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): June 25, 1999
HOLMES MICROSYSTEMS, INC.
(Exact Name of Registrant as Specified in Charter)
TEXAS 000-18257 91-1939829
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
57 West 200 South, Suite 310, Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (801) 269-9500
Item 1. Changes in Control of Registrant
(b) The Company is proposing to issue 3,000,000 post reverse split shares
to Kip Eardley, the president and sole director of the Company, for the
assumption of all of the Company's outstanding liabilities. The Company is
also proposing to reverse split the outstanding shares of common stock of the
Company at the rate of one share for each one hundred shares outstanding.
Thus, the total outstanding shares of common stock of the Company would be
reduced from 48,051,547 to approximately 480,515. Howard M. Oveson, the
controlling shareholder of the Company, has agreed to vote in favor of the
issuance of stock to Mr. Eardley and the reverse stock split. With the
effectiveness of the reverse split, and upon issuance of such shares to Mr.
Eardley, he would own approximately 86.2% of the outstanding common stock of
the Company and would assume control of the Company by virtue of his stock
ownership.
On June 25, 1999, the Company entered into a letter of intent with
Rascals Enterprises, Inc. ("Rascals"), a Delaware corporation which currently
operates three comedy clubs/restaurants in the States of New Jersey and
Florida. Rascals is controlled by Edward Rodriguez and Mark Magnusson. The
letter of intent proposes that after the proposed one-for-one hundred reverse
split of the outstanding common stock, the Company would issue 2,000,000 post
reverse-split shares to the shareholders of Rascals on a pro rata basis, that
Rascals would designate persons to be appointed as directors of the Company in
the place of the current sole director, and that the name of the Company would
be changed to Rascals Entertainment Companies, Inc. In addition, Mr. Eardley
has agreed to sell 2,920,000 of the 3,000,000 shares to be issued to him to
the principals of Rascals for $25,000 and not to sell the remaining 80,000
shares in the public market for a period of two years. Thus the shareholders
of Rascals would own 4,920,000 (approximately 89.77%) of the outstanding
shares of the Company and would assume control of the Company by virtue of
their stock ownership and their designation of new management.
The Company also would reserve up to 300,000 shares of its common stock
to issue to attorneys and consultants as compensation in the transaction with
Rascals. In addition, Mr. Oveson and Mr. Eardley would receive a portion of
these shares. These holders of these shares would have certain rights to have
such shares registered.
It is also anticipated that Mr. Oveson would sell up to 227,781 of the
post-split shares owned by him in a private transaction after the closing of
the transaction with Rascals for $25,000.
The transaction with Rascals is subject to the preparation and signing of
a definitive agreement which is intended to contain terms, conditions,
representations and warranties typical to a transaction of this nature, and
which will be subject to due diligence review of each company by the other
party. It is intended that the definitive agreement would terminate within
thirty days after signing if closing is not held within such period.
Item 5. Other Events
The Company is proposing to adopt Amended and Restated Articles of
Incorporation which would effect certain technical changes and would amend the
current Articles of Incorporation, as amended, as follows:
1. Article Four would be amended to effect the foregoing reverse
stock split, to eliminate the preferred shares, and to increase the number of
authorized shares of common stock from 49,000,000 to 50,000,000.
2. A new Article Ten would be added to permit the shareholders of the
Company to take action without a meeting.
The Company is proposing to hold a special meeting of shareholders to
approve adoption of the Amended and Restated Articles of Incorporation.
Item 7. Exhibits
Exhibit No. Description Page
3.1 Form of Amended and Restated Articles of Incorporation 3
10.1 Letter of Intent with Rascals dated June 25, 1999 8
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.
HOLMES MICROSYSTEMS, INC.
Date: June 28, 1999 /s/ Kip Eardley, President
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HOLMES MICROSYSTEMS, INC.
