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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MAY 3, 1999
AUTONATION, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-13107 73-1105145
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(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
110 S.E. 6TH STREET
FT. LAUDERDALE, FLORIDA 33301
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (954) 769-6000
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 3, 1999, AutoNation, Inc. (the "Company," formerly Republic
Industries, Inc.) closed the sale of 100 million shares of Class A common stock
of Republic Services, Inc. ("RSG"), the Company's former solid waste
subsidiary. The common stock was sold in a public offering at a price of
$16.875 per share, resulting in proceeds of approximately $1.63 billion, net of
underwriting fees. The Company will re-invest the proceeds of the offering in
capital projects, acquisitions and stock repurchases, as market conditions
warrant. On April 27, 1999, RSG, the Company, and the Company's wholly owned
subsidiary, AutoNation Insurance Company, Inc., entered into a U.S. Purchase
Agreement (the "U.S. Purchase Agreement") with Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Merrill Lynch & Co. and each of the U.S. Underwriters named
in the U.S. Purchase Agreement. On April 27, 1999, RSG, the Company and
AutoNation Insurance Company, Inc. also entered into an International Purchase
Agreement with Merrill Lynch International and each of the International
Managers named therein (the "International Purchase Agreement"). The U.S.
Underwriters named in the U.S. Purchase Agreement and the International
Managers named in the International Purchase Agreement have the right to
acquire the remaining 12.1 million shares of RSG Class A common stock held by
the Company at the offering price of $16.875 per share until May 26, 1999 to
cover over-allotments.
Prior to this offering, the Company owned approximately 63.9% of RSG's
common stock. In March 1999, the Company decided to sell its remaining interest
in RSG instead of distributing such shares to the Company's stockholders on a
tax-free basis because the Company was unable to obtain a favorable ruling from
the Internal Revenue Service.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not applicable
(b) Pro Forma Financial Information
Disposition of Solid Waste Services Segment
As described under Item 2 above, on May 3, 1999, the Company
received the proceeds from the sale of 100 million shares of RSG
Class A common stock totaling approximately $1.63 billion, net of
underwriting fees. The Company's shareholders' equity, as
reported in its Form 10-Q for the quarterly period ended March
31, 1999, was $5,393.8 million as of March 31, 1999. Had the
transaction described above occurred on March 31, 1999, the
Company's unaudited pro forma shareholders' equity would have
been approximately $5,800.0 million. Unaudited pro forma
shareholders' equity reflects the estimated gain on the sale of
the 100 million shares of RSG Class A common stock, net of income
taxes, and the write-up to fair value of the remaining 12.1
million shares, net of income taxes, as required under Statement
of Financial Accounting Standards Statement No. 115, "Accounting
for Certain Investments in Debt and Equity Securities".
The Company's solid waste services segment has been accounted
for as discontinued operations. As such, the results of
operations of this segment have been classified as discontinued
operations for all periods presented in the Company's
consolidated financial statements included in its Form 10-K for
the year ended December 31, 1998 and its Form 10-Q for the
quarterly period ended March 31, 1999. Accordingly, no further
pro forma statement of operations data is required under this
Item.
(c) Exhibits
The Exhibits to this Report are listed in the Exhibit Index set
forth elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AUTONATION, INC.
/s/ James O. Cole
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James O. Cole
Senior Vice President,
General Counsel and Secretary
Dated: May 14, 1999
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INDEX TO EXHIBITS
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
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1.1 U.S. Purchase Agreement dated April 27, 1999, between Republic
Services, Inc., AutoNation, Inc. and AutoNation Insurance
Company, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch & Co. and each of the U.S.
Underwriters named therein.
1.2 International Purchase Agreement dated April 27, 1999, between
Republic Services, Inc., AutoNation, Inc. and AutoNation
Insurance Company, Inc. and Merrill Lynch International and each
of the International Managers named therein.
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EXHIBIT 1.1
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REPUBLIC SERVICES, INC.
A Delaware corporation
100,000,000 Shares of Class A Common Stock
U.S. PURCHASE AGREEMENT
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Dated: April 27, 1999
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TABLE OF CONTENTS
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SECTION 1. Representations and Warranties....................................................................4
(a) Representations and Warranties by the Company........................................................4
(i) Compliance with Registration Requirements.....................................................4
(ii) Independent Accountants......................................................................5
(iii) Financial Statements........................................................................5
(iv) No Material Adverse Change in Business.......................................................5
(v) Good Standing of the Company..................................................................5
(vi) Good Standing of Subsidiaries................................................................6
(vii) Capitalization..............................................................................6
(viii) Authorization of Agreement.................................................................7
(ix) Description of Securities....................................................................7
(x) Absence of Defaults and Conflicts.............................................................7
(xi) Absence of Labor Dispute.....................................................................7
(xii) Absence of Proceedings......................................................................8
(xiii) Accuracy of Exhibits.......................................................................8
(xiv) Possession of Intellectual Property.........................................................8
(xv) Absence of Further Requirements..............................................................8
(xvi) Possession of Licenses and Permits..........................................................9
(xvii) Title to Property..........................................................................9
(xviii) Investment Company Act....................................................................9
(xix) Environmental Laws..........................................................................9
(xx) Registration Rights.........................................................................10
(xxi) Income Taxes...............................................................................10
(xxii) Internal Controls.........................................................................10
(xxiii) Insurance................................................................................11
(xxiv) Offering Material.........................................................................11
(xxv) Related Party Transactions.................................................................11
(xxvi) Solvency..................................................................................11
(xxvii) U.S. Real Property Holding Corporation...................................................11
(xxviii) Year 2000 and Euro Disclosures..........................................................11
(b) Representations and Warranties by AutoNation and the Selling Shareholder............................12
(i) Accurate Disclosure..........................................................................12
(ii) Authorization of Agreeements................................................................12
(iii) Good and Marketable Title..................................................................12
(iv) Absence of Manipulation.....................................................................12
(v) Absence of Defaults and Conflicts............................................................13
(vi) Absence of Further Requirements.............................................................13
(vii) Restriction on Sale of Securities..........................................................13
(viii) No Association with NASD..................................................................14
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(c) Officer's Certificates..............................................................................14
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing..................................................14
(a) Initial Securities..................................................................................14
(b) Option Securities...................................................................................14
(c) Payment.............................................................................................15
(d) Denominations; Registration.........................................................................16
SECTION 3. Covenants of the Company.........................................................................16
(a) Compliance with Securities Regulations and Commission Requests......................................16
(b) Filing of Amendments................................................................................16
(c) Delivery of Registration Statements.................................................................16
(d) Delivery of Prospectus..............................................................................17
(e) Continued Compliance with Securities Laws...........................................................17
(f) Blue Sky Qualifications.............................................................................17
(g) Rule 158............................................................................................18
(h) Listing.............................................................................................18
(i) Restriction on Sale of Securities...................................................................18
(j) Reporting Requirements..............................................................................18
SECTION 4. Payment of Expenses..............................................................................19
(a) Expenses............................................................................................19
(b) Expenses of AutoNation and the Selling Shareholder..................................................19
(c) Termination of Agreement............................................................................19
(d) Allocation of Expenses..............................................................................19
SECTION 5. Conditions of U.S. Underwriters' Obligations.....................................................20
(a) Effectiveness of Registration Statement.............................................................20
(b) Opinion of Counsel for Company......................................................................20
(c) Opinion of Counsel for AutoNation and the Selling Shareholder.......................................20
(d) Opinion of Counsel for U.S. Underwriters............................................................20
(e) Company Officers' Certificate.......................................................................21
(f) AutoNation and Selling Shareholder Officers' Certificates...........................................21
(g) Accountant's Comfort Letter.........................................................................21
(h) Bring-down Comfort Letter...........................................................................22
(i) Approval of Listing.................................................................................22
(j) No Objection........................................................................................22
(k) Lock-up Agreements..................................................................................22
(l) Purchase of Initial International Securities........................................................22
(m) Additional Documents...............................................................................22
(n) Conditions to Purchase of U.S. Option Securities....................................................22
(i) Company Officers' Certificate................................................................23
(ii) AutoNation and Selling Shareholder Officers' Certificates...................................23
(iii) Opinion of Counsel for Company.............................................................23
(iv) Opinion of Counsel for AutoNation and the Selling Shareholder...............................23
(v) Opinion of Counsel for U.S. Underwriters.....................................................23
(vi) Bring-down Comfort Letter...................................................................23
(o) Termination of Agreement............................................................................24
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SECTION 6. Indemnification..................................................................................24
(a) Indemnification of U.S. Underwriters................................................................24
(b) Indemnification of Company, Directors and Officers, AutoNation and the Selling
Shareholder.........................................................................................25
(c) Actions against Parties; Notification...............................................................25
(d) Settlement without Consent if Failure to Reimburse..................................................26
(e) Other Agreements with Respect to Indemnifcation.....................................................26
SECTION 7. Contribution.....................................................................................26
SECTION 8. Representations, Warranties and Agreements to Survive Delivery...................................28
SECTION 9. Termination Agreement............................................................................28
(a) Termination; General................................................................................28
(b) Liabilities.........................................................................................28
SECTION 10. Default by One or More of the U.S. Underwriters.................................................28
SECTION 11. Notices.........................................................................................29
SECTION 12. Parties.........................................................................................30
SECTION 13. Governing Law and Time..........................................................................30
SECTION 14. Effect of Headings..............................................................................30
SCHEDULES
SCHEDULE A LIST OF U.S. UNDERWRITERS.............................................SCH A-1
SCHEDULE B PRICING INFORMATION...................................................SCH B-1
SCHEDULE C LIST OF PERSONS SUBJECT TO LOCK-UP....................................SCH C-1
EXHIBITS
EXHIBIT A-1 FORM OF OPINION OF COMPANY'S COUNSEL......................................A-1
EXHIBIT A-2 FORM OF OPINION OF VERMONT COUNSEL.......................................A-13
EXHIBIT B FORM OF LOCK-UP LETTER....................................................B-1
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REPUBLIC SERVICES, INC.
A Delaware corporation
100,000,000 Shares of Class A Common Stock
Par Value $0.01 Per Share
U.S. PURCHASE AGREEMENT
April 27, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Deutsche Bank Securities Inc.
Bear, Stearns & Co. Inc.
