SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[x] Preliminary Information Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5 (d) (2))
[ ] Definitive Information Statement
HARRELL HOSPITALITY GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant(s)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14c-
5(g) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
______________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
______________________
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11 (a) (2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
HARRELL HOSPITALITY GROUP, INC.
16475 DALLAS PARKWAY, SUITE 410
DALLAS, TEXAS 75248
INFORMATION STATEMENT
**WE ARE NOT ASKING FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY**
INTRODUCTION
This Information Statement is being furnished to the stockholders
of record of Harrell Hospitality Group, Inc. (the _Company_) as
of September, 2000, in connection with the adoption of the
Certificate of Amendment of Restated Certificate of Incorporation
(the _Certificate of Amendment_) by the written consent of the
holders of a majority interest of the Company's voting capital
stock consisting of the Company's outstanding Class A Common
Stock, $0.01 par value (the "Common Stock") and a five-for-one
stock split of the Company's Common Stock. On September 7, 2000
the Company's Board of Directors approved and recommended that
the Restated Certificate of Incorporation be amended in order to:
increase the number of authorized shares of the
Company's Class A Common Stock to 100,000,000 shares.
change the par value of the Class A Common Stock to
$.002 per share.
redesignate the Preferred Stock as Class A Preferred
Stock.
create a new class of preferred stock (Class B
Preferred Stock) with 10,000,000 authorized shares
issuable in series.
The Certificate of Amendment was approved by written consent on
September 13, 2000, of the stockholders owning a majority of the
outstanding Common Stock, and the Certificate of Amendment was
filed and accepted by the Delaware Secretary of State on
September 15, 2000 with a delaying provision that the amendment
will not become effective until October 23, 2000.
The elimination of the need for a special meeting of stockholders
to approve the Certificate of Amendment is made possible by
Section 228 of the Delaware General Corporate Law (the _DGCL_),
which provides that the written consent of the holders of
outstanding shares of voting stock, having not less than the
minimum number of votes which would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted, may be substituted for such
a special meeting. Pursuant to Section 242 of the DGCL, a
majority of the outstanding shares of voting stock entitled to
vote thereon is required in order to amend the Company's Restated
Certificate of Incorporation. In order to eliminate the costs
and time involved in holding a special meeting and in order to
effect the Certificate of Amendment as early as possible in order
to accomplish the purposes of the Company as hereafter described,
the Board of Directors of the Company voted to utilize the
written consent of the holders of a majority in interest of the
voting stock of the Company.
On September 1, 2000, the Company's Board of Directors
unanimously adopted a resolution authorizing and declaring a
five-to-one stock split out of authorized capital, which split
provides four additional shares of Common Stock for each
authorized share of Common Stock issued to common stockholders
who were stockholders of record at 12:01 a.m. September 1, 2000.
On September 13, 2000, following the stock split, there were
6,682,900 outstanding shares of Common Stock and approximately
694 holders of record of Common Stock. The approval of the
Certificate of Amendment requires the written consent of the
holders of a majority of the outstanding shares of the Common
Stock, and each share of the Common Stock was entitled to one
vote with respect of the approval of the Certificate of
Amendment. By written consent in lieu of a meeting, holders of
4,828,990 shares of the Common Stock, representing approximately
72.3% of the outstanding voting power, have approved the listed
corporate actions.
Under applicable federal securities laws, the Certificate of
Amendment cannot be effected until at least 20 calendar days
after this information statement is sent or given to the
stockholders of the Company. The approximate date this
information statement is first being sent or given to
stockholders is October 1, 2000.
CERTIFICATE OF AMENDMENT
In September, 2000, the Board of Directors approved, subject to
the approval of the Company's stockholders, the Certificate of
Amendment, which amends and/or adds certain provisions of the
Restated Certificate of Incorporation to:
increase the number of authorized shares of the
Company's Class A Common Stock to 100,000,000 shares.
change the par value of the Class A Common Stock to
$.002 per share.
redesignate the Preferred Stock as Class A Preferred
Stock.
create a new class of preferred stock (Class B
Preferred Stock) with 10,000,000 authorized shares
issuable in series.
A copy of the Certificate of Amendment is attached to this
document as Exhibit _A_.
EFFECT OF THE CERTIFICATE OF AMENDMENT
The Certificate of Amendment will increase the total number of
authorized shares of the Common Stock by an amount substantially
greater than that necessary to effect the stock split and will
also substantially increase the total number of authorized shares
of Preferred Stock by creating a new class of preferred stock
issuable in series.
RIGHTS OF ADDITIONAL STOCK
Each additional share of Common Stock authorized by the
Certificate of Amendment would have the same rights and
privileges as each share of Common Stock currently authorized or
outstanding. Each share of a series of Class B Preferred Stock
would have the rights, privileges and preferences as designated
by the Board of Directors for such series.