ARTICLE ONE
Holmes Microsystems, Inc. a Texas corporation (the "Corporation"),
pursuant to the provisions of Article 4.07 of the Texas Business Corporation
Act, hereby adopts the attached Amended and Restated Articles of Incorporation
that accurately copy the Articles of Incorporation of the Corporation and all
previous amendments thereto and further amend the Articles of Incorporation as
provided therein (these "Restated Articles"). These Restated Articles contain
no other change in any provision of the Articles of Incorporation.
ARTICLE TWO
The Articles of Incorporation of the Corporation are hereby amended by
these Restated Articles as follows:
(1) Article One is amended to change the name of the Corporation to
"Rascals Entertainment Companies, Inc."
(2) Article Four is amended to effect a one hundred-to-one reverse stock
split of the issued common stock, par value $.001 per share (the "Old Common
Stock"), of the Corporation, eliminating the preferred stock, and increasing
the number of shares of common stock from 49,000,000 to 50,000,000. Effective
as of the close of business on the date of filing these Restated Articles (the
"Effective Time"), the filing of these Restated Articles shall effect a
reverse stock split (the "Reverse Stock Split") pursuant to which each share
of Old Common Stock currently issued shall be reclassified and converted into
one-one hundredth of a share of common stock, par value $.001 per share (the
"New Common Stock"), of the Corporation, thereby reducing the number of issued
shares of Common Stock from 48,051,547 to approximately 480,515 (with any
fractional share equal to or greater than one-half being rounded up to the
nearest whole share and any fractional share less than one-half being rounded
down to the nearest whole share, except that for any shareholder who owns less
than one hundred shares of the Old Common Stock, he shall receive at least one
share of New Common Stock). Each stock certificate that prior to the Effective
Time represented shares of Old Common Stock shall, following the Effective
Time, represent the number of shares of New Common Stock into which such
shares of Old Common Stock shall have been converted.
(2) Article Seven of the original Articles of Incorporation is amended to
eliminate the names and addresses of the members of the Board of Directors in
place at the time the Articles of Incorporation of the Corporation were
previously adopted, and now reflects the names and addresses of the current
members of the Board of Directors of the Corporation.
(3) Articles Five and Six of the original Articles of Incorporation are
amended to affect certain technical changes, and Article Ten is added to the
Restated Articles to permit action by the shareholders without a meeting.
ARTICLE THREE
Each amendment made by these Restated Articles has been effected in
conformity with the provisions of the Texas Business Corporation Act. The
number of shares of Common Stock outstanding at the time these Restated
Articles were adopted was 48,051,547, and the number of shares of such Common
Stock entitled to vote on the Restated Articles as so amended was 48,051,547.
At a meeting held on the date these Restated Articles were filed, the
shareholders of the Corporation voted for and against the Restated Articles as
follows:
CLASS FOR AGAINST
Common Stock _______________ _________________
ARTICLE FOUR
These Restated Articles maintain the par value of the Common Stock at
$.001 per share and effect a reverse stock split of the Old Common Stock in
the ratio of one hundred-to-one. Accordingly, the stated capital of the
Corporation has been decreased from $48,051 to $480, with $47,571 being
transferred to the Corporation's capital surplus.
ARTICLE FIVE
The Articles of Incorporation and all of the amendments and supplements
thereto are hereby superseded by the attached Amended and Restated Articles of
Incorporation, which accurately copy the entire text thereof, as amended as
above set forth.
EXECUTED as of the ______ day of June 1999.
HOLMES MICROSYSTEMS, INC.
By Kip Eardley, President
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HOLMES MICROSYSTEMS, INC.
ARTICLE ONE
The name of the Corporation is Rascals Entertainment Companies, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under
the Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares of capital stock that the Corporation will
have authority to issue is 50,000,000, all of which will be shares of Common
Stock, having a par value of $.001 per share.
