 2 of this Proxy Statement under the heading
"BIOGRAPHICAL INFORMATION REGARDING DIRECTORS/NOMINEES AND EXECUTIVE OFFICERS."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE NOMINEES FOR DIRECTOR NAMED ABOVE. PROXY CARDS EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
16
<PAGE> 20
PROPOSAL 2.
APPROVAL OF PROPOSED AMENDMENT TO 1995 AMENDED AND RESTATED EMPLOYEE
STOCK OPTION PLAN
On February 3, 1998, the Board of Directors adopted, subject to stockholder
approval at the Annual Meeting, an amendment to Republic's 1995 Amended and
Restated Employee Stock Option Plan (the "1995 Plan"), which will enable awards
of stock options made under the 1995 Plan to qualify as "performance-based
compensation" not subject to the limitation on deductibility on executive
compensation provided for in Section 162(m) of the Internal Revenue Code of
1986, as amended ("Section 162(m)").
Section 162(m) provides that the federal income tax deductibility of
compensation paid to each of Republic's Co-Chief Executive Officers and to its
four most highly compensated executive officers may be limited to the extent
that it exceeds $1 million in any one year. However, Republic can continue to
deduct compensation in excess of that amount if the compensation qualifies as
"performance-based compensation" under Section 162(m) and the material terms of
such compensation are approved by Republic's stockholders. In order for payments
under the 1995 Plan to qualify as "performance-based compensation," the 1995
Plan must set forth a per-employee limit on the number of shares of Common Stock
for which options may be granted during a specified period. Therefore, the Board
of Directors is proposing that the 1995 Plan be amended to limit the maximum
number of shares of Common Stock for which options may be granted to any
individual during any calendar year to 2,000,000 shares. The Board of Directors
is seeking stockholder approval of this amendment to ensure that Republic is
able to fully deduct executive compensation generated as a result of exercise of
options issued under the 1995 Plan.
The 1995 Plan was approved by stockholders of Republic at the 1995 annual
meeting and an amendment to the 1995 Plan to increase the number of shares of
Common Stock which may be issued under the 1995 Plan was approved by
stockholders at the 1996 annual meeting. Under the 1995 Plan, Republic reserved
20,000,000 shares of Common Stock for issuance upon the exercise of options. As
of March 10, 1998 the Company had granted, net of cancellations, options to
purchase an aggregate of 18,721,256 shares of Common Stock, leaving 1,278,744
options available for future grants.
PROPOSED AMENDMENT TO THE 1995 PLAN
The only change to be effected by the proposed amendment to the 1995 Plan
is to set forth that the maximum number of shares of Common Stock subject to
options which may be granted during any calendar year under the 1995 Plan to any
individual is 2,000,000 shares of Common Stock. The 1995 Plan will remain the
same in all other respects. The summary of the proposed amendment to the 1995
Plan are qualified in its entirety to the full text of such amendment which is
attached hereto as Appendix A.
REQUIRED VOTE AND BOARD RECOMMENDATION
The proposed amendment to the 1995 Plan is subject to approval by the
affirmative vote of the holders of a majority of the total shares of Common
Stock present at the Annual Meeting, in person or by proxy, and entitled to vote
thereon at the Annual Meeting. If the proposed amendment to the 1995 Plan is so
approved, it will be effective as of the date of its adoption by the Board of
Directors.
The sole purpose of the proposal relating to the 1995 Plan is the ensure
that Republic is permitted to take the maximum tax deduction with respect to
options issued and to be issued under the 1995 Plan. Accordingly, the Board of
Directors believes that the adoption of the proposal relating to the amendment
to the 1995 Plan is essential.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE 1995 PLAN. PROXY CARDS EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
17
<PAGE> 21
PROPOSAL 3.
APPROVAL OF REPUBLIC 1998 EMPLOYEE
STOCK OPTION PLAN
The Republic 1998 Employee Stock Option Plan (the "Plan") was adopted by
the Board of Directors of Republic effective as of February 3, 1998 (the
"Effective Date"), subject to stockholder approval at the Annual Meeting, to
provide for the grant of options to purchase shares of Common Stock to employees
and independent contractors of Republic and its subsidiaries. As of March 1,
1998, there were approximately 2,000 employees and independent contractors of
Republic and its subsidiaries who were potentially eligible to participate in
the Plan.
The Board of Directors of Republic believes that stock options are
important to attract and to encourage the continued employment and service of
officers, other key employees and key independent contractors, by facilitating
their acquisition of an equity interest in Republic. The acquisition and holding
of an equity interest by such persons in Republic aligns their interests with
those of Republic's stockholders.
The adoption of the Plan is subject to stockholder approval at the Annual
Meeting. Stockholder approval will allow Republic to obtain a tax deduction for
the full amount allowable with respect to the exercise of options granted under
the Plan and will provide Republic with the flexibility to grant options
qualifying as incentive stock options for tax purposes ("incentive options"),
although at this time Republic intends that options granted under the Plan will
be nonqualified options.
THE PRINCIPAL PROVISIONS OF THE PLAN ARE SUMMARIZED BELOW. SUCH SUMMARY
DOES NOT, HOWEVER, PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
THE TERMS OF THE PLAN. A COPY OF THE PLAN IS ATTACHED HERETO AS APPENDIX B AND
IS INCORPORATED HEREIN BY REFERENCE.
DESCRIPTION OF THE PLAN
The Plan provides that options may be granted to employees and independent
contractors of Republic and any subsidiary of Republic which is at least
majority-owned. Non-employee directors of Republic are not eligible to receive
options under the Plan. A total of 30,000,000 shares of Common Stock will be
reserved for issuance to employees and contractors under the Plan, representing
approximately 6.8% of the outstanding shares of Common Stock on March 10, 1998.
