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) JULY 2, 1997
HOMEOWNERS GROUP, INC.
(Exact name as specified in charter)
DELAWARE 0-17338 65-0033743
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 SAWGRASS CORPORATE PARKWAY, SUNRISE, FLORIDA 33325
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (954) 845-9100
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ITEM 5. OTHER EVENTS
On July 2, 1997, the Company and The Cross Country Group, Inc. entered into a
Third Amendment to the Agreement and Plan of Merger dated May 14, 1996 (the
"Merger Agreement"). Pursuant to this Third Amendment, the Merger Agreement will
remain in effect through July 31, 1997. The companies are currently engaged in
discussions in an attempt to agree to further modifications to the Merger
Agreement.
In conjunction with the Third Amendment to the Agreement and Plan of Merger, the
Company and Cross Country have also entered into a Second Amendment to Agreement
for Satisfaction of Judgment (the "Second Amendment"), pursuant to which a
certain Cross Country affiliate has extended the date through which the
affiliate has agreed, under certain conditions, to take no actions to collect on
its judgment, through July 31, 1997. Under the Second Amendment, Cross Country
has also agreed, under certain conditions, to accept the reduced amount of
approximately $2.7 million, plus interest, in full and complete satisfaction of
the judgment. One of the conditions of acceptance of such reduced amount is that
payment is made in full no later than the closing of the Merger Agreement or
July 31, 1997, whichever occurs first.
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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.
HOMEOWNERS GROUP, INC.
JULY 7, 1997 /s/ C. GREGORY MORRIS
(Date) -----------------------
C. Gregory Morris
Chief Financial Officer
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EXHIBITS
Exhibit 20.2 Third Amendment to Agreement and Plan of Merger
Exhibit 20.3 Second Amendment to Agreement for Satisfaction of Judgment
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EXHIBIT 20.2
THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment, dated as of the 1st day of July, 1997, is entered into by
and among The Cross Country Group, Inc. ("Parent"), CC Acquisition Corporation
("Merger Sub"), and Homeowners Group, Inc. (the "Company").
WHEREAS, Parent, CHGI, Acquisition Corporation, a wholly-owned subsidiary
of the Parent and the Company entered into an Agreement and Plan of Merger dated
as of May 14, 1996 (the "Merger Agreement");
WHEREAS, Parent, Merger Sub and the Company amended the Merger Agreement as
of October 31, 1996 (the "First Amendment") and again amended the Merger
Agreement as of January 31, 1997 (the "Second Amendment") (collectively, the
"Prior Amendments");
WHEREAS, the Company recently received Notices of Proposed Adjustment from
the Internal Revenue Service ("IRS") that could result in the disallowance of
approximately $20 million in losses previously claimed by the Company on its
federal income tax returns (the "Tax Contingency");
WHEREAS, Parent notified the Company that the Tax Contingency is a Company
Material Adverse Effect (as defined in the Merger Agreement) and that as a
result of such Company Material Adverse Effect, Parent and Merger Sub were not
willing to proceed with the Merger under the current terms of the Merger
Agreement; and
WHEREAS, The Company acknowledges that the Tax Contingency is a Company
Material Adverse Effect and the parties desire to further amend the Merger
Agreement to adequately reflect the impact of the Tax Contingency on the
Company.
NOW THEREFORE, in consideration of the premises and agreements contained
herein, Parent, Merger Sub and the Company agree as follows:
1. EFFECT ON MERGER AGREEMENT AND PRIOR AMENDMENTS.
The terms of this Amendment shall amend, modify, and supersede any contrary
or inconsistent terms in the Merger Agreement and Prior Amendments. Except
as modified
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by this Third Amendment, the terms of the Merger Agreement, as amended by
the Prior Amendments, shall remain unmodified and in full force and effect.
Except as otherwise indicated herein, all defined terms shall have the
meaning ascribed to them in the Merger Agreement.
2. FRANCHISE AMENDMENTS.
As a condition to the obligations of Parent and Merger Sub to consummate
the Merger, the Company shall have caused HMSI to enter into and execute a
Third Amendment to Affiliation Agreement, Second Amendment to Profit
Sharing Release and Second Amendment to Estoppel Agreement with each of
HMSI's Franchisees, upon terms and conditions satisfactory to Parent in its
sole discretion.