Effective as of the close of business on the date of filing these
Restated Articles (the "Effective Time"), the filing of these Restated
Articles shall effect a reverse stock split (the "Reverse Stock Split")
pursuant to which each share of common stock, par value $.001 per share (the
"Old Common Stock"), of the Corporation currently issued shall be reclassified
and converted into one-one hundredth of a share of common stock, par value
$.001 per share (the "New Common Stock"), of the Corporation, thereby reducing
the number of issued shares of Common Stock from 48,051,547 to approximately
480,515 (with any fractional share equal to or greater than one-half being
rounded up to the nearest whole share and any fractional share less than
one-half being rounded down to the nearest whole share, except that for any
shareholder who owns less than one hundred shares of the Old Common Stock, he
shall receive at least one share of New Common Stock). Each stock certificate
that prior to the Effective Time represented shares of Old Common Stock shall,
following the Effective Time, represent the number of shares of New Common
Stock into which such shares of Old Common Stock shall have been converted.
ARTICLE FIVE
The post office address of the Corporation's registered office is 2139
Stone Moss Lane, Grapevine, Texas 75051, and the name of its registered agent
at such address is Mark White.
ARTICLE SIX
The number of directors of the Corporation shall be specified or
determined in the manner provided in the Bylaws, and such number may from time
to time be increased or decreased in such manner as may be prescribed in the
Bylaws. The name and address of the current member of the Board of Directors
who will serve as such until the next annual meeting of shareholders or until
his successor is elected and qualified, is as follows: Kip Eardley, 5814
South 900 East, Salt Lake City, UT 84117.
ARTICLE SEVEN
To the fullest extent permitted by the laws of the State of Texas as the
same exist or may hereafter be amended, a director of the Corporation will not
be liable to the Corporation or its shareholders for monetary damages for an
act or omission in the director's capacity as a director. Any repeal or
modification of this Article will not increase the personal liability of any
director of the Corporation for any act or occurrence taking place before such
repeal or modification, or adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification. The provisions of this Article shall not be deemed to limit or
preclude indemnification of a director by the Corporation for any liability of
a director that has not been eliminated by the provisions of this Article.
ARTICLE EIGHT
The shareholders of the Corporation shall not have a preemptive right to
acquire additional, unissued or treasury shares of the Corporation, or
securities of the Corporation convertible into or carrying a right to
subscribe to or acquire shares.
ARTICLE NINE
The shareholders of the Corporation by this Article are hereby prohibited
from cumulatively voting their shares at any election for Directors.
ARTICLE TEN
Any action required or permitted by law, these Articles of Incorporation
or the Bylaws of the Corporation to be taken at a meeting of the shareholders
of the Corporation may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action
so taken, shall have been signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
Prompt notice of the taking of any action by shareholders without a
meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
EXECUTED as of the ____ day of June 1999.
By /s/ Kip Eardley, President
Holmes Microsystems, Inc.
EXHIBIT 10.1
HOLMES MICROSYSTEMS, INC.
57 West 200 South
Suite 310
Salt Lake City, Utah 84101
June 25, 1999
Edward Rodriguez, President
Rascals Enterprises, Inc.
Re: Proposed Exchange of capital shares of Holmes Microsystems, Inc., a Texas
corporation, ("Acquiror") for all of the outstanding shares of Rascals
Enterprises, Inc., a Delaware corporation, ("Acquiree").
