U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended May 31, 1995
Or
Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________________ to
__________________
Commission File Number: 0-17442
THOMAS EDISON INNS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Michigan 38-2730460
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
500 North Riverside
St. Clair, Michigan 48079
(Address of Principal Executive Offices)
(313) 329-2222
(Issuer's Telephone Number, including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
As of June 30, 1995, there were 1,520,150 issued and outstanding shares of
common stock, $0.01 par value.
Transitional Small Business Disclosure Format (check one): Yes No X
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The following unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Item 310(b) and (c) of Regulation S-B. Accordingly, they do not contain
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) considered necessary for a fair presentation of the financial
position, results of operations and cash flows of the Company have been
included. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-KSB, as amended, for the fiscal year ended November 30, 1994.
[Remainder of Page Left Blank Intentionally]
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Thomas Edison Inns, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
As of May 31, 1995
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash and cash equivalents $ 1,954,491
Trade accounts receivable, less allowance for
doubtful accounts of $24,000 435,241
Inventories 193,061
Prepaid expenses and other current assets 469,957
Refundable federal income taxes 350,900
Total current assets 3,403,650
PROPERTY, PLANT AND EQUIPMENT, net 13,315,203
OTHER ASSETS, net 1,490,666
AMOUNTS DUE FROM RELATED PARTIES 488,450
Total assets $18,697,969
</TABLE>
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<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C>
Notes payable - bank $ 200,551
Current portion of long-term debt 412,631
Trade accounts payable 482,048
Accrued expenses 444,667
Total current liabilities 1,539,897
LONG-TERM DEBT 11,954,336
DEFERRED TAXES 659,992
STOCKHOLDERS' EQUITY
Preferred stock - $0.01 par value: authorized
- 5,000,000 shares; issued and outstanding, none
Common stock - $0.01 par value: authorized
- 30,000,000 shares; issued and outstanding
1,520,150 15,200
Additional paid in capital 5,217,820
Accumulated deficit (689,276)
Total stockholders' equity 4,543,744
Total liabilities and stockholders' equity $18,697,969
</TABLE>
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Thomas Edison Inns, Inc. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the six-month period ended May 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Net sales
Room rents $2,357,509 $2,423,000
Food and beverages 3,658,002 4,270,710
Total sales 6,015,511 6,693,710
Costs and expenses
Cost of food and beverages 1,285,804 1,426,425
Operating expenses 3,395,371 3,561,155
General and administrative expenses 1,557,982 1,040,872
Depreciation and amortization 613,900 690,995
Total costs and expenses 6,853,057 6,719,447
Loss from operations (837,546) (25,737)
Other income (expense)
Interest expense (732,651) (494,138)
Other 537,971 125,315
(194,680) (368,823)
Loss before federal income tax benefit
and change in accounting principle (1,032,226) (394,560)
Federal income tax benefit (350,900) (134,100)
Net Loss before change in
accounting principle (681,326) (260,460)
Change in accounting principle -
Cumulative effect to November 30, 1993
of application of Statement of Financial
Accounting Standards No. 109
"Accounting for Income Taxes" -- (198,800)
Net Loss ($681,326) ($459,260)
Retained earnings (deficit) - beginning
of period (7,950) 19,212
Accumulated deficit - end of period ($689,276) ($440,048)
Loss per share
Before cumulative effect of change in
accounting principle (0.45) (0.17)
-5-
Cumulative effect of change in
accounting principle -- (0.13)
After cumulative effect of change
in accounting principle ($0.45) ($0.30)
Number of common shares outstanding 1,520,150 1,520,150
</TABLE>
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Thomas Edison Inns, Inc. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the three-month period ended May 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Net sales