Based on the closing price of $26.875 on the New York Stock Exchange for a share
of Common Stock on March 26, 1998, the aggregate value of the 30,000,000 shares
reserved for issuance under the Plan is $806,250,000. The Plan will terminate 10
years after the Effective Date, and no options may be granted under the Plan
thereafter.
The Plan may be administered by a committee (the "Committee"), which
consists of not less than two non-employee directors appointed by the Board of
Directors. The Board of Directors or the Committee selects the employees and
independent contractors of Republic and its subsidiaries to whom options will be
granted. Under the Plan, Republic may grant options covering up to 5,000,000
shares of Common Stock to any employee during any calendar year.
The exercise price of options granted under the Plan may not be less than
100% of the fair market value of the Common Stock (or 110% in the case of an
incentive stock option granted to an optionee beneficially owning more than 10%
of the outstanding Common Stock). The maximum option term is 10 years (or five
years in the case of an incentive stock option granted to an optionee
beneficially owning more than 10% of the outstanding Common Stock) from the date
the option is granted. Options vest and become exercisable to the extent of 25%
of the shares of Common Stock covered thereby on the first and each of the next
three anniversaries of the date of grant, except as otherwise may be determined
by the Board of Directors or the Committee or provided in the particular option
agreement. Under the Plan, the Board of Directors or the Committee has the
discretion to accelerate the vesting and exerciseability of options.
Upon the occurrence of a change in control of Republic (as defined in the
Plan) outstanding options will become immediately exercisable in full. Following
a change in control, unless waived in advance of such change in control by the
Board of Directors or the Committee, an optionee may require Republic or its
successor to pay a cash amount in cancellation of the option equal to the fair
market value of the shares of Common Stock covered by the option reduced by the
aggregate exercise price. Under the Plan, a change in
18
<PAGE> 22
control is deemed to occur if any person (a) acquires beneficial ownership of
more than 50% of the issued and outstanding shares of Common Stock (unless
immediately thereafter stockholders of Republic own substantially all of the
voting capital stock of such person) or (b) has the power (whether as a result
of ownership of capital stock, by contract or otherwise) to elect directors who,
at the time of such election, constitute a majority of the board of directors of
Republic.
Generally, during an optionee's lifetime, only the optionee (or a guardian
or legal representative if the optionee is incapacitated) may exercise an option
except that, upon approval by the Committee, nonqualified options may be
transferred to certain family members, charitable organizations or to trusts for
the benefit of such persons. Incentive stock options are non-transferable except
at death.
Payment for shares of Common Stock purchased under options granted pursuant
to the Plan may generally be made in cash or in shares of Common Stock or by
delivery of a promissory note, and such payments may be accomplished through
certain "cashless" exercise features involving a licensed stock broker.
If an employee's employment with Republic or a subsidiary terminates by
reason of death or permanent and total disability, options held by such employee
shall become immediately exercisable in full and may be exercised for a period
of three years after the date of such termination (but not later than the date
the option would otherwise expire). If an employee's employment by Republic or a
subsidiary terminates for any other reason, options held by such employee shall
terminate sixty days after termination of employment, except as otherwise
determined by the Board or the Committee or provided in the particular option
agreement.
If an Employee's employment with Republic or a subsidiary or former
subsidiary following a spin off (a "Spin-Off Corporation") terminates following
a Change in Ownership (as defined the Plan) of such subsidiary or Spin-Off
Corporation, options held by such employee shall continue to vest according to
the vesting schedule unless otherwise determined by the Board of Directors.
If the outstanding shares of Common Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or securities
of Republic, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares without receipt of
consideration by Republic, an appropriate and proportionate adjustment will be
made in the number and kinds of shares subject to the Plan, and in the number,
kinds and per share exercise price of shares subject to outstanding options
granted under the Plan. Any such adjustment in an outstanding option, however,
will be made without a change in the total price applicable to the unexercised
portion of the option, but with a corresponding adjustment in the per share
option price.
Upon any dissolution or liquidation of Republic, all outstanding options
will terminate and all outstanding options shall be exercisable in full during
such period immediately prior to the occurrence of such event and during such
reasonable period as the Board of Directors in its discretion shall determine.
Upon a reorganization, merger or consolidation in which Republic is not the
surviving corporation, or upon the sale of all or substantially all of the
assets of Republic to another corporation, or upon any transaction approved by
the Board of Directors which results in any person or entity owning more than
50% of the total combined voting power of all classes of stock of Republic,
outstanding options will become fully vested and provision will be made in
connection with such transaction for the continuation of the Plan and the
assumption of the options or for the substitution thereof of new options
covering the stock of a successor corporation or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares and the per
share exercise price.
The Board of Directors may amend the Plan, however, Republic's stockholders
must approve any amendment that would (i) change the requirements as to
eligibility to receive incentive stock options; (ii) increase the maximum number
of shares in the aggregate for which incentive stock options may be granted
(except for adjustments upon changes in capitalization); or (iii) otherwise
cause the Plan to fail to satisfy the requirements of Section 162(m) of the
Internal Revenue Code relating to limitations on the deduction of amounts not
constituting qualified performance-related compensation.
19
<PAGE> 23
The Board of Directors at any time may terminate or suspend the Plan.
Unless previously terminated, the Plan will terminate automatically on February
3, 2008, the tenth anniversary of the date of adoption of the Plan by the Board
of Directors. No termination, suspension or amendment of the Plan may, without
the consent of the person to whom an option has been granted, adversely affect
the rights of the holder of the option.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
General
The following discussion is a summary of some of the principal federal
income tax consequences of stock option grants under the Plan and recipients of
grants under the Plan should consult with their personal tax advisors with
respect to such grants and transactions in stock acquired pursuant to the Plan.
The grant of an option is not a taxable event for the optionee or Republic.