Dear Mr. Rodriguez:
This letter will confirm the recent discussions we have had with you
relative to the proposed exchange of shares of the voting capital stock of
Acquiror for all of the issued and outstanding voting capital stock of
Acquiree which, among other things, would provide for the various matters set
forth below:
1. Acquiror would acquire all of the issued and outstanding voting
capital stock of Acquiree from the shareholders of Acquiree in exchange for
approximately 2,000,000 post-reverse split restricted shares of the $.001 par
value common stock of Acquiror ("Acquiror Common Stock"), all of which would
be delivered upon the closing of this transaction (the "Closing" or "Closing
Date"), with the condition that the exchange would be made with no more than
35 non-accredited Acquiree shareholders and the transaction would not
otherwise violate the provisions of the Securities Act of 1933, as amended,
(the "Securities Act") or any applicable state securities laws. You would
need to provide us with the names and addresses of the shareholders of
Acquiree as soon as possible. It is anticipated that the Closing Date would
be as soon as possible after the shareholders of Acquiror approve this
transaction. This exchange is intended to qualify as a tax-free transaction
under Section 351 and/or 368 of the Internal Revenue Code, and the shares of
Acquiror received by the Acquiree shareholders are expected to be received on
a tax-free basis. The shares to be issued by Acquiror would be "restricted
securities" as defined in Rule 144 under the Securities Act. An appropriate
legend would be placed on the certificates representing such shares, and stop
transfer orders placed against them. The specific form of the reorganization
under Section 351 is expected to be a "stock-for-stock" reorganization;
however, said form of reorganization shall be mutually determined by council
for the parties hereto.
2. In the event that Acquiror were to acquire less than 100% of the
outstanding shares of Acquiree, the number of shares to be issued at the
Closing would be reduced proportionately.
3. There are currently 48,051,547 shares of Acquiror Common Stock
outstanding. After a one for one hundred (1-for-100) reverse split, there
would be approximately 480,516 shares of Acquiror Common Stock outstanding,
excluding the issuance of 3,000,000 post reverse-split shares to the president
of Acquiror in connection with the settlement of existing debts of the
Acquiror. Upon Closing, Acquiror would issue approximately 2,000,000
post-reverse split restricted shares to the shareholders of Acquiree, and
Acquiree would become a wholly-owned or controlled subsidiary of Acquiror. It
is also anticipated that the Company would issue approximately 300,000 post
reverse-split shares to attorneys or other consultants prior to or at
Closing. After Closing the share ownership of Acquiror would be approximately
as follows:
Existing Shareholders of Acquiror 480,516 8.3%
Shares issued for debt settlement 3,000,000 51.9%
Existing Shareholders of Acquiree 2,000,000 34.6%
S-8 Shareholders 300,000 5.2%
TOTAL 5,780,516 100%
4. Subject to compliance with Rule 14f-1 of the Exchange Act, the
current officers and directors of Acquiror would submit their resignations as
officers and directors effective on the Closing Date and the new officers and
directors reasonably designated by Acquiree would be appointed by the Board of
Directors of Acquiror.
5. At Closing Acquiree would purchase 2,920,000 post reverse-split
restricted shares of the Acquiror from the president of the Company for
$25,000. The 80,000 remaining shares would be subject to a lock up
arrangement whereby such shares could not be sold into the public market for a
period of two years from the date of the definitive agreement.
6. After Closing it is anticipated that the principal shareholder of
the Company will offer for sale 227,781 post reverse-split shares for $25,000
in one or more private transactions.
7. Upon the signing of this Letter of Intent, Acquiror and Acquiree
will provide to each other full access to their books and records (excluding
proprietary information) and will furnish financial and operating data and
such other information with respect to their business and assets as may
reasonably be requested from time to time. If the proposed transaction is not
consummated, all parties shall keep confidential any information (unless
ascertainable from public filings or other public sources) obtained concerning
the other's operations, assets, and business.
8. Upon the execution by you and return to us of this Letter of
Intent, our counsel would prepare an Agreement and Plan of Reorganization (the
"Definitive Agreement") which would contain provisions in accord with this
Letter of Intent, together with such further appropriate terms and conditions
as legal counsel for each entity and the parties may mutually determine. The
Definitive Agreement shall be subject, in all respects, to the approval of the
respective Boards of Directors of Acquiror and Acquiree. Each of the parties
would be responsible for its own legal and other expenses in connection with
the proposed transaction, except that it is anticipated that the Acquiror
would issue up to 120,000 shares to its attorneys for services performed in
this transaction, which shares would be registered on Form S-8 as part of the
300,000 shares proposed to be registered on such form. The remaining 180,000
shares would be registered on such form as designated by Acquiree.
