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
March 11, 1997
(Date of Report)
Famous Sam's Group, Inc.
(Exact Name of Registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-24736 88-0361701
(Commission File Number) (IRS Employer Identification Number)
4221 E. Pontatoc Canyon Dr., Tucson, AZ 85718
(Address of principal executive offices including zip code)
(520) 577-6611
(Registrant's telephone number including area code)
Not Applicable.
(Former name or former address, if changed since last report)
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Item 1. Change in Control of Registrant.
See Item 2, below.
Item 2. Acquisition or Disposition of Assets.
On March 11, 1997 (the "Closing Date"), Registrant, Famous Sam's Group,
Inc., executed, delivered and closed under a Recision, Release and Final
Settlement Agreement (the "Recision Agreement") with Famous Sam's Franchise
Corporation ("FSFC") and the former shareholders of FSFC, whereby
Registrant returned to the Shareholders all of the outstanding proprietary
interest of its sole wholly-owned subsidiary, FSFC, in exchange for a
release of any and all liabilities between Registrant, FSFC and the
Shareholders. The effect of the Recision Agreement was the recision of the
acquisition of FSFC from the Shareholders on July 24, 1996, as if the
acquisition had never been agreed to. The Recision Agreement was entered
into in an effort by Registrant to avoid what it considered to be otherwise
unnecessary litigation if the disputes which had arisen with the
Shareholders had not been resolved, which litigation Registrant could not
have afforded.
The Shareholders transferred the 700,000 common shares of Registrant issued
in the acquisition of FSFC back to the treasury of Registrant. Concurrent
with the recision, the existing board and officers of Registrant resigned,
and counsel to Registrant, Mr. Mark S. Pierce, was appointed to the board.
Mr. Pierce is now the sole director and executive officer of Registrant.
In connection with the recission, Mr. Pierce agreed to pay to the former
shareholders of FSFC the sum of $40,000 at the earlier of two years from
the date of the recission or upon the issuance by Registrant of a
controlling interest.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
None.
Item 6. Resignation of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not Required.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Famous Sam's Group, Inc.
(Registrant)
By: /s/ Mark S. Pierce
Mark S. Pierce, Chief
Executive Officer
DATE: March 13, 1997
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EXHIBITS
Exhibit 1. - Recision, Release and Final Settlement Agreement registrant,
Famous Sam's Franchise Corporation and the former shareholders of Famous
Sam's Franchise Corporation
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RESCISSION, RELEASE AND FINAL SETTLEMENT
(March 11, 1997)
THIS AGREEMENT is made and entered into this 11th day of March, 1997, by
and among Famous Sam's Group, Inc., a Nevada corporation formerly known as
U.S. Flywheel, Inc. ("FSGI"), and Famous Sam's Franchise Corporation, an
Arizona corporation ("FSFC"), and the former shareholders of FSFC, Mr.
Gerald Ross and Ms. Sandra Ross (collectively, "Mr. and Mrs. Ross").
RECITALS:
The following recitals are true and correct and form an integral part of
this Agreement.
1. FSGI, FSFC and the Rosses entered into an agreement (the "B Reorg
Agreement") on the 24th day of July, 1996, pursuant to which FSGI acquired
from the Rosses all of the outstanding proprietary interest of FSFC;
2. Dan Hodges ("Hodges") was the subject of two contracts with FSGI
pursuant to which he identified, negotiated and obtained the agreement of
the Rosses to sell their shares in FSFC to FSGI, all as the authorized
agent of FSGI;
3. Hodges, in obtaining the foregoing agreement from the Rosses to sell
their shares of FSFC to FSGI, made many representations and warranties to,
and covenants with, the Rosses on behalf of FSGI, each of which was
material in obtaining their agreement;
4. Hodges specifically represented, warranted and covenanted, among other
matters, to FSGI and Mr. and Mrs. Ross that he would (i) arrange for the
infusion of $2,000,000 in equity capital into FSGI following the
acquisition, (ii) provide a market for the common equity of FSGI following
the acquisition and the infusion of the foregoing capital so that a $5.00
share price would be maintained, (iii) guarantee the Rosses the return of
their shares in FSFC and money if he were unable to perform the foregoing;
5. Hodges had no ability whatsoever to provide for the undertakings he
made to the Rosses, each of which was materially false and misleading and
instrumental to the Rosses in their coming to their decision, and each of
which was made by Hodges knowing the same to be materially false and
misleading;
6. Hodges obtained shares in FSGI for his services, liquidated those
shares to his significant economic advantage, and failed to provide for any
of the undertakings which he made, never intending to do so, and intending
only to profit through the loss of FSGI, FSFC and the Rosses;
7. FSGI, FSFC and the Rosses, after discovering the materially false and
misleading actions of Hodges, as set forth in part above, have endeavored
since October 1, 1996, to resolve the issues with Hodges which have arisen.