CIBC Oppenheimer Corp.
Credit Suisse First Boston Corporation
Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Republic Services, Inc., a Delaware corporation (the "Company"),
AutoNation, Inc., a Delaware corporation ("AutoNation"), and AutoNation
Insurance Company, Inc., a Vermont corporation (the "Selling Shareholder"),
confirm their respective agreements with Merrill Lynch & Co., Merrill Lynch,
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Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other
U.S. Underwriters named in Schedule A hereto (collectively, the "U.S.
Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch, Donaldson,
Lufkin & Jenrette Securities Corporation, Deutsche Bank Securities Inc., Bear,
Stearns & Co. Inc., CIBC Oppenheimer Corp., Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc.
are acting as representatives (in such capacity, the "U.S. Representatives"),
with respect to (i) the sale by the Selling Shareholder and the purchase by the
U.S Underwriters, acting severally and not jointly, of the respective numbers
of shares of Class A Common Stock, par value $0.01 per share, of the Company
("Common Stock") set forth in Schedule A hereto, and (ii) the grant by the
Selling Shareholder to the U.S. Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of
9,730,000 additional shares of Common Stock solely to cover over-allotments, if
any. The aforesaid 80,000,000 shares of Common Stock (the "Initial U.S.
Securities") to be purchased by the U.S. Underwriters and all or any part of
the 9,730,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "U.S. Option Securities") are hereinafter called,
collectively, the "U.S. Securities."
It is understood that the Company, AutoNation and the Selling
Shareholder are concurrently entering into an agreement dated the date hereof
(the "International Purchase Agreement") providing for the offering by the
Selling Shareholder of an aggregate of 20,000,000 shares of Common Stock (the
"Initial International Securities") through arrangements with certain
underwriters outside the United States and Canada (the "International
Managers") for which Merrill Lynch International, Donaldson, Lufkin & Jenrette
International, Deutsche Bank AG London, Bear, Stearns International Limited,
CIBC Oppenheimer International Ltd., Credit Suisse First Boston (Europe)
Limited, Morgan Stanley & Co. International Limited and Salomon Brothers
International Limited are acting as lead managers (the "Lead Managers") and the
grant by the Selling Shareholder to the International Managers, acting
severally and not jointly, of an option to purchase all or any part of the
International Managers' pro rata portion of up to 2,432,500 additional shares
of Common Stock solely to cover over-allotments, if any (the "International
Option Securities" and, together with the U.S. Option Securities, the "Option
Securities"). The Initial International Securities and the International Option
Securities are hereinafter called the "International Securities." It is
understood that the Selling Shareholder is not obligated to sell, and the U.S.
Underwriters are not obligated to purchase, any Initial U.S. Securities unless
all of the Initial International Securities are contemporaneously purchased by
the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities."
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The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").
The Company, AutoNation and the Selling Shareholder understand that
the U.S. Underwriters propose to make a public offering of the U.S. Securities
as soon as the U.S. Representatives deem advisable after this Agreement has
been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-73259) covering the
registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to the U.S. Securities (the "Form of
U.S. Prospectus") and one relating to the International Securities (the "Form
of International Prospectus"). The Form of U.S. Prospectus is identical to the
Form of International Prospectus, except for their respective front cover
pages, "Underwriting" sections and back cover pages. The information included
in any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to
as "Rule 434 Information." Each Form of U.S. Prospectus and Form of
International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of U.S. Prospectus and the final Form of International Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
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refer to the preliminary U.S. Prospectus dated April 6, 1999 and preliminary
International Prospectus dated April 6, 1999, respectively, each together with
the applicable Term Sheet and all references in this Agreement to the date of
such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the U.S. Prospectus, the International Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each U.S.
Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Prospectuses nor any amendments or supplements
thereto, at the time the Prospectuses or any amendments or supplements
thereto were issued and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectuses shall not be "materially
different," as such term is used in Rule 434, from the prospectuses
included in the Registration Statement at the time it became
effective. The representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration
Statement or the Prospectuses made in reliance upon and in conformity
with information furnished to the Company in writing by any
Underwriter through the U.S. Representatives or the Lead Managers
expressly for use in the Registration Statement or the Prospectuses.
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Each preliminary prospectus and the prospectuses filed as
part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the 1933
Act, complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
and the summary financial information included in the Prospectuses
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial
information included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial information and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein,
(A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
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(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses or as proposed to be
conducted and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation or limited liability company, as the case may be, in good
standing under the laws of the jurisdiction of its organization, has
the corporate or limited liability company power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified as a foreign
corporation or limited liability company, as the case may be, to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in
the Registration Statement, all of the issued and outstanding capital
stock or limited liability interests of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through Subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of
capital stock or limited liability interests of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the
Company are (a) the subsidiaries listed on Exhibit 21.1 to the
Registration Statement and (b) certain other subsidiaries which,
considered in the aggregate as a single subsidiary, do not constitute
a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses under
the caption "Description of Capital Stock" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities, warrants or options referred to in
the Prospectuses). The shares of issued and outstanding capital stock
of the Company, including the Securities to be purchased by the
Underwriters from the Selling Shareholder, have been duly authorized
and validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company, including the
Securities to be purchased by the Underwriters from the Selling
Shareholder, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.
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(viii) AUTHORIZATION OF AGREEMENT. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company.
(ix) DESCRIPTION OF SECURITIES. The Common Stock conforms to
all statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement
and the International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, in the International
Purchase Agreement and in the Registration Statement (including the
sale and delivery of the Securities) and compliance by the Company
with its obligations under this Agreement and the International
Purchase Agreement have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company,
AutoNation, the Selling Shareholder or any of their respective
subsidiaries.
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(xi) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in any case, may reasonably be expected to result
in a Material Adverse Effect.
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company, AutoNation, the Selling Shareholder or any of their
respective subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement and the International
Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending
legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiii) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xiv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xv) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance
or sale of the Securities under this Agreement and the International
Purchase Agreement or the consummation of the transactions
contemplated by this Agreement and the International Purchase
Agreement, except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations and foreign or
state securities or blue sky laws.
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(xvi) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(xvii) TITLE TO PROPERTY. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do
not, singly or in the aggregate, materially affect the value of such
property as currently used or intended to be used and do not interfere
with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Prospectuses, are in full force and effect, and neither the Company
nor any subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xviii) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xix) ENVIRONMENTAL LAWS. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
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<PAGE> 14
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are
each in compliance with their requirements, (C) there are no
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings pending or, to the best of the Company's
knowledge, threatened relating to any Environmental Law against the
Company or any of its subsidiaries and (D) to the best of the
Company's knowledge, there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xx) REGISTRATION RIGHTS. Except as disclosed in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement, or otherwise registered by the Company under
the 1933 Act.
(xxi) INCOME TAXES. All United States federal income tax
returns of the Company and its subsidiaries required by law to be
filed have been filed (taking into account extensions granted by the
applicable federal governmental agency) and all taxes shown by such
returns or otherwise assessed, which are due and payable, have been
paid, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. All other
corporate franchise and income tax returns of the Company and its
subsidiaries required to be filed pursuant to applicable foreign,
state or local law have been filed, except insofar as the failure to
file such returns would not individually or in the aggregate have a
Material Adverse Effect, and all taxes shown on such returns or
otherwise assessed which are due and payable have been paid, except
for such taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company in respect of any income and
corporation tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional
income tax for any years not finally determined, except to the extent
of any inadequacy that would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered
together as one enterprise.
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(xxii) INTERNAL CONTROLS. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any material differences.
(xxiii) INSURANCE. The Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in the
same or similar business, and all such insurance is in full force and
effect.
(xxiv) OFFERING MATERIAL. The Company has not distributed
and, prior to the later to occur of (i) the Closing Time and (ii)
completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities other than the Registration Statement, any preliminary
prospectuses, the Prospectuses or other materials, if any, permitted
by the 1933 Act and approved by the Global Coordinator.
(xxv) RELATED PARTY TRANSACTIONS. There are no business
relationships or related party transactions of the nature described in
Item 404 of Regulation S-K involving the Company and any person
described in such Item that are required to be disclosed in the
Registration Statement and which have not been so disclosed.
(xxvi) SOLVENCY. The Company is, and immediately after the
Closing Time the Company will be, Solvent. As used herein, the term
"Solvent" means, with respect to the Company on a particular date,
that on such date (A) the fair market value of the assets of the
Company is greater than the total amount of liabilities (including
contingent liabilities) of the Company, (B) the present fair salable
value of the assets of the Company is greater than the amount that
will be required to pay the probable liabilities of the Company on its
debts as they become absolute and matured, (C) the Company is able to
realize upon its assets and pay its debts and other liabilities,
including contingent obligations, as they mature, and (D) the Company
does not have unreasonably small capital.
(xxvii) U.S. REAL PROPERTY HOLDING CORPORATION. The Company
is not, and has not been, at any time within the year prior to the
date hereof, a "United States real property holding corporation"
within the meaning of Section 897 of the Internal Revenue Code of
1986, as amended.
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<PAGE> 16
(xxviii) YEAR 2000 AND EURO DISCLOSURES. All disclosure
regarding year 2000 compliance and the Euro conversion that is
required to be described under the 1933 Act and the 1933 Act
Regulations (including disclosures required by Staff Legal Bulletin
No. 6, SEC Release No. 33-7558 (July 29, 1998) and SEC Release No.
33-7609 (November 9, 1998)) has been included in the Prospectuses.
Neither the Company nor any of its subsidiaries will incur significant
operating expenses or costs to ensure that its information systems
will be year 2000 compliant or to adjust its operating and information
systems to the conversion to a single currency in Europe, other than
as disclosed in the Prospectuses.
(b) REPRESENTATIONS AND WARRANTIES BY AUTONATION AND THE SELLING
SHAREHOLDER. AutoNation and the Selling Shareholder, jointly and severally,
represent and warrant to each U.S. Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b), hereof and agrees with each U.S.
Underwriter as follows:
(i) ACCURATE DISCLOSURE. To the best knowledge of AutoNation
and the Selling Shareholder, the representations and warranties of the
Company contained in Section 1(a) hereof are true and correct. At the
respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectuses nor any amendments or supplements
thereto, at the time the Prospectuses or any amendments or supplements
thereto were issued and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(ii) AUTHORIZATION OF AGREEMENTS. Each of AutoNation and the
Selling Shareholder has the full right, power and authority to enter
into this Agreement and the International Purchase Agreement and to
sell, transfer and deliver the Securities.