Room rents $1,339,655 $1,431,399
Food and beverages 1,859,716 2,222,966
Total sales 3,199,371 3,654,365
Cost and expenses
Cost of food and beverages 658,919 739,942
Operating expenses 1,720,413 1,859,882
General and administrative expenses 906,452 514,336
Depreciation and amortization 302,538 346,159
Total costs and expenses 3,588,322 3,460,319
Income (Loss) from operations (388,951) 194,046
Other income (expense)
Interest expense (401,471) (237,346)
Other 486,884 63,512
85,413 (173,834)
Income (Loss) before federal
income tax benefit (303,538) 20,212
Federal income tax (benefit) (103,100) 6,900
Net Income (Loss) ($200,438) $13,312
Income (Loss) per share ($0.13) $0.01
Number of common shares outstanding 1,520,150 1,520,150
</TABLE>
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Thomas Edison Inns, Inc. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six-month period ended May 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities
Net loss ($681,326) ($459,260)
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization 613,900 690,995
Increase in deferred taxes 11,192 202,400
Gain on disposal of property, plant
and equipment (234,113) --
(Increase) decrease in assets
Accounts receivable 240,851 (180,835)
Other current assets and deferred
charges (106,510) 284,760
Refundable federal income taxes (236,105) (194,143)
Payment to obtain financing -- (231,567)
Increase (decrease) in liabilities
Accounts payable and accrued expenses 210,529 144,342
Income taxes payable -- (8,357)
Net cash provided by (used in)
operating activities (181,582) 248,335
Cash flows from investing activities
Purchase of property, plant and equipment (201,248) (359,954)
Proceeds from sale of property, plant
and equipment 375,000 --
Decrease (increase) in other assets 76,159 (56,646)
Additions to amount due from stockholder (76,176) (41,567)
Payments on amounts due from stockholder 1,774,680 337,190
Addition to amount due from related
parties (8,945) --
Payments on amounts due from other
related parties 105,697 11,674
Net cash provided by (used in)
investing activities 2,045,167 (109,303)
Cash flows from financing activities
Proceeds from long-term borrowings -- 152,000
Proceeds (payments) related to
borrowings from stockholders and
related parties (250,463) (87,913)
-8-
Principal payments of long-term debt (280,392) (181,572)
Net cash used in financing
activities (530,855) (117,485)
Net increase in cash 1,332,730 21,547
Cash and cash equivalents - beginning
of period 621,761 450,712
Cash and cash equivalents - end of period $1,954,491 $ 472,259
</TABLE>
-9-
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following is management's discussion and analysis of certain
significant factors which have affected the Company's results of operations
and financial condition during the period included in the accompanying
unaudited consolidated financial statements.
Operations Report
A summary of the period-to-period changes in principal items included
in the consolidated statements of income is shown below:
<TABLE>
<CAPTION>
Comparisons of periods ended
May 31, 1994 vs. May 31, 1995
Increase (Decrease)
Three Months Six Months
<S> <C> <C> <C> <C>
Net Sales ($454,994) (12.4)% ($678,199) (10.1)%
General and Admin. Expense 392,116 76.2 517,110 49.7
Loss from Operations 582,997 300.4 811,809 3,154.2
Loss Before Federal
Income Tax Benefit 323,750 1,601.8 637,666 161.6
Net Loss 213,750 1,605.7 222,066 48.4
</TABLE>
Net Sales
For the 6 months ended May 31, 1995, consolidated net sales decreased
$678,199, or 10.1%, as compared to the same period in 1994. Net sales
decreased $454,994, or 12.4%, for the quarter ended May 31, 1995, as
compared to the same quarter in the prior year. During the 6-month period
ended May 31, 1995, net sales at St. Clair Inn decreased $150,894, a
decrease of 7.8% as compared to the same period in 1994. During the same
period, net sales at Thomas Edison Inn and Spring Lake Holiday Inn
decreased $498,101 and $27,256, or 15.3% and 1.8%, respectively, from the
same period in the prior year.
The decreased net sales at all three hotels primarily reflect a
decline in business meetings and banquets. The decrease is also
attributable to a slight decline in tourism. These declines are generally
attributable to the gradual deceleration of the economy, both nationally
and particularly in Michigan.