8. Hodges has not even performed under these agreements, the result of
which has been the loss of two separate financing opportunities to FSGI,
FSFC and the Rosses for the business of FSFC, and the complete collapse
of the market for the FSGI equity shares;
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9. The parties have now concluded that Hodges had no intent whatsoever to
fulfill his obligations under his latest set of agreements, or any of his
prior agreements either for that matter, all to the detriment of the
parties;
10. FSFC and the Rosses, as a result of those actions set forth above,
among other actions, have the right under Section 17 of the Securities Act
of 1933, as amended (the "Securities Act"), Sections 10(b), 18 and 29 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the "Arizona Securities Act" to sue FSGI for recision of the B Reorg
Agreement and for their damages in regards of the same;
11. The parties have now determined that it is in the best interests of
the parties to rescind the B Reorg Agreement, without the necessity of
litigation, and return themselves, as best they are able, to the position
they were in prior to July 24, 1996; and
12. The parties further desire to compromise all claims between themselves
in regards of the aforesaid on the terms and conditions set forth herein.
COVENANTS:
NOW, THEREFORE, for Ten ($10) Dollars and other good and valuable
consideration, the receipt and sufficiency of which are each hereby
acknowledged, THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
RECISION
1.1 Rescission of B Reorg Agreement. The parties hereby rescind the B
Reorg Agreement nunc pro tunc to the date thereof in accordance with the
provisions of the Securities Act, the Exchange Act and the Arizona
Securities Act, all of which are set forth in the premises above.
1.2 Return of FSFC Shares by FSGI to the Rosses; Return of FSGI Shares to
Treasury by the Rosses. FSGI hereby delivers to the Rosses all of its
right, title and interest in and to FSFC, including all its outstanding
proprietary interest in FSFC. FSFC and the Rosses hereby return to FSGI
all of their right, title and interest in and to FSGI, including all of
their shares of capital stock and all options and other rights to acquire
shares of FSGI, whether under FSGI's current Incentive Stock Ownership Plan
("ISOP") or otherwise. FSFC and the Rosses also hereby return to FSGI all
outstanding options and other rights outstanding under the aforesaid ISOP
or otherwise, whether owned by the Rosses or anyone else.
1.3 Return of FSGI Corporate Records by the Rosses; Resignation of Rosses
and their Employees as Officers and Directors of FSGI; Appointment of New
Director; Assets and Liabilities of FSGI; Change of Name by FSGI. The
Rosses hereby return to FSGI its corporate record and minute book, as well
as any and all other corporate records of FSGI in their possession or
control. The current board of FSGI has appointed a new director
immediately prior to the execution and delivery hereof, that being Mr. Mark
S. Pierce, and have obtained the resignation of the remaining directors and
officers of FSGI effective immediately prior to the execution and delivery
hereof. The Rosses hereby represent and warrant to FSGI that there are no
assets or outstanding liabilities of FSGI as of the date hereof. FSGI
covenants that it will endeavor as soon as economically practicable to
change its names from Famous Sam's Group, Inc.
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ARTICLE II
MUTUAL AND FINAL RELEASES AND COVENANTS NOT TO SUE
2.1 Release of the FSFC and the Rosses by FSGI. For and in consideration
of the above and foregoing premises and the mutual covenants, promises and
agreements contained herein, FSGI hereby releases, acquits and forever
discharges FSFC and the Rosses, as well as FSFC's officers, directors,
shareholders, affiliates, successors and assigns, if any, from and against
any and all actions, causes of action, suits, claims, demands, rights,
controversies, debts, agreements, damages, costs, expenses, liabilities and
compensation whatsoever which it now has or may hereafter have on account
of or arising out of any matter, thing or event which has happened,
developed or occurred, whether known or unknown, at any time at or prior
to the execution and delivery of this Agreement.
2.2 Release of FSGI by FSFC and the Rosses. For and in consideration of
the above and foregoing premises and the mutual covenants, promises and
agreements contained herein, FSFC and the Rosses hereby release, acquit and
forever discharge FSGI, as well as FSGI's current officer and director, and
Joseph Craig & Co., as well as its officers, directors, shareholders and
advisors, including Messrs. Matthew Milonas and Craig Edelman, from and
against any and all actions, causes of action, suits, claims, demands,
rights, controversies, debts, agreements, damages, costs, expenses,
liabilities and compensation whatsoever which they now have or may
hereafter have on account of or arising out of any matter, thing or event
which has happened, developed or occurred, whether known or unknown, at any
time at or prior to the execution and delivery of this Agreement.
2.3 FSGI's Covenant Not to Sue. FSGI further covenants and agrees that it
will not bring, commence, institute, maintain, prosecute or instigate any
action at law, proceeding in equity, administrative proceeding or
otherwise, nor prosecute or sue either FSFC and/or the Rosses and/or FSFC's
officers, directors, shareholders, affiliates, successors or assigns, if
any, either affirmatively or by way of cross-claim, defense or
counterclaim, or by any other manner, for any alleged claim, demand,
liability or cause of action in any way stemming from any claimed action
or inaction of either FSFC and/or the Rosses at or prior to the execution
and delivery of this Agreement.