(iii) GOOD AND MARKETABLE TITLE. The Selling Shareholder has
and will at the Closing Time and, if any Option Securities are
purchased, on the Date of Delivery have good and marketable title to
the Securities to be sold by the Selling Shareholder hereunder, free
and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Securities and payment of the
purchase price therefor as herein contemplated, assuming each such
Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from the Selling Shareholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
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<PAGE> 17
(iv) ABSENCE OF MANIPULATION. Each of AutoNation and the
Selling Shareholder has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(v) ABSENCE OF DEFAULTS AND CONFLICTS. Neither AutoNation,
the Selling Shareholder nor any of their subsidiaries is in violation
of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to
which AutoNation, the Selling Shareholder or any of their subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the property or assets of AutoNation, the Selling Shareholder or
any of their subsidiaries is subject (collectively, "the
AutoNation/Selling Shareholder Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement and the
International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, in the International
Purchase Agreement, and in the Registration Statement (including the
sale and delivery of the Securities) and compliance by AutoNation and
the Selling Shareholder with their obligations under this Agreement
and the International Purchase Agreement have been duly authorized by
all necessary corporate action and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of AutoNation and the Selling
Shareholder or any subsidiary pursuant to, the AutoNation/Selling
Shareholder Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of each of
AutoNation and the Selling Shareholder or any subsidiary or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over AutoNation, the Selling
Shareholder or any of their subsidiaries or any of their assets,
properties or operations.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, is necessary or required for the performance by AutoNation and
the Selling Shareholder of their respective obligations hereunder, in
connection with the offering or sale of the Securities under this
Agreement and the International Purchase Agreement or the consummation
of the transactions contemplated by this Agreement and the
International Purchase Agreement, except such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations and foreign or state securities or blue sky laws.
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<PAGE> 18
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of
90 days from the date of the Prospectuses, neither AutoNation nor the
Selling Shareholder will, without the prior written consent of the
Global Coordinator, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock
or the Company's Class B Common Stock, par value $0.01 per share (the
"Class B Common Stock") or any securities convertible into or
exercisable or exchangeable for Common Stock and/or Class B Common
Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of
the Common Stock and/or the Class B Common Stock, whether any such
swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of such Stock or such other securities, in cash or
otherwise.
(viii) NO ASSOCIATION WITH NASD. Neither AutoNation, the
Selling Shareholder nor any of their affiliates (within the meaning of
NASD Conduct Rule 2720(b)(1)(a)) directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under
common control with, or is an associated person (within the meaning of
Article I, Section 1(q) of the By-laws of the National Association of
Securities Dealers, Inc.) of, any member firm of the National
Association of Securities Dealers, Inc.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Company, AutoNation, the Selling Shareholder or any of the Company's
subsidiaries delivered to the Global Coordinator, the U.S. Representatives, or
to counsel for the U.S. Underwriters shall be deemed a representation and
warranty by the Company, AutoNation or the Selling Shareholder, as the case may
be, to each U.S. Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Selling Shareholder agrees to sell to each U.S. Underwriter,
severally and not jointly, and each U.S. Underwriter, severally and not
jointly, agrees to purchase from the Selling Shareholder, at the price per
share set forth in Schedule B, the number of Initial U.S. Securities set forth
in Schedule A opposite the name of such U.S. Underwriter, plus any additional
number of Initial U.S. Securities which such U.S. Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Selling Shareholder hereby grants an option to
the U.S. Underwriters, severally and not jointly, to purchase up to an
additional 9,730,000 shares of Common Stock at the price per share set forth in
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Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial U.S. Securities but not
payable on the U.S. Option Securities. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time
to time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial U.S. Securities
upon notice by the Global Coordinator to the Company and the Selling
Shareholder setting forth the number of U.S. Option Securities as to which the
several U.S. Underwriters are then exercising the option and the time and date
of payment and delivery for such U.S. Option Securities. Any such time and date
of delivery for the Option Securities (a "Date of Delivery") shall be
determined by the Global Coordinator, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the Global Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York
10004, or at such other place as shall be agreed upon by the Global Coordinator
and the Company and the Selling Shareholder, at 9:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any
given day) business day after the date hereof (unless postponed in accordance
with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Global Coordinator
and the Company and the Selling Shareholder (such time and date of payment and
delivery being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option
Securities are purchased by the U.S. Underwriters, payment of the purchase
price for, and delivery of certificates for, such U.S. Option Securities shall
be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Global Coordinator and the Company, on each Date of Delivery
as specified in the notice from the Global Coordinator to the Company and the
Selling Shareholder.
Payment shall be made to the Selling Shareholder by wire transfer of
immediately available funds to a bank account designated by the Selling
Shareholder, against delivery to the U.S. Representatives for the respective
accounts of the U.S. Underwriters of certificates for the U.S. Securities to be
purchased by them. It is understood that each U.S. Underwriter has authorized
the U.S. Representatives, for its account, to accept delivery of, receipt for,
and make payment of the purchase price for, the Initial U.S. Securities and the
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U.S. Option Securities, if any, which it has agreed to purchase. Merrill Lynch,
individually and not as representative of the U.S. Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Initial U.S.
Securities or the U.S. Option Securities, if any, to be purchased by any U.S.
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such U.S. Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in The City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
U.S. Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator as soon as practicable, and confirm the notice
in writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii)
of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectuses or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to
Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment
to the Registration Statement (including any filing under Rule
462(b)), any Term Sheet or any amendment, supplement or revision to
either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectuses, will furnish the
Global Coordinator with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global
Coordinator or counsel for the U.S. Underwriters shall reasonably
object.
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(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will deliver to the U.S. Representatives and counsel for
the U.S. Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the U.S. Representatives, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each
preliminary prospectus as such U.S. Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each U.S.
Underwriter, without charge, during the period when the U.S.
Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of
copies of the U.S. Prospectus (as amended or supplemented) as such
U.S. Underwriter may reasonably request. The U.S. Prospectus and any
amendments or supplements thereto furnished to the U.S. Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement
and in the Prospectuses. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement
or amend or supplement any Prospectus in order that the Prospectuses
will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary,
in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement any Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the U.S. Underwriters
such number of copies of such amendment or supplement as the U.S.
Underwriters may reasonably request.
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(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications
in effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) LISTING. The Company will use its best efforts to effect
the listing of the Securities on the New York Stock Exchange (the
"NYSE").
(i) RESTRICTION ON SALE OF SECURITIES. During a period of 90
days from the date of the Prospectuses, the Company will not, without
the prior written consent of the Global Coordinator, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or the Company's Class B Common
Stock, par value $0.01 per share (the "Class B Common Stock") or any
securities convertible into or exercisable or exchangeable for Common
Stock and/or Class B Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock and/or the Class B Common
Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of such Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to (a) shares of Common Stock issued to a third party as
consideration for the Company's acquisition from such third party of a
non hazardous solid waste business and (b) options to purchase shares
of Common Stock granted under the Company's 1998 Stock Option Plan.
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(j) REPORTING REQUIREMENTS. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required
by the 1934 Act and the rules and regulations of the Commission
thereunder.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company, AutoNation
and the Selling Shareholder will pay or cause to be paid all expenses incident
to the performance of their obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, any Agreement among Underwriters and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters and the transfer of
the Securities between the U.S. Underwriters and the International Managers,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the NASD of the terms of the sale of the
Securities and (x) the fees and expenses incurred in connection with the
listing of the Securities on the NYSE.
(b) EXPENSES OF AUTONATION AND THE SELLING SHAREHOLDER. AutoNation and
the Selling Shareholder will pay or cause to be paid all expenses incident to
the performance of their obligations under, and the consummation of the
transactions contemplated by, this Agreement, including (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the Underwriters, and their transfer between the Underwriters
pursuant to an agreement between such Underwriters, and (ii) the fees and
disbursements of its counsel and accountants.
(c) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company, AutoNation and the Selling Shareholder shall
reimburse the U.S. Underwriters for all of their reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
U.S. Underwriters.
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(d) ALLOCATION OF EXPENSES. The provisions of this Section shall not
affect any agreement that the Company, AutoNation and the Selling Shareholder
may make for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company, AutoNation and
the Selling Shareholder contained in Section 1 hereof or in certificates of any
officer of the Company or any subsidiary of the Company or on behalf of
AutoNation or the Selling Shareholder delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has
become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the U.S. Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A)
or, if the Company has elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule
424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the U.S.
Representatives shall have received the opinion, dated as of Closing
Time, of Akerman, Senterfitt & Eidson, P.A., counsel for the Company,
in form and substance reasonably satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters to the effect set forth in
Exhibit A-1 hereto and to such further effect as counsel to the U.S.
Underwriters may reasonably request, based upon events occurring or
information discovered after the date hereof.
(c) OPINION OF COUNSEL FOR AUTONATION AND THE SELLING
SHAREHOLDER. At Closing Time, the U.S. Representatives shall have
received the favorable opinion, dated as of Closing Time, of Akerman,
Senterfitt & Eidson, P.A., counsel for AutoNation and the Selling
Shareholder and of Primmer & Piper, P.C., Vermont counsel for the
Selling Shareholder, in form and substance satisfactory to counsel for
the U.S. Underwriters, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters to the effect set
forth in Exhibits A-1 and A-2, respectively, hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably
request.
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(d) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. At Closing
Time, the U.S. Representatives shall have received the favorable
opinion, dated as of Closing Time, of Fried, Frank, Harris, Shriver &
Jacobson, counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters with respect to the matters pertaining to the Company set
forth in clauses (i), (ii), (vi) through (viii), inclusive, (ix), (xi)
(solely as to the information in the Prospectus under "Description of
Capital Stock--Common Stock") and (xviii) and the matters set forth in
the penultimate paragraph of Exhibit A-1 hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of New York and the
federal law of the United States and the General Corporation Law of
the State of Delaware, upon the opinions of counsel satisfactory to
the U.S. Representatives which may include counsel to the Company.
Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(e) COMPANY OFFICERS' CERTIFICATE. At Closing Time, there
shall not have been, since the date hereof or since the respective
dates as of which information is given in the Prospectuses, any
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the U.S.