-10-
<TABLE>
General and Administrative Expenses
<CAPTION>
Comparative consolidated general and administrative expenses are:
Percent of
Expense Net Sales
<S> <C> <C>
3 months ended May 31, 1995 $ 906,452 28.33%
3 months ended May 31, 1994 514,336 14.07
6 months ended May 31, 1995 1,557,982 25.90
6 months ended May 31, 1994 1,040,872 15.55
</TABLE>
The increases in general and administrative expenses are primarily
attributable to loan guarantee fees and legal fees. At May 31, 1995,
the Company paid loan guarantee fees to Mr. Reynolds in the amount of
$96,000. The Company has paid legal fees as a result of a lawsuit
brought against the Company by several shareholders. This lawsuit is
described in Part 1, Item 3 in Amendment No. 1 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended November 30, 1994.
During the quarter ended May 31, 1995, the Company paid to Mr. Donald
W. Reynolds, Chairman of the Board, President and principal shareholder of
the Company, and companies affiliated with Mr. Reynolds or Mr. Reynolds and
Mr. William F. Ehinger, a director of the Company, $250,463, representing
the full balance of the Company's indebtedness to these individuals and
companies. Mr. Reynolds owed the Company amounts aggregating approximately
$242,700 (a decrease of approximately $1,186,289 from November 30, 1994),
and companies affiliated with Mr. Reynolds, or Mr. Reynolds and
Mr. Ehinger, owed the Company amounts aggregating $245,750 (a decrease of
approximately $608,967 from November 30, 1994).
As previously reported, the Company and each of its subsidiaries has
entered into a Management Agreement with Innkeepers Management Company,
which is wholly owned by Mr. Reynolds ("Innkeepers"), for the management of
the subsidiaries. Under the Management Agreement, the Company agreed to
pay Innkeepers a management fee of 3% of gross revenues derived from the
operations of the subsidiaries. On February 28, 1995, the Management
Agreement was amended to reduce the management fee from 3% to 2% for a term
ending on December 1, 1996, and to provide that the Management Agreement
may be terminated by any of the subsidiaries at any time upon 30 days'
prior written notice to Innkeepers.
From February 28, 1995 to May 31, 1995, the Company accrued management
fees due to Innkeepers in the amount of $126,062. At May 31, 1995, the
Company had disbursed to Innkeepers management fees in the amount of
$157,000, and had net prepaid management fees in the amount of
approximately $30,062.
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As of May 31, 1995, the Company had paid certain life insurance
premiums to be reimbursed by Mr. Reynolds in the aggregate amount of
$6,906.
Interest Expense
The Company's decreased level of long-term debt was insufficient to
offset the series of increases in the prime rate, which determines the
current interest rate for all of the Company's long-term and some of its
short-term indebtedness. Consequently, interest expenses rose to $732,651
for the 6 months ended May 31, 1995, from $494,138 for the 6 months ended
May 31, 1994.
Net Income (Loss) Per Share
The Company's net loss after income tax benefit for the 3-month period
from March 1, 1995 through May 31, 1995, was $200,438 ($.13 per share)
compared to a gain of $13,312 ($.01 per share) for the comparable period in
fiscal year 1994. The loss was due to the decline in business meetings and
banquets, increased administrative expenses, and increased interest
expenses.
Cash Flows
For the 6 months ended May 31, 1995, operating activities used net
cash in the amount of $181,582. During that period, cash flows from
investing activities provided $2,045,167, including receipt of payments of
$1,774,680 from Mr. Reynolds, $105,697 from affiliated parties, and
$375,000 from the sale of property. The Company used cash in financing
activities in the amount of $530,855, which consisted of payments related
to borrowings from shareholders and other related parties in the amount of
$250,463, and principal payments of long-term debt in the amount of
$280,392.
Financial Condition and Liquidity
Current assets increased $1,434,494 (72.8%) from November 30, 1994.
Cash, cash equivalents, and certificates of deposit increased $1,332,730
(214.3%), primarily as a result of payments made by Mr. Reynolds and other
related parties on outstanding indebtedness to the Company, trade accounts
receivable decreased $240,851 (-35.6%), inventories decreased $3,699
(-1.9%) and prepaid expenses increased $110,209 (30.6%) from November 30,
1994.