Non-Qualified Options
Upon exercising a non-qualified option, an optionee will recognize ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the Common Stock on the date of exercise. If Republic
complies with applicable reporting requirements, it will be entitled to a
business expense deduction in the same amount. Non-qualified options under the
Plan are intended to satisfy the requirements applicable to "qualified
performance-related compensation" under the Code, so that Republic should be
entitled to deduct the full amount of such compensation income without regard to
the $1,000,000 limitation imposed on the deduction of annual compensation paid
to each of the chief executive officer and the four other most highly
compensated officers of a publicly held corporation. Upon a taxable disposition
of shares acquired pursuant to the exercise of a non-qualified option, the
optionee will have taxable gain or loss, measured by the difference between the
amount realized on the disposition and the tax basis of the shares (generally,
the amount paid for the shares plus the amount treated as ordinary income at the
time the option was exercised).
If the optionee surrenders shares of Common Stock in payment of part or all
of the exercise price for non-qualified options, no gain or loss will be
recognized with respect to the shares surrendered and the optionee will be
treated as receiving an equivalent number of shares pursuant to the exercise of
the option in a non-taxable exchange. The basis of the shares surrendered will
be treated as the substituted tax basis for an equivalent number of option
shares received. However, the fair market value of any shares received in excess
of the number of shares surrendered will be taxed as ordinary income.
Incentive Options
Upon exercising an incentive option, an optionee will not recognize taxable
income and any gain realized upon a disposition of shares received pursuant to
the exercise of an incentive option will be taxed as long-term capital gain if
the optionee holds the shares for at least two years after the date of grant and
for one year after the date of exercise of the option. However, the excess of
the fair market value of the shares subject to an incentive option on the
exercise date over the option exercise price will be included in the optionee's
alternative minimum taxable income in the year of exercise for purposes of the
alternative minimum tax. An optionee may be entitled to a credit against regular
tax liability in future years for minimum taxes paid with respect to the
exercise of incentive options. Republic and its subsidiaries and affiliates will
not be entitled to any business expense deduction with respect to the grant or
exercise of an incentive option, except as discussed below.
For the exercise of an incentive option to qualify for the foregoing tax
treatment, the optionee generally must be an employee of Republic or its
subsidiaries from the date the option is granted through a date within three
months before the date of exercise. In the case of an optionee who is disabled,
this three-month period is extended to one year. In the case of an employee who
dies, the three-month period and the holding period for shares received pursuant
to the exercise of the option are waived.
20
<PAGE> 24
If all of the foregoing requirements for incentive option treatment are met
except for the special holding period rules set forth above, the optionee will
recognize ordinary income upon the disposition of the shares in an amount equal
to the excess of the fair market value of the shares at the time the option was
exercised over the option exercise price. The balance of the realized gain, if
any, will be long- or short-term capital gain, depending upon whether or not the
shares were sold more than one year after the option was exercised. If the
optionee sells the shares prior to the satisfaction of the holding period rules
but at a price below the fair market value of the shares at the time the option
was exercised (or other applicable measurement date), the amount of ordinary
income (and the amount included in alternative minimum taxable income, if the
sale occurs during the same year as the option was exercised) will be limited to
the excess of the amount realized on the sale over the option exercise price. If
Republic complies with applicable (if any) reporting requirements, it will be
allowed a business expense deduction to the extent the optionee recognizes
ordinary income.
If an optionee exercises an incentive option by tendering shares of Common
Stock with a fair market value equal to part or all of the option exercise
price, the exchange of shares generally will be treated as a non-taxable
exchange (except that this treatment would not apply if the optionee had
acquired the shares being transferred pursuant to the exercise of an incentive
option and had not satisfied the special holding period requirements summarized
above). If the exercise is treated as a tax free exchange, the optionee would
have no taxable income from the exchange and exercise (other than minimum
taxable income as discussed above) and the tax basis of the shares exchanged
would be treated as the substituted basis for the shares received. If the
optionee used shares received pursuant to the exercise of an incentive option
(or another statutory option) as to which the optionee had not satisfied the
applicable holding period requirement, the exchange would be treated as a
taxable disqualifying disposition of the exchanged shares, with the result that
the excess of the fair market value of the shares tendered over the optionee's
basis in the shares would be taxable.
OPTIONS GRANTED UNDER THE PLAN
As of the date of this Proxy Statement, Republic has granted options to
purchase an aggregate of 895,000 shares of Common Stock at an exercise price of
$22.0625 per share to certain employees of Republic (none of which are executive
officers or directors of Republic), which grants are contingent upon approval of
the Plan by Republic's stockholders. The following table provides certain
information with respect to such grants.
NEW PLAN BENEFITS
REPUBLIC 1998 EMPLOYEE STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION EXERCISE PRICE(a) OPTIONS GRANTED
- ----------------- ----------------- ---------------
<S> <C> <C>
Executive Officer Group.................................. -- --
Non-Executive Officer Director Group..................... -- --
Non-Executive Officer Employee Group..................... $22.0625 895,000
</TABLE>
- ---------------
(a) The exercise price of all option grants reflects the fair market value of a
share of Common Stock on the date of grant. All options granted vest at the
rate of 25% per year and will become fully vested on the fourth anniversary
of their grant date, unless otherwise determined by the Committee at the
time of grant.
BOARD RECOMMENDATION
Assuming the presence of a quorum at the Annual Meeting, the affirmative
vote of the holders of a majority of the total shares of Common Stock present at
the Annual Meeting, in person or by proxy, and entitled to vote at the Annual
Meeting is required to approve and adopt the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL AND
ADOPTION OF THE PLAN. PROXY CARDS EXECUTED AND RETURNED WILL BE SO VOTED UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
21
<PAGE> 25
PROPOSAL 4
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
approved and recommends the appointment of Arthur Andersen LLP as independent
public accountants of Republic and its subsidiaries for the year ending December
31, 1998.
Arthur Andersen LLP has been serving Republic in this capacity since May
1990. A representative of Arthur Andersen LLP is expected to attend the Annual
Meeting and be available to respond to appropriate questions. The representative
will also be afforded an opportunity to make a statement, if he desires to do
so.