Representatives shall have received a certificate of the Chief
Executive Officer, the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company,
dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) the representations and warranties
in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time,
and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of
such officers, are contemplated by the Commission.
(f) AUTONATION AND SELLING SHAREHOLDER OFFICERS'
CERTIFICATES. At Closing Time the U.S. Representatives shall have
received a certificate of a Co-Chief Executive Officer, the President
or a Vice President of each of AutoNation and the Selling Shareholder,
each dated as of Closing Time, to the effect that (i) the
representations and warranties in Section 1(b) hereof are true and
correct with the same force and effect as though expressly made at and
as of Closing Time, and (ii) AutoNation or the Selling Shareholder, as
the case may be, has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to
Closing Time.
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(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution
of this Agreement, the U.S. Representatives shall have received from
Arthur Andersen LLP a letter dated such date, in form and substance
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectuses.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the U.S.
Representatives shall have received from Arthur Andersen LLP a letter,
dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (g) of
this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(i) APPROVAL OF LISTING. At Closing Time, the Securities
shall have been approved for listing on the NYSE, subject only to
official notice of issuance.
(j) NO OBJECTION. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the
U.S. Representatives shall have received an agreement substantially in
the form of Exhibit B hereto signed by AutoNation, the Selling
Shareholder and the persons listed on Schedule C hereto.
(l) PURCHASE OF INITIAL INTERNATIONAL SECURITIES.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(m) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished
with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities
as herein contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company, AutoNation and the Selling Shareholder in connection with the
issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the U.S. Representatives and
counsel for the U.S. Underwriters.
(n) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES. In the
event that the U.S. Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company,
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AutoNation and the Selling Shareholder contained herein and the
statements in any certificates furnished by the Company, any
subsidiary of the Company, AutoNation or the Selling Shareholder
hereunder shall be true and correct as of each Date of Delivery and,
at the relevant Date of Delivery, the U.S. Representatives shall have
received:
(i) COMPANY OFFICERS' CERTIFICATE. A certificate, dated
such Date of Delivery, of the Chief Executive
Officer, the President or a Vice President of the
Company and of the chief financial or chief
accounting officer of the Company confirming that
the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and
correct as of such Date of Delivery.
(ii) AUTONATION AND SELLING SHAREHOLDER OFFICERS'
CERTIFICATES. A certificate, dated such Date of
Delivery, of a Co-Chief Executive Officer, the
President or a Vice President of each of AutoNation
and the Selling Shareholder confirming that the
certificates delivered at the Closing Time pursuant
to Section 5(f) hereof remains true and correct as
of such Date of Delivery.
(iii) OPINION OF COUNSEL FOR COMPANY. The opinion of
Akerman, Senterfitt & Eidson, P.A., counsel for the
Company, in form and substance reasonably
satisfactory to counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iv) OPINION OF COUNSEL FOR AUTONATION AND THE SELLING
SHAREHOLDER. The opinion of Akerman, Senterfitt &
Eidson, P.A., counsel for AutoNation and the Selling
Shareholder and of Primmer & Piper, P.C., Vermont
counsel for the Selling Shareholder, in form and
substance reasonably satisfactory to counsel for the
U.S. Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(c)
hereof.
(v) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. The
favorable opinion of Fried, Frank, Harris, Shriver &
Jacobson, counsel for the U.S. Underwriters, dated
such Date of Delivery, relating to the U.S. Option
Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
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(vi) BRING-DOWN COMFORT LETTER. A letter from Arthur
Andersen LLP, in form and substance satisfactory to
the U.S. Representatives and dated such Date of
Delivery, substantially in the same form and
substance as the letter furnished to the U.S.
Representatives pursuant to Section 5(h) hereof,
except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date
not more than five days prior to such Date of
Delivery.
(o) TERMINATION OF AGREEMENT. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities on a Date of Delivery which is
after the Closing Time, the obligations of the several U.S.
Underwriters to purchase the relevant Option Securities, may be
terminated by the U.S. Representatives by notice to the Company at any
time at or prior to Closing Time or such Date of Delivery, as the case
may be, and such termination shall be without liability of any party
to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF U.S. UNDERWRITERS. The Company, AutoNation and
the Selling Shareholder, jointly and severally, agree to indemnify and hold
harmless each U.S. Underwriter and each person, if any, who controls any U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
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threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS, AUTONATION AND
THE SELLING SHAREHOLDER. Each U.S. Underwriter severally agrees to indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
AutoNation, each person, if any, who controls AutoNation within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the Selling
Shareholder and each person, if any, who controls the Selling Shareholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such U.S. Underwriter through
the U.S. Representatives expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the U.S. Prospectus
(or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
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relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) or (iii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The provisions
of this Section shall not affect any agreement among the Company, AutoNation
and the Selling Shareholder with respect to indemnification.
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SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, AutoNation and the Selling Shareholder on the one hand and the U.S.
Underwriters on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, AutoNation and the Selling Shareholder on the
one hand and of the U.S Underwriters on the other hand in connection with the
statements or omissions, which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, AutoNation and the
Selling Shareholder on the one hand and the U.S. Underwriters on the other hand
in connection with the offering of the U.S. Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the U.S. Securities pursuant to this
Agreement (before deducting expenses) received by the Company, AutoNation and
the Selling Shareholder and the total underwriting discount received by the
U.S. Underwriters, in each case as set forth on the cover of the U.S.
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the U.S.
Securities as set forth on such cover.
The relative fault of the Company, AutoNation and the Selling
Shareholder on the one hand and the U.S. Underwriters on the other hand shall
be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company,
AutoNation or the Selling Shareholder or by the U.S. Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, AutoNation, the Selling Shareholder and the U.S.
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
U.S. Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
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Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company, AutoNation or the Selling Shareholder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company, AutoNation or the Selling Shareholder, as the case
may be. The U.S. Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial U.S.
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
The provisions of this Section shall not affect any agreement among
the Company, AutoNation and the Selling Shareholder with respect to
contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries, AutoNation or the Selling Shareholder submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company, AutoNation or the Selling
Shareholder, and shall survive delivery of the Securities to the U.S.
Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Company, AutoNation and the Selling Shareholder, at
any time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the U.S. Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the U.S. Representatives,
-28-
<PAGE> 33
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission, or the NYSE, or if trading
generally on the American Stock Exchange or the NYSE or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required,
by any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under
this Agreement (the "Defaulted Securities"), the U.S. Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting U.S. Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the U.S. Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of
the non-defaulting U.S. Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the
Closing Time, the obligation of the U.S. Underwriters to purchase and
of the Company to sell the Option Securities to be purchased and sold
on such Date of Delivery shall terminate without liability on the part
of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the U.S. Underwriters to purchase and the Selling Shareholder to
-29-
<PAGE> 34
sell the relevant U.S. Option Securities, as the case may be, either the U.S.
Representatives or the Selling Shareholder shall have the right to postpone
Closing Time or the relevant Date of Delivery, as the case may be, for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term " U.S. Underwriter" includes any person substituted
for a U.S.; Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower,
World Financial Center, New York, New York 10281-1201, attention of the U.S.
Representatives; with a copy to Valerie Ford Jacob, Esq., Fried, Frank, Harris,
Shriver & Jacobson, One New York Plaza, New York, New York 10004; and notices
to the Company shall be directed to it at Republic Services, Inc., 110 S.E.
Sixth Street, Fort Lauderdale, Florida 33301, attention of David A. Barclay,
General Counsel; with a copy to Jonathan L. Awner, Esq., Akerman, Senterfitt &
Eidson, P.A., One S.E. Third Avenue, Miami, Florida 33131; notices to
AutoNation shall be directed to it at AutoNation, Inc., 110 S.E. Sixth Street,
Fort Lauderdale, Florida 33301, attention of James O. Cole with a copy to
Jonathan L. Awner, Esq., Akerman, Senterfitt & Eidson, P.A.; and notices to the
Selling Shareholder shall be directed to it at AutoNation Insurance Company,
Inc., 76 St. Paul Street, Suite 501, Burlington, Vermont 05401, attention of
Guy F. Ragosta with a copy to Jonathan L. Awner, Esq., Akerman, Senterfitt &
Eidson, P.A.
SECTION 12. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the U.S. Underwriters, the Company, AutoNation and the
Selling Shareholder and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the U.S. Underwriters, the Company,
AutoNation and the Selling Shareholder and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the U.S. Underwriters, the Company,
AutoNation and the Selling Shareholder and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from any U.S. Underwriter shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
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<PAGE> 35
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company, AutoNation and the Selling
Shareholder a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the U.S. Underwriters, the
Company, AutoNation and the Selling Shareholder in accordance with its terms.
Very truly yours,
AUTONATION, INC.
By: /s/ James O. Cole
------------------------------------
Title: Senior Vice President
General Counsel & Secretary
AUTONATION INSURANCE
COMPANY, INC.
By: /s/ Guy Ragosta
------------------------------------
Title: Vice President
REPUBLIC SERVICES, INC.
By: /s/ David Barclay
------------------------------------
Title: Senior Vice President
-31-
<PAGE> 36
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
CIBC OPPENHEIMER CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Michael L. Santini
------------------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto
-32-
<PAGE> 37
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial U.S.
Name of U.S. Underwriter Securities
- ------------------------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................. 14,773,125
Donaldson, Lufkin & Jenrette Securities Corporation....................... 14,773,125
Deutsche Bank Securities Inc.............................................. 14,773,125
Bear, Stearns & Co. Inc. ................................................. 5,975,125
CIBC Oppenheimer Corp. ................................................... 5,975,125
Credit Suisse First Boston Corporation.................................... 5,975,125
Morgan Stanley & Co. Incorporated......................................... 5,975,125
Salomon Smith Barney Inc. ................................................ 5,975,125
NationsBanc Montgomery Securities LLC .................................... 430,000
ABN AMRO Incorporated .................................................... 430,000
Allen & Company Incorporated ............................................. 430,000
BT Alex. Brown Incorporated .............................................. 430,000
BancBoston Robertson Stephens Inc. ....................................... 430,000
ING Baring Furman Selz LLC ............................................... 430,000
Goldman, Sachs & Co. ..................................................... 430,000
JWGenesis Clearing Corp. ................................................. 430,000
PaineWebber Incorporated ................................................. 430,000
Sanford C. Bernstein & Co., Inc. ......................................... 193,500
Blaylock & Partners, L.P. ................................................ 193,500
First Analysis Securities Corporation .................................... 193,500
First Union Capital Markets Corp. ........................................ 193,500
Gabelli & Company, Inc. .................................................. 193,500
Kokusai America Incorporated ............................................. 193,500
Neuberger Berman, LLC .................................................... 193,500
Raymong James & Associates, Inc. ......................................... 193,500
Sanders Morris Mundy ..................................................... 193,500
The Williams Capital Group, L.P. ......................................... 193,500
----------
Total.................................................. 80,000,000
==========
</TABLE>
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<PAGE> 38
SCHEDULE B
REPUBLIC SERVICES, INC.