2.4 FSFC's and the Ross' Covenant Not to Sue. FSFC and the Rosses each
further covenant and agree that they will not bring, commence, institute,
maintain, prosecute or instigate any action at law, proceeding in equity,
administrative proceeding or otherwise, nor prosecute or sue FSGI, as well
as FSGI's current officer and director, and Joseph Craig & Co., as well as
its officers, directors, shareholders and advisors, including Messrs.
Matthew Milonas and Craig Edelman, either affirmatively or by way of
cross-claim, defense or counterclaim, or by any other manner, for any
alleged claim, demand, liability or cause of action in any way stemming
from any claimed action or inaction of FSGI at or prior to the execution
and delivery of this Agreement.
2.5 Final Settlement. The parties each acknowledge, understand and agree
that they are aware that they or their attorneys may hereafter discover
facts different from or in addition to the facts which they now know or
believe to be true, but that it is their intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences
which now exist, may exist or may have existed between them, and that in
furtherance of such intention, the general and other releases given herein
shall be and remain in effect as full and complete releases,
notwithstanding any mistake of fact or the discovery of any different or
additional facts.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations and Warranties of FSGI. FSGI hereby represents and
warrants to FSFC and the Rosses as follows: (i) All necessary action has
been taken to make this Agreement a legal, valid and binding obligation of
the Hodges Group, and this Agreement is enforceable in accordance with its
terms and conditions; and (ii) The execution and delivery of this Agreement
and the performance by FSGI of its obligations hereunder will not result
in any material breach or violation of or material default under any
material agreement, indenture, lease, license, mortgage, instrument, or
understanding, nor result in any violation of any law, rule, regulation,
statute, order or decree of any kind to which FSGI is a party. 3.2
Representations and Warranties of FSFC and the Rosses. FSFC and the
Rosses each represent and warrant to FSFC as follows: (i) All necessary
action has been taken to make this Agreement a legal, valid and binding
obligation of FSFC and of the Rosses, and this Agreement is enforceable in
accordance with its terms and conditions; and (ii) The execution and
delivery of this Agreement and the performance by FSFC and the Rosses of
their respective obligations hereunder will not result in any material
breach or violation of or material default under any material agreement,
indenture, lease, license, mortgage, instrument, or understanding, nor
result in any violation of any law, rule, regulation, statute, order or
decree of any kind to which either FSFC or
the Rosses are a party.
ARTICLE IV
MISCELLANEOUS
4.1 Entire Agreement; Modification. This Agreement sets forth and
constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof, and supersedes any and all prior agreements,
understandings, promises, and representations made by any party to any
other concerning the subject matter hereof and/or the terms applicable
hereto. This Agreement may not be released, discharged, amended or
modified in any manner except by an instrument in writing signed by duly
authorized representatives of the parties hereto.
4.2 Severability. The invalidity or unenforceabilty of one or more
provisions of this Agreement shall not affect the validity or
enforceability of any of the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions are omitted.
4.3 Governing Law. This Agreement shall be deemed to have been entered
into and shall be construed and enforced in accordance with the laws of the
State of Arizona. All parties agree to venue in the City of Tucson, County
of Pima, State of Arizona, and agree to submit any disagreements hereunder
to the appropriate court in said city and state.
4.4 Waivers. The failure of any party hereto to insist, in any one or
more instances, upon the performance of any of the terms, covenants or
conditions of this Agreement, or to otherwise exercise any right hereunder,
shall not be construed as a waiver or relinquishment of the future
performance of any such term, covenant or condition or the future exercise
of such right, but the obligations of the party with respect to such future
performance shall continue in full force and effect.
4.5 Headings. The headings of the articles, sections and paragraphs used
in this Agreement are included for convenience only and are not to be used
in construing or interpreting this Agreement.
4.6 Successor and Assigns. This Agreement, and each and every provision
hereof, shall be binding upon and inure to the benefit of the parties,
their respective successors, successors-in-title, heirs and assigns, and
each and every successor-in-interest to any party, whether such successor
acquires such interest by way of gift, purchase, foreclosure, or by any
other method, who shall hold such interest subject to all the terms and
conditions of this Agreement.
4.7 Survival of Representations. The representations, warranties and
agreements of the parties hereto which are contained in this Agreement
shall survive the execution hereof, and shall be unaffected by any
investigation made by any party at any time.
4.8 Further Assurances. Each party hereto further agrees that they shall,
either collectively or individually, take such further and additional
action as may be reasonable and necessary to carry into full effect the
intent of this agreement and to otherwise provide for the fulfillment
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the date first above written.
Famous Sam's Group, Inc. Famous Sam's Franchise Corporation
By: \s\ Mark S. Pierce By: \s\ Gerald Ross
Mark S. Pierce, President Gerald Ross, President
\s\ Sandra Ross \s\ Gerald Ross
Sandra Ross, Individually Gerald Ross, Individually