Ratification of the Board of Directors' selection of Arthur Andersen LLP
will require the affirmative vote of the holders of a majority of the total
shares of Common Stock present at the Annual Meeting, in person or by proxy, and
entitled to vote thereon at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF
REPUBLIC AND ITS SUBSIDIARIES FOR THE YEAR ENDING DECEMBER 31, 1998, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 1999 Annual
Meeting must be received by Republic for inclusion in the proxy statement and
form of proxy relating to such meeting not later than December 1, 1998. It is
suggested that proponents submit their proposals by certified mail, return
receipt requested. Detailed information for submitting resolutions will be
provided upon written request to the Secretary of Republic (Republic Industries,
Inc., 110 S.E. 6th Street, Fort Lauderdale, Florida 33301). No stockholder
proposals were received for inclusion in this Proxy Statement.
OTHER MATTERS
You are again invited to attend the Annual Meeting at which management of
Republic will present a review of Republic's progress and operations.
Management does not intend to present any other items of business and knows
of no other matters that will be brought before the Annual Meeting. However, if
any additional matters are properly brought before the Annual Meeting, the
persons named in the enclosed proxy shall vote the proxies in their discretion
in the manner they believe to be in the best interest of Republic. The
accompanying form of proxy has been prepared at the direction of the Board of
Directors and is sent to you at the request of the Board of Directors. The
proxies named therein have been designated by your Board of Directors.
22
<PAGE> 26
APPENDIX A
AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED 1995 EMPLOYEE
STOCK OPTION PLAN
Republic's Amended and Restated 1995 Employee Stock Option Plan (the "1995
Plan") is hereby amended as follows, effective as of February 3, 1998.
The 1995 Plan is hereby amended to include the following sentence at the
end of Section 4:
"The maximum number of shares of Common Stock subject to options that
may be granted during any calendar year under the Plan to any executive
officer or other employee of the Company or any subsidiary whose
compensation is or may be subject to Section 162(m) of the Code is
2,000,000 shares (subject to adjustment as provided in Section 10 hereof)."
A-1
<PAGE> 27
APPENDIX B
REPUBLIC INDUSTRIES, INC.
1998 EMPLOYEE STOCK OPTION PLAN
Republic Industries, Inc. ("Republic") hereby adopts this Republic
Industries, Inc. 1998 Employee Stock Option Plan (the "Plan") the terms of which
shall be as follows:
1. PURPOSE
The Plan is intended to advance the interests of Republic by providing
eligible individuals (as designated pursuant to Section 4 below) with an
opportunity to acquire or increase a proprietary interest in Republic, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of Republic and its subsidiaries, and will encourage such eligible
individuals to remain in the employ of Republic or one or more of its
subsidiaries. Each stock option granted under the Plan (an "Option") shall be an
option that is not intended to constitute an "incentive stock option"
("Incentive Stock Option") within the meaning of Section 422 of the Internal
Revenue Code of 1986, or the corresponding provision of any subsequently-
enacted tax statute, as amended from time to time (the "Code") unless such
Option is granted to an employee of Republic or a "subsidiary corporation" (a
"Subsidiary") thereof within the meaning of Section 424(f) of the Code and is
specifically designated at the time of grant as being an Incentive Stock Option.
Any Option so designated shall constitute an Incentive Stock Option only to the
extent that it does not exceed the limitations set forth in Section 7 below.
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the Board of Directors of
Republic (the "Board"), which shall have the full power and authority to take
all actions, and to make all determinations required or provided for under the
Plan or any Option granted or Option Agreement (as defined in Section 8 below)
entered into under the Plan and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting at which any issue relating to the Plan is
properly raised for consideration or without a meeting by written consent of the
Board executed in accordance with Republic's Certificate of Incorporation and
Bylaws, and with applicable law. The interpretation and construction by the
Board of any provision of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
(b) Committee. The Board may from time to time appoint a committee (the
"Committee") consisting of not less than two members of the Board, none of whom
shall be an officer or other salaried employee of Republic or any Subsidiary,
and each of whom shall qualify in all respects as an "outside director" for
purposes of Section 162(m) of the Code. The Board, in its sole discretion, may
provide that the role of the Committee shall be limited to making
recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or the
Board may delegate to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as the Board
shall determine, consistent with the Certificate of Incorporation and Bylaws of
Republic and applicable law. The Board may remove members, add members, and fill
vacancies on the Committee from time to time, all in accordance with Republic's
Certificate of Incorporation and Bylaws, and with applicable law. The majority
vote of the Committee, or acts reduced to or approved in writing by a majority
of the members of the Committee, shall be the valid acts of the Committee.
(c) No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.
B-1
<PAGE> 28
(d) Delegation to the Committee. In the event that the Plan or any Option
granted or Option Agreement entered into hereunder provides for any action to be
taken by or determination to be made by the Board, such action may be taken by
or such determination may be made by the Committee if the power and authority to
do so has been delegated to the Committee by the Board as provided for in
Section 2(b) above. Unless otherwise expressly determined by the Board, any such
action or determination by the Committee shall be final and conclusive.
3. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, $.01 par value, of Republic (the "Stock"),
which shares may be treasury shares or authorized but unissued shares. The
number of shares of Stock that may be issued pursuant to Options granted under
the Plan shall not exceed in the aggregate 30,000,000 shares, subject to
adjustment as provided in Section 17 below. If any Option expires, terminates,
or is terminated or canceled for any reason prior to exercise in full, the
shares of Stock that were subject to the unexercised portion of such Option
shall be available for future Options granted under the Plan.