Current liabilities have decreased $22,976 (-1.5%) from November 30,
1994. The current portion of long-term debt and capital lease obligations
increased $16,958 (4.3%) from November 30, 1994. Notes payable were
unchanged from November 30, 1994. Accrued expenses increased $126,470
-12-
(39.7%) and trade accounts payable increased $84,059 (21.1%) from November
30, 1994.
The Company has outstanding indebtedness to Michigan National Bank-
Central, which consists of two notes in the respective amounts of
$3,625,497 (the "Mortgage Loan") and $1,095,300 (the "Term Loan")
(collectively referred to as the "MNB Loan"). The interest rates on both
the Mortgage Loan and the Term Loan are equal to the Citibank, N.A. prime
rate plus 1%, fully floating. As of May 31, 1995, the MNB Loan had a
principal balance of $4,375,900, which consisted of a balance of $3,475,776
on the Mortgage Loan and a balance of $900,124 on the Term Loan.
In addition, under a Reimbursement Agreement entered into with First
Federal Savings and Loan Association (formerly, First Federal Savings Bank
and Trust) ("First Federal"), the Company is obligated to reimburse First
Federal for amounts used to retire bonds issued by the Michigan Strategic
Fund in connection with a loan extended by the Michigan Strategic Fund to
the Company. At May 31, 1995, the principal amount due under the
Reimbursement Agreement was $4,739,725.
First Federal also has a separate loan to the Company (the "First
Federal Loan"), which loan is secured by, among other collateral, a first
real estate mortgage on the St. Clair Inn. The principal amount due under
the First Federal Loan as of May 31, 1995, was $2,926,324. Mr. Reynolds
has guaranteed the Company's obligations to First Federal and granted a
security interest to First Federal in a nonrecourse mortgage note
receivable as additional collateral. Mr. Reynolds has also granted the
Company a second security interest in the same mortgage note as collateral
for the amounts due from Mr. Reynolds. During the second quarter of 1995,
the current holder of the Company's obligations under the First Federal
Loan agreed to release its interest in the mortgage note upon a prepayment
by the Company on the amount due under the First Federal Loan. Mr.
Reynolds paid on behalf of the Company the amount of the prepayment to the
current holder of the First Federal Loan. The Company then reimbursed Mr.
Reynolds for the amount of the prepayment he made on behalf of the Company.
During the second quarter of fiscal year 1995, the Company sold its
remaining condominium unit at Spring Lake Holiday Inn. The Company
continues to hold land at the Thomas Edison Inn for future possible
expansion, although it sold one parcel of land during the second quarter of
fiscal year 1995. In addition, the Company continues to consider offers to
purchase one or more of the three inns and to explore other alternative
means to provide value to its shareholders.
The First Federal Loan contains certain restrictive covenants, one of
which prohibits the Company from making capital expenditures in excess of
$50,000. The Company exceeded this limit during the 1994 fiscal year. In
addition, the First Federal Loan prohibits the Company from incurring new
debt. During the 1994 fiscal year, the Company incurred new debt in making
various capital expenditures. During the second quarter of 1995, the
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Company obtained waivers with respect to the capital expenditures and new
debt incurred from the current holder of the Company's obligations under
the First Federal Loan.
As previously reported, on February 3, 1995, Mr. Donald W. Reynolds
entered into an Irrevocable Option Agreement to Purchase Common Stock and
Irrevocable Proxy (the "Option Agreement") with Mr. Robert J. Skandalaris.
The execution of the Option Agreement without the prior written consent of
the holder of the Company's obligations under the First Federal Loan could
have been considered a change in control of the Company in breach of
certain covenants under the First Federal Loan and could have therefore, if
not cured after notice, constituted a default under the First Federal Loan.