REASON FOR THE AMENDMENT
The amendment would increase the number of shares of common stock
that the Company is authorized to issue from 9,000,000 to
100,000,000 and would also create a new class of preferred stock
to be designated as "Class B Preferred Stock." The increase will
ensure that the Company continues to have additional shares
available for future issuances from time to time as approved by
the Board of Directors for any proper purpose, including
financing, mergers, acquisitions of other businesses, future
stock dividends or splits and issuances under stock options and
other incentive programs. The total number of shares of Class B
Preferred Stock that the Board of Directors shall have the
authority to issue is 10,000,000 shares, par value $.01 per
share. The creation of Class B Preferred Stock will enable the
Board of Directors to seek additional capitalization for the
Company with the flexibility to designate different series of
stock having different attributes such as dividend preferences,
conversion rights, or redemption rights. No further action or
authorization by the stockholders would be necessary prior to the
issuance of additional shares of the Common Stock or the issuance
or authorization of additional shares of the Class B Preferred
Stock unless required by the Restated Certificate of
Incorporation or by applicable law or regulation.
THE STOCK SPLIT
The Board of Directors believe that the stock split, by
increasing the number of issued and outstanding shares, may help
to obtain wider distribution and improved marketability of the
Common Stock over time.
Certificates representing shares of the Company's Common Stock
issued prior to September 1, 2000 (the "Stock Split Record Date")
will continue to represent the same number of shares of the
Company's stock as they did prior the Stock Split Record Date.
Each common stockholder will be entitled to receive four
additional shares of common stock for each share of common stock
held on such date. Distribution of the additional share
certificates is presently expected to occur in late October,
2000. Existing certificates will not be exchanged for new
certificates. Please do not return any certificates to the
Company or the Company's transfer agent.
The Company has been advised by legal counsel that under U.S.
federal income tax laws the receipt of additional shares of
common stock in the stock split will not constitute taxable
income to stockholders. In addition, the cost or other tax basis
to a stockholder of each old share held immediately before the
split will be divided equally among the corresponding five shares
held immediately after the split, and the holding period for the
five shares will include the period for which the corresponding
old share was held. The laws and jurisdiction other than the
United States may impose income taxes or other fees on the
receipt of additional shares resulting from the split.
Stockholders subject to such other laws should consult with their
own financial advisors for additional information.
If a stockholder elects to sell or purchase shares of the
Company's common stock following the stock split, stock transfer
taxes, if applicable, may be higher in a transaction involving an
equivalent aggregate market value, because of the greater number
of shares involved, and the brokerage commissions associated with
such activities may also be higher. Stockholders may wish to
determine from their brokers the taxes and commissions applicable
for the additional number of shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of
September 13, 2000, (i) the name of each current director of the
Company and each person or entity known to the Company to be the
beneficial owner of more than 5% of the Company's Class A Common
Stock, (ii) the number of shares each such director and 5%
beneficial owner and all officers and directors of the company as
a group, and (iii) the percent of outstanding Class A Common
Stock so owned by each such director, 5% beneficial owner and
management group:
Name and Address of Number of Shares Approximate
Beneficial Owner of Class A Common Percent of
Stock Beneficially Class
Owned as of
DIRECTORS: September 13, 2000
(1)
Paul L. Barham (2)
16475 Dallas Parkway 0 0
Suite 410
Dallas, Texas 75248
Norman L. Marks (3)
16475 Dallas Parkway 0 0
Suite 410
Dallas, Texas 75248
Geoffrey Dart
c/o Robert Edwards 0 0
Edwards & Associates
17060 Dallas Parkway
Suite 101
Dallas, Texas 75248
Gerard Thompson
4th Floor Nuffield 0 0
House
41-46 Picadilly
London, UK WIVONB
5% BENEFICIAL OWNERS:
Businesship 1,456,440 21.79%
International, Inc.
One Alhambra Plaza
Suite 1400
Coral Gables, Florida
33134
Barham Family 500,000 7.48%
Interests, Inc. 318,195 options
16475 Dallas Parkway (4)
Suite 410
Dallas, Texas 75248
Marks & Associates, 500,000 7.48%
Inc. 318,195 options
16475 Dallas Parkway (4)
Suite 410
Dallas, Texas 75248
The Estate of Wilson 822,850 (5) 12.31%
L. Harrell
7380 Pine Valley Road
Cummings, Georgia
30131
Merchant Capital 1,000,000 14.96%
Holdings, Ltd.
c/o Robert Edwards
Edwards & Associates
17060 Dallas Parkway
Suite 101
Dallas, Texas 75248
Cybertec Holdings, 550,000 8.22%
PLC
Rosedale House
Rosedale Road
Richmond Surrey, UK
TW 92 SZ
(1) Except as noted below, the individual listed has sole voting
and investment power.
(2) Paul L. Barham and his other family members own 500,000
shares through Barham Family Interests, Inc.
(3) Norman L. Marks and his other family members own 500,000
shares through Marks & Associates, Inc.
(4) Barham Family Interests, Inc. and Marks & Associates, Inc.
have informed the Company that each has an option to acquire
318,195 shares of Common stock from Businesship International,
Inc. that will automatically expire on September 30, 2001 if not
exercised.
(5) The 29,250 shares of Class A Common Stock owned by Charlene
Harrell, Wilson L. Harrell's widow, are included in the estates
beneficial ownership in the above table.