4. ELIGIBILITY
(a) Employees. Options may be granted under the Plan to any employee of
Republic, a Subsidiary or any other entity of which on the relevant date at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions ("Voting Securities") are at the time owned
directly or indirectly by Republic or any Subsidiary (an "Affiliate"), including
any such employee who is an officer or director of Republic, a Subsidiary or an
Affiliate, as the Board shall determine and designate from time to time prior to
expiration or termination of the Plan. The maximum number of shares of Stock
subject to Options that may be granted during any calendar year under the Plan
to any executive officer or other employee of Republic or any Subsidiary or
Affiliate whose compensation is or may be subject to Code section 162(m) is
5,000,000 shares (subject to adjustment as provided in Section 17 hereof).
(b) Independent Contractors. Options may be granted to independent
contractors performing services for Republic or any Subsidiary or Affiliate as
determined by the Board from time to time on the basis of their importance to
the business of Republic or such Subsidiary or Affiliate. Independent
contractors shall not be eligible to receive options intended to constitute
Incentive Stock Options. Non-employee directors of Republic shall not be
eligible to receive options under the Plan.
(c) Multiple Grants. An individual may hold more than one Option, subject
to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the date of adoption
by the Board, which date is set forth below, subject to approval of the Plan,
within one year of such effective date, by the stockholders of Republic by a
majority of the votes present and entitled to vote at a duly held meeting of the
stockholders at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy or by written consent in
accordance with Republic's Certificate of Incorporation and Bylaws; provided,
however, that upon approval of the Plan by the stockholders of Republic as set
forth above, all Options granted under the Plan on or after the effective date
shall be fully effective as if the stockholders of Republic had approved the
Plan on the effective date. If the stockholders fail to approve the Plan within
one year of such effective date, any options granted hereunder shall be null and
void and of no effect.
(b) Term. The Plan shall terminate on the date 10 years from the effective
date.
B-2
<PAGE> 29
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time, prior to the date of termination of the Plan, grant to
such eligible individuals as the Board may determine ("Optionees"), Options to
purchase such number of shares of the Stock on such terms and conditions as the
Board may determine. The date on which the Board approves or ratifies the grant
of an Option (or if the grant is ratified by the Board or Committee such earlier
date as is specified by the Board or Committee) shall be considered the date on
which such Option is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option intended to constitute an Incentive Stock Option (and so
designated at the time of grant) shall qualify as an Incentive Stock Option only
to the extent that the aggregate fair market value (determined at the time the
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other plans of the Optionee's employer corporation and
its parent and subsidiary corporations within the meaning of Section 422(d) of
the Code) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by Republic and by the
Optionee, in such form or forms as the Board shall from time to time determine
and with such restrictions including, covenants not to compete as the Board or
Committee may from time to time determine. Option Agreements covering Options
granted from time to time or at the same time need not contain similar
provisions; provided, however, that all such Option Agreements shall comply with
all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option shall be
not less than 100 percent of the fair market value of a share of the Stock which
shall mean either the closing price of a share of the Stock on the business day
prior to the date the Option is granted as reported on the New York Stock
Exchange, absent manifest error, or a price otherwise fixed by the Board in good
faith as the fair market value and stated in an Option Agreement with the
Optionee (the "Option Price"); PROVIDED HOWEVER, that in the event that the
Optionee would otherwise be ineligible to receive an Incentive Stock Option by
reason of the provisions of Section 422(b)(6) and 424(d) of the Code (relating
to stock ownership of more than 10 percent), the Option Price of an Option that
is intended to be an Incentive Stock Option shall be not less than 110 percent
of the fair market value of a share of Stock at the time such Option is granted.
10. TERM AND EXERCISE OF OPTIONS
(a) Option Period. Each Option granted under the Plan shall terminate and
all rights to purchase shares thereunder shall cease upon the expiration of ten
years from the date such Option is granted, or on such date prior thereto as may
be fixed by the Board and stated in the Option Agreement relating to such
Option; provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), an Option granted to such Optionee that is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
(b) Vesting and Limitations on Exercise. Except as otherwise provided
herein, each Option shall become exercisable with respect to 25% of the total
number of shares subject to the Option on the date that is 12 months after the
date of its grant (the "Vesting Date") and with respect to an additional 25% of
the number of such shares on each of the next three succeeding anniversaries of
the Vesting Date; provided, however, that the Board may in its discretion
provide that an Option may be exercised, in whole or in part, at any time and
from time to time, over a period commencing on or after the date of grant and
ending upon the expiration or termination of the Option, as the Board shall
determine and set forth in the Option Agreement relating to such Option. Without
limiting the foregoing, the Board, subject to the terms and conditions of the
Plan, may in its sole discretion provide that an Option may be exercised
immediately upon grant or that it may
B-3
<PAGE> 30
not be exercised in whole or in part for any period or periods of time during
which such Option is outstanding; PROVIDED, HOWEVER, that any vesting
requirement or other such limitation on the exercise of an Option may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised.
(c) Method of Exercise. An Option that is exercisable hereunder may be
exercised by delivery to Republic on any business day, at its principal office,
addressed to the attention of the Stock Option Administrator, of written notice
of exercise, which notice shall specify the number of shares with respect to
which the Option is being exercised, and shall be accompanied by payment in full
of the Option Price of the shares for which the Option is being exercised,
except as provided below. The minimum number of shares of Stock with respect to
which an Option may be exercised, in whole or in part, at any time shall be the
lesser of 100 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents; (ii) through the tender to Republic of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their fair market
value (determined in the manner described in Section 9 above) on the date of
exercise; (iii) by delivering a written direction to Republic that the Option be
exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which
funds to pay for exercise of the Option are delivered to Republic by a broker
upon receipt of stock certificates from Republic) or a cashless exercise/loan
procedure (pursuant to which the optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker acceptable to Republic
whereby the stock certificate or certificates for the shares of Stock for which
the Option is exercised will be delivered to such broker as the agent for the
individual exercising the Option and the broker will deliver to Republic cash
(or cash equivalents acceptable to Republic) equal to the Option Price for the
shares of Stock purchased pursuant to the exercise of the Option plus the amount
(if any) of federal and other taxes that Republic, may, in its judgment, be
required to withhold with respect to the exercise of the Option; (iv) to the
extent permitted by applicable law and under the terms of the Option Agreement
with respect to such Option, by the delivery of a promissory note of the
Optionee to Republic on such terms as shall be set out in such Option Agreement;
or (v) by a combination of the methods described in (i), (ii), (iii) and (iv).
