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):
September 6, 2000
CLARK/BARDES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-24769 52-2103926
(State of incorporation) (Commission file number) (IRS employer
identification no.)
102 SOUTH WYNSTONE PARK DRIVE, #200
NORTH BARRINGTON, ILLINOIS 60010
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code:
(847) 304-5800
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 6, 2000, Clark/Bardes Holdings, Inc. ("CBH"), a Delaware
corporation, and Clark/Bardes Acquisition, Inc., ("CBA") a Delaware corporation
and wholly owned subsidiary of Clark/Bardes Holdings, Inc., consummated the
merger contemplated under the Agreement of Merger and Plan of Reorganization
(the "Agreement") by and among CBH, CBA, Compensation Resource Group, Inc.
("CRG"), a California corporation, and William MacDonald, Sr. ("MacDonald")
(collectively, the "Sellers"). The Agreement provides for, among other things,
the acquisition by CBH of the businesses and all of the stock of CRG for a
purchase price of approximately $25.3 million consisting of:
(i) a cash payment by wire transfer to the CRG shareholders Sellers
of $6.3 million;
(ii) the issuance by CBH of 596,463 shares of its common stock, par
value $.01 per share (the "Common Stock"), having an aggregate
value of $6.0 million based on the average closing price of the
Common Stock on September 5, 2000; and,
(iii) the assumption and repayment of approximately $13.0 million of
long-term debt.
The purchase price was determined by an arm's length negotiation among the
parties to the Agreement.
In connection with the Merger, MacDonald's employment agreement with CRG was
amended and restated to, among other things, terminate MacDonald's right to
receive a portion of future commissions on in-force policy premiums, which will
instead accrue to the benefit of CBA or its affiliates. In consideration for the
termination of Macdonald's right to the premiums, CBH made a loan to MacDonald
in the amount of $5.2 million, which loan will be forgiven or, in certain
circumstances, repaid.
CRG is an executive compensation and benefits organization providing services
related to the design, funding and administration of non-qualified plans. CRG is
headquartered in Los Angeles, California and has affiliate offices in eleven
other cities. Prior to the acquisition described above, there was no material
relationship between any of the Sellers and Clark/Bardes or any of its
affiliates, any directors or officers of Clark/Bardes, or any associate of any
such director or officer.
The $24.5 million cash portion of the purchase prices was funded by a borrowing
under CBI's existing credit facility with Bank One.
Coincident with the foregoing transaction, CBH will enter into a bonus
arrangement for certain key executives and employees of CRG. This arrangement
will provide for the payment of bonuses of up to $20 million if certain
stipulated financial objectives are achieved during the years ended December 31,
2003 to 2005.
ITEM 7. PRO FORMA FINANACIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENT OF BUSINESS ACQUIRED
The required audited Financial Statements will be filed by an
amendment not later than 60 days after the date that the initial
report on Form 8-K must be filed.
(b) PRO FORMA FINANCIAL INFORMATION
The required audited Financial Statements will be filed by an
amendment not later than 60 days after the date that the initial
report on Form 8-K must be filed.
(c) EXHIBITS
The following Exhibits are filed herewith:
Agreement of Merger and Plan of Reorganization, dated August 15, 2000, by
and among Clark/Bardes Holdings, Inc., Clark/Bardes Acquisition, Inc. and
Compensation Resource Group, Inc. and certain shareholders.
Employment Agreement, dated September 6, 2000, by and among Clark/Bardes,
Inc., and William L. MacDonald, Sr.
Promissory Note, dated September 6, 2000, by and among Clark/Bardes
Holdings, Inc. and William L. MacDonald, Sr.
Press Release.
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical fact included in the press
release attached hereto are forward-looking statements. Words such as
"anticipate," "estimate," "intend," and similar expressions included in such
press release as they relate to CBH or its management identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements are based on the beliefs of CBH's management as well as assumptions
made by and information currently available to CBH's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, including difficulties associated
with changes in tax legislation, dependence on key producers, CBH's dependence
on persistency of existing business, credit risk related to renewal revenue,
acquisition risks, competitive factors and pricing pressures, dependence on
certain insurance companies, changes in legal and regulatory requirements and
general economic conditions. Such statements reflect the current views of CBH's
management with respect to future events and are subject to these and other
risks, uncertainties and assumptions relating to the operations, results of
operations, growth strategy and liquidity of CBH. Should one or more of these
risks or uncertainties and assumptions relating to the operations, results of
operations, growth strategy and liquidity of CBH. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, expected
or projected. All subsequent written and oral forward-looking statements
attributable to CBH or persons acting on its behalf are expressly qualified in
their entirety by this paragraph.
SIGNATURE
CLARK/BARDES HOLDINGS, INC.
Date: September 11, 2000 /s/ Thomas M. Pyra
Thomas M. Pyra
Chief Operating Officer
and Chief Financial Officer