80,000,000 Shares of Class A Common Stock
(Par Value $0.01 Per Share)
1. The initial public offering price per share for the U.S. Securities,
determined as provided in said Section 2, shall be $16.875.
2. The purchase price per share for the U.S. Securities to be paid by the
several U.S. Underwriters shall be $16.325, being an amount equal to the initial
public offering price set forth above less $.55 per share; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.
<PAGE> 1
EXHIBIT 1.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REPUBLIC SERVICES, INC.
A Delaware corporation
100,000,000 Shares of Class A Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: April 27, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. Representations and Warranties....................................................................4
(a) Representations and Warranties by the Company.........................................................4
(i) Compliance with Registration Requirements.....................................................4
(ii) Independent Accountants......................................................................5
(iii) Financial Statements........................................................................5
(iv) No Material Adverse Change in Business.......................................................5
(v) Good Standing of the Company..................................................................5
(vi) Good Standing of Subsidiaries................................................................6
(vii) Capitalization..............................................................................6
(viii) Authorization of Agreement.................................................................6
(ix) Description of Securities....................................................................7
(x) Absence of Defaults and Conflicts.............................................................7
(xi) Absence of Labor Dispute.....................................................................7
(xii) Absence of Proceedings......................................................................7
(xiii) Accuracy of Exhibits.......................................................................8
(xiv) Possession of Intellectual Property.........................................................8
(xv) Absence of Further Requirements..............................................................8
(xvi) Possession of Licenses and Permits..........................................................8
(xvii) Title to Property..........................................................................9
(xviii) Investment Company Act....................................................................9
(xix) Environmental Laws..........................................................................9
(xx) Registration Rights.........................................................................10
(xxi) Income Taxes...............................................................................10
(xxii) Internal Controls.........................................................................10
(xxiii) Insurance................................................................................11
(xxiv) Offering Material.........................................................................11
(xxv) Related Party Transactions.................................................................11
(xxvi) Solvency..................................................................................11
(xxvii) U.S. Real Property Holding Corporation...................................................11
(xxviii) Year 2000 and Euro Disclosures..........................................................11
(b) Representations and Warranties by AutoNation and the Selling Shareholder............................12
(i) Accurate Disclosure..........................................................................12
(ii) Authorization of Agreeements................................................................12
(iii) Good and Marketable Title..................................................................12
(iv) Absence of Manipulation.....................................................................12
(v) Absence of Defaults and Conflicts............................................................13
(vi) Absence of Further Requirements.............................................................13
(vii) Restriction on Sale of Securities..........................................................13
(viii) No Association with NASD..................................................................14
(c) Officer's Certificates..............................................................................14
</TABLE>
-1-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
SECTION 2. Sale and Delivery to International Managers; Closing.............................................14
(a) Initial Securities..................................................................................14
(b) Option Securities...................................................................................14
(c) Payment.............................................................................................15
(d) Denominations; Registration.........................................................................15
SECTION 3. Covenants of the Company.........................................................................16
(a) Compliance with Securities Regulations and Commission Requests......................................16
(b) Filing of Amendments................................................................................16
(c) Delivery of Registration Statements.................................................................16
(d) Delivery of Prospectus..............................................................................17
(e) Continued Compliance with Securities Laws...........................................................17
(f) Blue Sky Qualifications.............................................................................17
(g) Rule 158............................................................................................18
(h) Listing.............................................................................................18
(i) Restriction on Sale of Securities...................................................................18
(j) Reporting Requirements..............................................................................18
SECTION 4. Payment of Expenses..............................................................................19
(a) Expenses............................................................................................19
(b) Expenses of AutoNation and the Selling Shareholder..................................................19
(c) Termination of Agreement............................................................................19
(d) Allocation of Expenses..............................................................................19
SECTION 5. Conditions of International Managers' Obligations................................................20
(a) Effectiveness of Registration Statement.............................................................20
(b) Opinion of Counsel for Company......................................................................20
(c) Opinion of Counsel for AutoNation and the Selling Shareholder.......................................20
(d) Opinion of Counsel for International Managers.......................................................20
(e) Company Officers' Certificate.......................................................................21
(f) AutoNation and Selling Shareholder Officers' Certificates...........................................21
(g) Accountant's Comfort Letter.........................................................................21
(h) Bring-down Comfort Letter...........................................................................22
(i) Approval of Listing.................................................................................22
(j) No Objection........................................................................................22
(k) Lock-up Agreements..................................................................................22
(l) Purchase of Initial U.S. Securities.................................................................22
(m) Additional Documents................................................................................22
(n) Conditions to Purchase of International Option Securities...........................................22
(i) Company Officers' Certificate................................................................22
(ii) AutoNation and Selling Shareholder Officers' Certificates...................................23
(iii) Opinion of Counsel for Company.............................................................23
(iv) Opinion of Counsel for AutoNation and the Selling Shareholder...............................23
(v) Opinion of Counsel for International Managers................................................23
(vi) Bring-down Comfort Letter...................................................................23
(o) Termination of Agreement............................................................................24
</TABLE>
-2-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
SECTION 6. Indemnification..................................................................................24
(a) Indemnification of International Managers...........................................................24
(b) Indemnification of Company, Directors and Officers, AutoNation and the Selling
Shareholder.........................................................................................25
(c) Actions against Parties; Notification...............................................................25
(d) Settlement without Consent if Failure to Reimburse..................................................26
(e) Other Agreements with Respect to Indemnifcation.....................................................26
SECTION 7. Contribution.....................................................................................26
SECTION 8. Representations, Warranties and Agreements to Survive Delivery...................................28
SECTION 9. Termination Agreement............................................................................28
(a) Termination; General................................................................................28
(b) Liabilities.........................................................................................28
SECTION 10. Default by One or More of the International Managers............................................28
SECTION 11. Notices.........................................................................................29
SECTION 12. Parties.........................................................................................29
SECTION 13. Governing Law and Time..........................................................................30
SECTION 14. Effect of Headings..............................................................................30
SCHEDULES
SCHEDULE A LIST OF INTERNATIONAL MANAGERS........................................SCH A-1
SCHEDULE B PRICING INFORMATION...................................................SCH B-1
SCHEDULE C LIST OF PERSONS SUBJECT TO LOCK-UP....................................SCH B-1
EXHIBITS
EXHIBIT A-1 FORM OF OPINION OF COMPANY'S COUNSEL......................................A-1
EXHIBIT A-2 FORM OF OPINION OF VERMONT COUNSEL.......................................A-13
EXHIBIT B FORM OF LOCK-UP LETTER....................................................B-1
</TABLE>
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<PAGE> 5
REPUBLIC SERVICES, INC.
A Delaware corporation
100,000,000 Shares of Class A Common Stock
Par Value $0.01 Per Share
INTERNATIONAL PURCHASE AGREEMENT
---------------------------------
April 27, 1999
Merrill Lynch International
Donaldson, Lufkin & Jenrette International
Deutsche Bank AG London
Bear, Stearns International Limited
CIBC Oppenheimer International Ltd.
Credit Suisse First Boston (Europe) Limited
Morgan Stanley & Co. International Limited
Salomon Brothers International Limited.
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Ladies and Gentlemen:
Republic Services, Inc., a Delaware corporation (the "Company"),
AutoNation, Inc., a Delaware corporation ("AutoNation"), and AutoNation
Insurance Company, Inc., a Vermont corporation (the "Selling Shareholder"),
confirm their respective agreements with Merrill Lynch International ("Merrill
Lynch") and each of the other International Managers named in Schedule A hereto
(collectively, the "International Managers", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Merrill Lynch, Donaldson, Lufkin & Jenrette International, Deutsche Bank AG
London, Bear, Stearns International Limited, CIBC Oppenheimer International
-1-
<PAGE> 6
Ltd., Credit Suisse First Boston (Europe) Limited, Morgan Stanley & Co.
International Limited and Salomon Brothers International Limited are acting as
representatives (in such capacity, the "Lead Managers"), with respect to (i)
the sale by the Selling Shareholder and the purchase by the International
Managers, acting severally and not jointly, of the respective numbers of shares
of Class A Common Stock, par value $0.01 per share, of the Company ("Common
Stock") set forth in Schedule A hereto, and (ii) the grant by the Selling
Shareholder to the International Managers, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of
2,432,500 additional shares of Common Stock solely to cover over-allotments, if
any. The aforesaid 20,000,000 shares of Common Stock (the "Initial
International Securities") to be purchased by the International Managers and
all or any part of the 2,432,500 shares of Common Stock subject to the option
described in Section 2(b) hereof (the "International Option Securities") are
hereinafter called, collectively, the "International Securities."
It is understood that the Company, AutoNation and the Selling
Shareholder are concurrently entering into an agreement dated the date hereof
(the "U.S. Purchase Agreement") providing for the offering by the Selling
Shareholder of an aggregate of 80,000,000 shares of Common Stock (the "Initial
U.S. Securities") through arrangements with certain underwriters in the United
States and Canada (the "U.S. Underwriters") for which Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Deutsche Bank Securities Inc., Bear, Stearns &
Co. Inc., CIBC Oppenheimer Corp., Credit Suisse First Boston Corporation,
Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc. are acting as
representatives (the "U.S. Representatives") and the grant by the Selling
Shareholder to the U.S. Underwriters, acting severally and not jointly, of an
option to purchase all or any part of the U.S. Underwriters' pro rata portion
of up to 9,730,000 additional shares of Common Stock solely to cover
over-allotments, if any (the "U.S. Option Securities" and, together with the
International Option Securities, the "Option Securities"). The Initial U.S.
Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities." It is understood that the Selling Shareholder is not obligated to
sell, and the International Managers are not obligated to purchase, any Initial
International Securities unless all of the Initial U.S. Securities are
contemporaneously purchased by the U.S. Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters," the Initial International Securities
and the Initial U.S. Securities are hereinafter collectively called the
"Initial Securities," and the International Securities and the U.S. Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").
-2-
<PAGE> 7
The Company, AutoNation and the Selling Shareholder understand that
the International Managers propose to make a public offering of the
International Securities as soon as the Lead Managers deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-73259) covering the
registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to the U.S. Securities (the "Form of
U.S. Prospectus") and one relating to the International Securities (the "Form
of International Prospectus"). The Form of International Prospectus is
identical to the Form of U.S. Prospectus, except for their respective front
cover pages, "Underwriting" sections and back cover pages. The information
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each Form of International Prospectus
and Form of U.S. Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of U.S. Prospectus and the final Form of International Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated April 6, 1999 and preliminary
International Prospectus dated April 6, 1999, respectively, each together with
the applicable Term Sheet and all references in this Agreement to the date of
such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the U.S. Prospectus, the International Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
-3-
<PAGE> 8
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each International Manager as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
International Manager, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), the Registration Statement, the Rule 462(b) Registration
Statement and any amendments and supplements thereto complied and will
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434 and
the Prospectuses shall not be "materially different," as such term is
used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the Prospectuses made in
reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through the Lead Managers or the
U.S. Representatives expressly for use in the Registration Statement
or the Prospectuses.
Each preliminary prospectus and the prospectuses filed as
part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the 1933
Act, complied when so filed in all material respects with the 1933 Act
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<PAGE> 9
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
and the summary financial information included in the Prospectuses
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial
information included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial information and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein,
(A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
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authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses or as proposed to be
conducted and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation or limited liability company, as the case may be, in good
standing under the laws of the jurisdiction of its organization, has
the corporate or limited liability company power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified as a foreign
corporation or limited liability company, as the case may be, to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in
the Registration Statement, all of the issued and outstanding capital
stock or limited liability interests of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through Subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of
capital stock or limited liability interests of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the
Company are (a) the subsidiaries listed on Exhibit 21.1 to the
Registration Statement and (b) certain other subsidiaries which,
considered in the aggregate as a single subsidiary, do not constitute
a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses under
the caption "Description of Capital Stock" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities, warrants or options referred to in
the Prospectuses). The shares of issued and outstanding capital stock
of the Company, including the Securities to be purchased by the
Underwriters from the Selling Shareholder, have been duly authorized
and validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company, including the
Securities to be purchased by the Underwriters from the Selling
Shareholder, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.
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<PAGE> 11
(viii) AUTHORIZATION OF AGREEMENT. This Agreement and the
U.S. Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) DESCRIPTION OF SECURITIES. The Common Stock conforms to
all statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement
and the U.S. Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, in the U.S. Purchase
Agreement and in the Registration Statement (including the sale and
delivery of the Securities) and compliance by the Company with its
obligations under this Agreement and the U.S. Purchase Agreement have
been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to, the Agreements
and Instruments (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary
or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company, AutoNation, the Selling Shareholder or
any of their respective subsidiaries.
(xi) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in any case, may reasonably be expected to result
in a Material Adverse Effect.
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<PAGE> 12
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company, AutoNation, the Selling Shareholder or any of their
respective subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement and the U.S. Purchase
Agreement or the performance by the Company of its obligations
hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse
Effect.
(xiii) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xiv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xv) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance
or sale of the Securities under this Agreement and the U.S. Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement and the U.S. Purchase Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations and foreign or state securities or blue sky laws.
(xvi) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies
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<PAGE> 13
or bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(xvii) TITLE TO PROPERTY. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do
not, singly or in the aggregate, materially affect the value of such
property as currently used or intended to be used and do not interfere
with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Prospectuses, are in full force and effect, and neither the Company
nor any subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xviii) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xix) ENVIRONMENTAL LAWS. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
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<PAGE> 14
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are
each in compliance with their requirements, (C) there are no
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings pending or, to the best of the Company's
knowledge, threatened relating to any Environmental Law against the
Company or any of its subsidiaries and (D) to the best of the
Company's knowledge, there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xx) REGISTRATION RIGHTS. Except as disclosed in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement, or otherwise registered by the Company under
the 1933 Act.
(xxi) INCOME TAXES. All United States federal income tax
returns of the Company and its subsidiaries required by law to be
filed have been filed (taking into account extensions granted by the
applicable federal governmental agency) and all taxes shown by such
returns or otherwise assessed, which are due and payable, have been
paid, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. All other
corporate franchise and income tax returns of the Company and its
subsidiaries required to be filed pursuant to applicable foreign,
state or local law have been filed, except insofar as the failure to
file such returns would not individually or in the aggregate have a
Material Adverse Effect, and all taxes shown on such returns or
otherwise assessed which are due and payable have been paid, except
for such taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company in respect of any income and
corporation tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional
income tax for any years not finally determined, except to the extent
of any inadequacy that would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered
together as one enterprise.
(xxii) INTERNAL CONTROLS. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of
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<PAGE> 15
financial statements in conformity with GAAP and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any material differences.
(xxiii) INSURANCE. The Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in the
same or similar business, and all such insurance is in full force and
effect.
(xxiv) OFFERING MATERIAL. The Company has not distributed
and, prior to the later to occur of (i) the Closing Time and (ii)
completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities other than the Registration Statement, any preliminary
prospectuses, the Prospectuses or other materials, if any, permitted
by the 1933 Act and approved by the Global Coordinator.
(xxv) RELATED PARTY TRANSACTIONS. There are no business
relationships or related party transactions of the nature described in
Item 404 of Regulation S-K involving the Company and any person
described in such Item that are required to be disclosed in the
Registration Statement and which have not been so disclosed.
(xxvi) SOLVENCY. The Company is, and immediately after the
Closing Time the Company will be, Solvent. As used herein, the term
"Solvent" means, with respect to the Company on a particular date,
that on such date (A) the fair market value of the assets of the
Company is greater than the total amount of liabilities (including
contingent liabilities) of the Company, (B) the present fair salable
value of the assets of the Company is greater than the amount that
will be required to pay the probable liabilities of the Company on its
debts as they become absolute and matured, (C) the Company is able to
realize upon its assets and pay its debts and other liabilities,
including contingent obligations, as they mature, and (D) the Company
does not have unreasonably small capital.
(xxvii) U.S. REAL PROPERTY HOLDING CORPORATION. The Company
is not, and has not been, at any time within the year prior to the
date hereof, a "United States real property holding corporation"
within the meaning of Section 897 of the Internal Revenue Code of
1986, as amended.
(xxviii) YEAR 2000 AND EURO DISCLOSURES. All disclosure
regarding year 2000 compliance and the Euro conversion that is
required to be described under the 1933 Act and the 1933 Act
Regulations (including disclosures required by Staff Legal Bulletin
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<PAGE> 16
No. 6, SEC Release No. 33-7558 (July 29, 1998) and SEC Release No.
33-7609 (November 9, 1998)) has been included in the Prospectuses.
Neither the Company nor any of its subsidiaries will incur significant
operating expenses or costs to ensure that its information systems
will be year 2000 compliant or to adjust its operating and information
systems to the conversion to a single currency in Europe, other than
as disclosed in the Prospectuses.
(b) REPRESENTATIONS AND WARRANTIES BY AUTONATION AND THE SELLING
SHAREHOLDER. AutoNation and the Selling Shareholder, jointly and severally,
represent and warrant to each International Manager as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b), hereof and agrees with each
International Manager as follows:
(i) ACCURATE DISCLOSURE. To the best knowledge of AutoNation
and the Selling Shareholder, the representations and warranties of the
Company contained in Section 1(a) hereof are true and correct. At the
respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any International
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ii) AUTHORIZATION OF AGREEMENTS. Each of AutoNation and the
Selling Shareholder has the full right, power and authority to enter
into this Agreement and the U.S. Purchase Agreement and to sell,
transfer and deliver the Securities.
(iii) GOOD AND MARKETABLE TITLE. The Selling Shareholder has
and will at the Closing Time and, if any Option Securities are
purchased, on the Date of Delivery have good and marketable title to
the Securities to be sold by the Selling Shareholder hereunder, free
and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Securities and payment of the
purchase price therefor as herein contemplated, assuming each such
Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from the Selling Shareholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
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<PAGE> 17
(iv) ABSENCE OF MANIPULATION. Each of AutoNation and the
Selling Shareholder has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(v) ABSENCE OF DEFAULTS AND CONFLICTS. Neither AutoNation,
the Selling Shareholder nor any of their subsidiaries is in violation
of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to
which AutoNation, the Selling Shareholder or any of their subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the property or assets of AutoNation, the Selling Shareholder or
any of their subsidiaries is subject (collectively, "the
AutoNation/Selling Shareholder Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement and the U.S.
Purchase Agreement and the consummation of the transactions
contemplated in this Agreement, in the U.S. Purchase Agreement, and in
the Registration Statement (including the sale and delivery of the
Securities) and compliance by AutoNation and the Selling Shareholder
with their obligations under this Agreement and the U.S. Purchase
Agreement have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of AutoNation and the Selling Shareholder or any subsidiary
pursuant to, the AutoNation/Selling Shareholder Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of each of AutoNation and the
Selling Shareholder or any subsidiary or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over AutoNation, the Selling Shareholder or any of their
subsidiaries or any of their assets, properties or operations.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, is necessary or required for the performance by AutoNation and
the Selling Shareholder of their respective obligations hereunder, in
connection with the offering or sale of the Securities under this
Agreement and the U.S. Purchase Agreement or the consummation of the
transactions contemplated by this Agreement and the U.S. Purchase
Agreement, except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations and foreign or
state securities or blue sky laws.
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<PAGE> 18
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of
90 days from the date of the Prospectuses, neither AutoNation nor the
Selling Shareholder will, without the prior written consent of the
Global Coordinator, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock
or the Company's Class B Common Stock, par value $0.01 per share (the
"Class B Common Stock") or any securities convertible into or
exercisable or exchangeable for Common Stock and/or Class B Common
Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of
the Common Stock and/or the Class B Common Stock, whether any such
swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of such Stock or such other securities, in cash or
otherwise.