This potential default also could have caused the Company to be in breach
of restrictive covenants under other loan agreements, including the MNB
Loan, which prohibit the Company from being in default under any other loan
agreement. On June 16, 1995, Mr. Reynolds and Mr. Skandalaris entered into
a Rescission Agreement and Amendment No. 1 to Irrevocable Option Agreement
to Purchase Common Stock and Irrevocable Proxy (the "Rescission
Agreement"). Pursuant to the Rescission Agreement, the parties agreed that
the purported grant of an irrevocable proxy to Mr. Skandalaris by Mr.
Reynolds under the Option Agreement was void ab initio. Contemporaneous
with the execution of the Rescission Agreement, Mr. Reynolds and
Mr. Skandalaris entered into a Purchase and Sale Agreement, whereby Mr.
Reynolds exercised his right under the Option Agreement to repurchase the
option from Skandalaris for $500,000. Because the Company did not receive
any notice of breach of the covenant under the First Federal Loan from the
current holder of the Company's obligations under that loan and because the
Rescission Agreement provides that the purported grant of an irrevocable
proxy to Mr. Skandalaris was void ab initio, the Company believes that any
potential default under the First Federal Loan and other loan agreements
that may have resulted from the execution of the Option Agreement has been
cured. A shareholder of the Company filed a complaint for declaratory and
injunctive relief against Mr. Reynolds and other related parties
("Defendants") on July 5, 1995, contesting the Defendants' right to vote
their shares of Company common stock in light of Mr. Reynolds' execution of
the Option Agreement and the Rescission Agreement. For a description of
this litigation, see the discussion below in Part II, Item 5, "Other
Information," incorporated herein by reference.
The Company entered into a Consulting Agreement with Mr. Skandalaris
on February 20, 1995, whereby Mr. Skandalaris agreed to provide consulting
services to the Company for one year and the Company agreed to compensate
Mr. Skandalaris in the amount of $17,500 per month.
The loans and other advances to Mr. Reynolds and companies affiliated
with Mr. Reynolds or Mr. Reynolds and Mr. Ehinger, described above in this
Item 2, may be deemed to have been made in breach of certain restrictions
in the agreements with Michigan National Bank-Central and First Federal.
-14-
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The information required by this item is included in Part I, Item 3,
"Legal Proceedings," in Amendment No. 1 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended November 30, 1994, previously filed
by the Company with the Securities and Exchange Commission on March 15,
1995.
Item 2. Changes in Securities
During the second quarter of 1995, the Company's Board of Directors
amended the Company's Bylaws by adding a new Article 10 concerning Control
Share Acquisitions. The amendment will affect persons who purchase shares
of the Company's common stock, $0.01 par value, after June 12, 1995. The
amendment prevents the application of the provisions of Chapter 7B of the
Michigan Business Corporation Act ("MBCA") to shares purchased after the
effective date of the amendment. Chapter 7B of the MBCA generally denies
voting rights to shares of stock acquired in a control share acquisition
unless the corporation's disinterested shareholders (defined to exclude the
acquiring person, officers of the corporation, and directors who are also
employees of the corporation) vote to confer voting rights on the shares.
A control share acquisition is defined as an acquisition of shares by an
acquirer which, when combined with other shares held by that person or
entity, would give the acquirer voting power at or above any of the
following thresholds: 20%; 33 1/3%; or 50%. Chapter 7B of the MBCA does
not affect the voting rights of shares owned by the acquirer before the
control share acquisition. The general effect of the amendment to the
Company's Bylaws is to remove an obstacle to the acquisition of potentially
controlling interests in the Company by guaranteeing that such shares will
have voting rights after a control share acquisition.
Item 3. Defaults Upon Senior Securities
For a description of potential defaults of the provisions of the
Company's indebtedness to Michigan National Bank-Central and First Federal
Savings and Loan Association, see the discussion in Part I, Item 2,
"Management's Discussion and Analysis or Plan of Operation," under the
subheading "Financial Condition and Liquidity" which is incorporated herein
by reference.