Payment in full of the Option Price need not accompany the written notice of
exercise if the Option is exercised pursuant to the cashless exercise/sale
procedure described above. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option, the individual exercising the Option
shall be entitled to the issuance of a Stock certificate or certificates
evidencing his ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option that is intended to be an Incentive Stock Option, which certificate
or certificates shall not include any shares that were purchased pursuant to the
exercise of an Option that is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a shareholder
until the shares of Stock covered thereby are fully paid and issued to him and,
except as provided in Section 18 below, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
(d) Change in Control. In the event of a Change in Control (as defined
below), except as the Board shall otherwise provide in an Option Agreement with
respect to an Option granted under the Plan, all outstanding Options shall
become immediately exercisable in full, without regard to any limitation on
exercise imposed pursuant to Section 10(b) above, and, unless waived in advance
of such Change in Control by the Board, each Optionee who is a director, an
employee or a consultant of Republic or a Subsidiary or Affiliate at the time of
such Change in Control shall have the right to require Republic to pay, in
cancellation of such Option, an amount equal to the product of (i) the excess of
(x) the fair market value per share of the Stock over (y) the Option Price times
(ii) the number of shares of Stock specified by the Optionee in a written notice
to Republic (up to the full number of shares of Stock then subject to such
Option). For purposes of the Plan, a "Change in Control" shall be deemed to
occur if any person shall (a) acquire direct or indirect beneficial ownership of
more than 50% of the total combined voting power with respect to the election of
directors of the issued and outstanding stock of Republic (except that no Change
in Control shall be deemed to have occurred if the persons who were stockholders
of Republic immediately before such acquisition own all or substantially all of
the voting stock or other interests of such person immediately after such
transaction),
B-4
<PAGE> 31
or (b) have the power (whether as a result of stock ownership, revocable or
irrevocable proxies, contract or otherwise) or ability to elect or cause the
election of directors consisting at the time of such election of a majority of
the Board. A "person" for this purpose shall mean any person, corporation,
partnership, joint venture or other entity or any group (as such term is defined
for purposes of Section 13(d) of the Exchange Act) and a person shall be deemed
to be a beneficial owner as that term is used in Rule 13d-3 under the Exchange
Act. The amount payable under this Section 10(d) shall be remitted by Republic
in cash or by certified or bank check, reduced by applicable tax withholding.
(e) Notwithstanding any other provision of the Plan, no Option granted to
an Optionee under the Plan shall be exercisable in whole or in part prior to the
date the Plan is approved by the stockholders of Republic as provided in Section
5 above.
11. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom it is
granted, other than by will or the laws of descent and distribution, except
that, upon approval by the Board, the Optionee may transfer an Option that is
not intended to constitute an Incentive Stock Option (a) pursuant to a qualified
domestic relations order as defined for purposes of the Employee Retirement
Income Security Act of 1974, as amended, or (b) by gift: to a member of the
"Family" (as defined below) of the Optionee, to or for the benefit of one or
more organizations qualifying under Code sections 501(c)(3) and 170(c)(2) (a
"Charitable Organization") or to a trust for the exclusive benefit of the
Optionee, one or more members of the Optionee's Family, one or more Charitable
Organizations, or any combination of the foregoing, provided that any such
transferee shall enter into a written agreement to be bound by the terms of this
Agreement. For this purpose, "Family" shall mean the ancestors, spouse,
siblings, spouses of siblings, lineal descendants and spouses of lineal
descendants of the Optionee. During the lifetime of an Optionee to whom an
Incentive Stock Option is granted, only such Optionee (or, in the event of legal
incapacity or incompetence, the Optionee's guardian or legal representative) may
exercise the Incentive Stock Option.
12. TERMINATION OF EMPLOYMENT OR SERVICE
(a) General. Except as otherwise provided herein, upon the termination of
the employment or other service of an Optionee with Republic, a Subsidiary, a
Spin-off Corporation (as defined in Section 17) or an Affiliate, other than by
reason of a "Change in Ownership" (as defined below) or the death or "permanent
and total disability" (within the meaning of Section 22(e)(3) of the Code) of
such Optionee, any Option granted to an Optionee pursuant to the Plan shall,
unless otherwise agreed in writing with the Optionee, terminate sixty days after
the date of such termination of employment or service and such Optionee shall
have no further right to purchase shares of Stock pursuant to such Option.
Notwithstanding the foregoing provisions of this Section 12, the Board may
provide, in its discretion, that following the termination of employment or
service of an Optionee with Republic, a Subsidiary, a Spin-off Corporation or
Affiliate, an Optionee may exercise an Option, in whole or in part, at any time
subsequent to such termination of employment or service and prior to termination
of the Option pursuant to Section 10(a) above, either subject to or without
regard to any vesting or other limitation on exercise imposed pursuant to
Section 10(b) above.