(viii) NO ASSOCIATION WITH NASD. Neither AutoNation, the
Selling Shareholder nor any of their affiliates (within the meaning of
NASD Conduct Rule 2720(b)(1)(a)) directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under
common control with, or is an associated person (within the meaning of
Article I, Section 1(q) of the By-laws of the National Association of
Securities Dealers, Inc.) of, any member firm of the National
Association of Securities Dealers, Inc.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Company, AutoNation, the Selling Shareholder or any of the Company's
subsidiaries delivered to the Global Coordinator, the Lead Managers, or to
counsel for the International Managers shall be deemed a representation and
warranty by the Company, AutoNation or the Selling Shareholder, as the case may
be, to each International Manager as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO INTERNATIONAL MANAGERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Selling Shareholder agrees to sell to each International Manager,
severally and not jointly, and each International Manager, severally and not
jointly, agrees to purchase from the Selling Shareholder, at the price per
share set forth in Schedule B, the number of Initial International Securities
set forth in Schedule A opposite the name of such International Manager, plus
any additional number of Initial International Securities which such
International Manager may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Selling Shareholder hereby grants an option to
the International Managers, severally and not jointly, to purchase up to an
additional 2,432,500 shares of Common Stock at the price per share set forth in
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Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial International Securities but
not payable on the International Option Securities. The option hereby granted
will expire 30 days after the date hereof and may be exercised in whole or in
part from time to time only for the purpose of covering over-allotments which
may be made in connection with the offering and distribution of the Initial
International Securities upon notice by the Global Coordinator to the Company
and the Selling Shareholder setting forth the number of International Option
Securities as to which the several International Managers are then exercising
the option and the time and date of payment and delivery for such International
Option Securities. Any such time and date of delivery for the Option Securities
(a "Date of Delivery") shall be determined by the Global Coordinator, but shall
not be later than seven full business days after the exercise of said option,
nor in any event prior to the Closing Time, as hereinafter defined. If the
option is exercised as to all or any portion of the International Option
Securities, each of the International Managers, acting severally and not
jointly, will purchase that proportion of the total number of International
Option Securities then being purchased which the number of Initial
International Securities set forth in Schedule A opposite the name of such
International Manager bears to the total number of Initial International
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York
10004, or at such other place as shall be agreed upon by the Global Coordinator
and the Company and the Selling Shareholder, at 9:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any
given day) business day after the date hereof (unless postponed in accordance
with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Global Coordinator
and the Company and the Selling Shareholder (such time and date of payment and
delivery being herein called "Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company and the Selling Shareholder.
Payment shall be made to the Selling Shareholder by wire transfer of
immediately available funds to a bank account designated by the Selling
Shareholder, against delivery to the Lead Managers for the respective accounts
of the International Managers of certificates for the International Securities
to be purchased by them. It is understood that each International Manager has
authorized the Lead Managers, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Initial International
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Securities and the International Option Securities, if any, which it has agreed
to purchase. Merrill Lynch, individually and not as representative of the
International Managers, may (but shall not be obligated to) make payment of the
purchase price for the Initial International Securities or the International
Option Securities, if any, to be purchased by any International Manager whose
funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such
International Manager from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial International Securities and the International Option Securities, if
any, will be made available for examination and packaging by the Lead Managers
in The City of New York not later than 10:00 A.M. (Eastern time) on the
business day prior to the Closing Time or the relevant Date of Delivery, as the
case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
International Manager as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator as soon as practicable, and confirm the notice
in writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii)
of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectuses or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to
Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment
to the Registration Statement (including any filing under Rule
462(b)), any Term Sheet or any amendment, supplement or revision to
either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectuses, will furnish the
Global Coordinator with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global
Coordinator or counsel for the International Managers shall reasonably
object.
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<PAGE> 21
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will deliver to the Lead Managers and counsel for the
International Managers, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the Lead Managers, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
International Managers. The copies of the Registration Statement and
each amendment thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to
each International Manager, without charge, as many copies of each
preliminary prospectus as such International Manager reasonably
requested, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to
each International Manager, without charge, during the period when the
International Prospectus is required to be delivered under the 1933
Act or the Securities Exchange Act of 1934 (the "1934 Act"), such
number of copies of the International Prospectus (as amended or
supplemented) as such International Manager may reasonably request.
The International Prospectus and any amendments or supplements thereto
furnished to the International Managers will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the U.S. Purchase Agreement and in the
Prospectuses. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the International Managers or
for the Company, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement any Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations, the
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<PAGE> 22
Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the
Company will furnish to the International Managers such number of
copies of such amendment or supplement as the International Managers
may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the International Managers, to qualify
the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions (domestic or foreign) as
the Global Coordinator may designate and to maintain such
qualifications in effect for a period of not less than one year from
the later of the effective date of the Registration Statement and any
Rule 462(b) Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in effect
for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) LISTING. The Company will use its best efforts to effect
the listing of the Securities on the New York Stock Exchange (the
"NYSE").
(i) RESTRICTION ON SALE OF SECURITIES. During a period of 90
days from the date of the Prospectuses, the Company will not, without
the prior written consent of the Global Coordinator, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or the Company's Class B Common
Stock, par value $0.01 per share (the "Class B Common Stock") or any
securities convertible into or exercisable or exchangeable for Common
Stock and/or Class B Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock and/or the Class B Common
Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of such Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to (a) shares of Common Stock issued to a third party as
consideration for the Company's acquisition from such third party of a
non-hazardous solid waste business and (b) options to purchase shares
of Common Stock granted under the Company's 1998 Stock Option Plan.
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<PAGE> 23
(j) REPORTING REQUIREMENTS. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required
by the 1934 Act and the rules and regulations of the Commission
thereunder.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company, AutoNation
and the Selling Shareholder will pay or cause to be paid all expenses incident
to the performance of their obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, any Agreement among Underwriters and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters and the transfer of
the Securities between the International Managers and the U.S. Underwriters,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the NASD of the terms of the sale of the
Securities and (x) the fees and expenses incurred in connection with the
listing of the Securities on the NYSE.
(b) EXPENSES OF AUTONATION AND THE SELLING SHAREHOLDER. AutoNation and
the Selling Shareholder will pay or cause to be paid all expenses incident to
the performance of their obligations under, and the consummation of the
transactions contemplated by, this Agreement, including (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the Underwriters, and their transfer between the Underwriters
pursuant to an agreement between such Underwriters, and (ii) the fees and
disbursements of its counsel and accountants.
(c) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company, AutoNation and the Selling Shareholder shall reimburse the
International Managers for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
International Managers.
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<PAGE> 24
(d) ALLOCATION OF EXPENSES. The provisions of this Section shall not
affect any agreement that the Company, AutoNation and the Selling Shareholder
may make for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF INTERNATIONAL MANAGERS' OBLIGATIONS. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company, AutoNation and
the Selling Shareholder contained in Section 1 hereof or in certificates of any
officer of the Company or any subsidiary of the Company or on behalf of
AutoNation or the Selling Shareholder delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has
become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A)
or, if the Company has elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule
424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Lead
Managers shall have received the opinion, dated as of Closing Time, of
Akerman, Senterfitt & Eidson, P.A., counsel for the Company, in form
and substance reasonably satisfactory to counsel for the International
Managers, together with signed or reproduced copies of such letter for
each of the other International Managers to the effect set forth in
Exhibit A-1 hereto and to such further effect as counsel to the
International Managers may reasonably request, based upon events
occurring or information discovered after the date hereof.
(c) OPINION OF COUNSEL FOR AUTONATION AND THE SELLING
SHAREHOLDER. At Closing Time, the Lead Managers shall have received
the favorable opinion, dated as of Closing Time, of Akerman,
Senterfitt & Eidson, P.A., counsel for AutoNation and the Selling
Shareholder and of Primmer & Piper, P.C., Vermont counsel for the
Selling Shareholder, in form and substance satisfactory to counsel for
the International Managers, together with signed or reproduced copies
of such letter for each of the other International Managers to the
effect set forth in Exhibits A-1 and A-2, respectively, hereto and to
such further effect as counsel to the International Managers may
reasonably request.
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(d) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. At Closing
Time, the Lead Managers shall have received the favorable opinion,
dated as of Closing Time, of Fried, Frank, Harris, Shriver & Jacobson,
counsel for the International Managers, together with signed or
reproduced copies of such letter for each of the other International
Managers with respect to the matters pertaining to the Company set
forth in clauses (i), (ii), (vi) through (viii), inclusive, (ix), (xi)
(solely as to the information in the Prospectus under "Description of
Capital Stock--Common Stock") and (xviii) and the matters set forth in
the penultimate paragraph of Exhibit A hereto. In giving such opinion
such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the
federal law of the United States and the General Corporation Law of
the State of Delaware, upon the opinions of counsel satisfactory to
the Lead Managers which may include counsel to the Company. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(e) COMPANY OFFICERS' CERTIFICATE. At Closing Time, there
shall not have been, since the date hereof or since the respective
dates as of which information is given in the Prospectuses, any
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Lead Managers
shall have received a certificate of the Chief Executive Officer, the
President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section
1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of such officers, are
contemplated by the Commission.
(f) AUTONATION AND SELLING SHAREHOLDER OFFICERS'
CERTIFICATES. At Closing Time the Lead Managers shall have received a
certificate of a Co-Chief Executive Officer, the President or a Vice
President of each of AutoNation and the Selling Shareholder, each
dated as of Closing Time, to the effect that (i) the representations
and warranties in Section 1(b) hereof are true and correct with the
same force and effect as though expressly made at and as of Closing
Time, and (ii) AutoNation or the Selling Shareholder, as the case may
be, has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time.
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(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution
of this Agreement, the Lead Managers shall have received from Arthur
Andersen LLP a letter dated such date, in form and substance
satisfactory to the Lead Managers, together with signed or reproduced
copies of such letter for each of the other International Managers
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectuses.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the Lead
Managers shall have received from Arthur Andersen LLP a letter, dated
as of Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (g) of this
Section, except that the specified date referred to shall be a date
not more than three business days prior to Closing Time.