Item 4. Submission of Matters to a Vote of Security Holders
None
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Item 5. Other Information
Meritage Hospitality Group, Incorporated ("Plaintiff"), a shareholder
of the Company, filed a Complaint for Declaratory Judgment and Injunctive
Relief ("Complaint") in the U.S. District Court for the Western District of
Michigan on July 5, 1995. The Complaint was filed against Donald W.
Reynolds, Rebecca L. Awtrey, Cynthia Distad, Thomas Reynolds, Deborah
Reynolds, and Innkeepers Management Company ("Defendants"). The Company
was not named as a defendant in the proceeding.
The Complaint alleges that the Rescission Agreement entered into
between Donald W. Reynolds and Robert J. Skandalaris, discussed above in
Part I, Item 2, "Management's Discussion and Analysis or Plan of
Operation," under the subheading "Financial Condition and Liquidity,"
deprived Plaintiff of its alleged right to determine whether the shares
covered under the Option Agreement are to be accorded voting rights under
Chapter 7B of the MBCA. Both the Option Agreement and the Rescission
Agreement involved shares of Company common stock beneficially owned by the
Defendants. The Complaint therefore contests the Defendants' present
right to vote the shares and to take shareholder action by written consent.
The Complaint states that Plaintiff seeks relief against the
Defendants in the nature of: an injunction against the Defendants from
voting their shares of Company common stock pending a final determination
of their voting rights under Chapter 7B of the MBCA; a declaration that the
Defendants are not entitled to vote their shares of Company common stock at
a shareholders' meeting or to execute written consents in lieu of a
shareholders' meeting unless and until voting rights have been conferred on
the stock pursuant to Chapter 7B of the MBCA; and a declaration that the
shares of Company common stock owned beneficially by the Defendants are
"interested shares" as defined under Section 792 of the MBCA.
The Company understands that the Defendants believe they have
meritorious defenses to the allegations in Plaintiff's Complaint and
intend to vigorously defend the action.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed as part of this
report:
Exhibit No. Description of Document
3(i) Articles of Incorporation of Thomas Edison Inns, Inc.*
3(ii) Restated and Amended Bylaws of Thomas Edison Inns, Inc.
4 Form of Warrant issued to Buys-MacGregor, MacNaughton-
Greenawalt & Co.*
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Exhibit No. Description of Document
10(a) Management Agreement.*
10(b) Amendment No. 1 to Management Agreement.*
10(c) Amendment No. 2 to Management Agreement.*
10(d) Adoption Agreement For Pathway Benefit Services, Inc. Regional
Prototype Non-Standardized 401(k) Profit-Sharing Plan and Trust;
Pathway Benefit Services, Inc. Regional Prototype Defined
Contribution Plan and Trust.*
10(e) Amendment No. 3 to Management Agreement.*
10(f) Reimbursement Agreement between the Company and First Federal
Savings Bank and Trust.*
10(g) License Agreement between Spring Lake Inn, Inc. and Holiday Inns,
Inc.*
10(h) Loan Agreement between the Company and Michigan National Bank-
Central.*
10(i) Loan Agreement between St. Clair Inn, Inc. and First Federal
Savings Bank and Trust.*
10(j) Assignment of Promissory Note and Mortgage as Security.*
10(k) Assignment of Mortgage as Security.*
10(l) Assignment of Promissory Note and Security Agreements as
Security.*
10(m) Promissory Note issued by Fables-Innkeepers Management, Inc. in
the principal amount of $61,538.23.*
10(n) Promissory Note issued by Fables-Innkeepers Management, Inc. in
the principal amount of $117,487.65.*
10(o) Amendment No. 5 to Management Agreement. (There is no written
Amendment No. 4 to Management Agreement.)
10(p) Consulting Agreement between the Company and Robert J.
Skandalaris, dated February 20, 1995.
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27 Financial Data Schedule.
*Previously filed.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
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SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: July 17, 1995 THOMAS EDISON INNS, INC.
