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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) June 10, 1996
REPUBLIC ENVIRONMENTAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-25890 22-2769024
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1787 SENTRY PARK WEST
BUILDING 16, SUITE 400
BLUE BELL PENNSYLVANIA 19422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 283-4900
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With respect to each contract, agreement or other document referred to
herein and filed with the Securities and Exchange Commission (the "Commission")
as an exhibit to this report, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. Unless otherwise
indicated, all share information contained in this Form 8-K reflects a
two-for-one stock split by means of the issuance of a stock dividend of one
share of Republic Environmental Systems, Inc. ("RESI") common stock, $.01 par
value per share ("RESI Common Stock"), for each outstanding share of Common
Stock held of record on June 14, 1996 to be effected June 30, 1996 (the "Stock
Split").
ITEM 5. OTHER EVENTS.
Merger Agreements. On June 10, 1996, RESI, Republic/CSC Acquisition
Corporation ("CSC Merger Sub"), Republic/CSU Acquisition Corporation ("CSU
Merger Sub" and, together with CSC Merger Sub, the "Merger Subs"), Alliance
Holding Corporation ("Alliance"), Century Surety Company ("CSC") and Commercial
Surety Agency, Inc., d/b/a Century Surety Underwriters ("CSU" and, together
with CSC, the "Alliance Companies") entered into an Agreement and Plan of
Merger (the "Merger Agreement"), effective as of May 19, 1996, which provides
for (i) the merger of CSC Merger Sub, a Delaware corporation and wholly-owned
subsidiary of RESI, with and into CSC, an Ohio corporation and wholly-owned
subsidiary of Alliance (the "CSC Merger"), on the terms set forth in the Merger
Agreement and subject to obtaining certain stockholder and regulatory approvals
and other customary closing conditions, and (ii) the merger of CSU Merger Sub,
a Delaware corporation and wholly-owned subsidiary of RESI, with and into CSU,
an Ohio corporation and wholly-owned subsidiary of Alliance (the "CSU Merger"
and, together with the CSC Merger, the "Mergers"), on the terms set forth in
the Merger Agreement and subject to obtaining stockholder and certain
regulatory approvals and other customary closing conditions. Pursuant to the
Merger Agreement, CSC and CSU shall be the surviving corporations in the
Mergers resulting in CSC and CSU becoming wholly-owned subsidiaries of RESI.
At the effective time of the Mergers, all of the outstanding capital stock of
CSC and CSU shall be converted into the right to receive (i) an aggregate of
15,000,000 shares of Common Stock (the "Merger Shares"), (ii) warrants to
purchase an additional (a) 2,000,000 shares of Common Stock at $2.625 per
share, (b) 2,000,000 shares of Common Stock at $3.125 per share, and (c)
2,000,000 shares of Common Stock at $3.875 per share (collectively, the
"Alliance Warrants"), and (iii) a promissory note in the principal amount of
$4,000,000 (the "Note"). The Merger Agreement is attached hereto as Exhibit
10.1 and incorporated herein by reference for all purposes.
Stock Purchase Agreements. On June 10, 1996, RESI and H. Wayne
Huizenga entered into a Stock Purchase Agreement (the "Huizenga Purchase
Agreement"), which provides for Huizenga to purchase from Republic, for an
aggregate purchase price of $5,250,000, (i) an aggregate of 2,000,000 shares of
Common Stock (the "Huizenga Shares"), and (ii) warrants to purchase an
additional (a) 2,000,000 shares of Common Stock at $2.625 per share, (b)
2,000,000 shares of Common Stock at $3.125 per share, and (c) 2,000,000 shares
of Common Stock at $3.875 per share (collectively, the "Huizenga Warrants"), on
the terms set forth in the
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Huizenga Purchase Agreement and subject to obtaining stockholder and certain
regulatory approvals, including the expiration or early termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 ("HSR Act"), and other customary closing conditions. The Huizenga
Purchase Agreement is attached hereto as Exhibit 10.2 and incorporated herein
by reference for all purposes.