By Order of the Board of Directors,
Paul L. Barham, Chief Executive
Officer
Dallas, Texas
September 18, 2000
EXHIBIT _A_
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
HARRELL HOSPITALITY GROUP, INC.
Harrell Hospitality Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That, pursuant to the provisions of Section 141, 161
and 242 of the General Corporation Law of the State of Delaware,
the Board of Directors of the Company by an Unanimous Written
Consent dated as of September 7, 2000, did hereby adopt the
following resolutions:
RESOLVED, that it is hereby proposed and declared advisable
to amend the Restated Certificate of Incorporation of the
Company by changing Article Four thereof so that, as
amended, it shall read in its entirety as follows:
(a) The total number of shares of all classes of stock
which the corporation shall have authority to issue is
one hundred and eleven million (111,000,000) divided
into three classes as follows:
One hundred million (100,000,000) shares shall be
Class A common stock, $.002 par value per share
("Class A Common Stock"); and
One million (1,000,000) shares shall be Class A
preferred stock, $1.00 par value per share (the
"Class A Preferred Stock").
Ten million (10,000,000) shares shall be Class B
preferred stock, $.01 par value per share,
issuable in series (the "Class B Preferred
Stock").
(b) The Class A Preferred Stock shall be entitled to
receive dividends, out of any funds legally available
for that purpose, at the annual rate of ten percent
(10%) of the par value and no more, payable in
preference and priority to any dividends on the Class A
Common Stock or the Class B Preferred Stock, as the
Board of Directors may from time to time determine.
The right to dividends on the Class A Preferred Stock
is not cumulative. Except as otherwise required by
law, the Class A Preferred Stock shall have no voting
rights. The corporation, at the option of the Board of
Directors, may at any time redeem the whole, or from
time to time any part, of the outstanding Class A
Preferred Stock by paying in cash the par value per
share plus all dividends declared but unpaid. Such
Class A Preferred Stock shares are considered redeemed,
and dividends cease to accrue, upon notice mailed to
the last known address of the holder and the earlier of
(i) payment of the redemption price to the holder, or
(ii) deposit of the redemption price with a bank or
trust company with irrevocable instructions to pay the
holder the redemption price upon surrender of the
certificates evidencing the Class A Preferred Stock.
Upon liquidation of the corporation, the holders of any
outstanding shares Class A Preferred Stock shall be
entitled to receive an amount per share equal to the
par value thereof and no more, payable in preference
and priority to any amounts payable upon liquidation to
the holders of any outstanding Class A Common Stock or
of any Class B Preferred Stock.
(c) The Class B Preferred Stock may be issued in one
or more series as shall from time to time be created
and authorized to be issued by the Board of Directors.
The Board of Directors is hereby expressly authorized,
by resolution or resolutions from time to time adopted
providing for the issuance of Class B Preferred Stock,
to fix and determine, to the extent not fixed by the
provisions of this Article, the powers, designations,
relative rights, preferences, qualifications and
limitations of the shares of each series of Class B
Preferred Stock, including (but without limiting the
generality of the foregoing) any of the following:
(i) the distinctive name and any serial
designations;
(ii) the dividend rate and payment dates;
(iii) with respect to the declaration and
payment of dividend upon each series of
Class B Preferred Stock, whether such
dividends are to be cumulative or
noncumulative, preferred, subordinate or
equal to dividends declared and paid on
any other series of Class B Preferred
Stock or Class A Common Stock;
(iv) the number of shares of such series;
(v) the voting rights, if any, of such series;
(vi) the liquidation rights and preferences
relative to any other series of Class B
Preferred Stock or Class A Common Stock;
(vii) the redemption provisions, if any, with
respect to any series; or
(viii) any conversion, exchange, purchase or
other privileges to acquire shares of
any other series of Class B Preferred
Stock or Class A Common Stock.
Each share of each series of Class B Preferred Stock
shall have the same relative rights and be identical in
all respects with all other shares of the same Class B
Preferred Stock series. Notwithstanding anything in
this Article to the contrary, no shares of Class B
Preferred Stock shall have a dividend preference or
liquidation preference over the Class A Preferred
Stock.
RESOLVED, that the amendment proposed above be presented for
their consideration to the stockholders of the Company.
SECOND: That the holders of a majority of the outstanding stock
of the Company entitled to a vote on the foregoing proposed
amendment have signed and delivered to the Company a written
consent in accordance with Section 228 of the General Corporation
Law of the State of Delaware, and written notice has been given
as provided by Section 228(d).
THIRD: That the aforementioned amendment was duly adopted in
accordance with the applicable provisions of Section 242 of the
General Corporation Law of the State of Delaware.
FOURTH: This Certificate of Amendment of Restated Certificate
of Incorporation shall be effective as of October 23, 2000.
IN WITNESS WHEREOF, said Harrell Hospitality Group, Inc.,
has caused this certificate to be executed by Norman L. Marks,
its President, and attested to by Paul L. Barham, its Secretary,
this 13th day of September, 2000.
HARRELL HOSPITALITY GROUP, INC.
By: /s/ Norman L. Marks
Norman L. Marks, President
ATTEST:
By: /s/ Paul L. Barham
Paul L. Barham, Secretary