(i) APPROVAL OF LISTING. At Closing Time, the Securities
shall have been approved for listing on the NYSE, subject only to
official notice of issuance.
(j) NO OBJECTION. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the
Lead Managers shall have received an agreement substantially in the
form of Exhibit B hereto signed by AutoNation, the Selling Shareholder
and the persons listed on Schedule C hereto.
(l) PURCHASE OF INITIAL U.S. SECURITIES. Contemporaneously
with the purchase by the International Managers of the Initial
International Securities under this Agreement, the U.S. Underwriters
shall have purchased the Initial U.S. Securities under the U.S.
Purchase Agreement.
(m) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the International Managers shall have been
furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company, AutoNation and the Selling
Shareholder in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to
the Lead Managers and counsel for the International Managers.
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<PAGE> 27
(n) CONDITIONS TO PURCHASE OF INTERNATIONAL OPTION
SECURITIES. In the event that the International Managers exercise
their option provided in Section 2(b) hereof to purchase all or any
portion of the International Option Securities, the representations
and warranties of the Company, AutoNation and the Selling Shareholder
contained herein and the statements in any certificates furnished by
the Company, any subsidiary of the Company, AutoNation or the Selling
Shareholder hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Lead Managers
shall have received:
(i) COMPANY OFFICERS' CERTIFICATE. A certificate, dated
such Date of Delivery, of the Chief Executive
Officer, the President or a Vice President of the
Company and of the chief financial or chief
accounting officer of the Company confirming that
the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and
correct as of such Date of Delivery.
(ii) AUTONATION AND SELLING SHAREHOLDER OFFICERS'
CERTIFICATES. A certificate, dated such Date of
Delivery, of a Co-Chief Executive Officer, the
President or a Vice President of each of AutoNation
and the Selling Shareholder confirming that the
certificates delivered at the Closing Time pursuant
to Section 5(f) hereof remains true and correct as
of such Date of Delivery.
(iii) OPINION OF COUNSEL FOR COMPANY. The opinion of
Akerman, Senterfitt & Eidson, P.A., counsel for the
Company, in form and substance reasonably
satisfactory to counsel for the International
Managers, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the
opinion required by Section 5(b) hereof.
(iv) OPINION OF COUNSEL FOR AUTONATION AND THE SELLING
SHAREHOLDER. The opinion of Akerman, Senterfitt &
Eidson, P.A., counsel for AutoNation and the Selling
Shareholder and of Primmer & Piper, P.C., Vermont
counsel for the Selling Shareholder, in form and
substance reasonably satisfactory to counsel for the
International Managers, dated such Date of Delivery,
relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(c)
hereof.
(v) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. The
favorable opinion of Fried, Frank, Harris, Shriver &
Jacobson, counsel for the International Managers,
dated such Date of Delivery, relating to the
International Option Securities to be purchased on
such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(d)
hereof.
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<PAGE> 28
(vi) BRING-DOWN COMFORT LETTER. A letter from Arthur
Andersen LLP, in form and substance satisfactory to
the Lead Managers and dated such Date of Delivery,
substantially in the same form and substance as the
letter furnished to the Lead Managers pursuant to
Section 5(h) hereof, except that the "specified
date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days
prior to such Date of Delivery.
(o) TERMINATION OF AGREEMENT. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of International Option Securities on a Date of Delivery
which is after the Closing Time, the obligations of the several
International Managers to purchase the relevant Option Securities, may
be terminated by the Lead Managers by notice to the Company at any
time at or prior to Closing Time or such Date of Delivery, as the case
may be, and such termination shall be without liability of any party
to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS. The Company, AutoNation
and the Selling Shareholder, jointly and severally, agree to indemnify and hold
harmless each International Manager and each person, if any, who controls any
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
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(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND THE SELLING
SHAREHOLDER. Each International Manager severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
AutoNation, each person, if any, who controls AutoNation within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the Selling
Shareholder and each person, if any, who controls the Selling Shareholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the International Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the International
Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
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<PAGE> 30
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a) (ii) or (iii) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The provisions
of this Section shall not affect any agreement among the Company, AutoNation
and the Selling Shareholder with respect to indemnification.
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<PAGE> 31
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, AutoNation and the Selling Shareholder on the one hand and the
International Managers on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, AutoNation and the Selling Shareholder on
the one hand and of the International Managers on the other hand in connection
with the statements or omissions, which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company, AutoNation and the
Selling Shareholder on the one hand and the International Managers on the other
hand in connection with the offering of the International Securities pursuant
to this Agreement shall be deemed to be in the same respective proportions as
the total net proceeds from the offering of the International Securities
pursuant to this Agreement (before deducting expenses) received by the Company,
AutoNation and the Selling Shareholder and the total underwriting discount
received by the International Managers, in each case as set forth on the cover
of the International Prospectus, or, if Rule 434 is used, the corresponding
location on the Term Sheet, bear to the aggregate initial public offering price
of the International Securities as set forth on such cover.
The relative fault of the Company, AutoNation and the Selling
Shareholder on the one hand and the International Managers on the other hand
shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, AutoNation or the Selling Shareholder or by the International Managers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, AutoNation, the Selling Shareholder and the International
Managers agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by pro rata allocation (even if the
International Managers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
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<PAGE> 32
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Manager has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company, AutoNation or the Selling Shareholder within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company, AutoNation or the Selling Shareholder,
as the case may be. The International Managers' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number
of Initial International Securities set forth opposite their respective names
in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among
the Company, AutoNation and the Selling Shareholder with respect to
contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries, AutoNation or the Selling Shareholder submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any International Manager or controlling
person, or by or on behalf of the Company, AutoNation or the Selling
Shareholder, and shall survive delivery of the Securities to the International
Managers.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Lead Managers may terminate this
Agreement, by notice to the Company, AutoNation and the Selling Shareholder, at
any time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the International Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
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<PAGE> 33
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Lead Managers, impracticable to
market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission, or the NYSE, or if trading generally on
the American Stock Exchange or the NYSE or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE INTERNATIONAL MANAGERS. If
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Lead Managers
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Lead Managers shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of International Securities to be purchased on such
date, each of the non-defaulting International Managers shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of International Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after
the Closing Time, the obligation of the International Managers to
purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
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<PAGE> 34
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the International Managers to purchase and the Selling
Shareholder to sell the relevant International Option Securities, as the case
may be, either the Lead Managers or the Selling Shareholder shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents
or arrangements. As used herein, the term " International Manager" includes any
person substituted for a International Manager under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at Ropemaker
Place, 25 Ropemaker Street, London EC2Y 9LY, attention of the Lead Managers;
with a copy to Valerie Ford Jacob, Esq., Fried, Frank, Harris, Shriver &
Jacobson, One New York Plaza, New York, New York 10004; and notices to the
Company shall be directed to it at Republic Services, Inc., 110 S.E. Sixth
Street, Fort Lauderdale, Florida 33301, attention of David A. Barclay, General
Counsel; with a copy to Jonathan L. Awner, Esq., Akerman, Senterfitt & Eidson,
P.A., One S.E. Third Avenue, Miami, Florida 33131; notices to AutoNation shall
be directed to it at AutoNation, Inc., 110 S.E. Sixth Street, Fort Lauderdale,
Florida 33301, attention of James O. Cole with a copy to Jonathan L. Awner,
Esq., Akerman, Senterfitt & Eidson, P.A.; and notices to the Selling
Shareholder shall be directed to it at AutoNation Insurance Company, Inc., 76
St. Paul Street, Suite 501, Burlington, Vermont 05401, attention of Guy F.
Ragosta with a copy to Jonathan L. Awner, Esq., Akerman, Senterfitt & Eidson,
P.A.
SECTION 12. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the International Managers, the Company, AutoNation and the
Selling Shareholder and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the International Managers, the
Company, AutoNation and the Selling Shareholder and their respective successors
and the controlling persons and officers and directors referred to in Sections
6 and 7 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the International Managers
and the Company, AutoNation and the Selling Shareholder and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Securities from any International Manager shall
be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
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<PAGE> 35
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
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<PAGE> 36
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company, AutoNation and the Selling
Shareholder a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the International Managers,
the Company, AutoNation and the Selling Shareholder in accordance with its
terms.
Very truly yours,
AUTONATION, INC.
By /s/ James O. Cole
---------------------------------------
Title: Senior Vice President,
General Counsel & Secretary
AUTONATION INSURANCE
COMPANY, INC.
By /s/ Guy Ragosta
---------------------------------------
Title: Vice President
REPUBLIC SERVICES, INC.
By /s/ David Barclay
---------------------------------------
Title: Senior Vice President &
General Counsel
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<PAGE> 37
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
DEUTSCHE BANK AG LONDON
BEAR, STEARNS INTERNATIONAL LIMITED
CIBC OPPENHEIMER INTERNATIONAL LTD.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
By: MERRILL LYNCH INTERNATIONAL
By /s/ Michael L. Santini
---------------------------------------
Authorized Signatory
For themselves and as Lead Managers of the other International Managers named
in Schedule A hereto
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<PAGE> 38
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial International
Name of International Manager Securities
- ----------------------------- ---------------------
<S> <C>
Merrill Lynch International............................................................. 4,000,000
Donaldson, Lufkin & Jenrette International.............................................. 4,000,000
Deutsche Bank AG London................................................................. 4,000,000
Bear, Stearns International Limited..................................................... 1,600,000
CIBC Oppenheimer International Ltd. .................................................... 1,600,000
Credit Suisse First Boston (Europe) Limited............................................. 1,600,000
Morgan Stanley & Co. International Limited.............................................. 1,600,000
Salomon Brothers International Limited.................................................. 1,600,000
----------
Total................................................................................... 20,000,000
==========
</TABLE>
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<PAGE> 39
SCHEDULE B
REPUBLIC SERVICES, INC.
20,000,000 Shares of Class A Common Stock
(Par Value $0.01 Per Share)
1. The initial public offering price per share for the International
Securities, determined as provided in said Section 2, shall be $16.875.
2. The purchase price per share for the International Securities to be
paid by the several International Managers shall be $16.325, being an amount
equal to the initial public offering price set forth above less $.55 per share;
provided that the purchase price per share for any International Option
Securities purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial International
Securities but not payable on the International Option Securities.