(b) Change in Ownership of Subsidiary or Affiliate. If an Optionee ceases
to be an employee or an independent contractor of Republic or any Subsidiary,
Spin-off Corporation or Affiliate following a "Change in Ownership" (as defined
below)(whether because of the termination of employment or service of the
Optionee, because the corporation or other entity by which the Optionee was
employed or for which the Optionee was providing services as an independent
contractor, ceases to be a Subsidiary of Affiliate or otherwise) then such
options shall continue to vest according to the vesting schedule unless the
Board determines otherwise. A "Change in Ownership" shall be deemed to have
occurred with respect to an Optionee if (i) as a result of a merger,
consolidation, reorganization, business combination, sale, exchange or other
disposition of Voting Securities (as defined in Section 4(a)) or other
transaction, the corporation or other entity by which the Optionee is employed
or for which the Optionee is providing services as an independent contractor
ceases to be a Subsidiary or Affiliate of Republic and, immediately after such
transaction, the persons who were stockholders of Republic immediately before
such transaction (the
B-5
<PAGE> 32
"Republic Stockholders") do not own at least a majority of the Voting Securities
of such corporation or other entity or (ii) there is a sale or other disposition
of all or substantially all of the assets of the trade or business by which the
Optionee is employed or for which the Optionee is providing services as an
independent contractor and, immediately after such transaction, Republic or the
Republic Stockholders do not own at least a majority of the Voting Securities of
a corporation or other entity that acquires such assets and engages in such
trade or business. In addition, the Board shall have the power to determine
whether other types of transactions shall constitute a "Change in Ownership" for
purposes of this section.
(c) Whether a leave of absence or leave on military or government service
shall constitute a termination of employment or service for purposes of the Plan
shall be determined by the Board, which determination shall be final and
conclusive. For purposes of the Plan, a termination of employment or service
with Republic, a Subsidiary, a Spin-off Corporation or Affiliate shall not be
deemed to occur if the Optionee continues in any capacity as an employee or
independent contractor of Republic, any Subsidiary, any Spin-off Corporation or
Affiliate. Continuous status as an employee or independent contractor shall not
be considered interrupted in the case of (i) any approved leave of absence, (ii)
transfers between locations of Republic, a Subsidiary, a Spin-Off Corporation or
Affiliate, in any capacity as an employee or independent contractor, or (iii)
any change in status as long as the Optionee remains in the service of Republic,
a Subsidiary, a Spin-Off Corporation or Affiliate in any capacity as an employee
or independent contractor (except as otherwise provided in the Option
Agreement). An approved leave of absence shall include sick leave, military
leave, or any other authorized personal leave. For purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract.
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death. If an Optionee dies while in the employ or service of Republic,
a Subsidiary, a Spin-off Corporation or Affiliate or within the period following
the termination of employment or service during which the Option is exercisable
under Section 13(b) below, all Options held by such Optionee prior to death
shall become immediately vested and exercisable in full and the executors or
administrators or legatees or distributees of such Optionee's estate shall have
the right, at any time within three years after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 10(a) above, to
exercise any Option held by such Optionee at the date of such Optionee's death;
PROVIDED, HOWEVER, that the Board may provide, in its discretion, that following
the death of an Optionee, the executors or administrators or legatees or
distributees of such Optionee's estate may exercise an Option, in whole or in
part, at any time subsequent to such Optionee's death and prior to termination
of the Option pursuant to Section 10(a) above, either subject to or without
regard to any vesting or other limitation on exercise imposed pursuant to
Section 10(b) above.
(b) Disability. If an Optionee terminates employment or service with
Republic, a Subsidiary, a Spin-off Corporation or Affiliate by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee, then all Options held by such Optionee shall become
immediately exercisable in full and the Optionee shall have the right, at any
time within three years after such termination of employment or service and
prior to termination of the Option pursuant to Section 10(a) above, to exercise,
in whole or in part, any Option held by such Optionee at the date of such
termination of employment or service; provided, however, that the Board may
provide, in its discretion, that an Optionee may, in the event of the
termination of employment or service of the Optionee with Republic, a
Subsidiary, a Spin-off Corporation or Affiliate by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option in whole or in part, at any time subsequent to such
termination of employment or service and prior to termination of the Option
pursuant to Section 10(a) above, either subject to or without regard to any
vesting or other limitation on exercise imposed pursuant to Section 10(b) above.
Whether a termination of employment or service is to be considered by reason of
"permanent and total disability" for purposes of this Plan shall be determined
by the Board, which determination shall be final and conclusive.
B-6
<PAGE> 33
14. USE OF PROCEEDS
The proceeds received by Republic from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of Republic.
15. REQUIREMENTS OF LAW
(a) Violations of Law. Republic shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or Republic of
any provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. Any
determination in this connection by the Board shall be final, binding, and
conclusive. Republic shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority. As
to any jurisdiction that expressly imposes the requirement that an Option shall
not be exercisable unless and until the shares of Stock covered by such Option
are registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The intent of this Plan is to qualify for
the exemption provided by Rule 16b-3 under the Exchange Act. In the event Rule
16b-3 is revised or replaced, the Board, or the Committee acting on behalf of
the Board, may exercise discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the stockholders of Republic at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the amendment, or by written consent in accordance with
applicable state law and the Certificate of Incorporation and Bylaws of
Republic, change the requirements as to eligibility to receive Options that are
intended to qualify as Incentive Stock Options, increase the maximum number of
shares of Stock in the aggregate that may be sold pursuant to Options that are
intended to qualify as Incentive Stock Options granted under the Plan (except as
permitted under Section 17 hereof) or modify the Plan so that Options granted
under the Plan could not satisfy the applicable requirements of Code
section 162(m). Except as permitted under Section 17 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the holder
of the Option, alter or impair rights or obligations under any Option
theretofore granted under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) Recapitalization. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of Republic by reason of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
Republic, occurring after the effective date of the Plan, the number and kinds
of shares for the purchase of which Options may be granted under the Plan shall
be adjusted proportionately and accordingly by Republic. In addition, the number
and kind of shares for which Options are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the holder
of the Option immediately following such event shall, to the extent practicable,
be the same as immediately prior to such event. Any such adjustment in
outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share. If there is a distribution payable in the capital stock of a
subsidiary corporation (a "Spin-off Corporation") of Republic ("Spin-off
Shares"), to the
B-7
<PAGE> 34
extent consistent with Treasury Regulation Section 1.425-1(a)(6) or the
corresponding provision of any subsequent regulation, each outstanding Option
shall thereafter additionally pertain to the number of Spin-off Shares that
would have been received in such distribution by a shareholder of Republic who
owned a number of shares of Common Stock equal to the number of shares that are
subject to the Option at the time of such distribution, the aggregate Option
Price of the Option shall be allocated between the Spin-off Shares and the
Common Stock in proportion to the relative fair market values of a Spin-off
Share and a share of Common Stock immediately after the distribution of Spin-off
Shares, and the Option shall be exercisable separately as to the shares of
Common Stock and Spin-off Shares covered thereby.