On June 10, 1996, RESI and MGD Holdings Ltd. ("MGD Holdings"), a
Bermuda corporation controlled by Mr. Michael DeGroote, entered into a Stock
Purchase Agreement (the "MGD Purchase Agreement" and, together with the
Huizenga Purchase Agreement, the "Purchase Agreements"), which provides for MGD
Holdings and its permitted assigns to purchase from RESI, for an aggregate
purchase price of $5,250,000, (i) an aggregate of 2,000,000 shares of Common
Stock (the "MGD Shares") and (ii) warrants to purchase an additional (a)
2,000,000 shares of Common Stock at $2.625 per share, (b) 2,000,000 shares of
Common Stock at $3.125 per share, and (c) 2,000,000 shares of Common Stock at
$3.875 per share (collectively, the "MGD Warrants" and, together with the
Merger Warrants and the Huizenga Warrants, the "Warrants"), on the terms set
forth in the MGD Purchase Agreement and subject to obtaining stockholder
approval and other customary closing conditions. The MGD Purchase Agreement is
attached hereto as Exhibit 10.3 and incorporated herein by reference for all
purposes. Mr. DeGroote is presently Republic's Chairman, Chief Executive
Officer, President and the beneficial owner of approximately 49.7% RESI Common
Stock.
The transactions contemplated by the Merger Agreement and the Purchase
Agreements may be collectively referred to herein as the "Combination."
Upon consummation of the Combination, Alliance will be the largest
stockholder of RESI and may effectively control the management and operations
of RESI. The following is a description of certain changes that will occur
with respect to RESI upon consummation of the Combination.
Change In Security Ownership Of Republic. Currently, Mr. DeGroote
beneficially owns 5,536,000 shares of RESI Common Stock (through MGD Holdings)
representing approximately 49.7% of the outstanding shares of RESI Common
Stock. Upon consummation of the Combination and assuming the exercise of all
of the Warrants in full at such time (but not the exercise of any other
outstanding options or warrants), and giving effect to the issuance of the
Merger Shares, the Huizenga Shares and the MGD Shares, Alliance and Mr.
DeGroote will beneficially own approximately 41.7% and 29.5%, respectively, of
the outstanding shares of RESI Common Stock. In addition, contemporaneously
with the consummation of the Combination, MGD Holdings will enter into a voting
agreement with Alliance (the "Voting Agreement") pursuant to which MGD
Holdings, for a period of two years commencing as of the date thereof, will
agree to vote all shares of RESI Common Stock held by it from time to time in
accordance with the recommendation of the management of Alliance. Accordingly,
upon execution of the Voting Agreement, Alliance will have the ability to
control the outcome of matters submitted to vote of the RESI stockholders,
including the election of directors.
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Change In The Composition Of The Republic Board Of Directors. In
connection with the Combination, the Board of Directors will be enlarged to
seven members, one present member of the Board of Directors, Michael J.
Occhionero, will resign, and Messrs. Edward F. Feighan, Craig L. Stout and
Harve A. Ferrill will be nominated by Alliance and elected to the RESI Board of
Directors and Mr. Richard C. Rochon will be nominated by Alliance upon the
recommendation of Mr. Huizenga and elected to the RESI Board of Directors.
Mr. Joseph E. LoConti, currently a director of RESI, is the Chairman of the
Board, President and controlling shareholder of Alliance. After consummation
of the Combination, Mr. LoConti will continue to serve as a director of RESI
and will also serve as Vice Chairman of the RESI Board of Directors.
Consequently, Messrs. LoConti, Feighan, Stout and Ferrill, if they vote
together, will have the ability to control most actions submitted to a vote of
the RESI Board of Directors.
ITEM 7. FINANCIAL INFORMATION AND EXHIBITS.
10.1 Agreement and Plan of Merger, dated as of May 19, 1996, by and
among RESI, CSC Merger Sub, CSU Merger Sub, Alliance, CSC and
CSU.
10.2 Stock Purchase Agreement, dated as of May 19, 1996, by and
between RESI and H. Wayne Huizenga.
10.3 Stock Purchase Agreement, dated as of May 19, 1996, by and
between RESI and MGD Holdings.
99.1 Press Release, dated June 18, 1996.
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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.
REPUBLIC ENVIRONMENTAL SYSTEMS, INC.
Date: June 26, 1996 /s/ Douglas R. Gowland
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Douglas R. Gowland
Vice President
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INDEX TO EXHIBITS
EXHIBIT
NUMBER
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10.1 Agreement and Plan of Merger, dated as of May 19, 1996,
by and among RESI, CSC Merger Sub, CSU Merger Sub,
Alliance, CSC and CSU.
10.2 Stock Purchase Agreement, dated as of May 19, 1996, by
and between RESI and H. Wayne Huizenga.
10.3 Stock Purchase Agreement, dated as of May 19, 1996, by
and between RESI and MGD Holdings.
99.1 Press Release, dated June 18, 1996.