3. TAX CONTINGENCY.
Parent may designate one person as its representative, who shall be kept
fully informed by, and whose advice shall be conveyed to, legal counsel
retained by the Company to represent it in connection with the Tax
Contingency.
4. EXTENSION OF AGREEMENT FOR SATISFACTION OF JUDGMENT.
Contemporaneously with execution of this Third Amendment, the Company and
The Cross Country Group, L.L.C. shall enter into an Extension of Agreement
for Satisfaction of Judgment which shall provide for the agreement of The
Cross Country Group, L.L.C. to take no action with respect to realization
of its rights under the Agreement for Satisfaction of Judgment between
Homeowners Marketing Services, Inc. and The Cross Country Group, L.L.C., as
amended, prior to the earlier of: (a) July 31, 1997 or (b) termination of
Parent's obligations under the Merger Agreement, as amended by the Prior
Amendments and this Third Amendment.
5. TERMINATION AND ABANDONMENT.
In addition to and not in limitation of, the termination rights set forth
in the Merger Agreement, as amended by the Prior Amendments, the Merger
Agreement, as amended by the Prior Amendments and this Third Amendment
shall terminate if, on or before July 31, 1997 both (a) the Tax Contingency
shall not have been resolved to the satisfaction of Parent, and (b) the
Merger shall not have been consummated.
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IN WITNESS WHEREOF, each party has executed this Amendment by its duly
authorized representative on the date set forth below.
HOMEOWNERS GROUP, INC.
Date: 7/1/97 By: /s/ C. GREGORY MORRIS
-------------------------------
Name: C. Gregory Morris
Title: VP, Treas, CFO
HOMEOWNERS MARKETING
SERVICES, INC.
Date: 7/1/97 By: /s/ C. GREGORY MORRIS
-------------------------------
Name: C. Gregory Morris
Title: VP, Treas, CFO
THE CROSS COUNTRY GROUP,
L.L.C.
Date: By: /s/ HOWARD WOLK
-------------------------------
Name: Howard Wolk
Title: Manager
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EXHIBIT 20.3
SECOND AMENDMENT TO
AGREEMENT FOR SATISFACTION OF JUDGMENT
This Second Amendment to Agreement for Satisfaction of Judgment is entered
into as of this 1st day of July, 1997 by and among HOMEOWNERS GROUP, INC.
("HOMG"), HOMEOWNERS MARKETING SERVICES, INC. ("HMS") and THE CROSS COUNTRY
GROUP, L.L.C. ("CC").
WHEREAS, on October 31, 1996, CC, HOMG and HMS entered into an Agreement
for Satisfaction of Judgment (the "Agreement") for the satisfaction and release
of that certain judgment entered on December 20, 1995 in favor of Acceleration
National Insurance Company against HMS for the sum of $5,156,022 plus interest
and costs;
WHEREAS, on January 31, 1997, CC, HOMG and HMS entered into the First
Amendment to the Agreement; and
WHEREAS, CC, HOMG and HMS desire to further amend the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 2 of this Agreement is hereby deleted and replaced in its
entirety with the following:
CASH PAYMENT. CC, as assignee of the rights of ANIC, agrees to accept the
sum of $2,698,214.80 (the "Judgment Amount") plus interest at 10% per annum
since September 5, 1996, as provided in Section 8, plus interst at 10% per annum
on $4,100,000 from September 1, through September 4, 1996 (collectively, the
"Payoff Amount") in full and complete satisfaction of the Judgment on the
condition such payment is received by CC no later than the closing of the Merger
Agreement or July 31, 1997, whichever occurs first.
2. Section 5 of the Agreement is hereby deleted and replaced in its
entirety with the following:
FORBEARANCE OF COLLECTION EFFORTS. Unless sooner terminated pursuant to the
provisions of Section 7 of this Agreement, CC, as the assignee of the rights of
ANIC, will not undertake prior to July 31, 1997, any act to execute on the
Judgment, including the issuance or service of writs of attachment, garnishment
or execution from any court, or to obtain discovery in aid of execution from any
third party.