(b) Reorganization in Which Republic Is the Surviving Corporation. Subject
to Subsection (c) hereof, if Republic shall be the surviving corporation in any
reorganization, merger, or consolidation of Republic with one or more other
corporations, any Option theretofore granted pursuant to the Plan shall pertain
to and apply to the securities to which a holder of the number of shares of
Stock subject to such Option would have been entitled immediately following such
reorganization, merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price per share so that the aggregate Option Price
thereafter shall be the same as the aggregate Option Price of the shares
remaining subject to the Option immediately prior to such reorganization,
merger, or consolidation.
(c) Dissolution or Liquidation; Reorganization in Which Republic Is Not the
Surviving Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of Republic the Plan and all Options outstanding hereunder shall
terminate. In the event of any termination of the Plan under this Section 17(c),
each individual holding an Option shall have the right, immediately prior to the
occurrence of such termination and during such reasonable period as the Board in
its sole discretion shall determine and designate, to exercise such Option in
whole or in part, whether or not such Option was otherwise exercisable at the
time such termination occurs and without regard to any vesting or other
limitation on exercise imposed pursuant to Section 10(b) above. In connection
with a merger, consolidation, reorganization or other business combination of
Republic with one or more other entities in which Republic is not the surviving
entity, or upon a sale of all or substantially all of the assets of Republic to
another entity, or upon any transaction (including, without limitation, a merger
or reorganization in which Republic is the surviving corporation) that results
in any person or entity (or persons or entities acting as a group or otherwise
in concert) owning more than 50 percent of the combined voting power of all
classes of stock of Republic, unless the Board or the Committee otherwise
determines Republic and the acquiring or surviving entity shall provide for the
continuation of the Plan and the assumption of the Options theretofore granted,
or for the substitution for such Options of new options covering the stock of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and exercise prices. The Board
shall send prior written notice of the occurrence of an event described in this
Section 17(c) to all individuals who hold Options not later than the time at
which Republic gives notice to its stockholders that such event is proposed.
(d) Adjustments. Adjustments under this Section 17 related to stock or
securities of Republic shall be made by the Board, whose determination in that
respect shall be final, binding, and conclusive. No fractional shares of Stock
or units of other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Corporation. The grant of an Option pursuant to the
Plan shall not affect or limit in any way the right or power of Republic to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve or liquidate, or to sell
or transfer all or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of Republic, any Subsidiary, any
Spin-off Corporation or Affiliate, or to interfere in any way with the right and
authority of Republic, any Subsidiary, any Spinoff Corporation or Affiliate
either to increase or decrease the compensation of any
B-8
<PAGE> 35
individual at any time, or to terminate any employment or other relationship
between any individual and Republic, any Subsidiary, any Spin-off Corporation or
Affiliate.
19. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of Republic for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
This Plan was duly adopted and approved by the Board of Directors of
Republic effective as of the 3rd day of February, 1998, subject to approval and
adoption by the stockholders of Republic.
/s/ JAMES O. COLE
--------------------------------------
Secretary of Republic
B-9
<PAGE> 36
(logo)
Printed on Recycled Paper
<PAGE> 37
APPENDIX C
PROXY
REPUBLIC INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Steven R. Berrard and James O. Cole each with power of substitution, are
hereby authorized to vote all shares of common stock which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Stockholders
of Republic Industries, Inc. to be held on May 20, 1998, or any postponements or
adjournments thereof, as indicated on the reserve side.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES AND FOR PROPOSALS 2, 3 AND 4 SET FORTH ON THE
OTHER SIDE. As to any other matter, said Proxies shall vote in accordance with
their best judgment.
The undersigned hereby acknowledges receipt of the Notice of the 1998 Annual
Meeting of Stockholders, the Proxy Statement and the Annual Report for the
fiscal year ended December 31, 1997 furnished herewith.
(Continued and to be signed on reverse side)
<TABLE>
<S> <C> <C> <C>
1. Election of [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS (FOR all
Directors: below for all nominees listed nominees except as
below indicated in space below)
</TABLE>
A VOTE FOR ALL NOMINEES IS RECOMMENDED BY THE BOARD OF DIRECTORS. Nominees: H.
Wayne Huizenga, Steven R. Berrard, Harris W. Hudson, Robert J. Brown, J.P.
Bryan, Rick L. Burdick, Michael G. DeGroote, George D. Johnson, Jr. and John J.
Melk.
* INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space
provided below.)
Exceptions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
2. Approval of Amendment to 1995 Plan: 3. Approval and Adoption of 1998 Employee Stock Option
FOR [ ] AGAINST [ ] ABSTAIN [ ] Plan:
A VOTE FOR IS RECOMMENDED BY THE BOARD OF DIRECTORS. FOR [ ] AGAINST [ ] ABSTAIN [ ]
A VOTE FOR IS RECOMMENDED BY THE BOARD OF DIRECTORS.
4. Ratification of the appointment of Arthur Andersen 5. In their discretion, on such other matters as may
LLP as Independent Public Accountants for 1998: properly come before the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ] [ ] Change of Address and or Comments Mark Here
A VOTE FOR IS RECOMMENDED BY THE BOARD OF DIRECTORS.
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. If acting as attorney, executor,
trustee, or in any representative capacity,
sign name and title.
Dated , 1998
----------------------------------
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
Votes must be indicated [X] in Black or Blue
ink.
</TABLE>
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