9. Except as set forth below in this Paragraph, if the Closing of
this transaction is not completed within thirty days of signing of the
Definitive Agreement (unless extended in writing signed by both parties), the
Definitive Agreement would terminate and the contemplated transactions would
be deemed abandoned.
10. Upon the execution by you and return to us of this Letter of
Intent, Acquiror would call a special meeting of the Shareholders, or obtain a
written consent, where management would recommend the: (a) the approval of a
one for one hundred (1-for-100) reverse stock split; and (b) the change of the
name of Acquiror to "Rascals Entertainment Companies, Inc., Inc.", or some
other name designated by Acquiree.
11. Prior to Closing Acquiree would provide the following: (a) a
complete description of its business; (b) background information for the
proposed new directors and officers; (c) a list of names, addresses, and
number of shares, warrants, and/or stock options owned as to each shareholder
of Acquiree; and (d) such other information as shall be reasonably requested
by counsel for Acquiror.
12. Prior to Closing, Acquiree would deliver certified financial
statements to Acquiror in form as required pursuant to Item 7(a) of Form 8-K.
13. At Closing Acquiror would have not more than $70,000 in
contingent liabilities as set forth in its financial statements, for which the
president of Acquiror would agree to personally indemnify Acquiree.
14. At Closing, Acquiror shall be in good standing as a corporation
under the laws of State of Texas, shall have filed all appropriate state and
federal tax returns, and paid the taxes appropriate thereto. Similarly,
Acquiree shall be in good standing as a corporation under the laws of the
State of Delaware, and shall have filed all appropriate state and federal tax
returns, and paid the taxes appropriate thereto.
15. Acquiree and its counsel would reasonably assist Acquiror's
counsel who would be responsible for the preparation of any required SEC
filings prior to Closing.
16. No party hereto shall release any information regarding the
transaction to the public or the media without at least 24-hour prior review
of the other party.
17. The parties hereto hereby agree to conduct their business in
accordance with the ordinary, usual and normal course of business heretofore
conducted by the companies. Thus, there may be no material adverse changes in
the business of any of the companies from the date hereof through the Closing
of this transaction.
18. This Letter of Intent may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. By execution of this Letter of Intent, both of the parties
represent and warrant that the parties whose signatures appear below were duly
authorized by the respective Boards of Directors for each company to execute
and deliver this Letter of Intent, and that the transactions contemplated
hereby have been authorized by the respective Boards of Directors.
20. The parties agree that from the date of this Letter of Intent
until the termination of this Letter of Intent or the termination of the
Definitive Agreement, if executed, neither party shall negotiate or enter into
a letter of intent or agreement with another person to consummate a
transaction similar to the one set forth in this Letter of Intent.
21. It is understood that the terms set forth in this Letter of
Intent may not constitute all of the major terms which would be included in
the Definitive Agreement, that the terms set forth herein are subject to
further discussion and negotiation, and that while this Letter of Intent
summarizes the various understandings which were reached between the parties,
this letter is not intended to create or constitute a legally binding
obligation between parties, except for the provisions of Paragraphs 7, 9, 16,
and 20.
If the foregoing accurately reflects our discussions, please execute and
return to the undersigned at least one fully executed copy of this Letter of
Intent. This Letter of Intent shall remain open for a period of five business
days from the date hereof. If this letter is not executed and returned to
Acquiror within such period, this Letter of Intent shall automatically expire.
ACQUIROR: Holmes Microsystems, Inc.
By: /s/ Kip Eardley, President
ACCEPTED AND AGREED TO THIS 28th DAY OF JUNE 1999.
ACQUIREE: Rascals Enterprises, Inc.
By: /s/ Edward Rodriguez, President