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3. Section 7 of the Agreement is hereby deleted and replaced in its
entirety with the following:
CONTINGENCIES AND TERMINATION. The obligations of CC, as the assignee of
ANIC, to accept the Payoff Amount in full satisfaction of the Judgment and to
forbear from any and all efforts to enforce the Judgment are contingent upon the
closing of the Merger Agreement. Sections 2 and 5 of this Agreement shall become
null, void, and of no further force or effect at the sole option of CC upon the
occurrence of any one of the following events:
(a) the Merger Agreement has not been closed on or before July 31,
1997;
(b) HOMG advises CC or either HOMG or CC publicly announces that the
Merger Agreement has been abandoned. HOMG further agrees to
directly notify CC within twenty-four hours should the Merger
Agreement be abandoned by HOMG for any reason;
(c) the stockholders of HOMG fail to approve and to authorize the
Merger Agreement;
(d) holders of more than 10% of HOMG's stock shall have claimed or
perfected apraisal rights;
(e) the failure of HMS and HMSI to execute and deliver to CC within
five (5) business days from the date of execution of this Second
Amendment, the appropriate UCC financing statements necessary to
grant a perfected security interest to CC in their assets, in
accordance with Section 16 of the Agreement and that certain
Security Agreement dated as of October 31, 1996, by and among CC,
HMS and HMSI; or
(f) HOMG or CC fails to obtain the approval of any government
regulatory body or agency from which approval of the Merger
Agreement is required prior to closing of the Merger Agreement.
If any of the foregoing events occur and CC elects to terminate its
agreements and commitments set forth in Section 2 and 5 of this Agreement, CC
shall promptly notify HOMG and HMS in writing of its decision to do so.
4. Section 10 of the Agreement is hereby deleted and replaced in its
entirety with the
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following:
MUTUAL RELEASE. At the closing of the Merger Agreement and upon receipt by
CC of either the Payoff Amount (if such payment occurs on or before July 31,
1997) or the Judgment, as reduced by the Refund Claim (if such payment occurs
after July 31, 1997), CC, HOMG and HMS will execute and exchange a mutual
release in the form attached to the Agreement as Exhibit 1. Within 30 days after
receiving such payment, CC shall file a Satisfaction of Judgment for each action
pending in: (i) the Circuit Court of Broward County, Florida, styled HOMEOWNERS
MARKETING SERVICES, INC. V. ACCELERATION NATIONAL INSURANCE COMPANY, Case No.
96-001110 CACA (12) (the "Domestication Action"); and (ii) the Court of Common
Pleas of Franklin County, Ohio, styled ACCELERATION NATIONAL INSURANCE COMPANY
V. HOMEOWNERS MARKETING SERVICES, INC. ET AL., Consolidated Case Nos.
91CVH11-9404, 94CVH05-3083 (the "Ohio Action"), and be responsible for
dismissing with prejudice each of the following actions: (i) the Ohio Action;
(ii) the Domestication Action; (iii) that certain action pending in the Circuit
Court of Broward County, Florida, styled ACCELERATION NATIONAL INSURANCE COMPANY
V. HOMEOWNERS MARKETING SERVICES, INC., ET AL., Case No. 96-001152 (18) and (iv)
that certain action pending in the Circuit Court of Dade County, Florida, styled
ACCELERATION NATIONAL INSURANCE COMPANY V. HOMEOWNERS MARKETING SERVICES, INC.
Case No. 96-00850 (CA) 23.
5. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and same instrument.
6. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts without
giving effect to principles of conflicts of laws. The parties further agree that
venue for any action shall be in the Suffolk County Superior court, Commonwealth
of Massachusetts.
7. NO OTHER MODIFICATIONS. Except as modified by this Agreement, the terms
of the Agreement shall remain unmodified and in full force and effect.
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IN WITNESS WHEREOF, each party has executed this Third Amendment as of the
first date set forth above.
THE CROSS COUNTRY GROUP, INC.
By: /s/ HOWARD WOLK
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Name: Howard Wolk
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Title: V.P.
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CC ACQUISITION CORPORATION
By: /s/ HOWARD WOLK
------------------------------------
Name: Howard Wolk
----------------------------------
Title: V.P.
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HOMEOWNERS GROUP, INC.
By: /s/ C. GREGORY MORRIS
------------------------------------
Name: C. Gregory Morris
----------------------------------
Title: VP, Treas., CFO
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