(Registrant)
By /s/ Donald W. Reynolds
Donald W. Reynolds
Its Chairman of the Board,
Chief Executive Officer,
President, Treasurer and Secretary
By /s/ David C. Distad
David C. Distad
Its Vice President and Chief
Financial Officer (principal
financial and accounting
officer)
-19-
EXHIBIT INDEX
Exhibit No. Description of Document
3(i) Articles of Incorporation of Thomas Edison Inns, Inc.
(incorporated by reference to Exhibit 3(a) of the
registration statement on Form S-18 No. 33-10798c).
3(ii) Restated and Amended Bylaws of Thomas Edison Inns, Inc.
4 Form of Warrant issued to Buys-MacGregor, MacNaughton-
Greenawalt & Co. (incorporated by reference to Exhibit
4(a) of the Annual Report on Form 10-K for the Company's
fiscal year ended November 30, 1987).
10(a) Management Agreement (incorporated by reference to
Exhibit 10 of the registration statement on Form S-18
No. 33-10798c).
10(b) Amendment No. 1 to Management Agreement (incorporated
by reference to Exhibit 10(b) of the Annual Report on
Form 10-K for the Company's fiscal year ended
November 30, 1988).
10(c) Amendment No. 2 to Management Agreement (incorporated
by reference to Exhibit 10(c) of the Annual Report on
Form 10-K for the Company's fiscal year ended
November 30, 1988).
10(d) Adoption Agreement For Pathway Benefit Services, Inc.
Regional Prototype Non-Standardized 401(k) Profit Sharing
Plan and Trust; Pathway Benefit Services, Inc. Regional
Prototype Defined Contribution Plan and Trust; as amended
May 24, 1994 (incorporated by reference to Exhibit 10(d)
to the Annual Report on Form 10-KSB for the Company's
fiscal year ended November 30, 1994).
10(e) Amendment No. 3 to Management Agreement dated February 11,
1995 (incorporated by reference to Exhibit 10(e) to the
Annual Report on Form 10-KSB for the Company's fiscal year
ended November 30, 1994).
10(f) Reimbursement Agreement between the Company and First Federal
Savings Bank and Trust dated April 15, 1987, as amended on
October 1, 1992 (incorporated by reference to Exhibit 10(f) to
the Annual Report on Form 10-KSB for the Company's fiscal year
ended November 30, 1994).
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Exhibit No. Description of Document
10(g) License Agreement between Spring Lake Inn, Inc. and Holiday
Inns, Inc. dated July 26, 1983 (incorporated by reference to
Exhibit 10(g) to the Annual Report on Form 10-KSB for the
Company's fiscal year ended November 30, 1994).
10(h) Loan Agreement between the Company and Michigan National
Bank-Central dated January 28, 1987, as amended on
August 19, 1993 (incorporated by reference to Exhibit 10(h)
to the Annual Report on Form 10-KSB for the Company's fiscal
year ended November 30, 1994).
10(i) Loan Agreement between St. Clair Inn, Inc. and First Federal
Savings Bank and Trust dated July 16, 1985, as amended on
October 1, 1992 (incorporated by reference to Exhibit 10(i)
to the Annual Report on Form 10-KSB for the Company's fiscal
year ended November 30, 1994).
10(j) Assignment of Promissory Note and Mortgage as Security dated
June 30, 1994 (incorporated by reference to Exhibit 10(j) to
the Annual Report on Form 10-KSB for the Company's fiscal year
ended November 30, 1994).
10(k) Assignment of Mortgage as Security dated April 15, 1987
(incorporated by reference to Exhibit 10(k) to the Annual
Report on Form 10-KSB for the Company's fiscal year ended
November 30, 1994).
10(l) Assignment of Promissory Note and Security Agreements as
Security dated April 15, 1987 (incorporated by reference to
Exhibit 10(l) to the Annual Report on Form 10-KSB for the
Company's fiscal year ended November 30, 1994).
10(m) Promissory Note issued by Fables-Innkeepers Management, Inc.,
in the principal amount of $61,538.23 dated December 31, 1992
(incorporated by reference to Exhibit 10(m) to the Annual
Report on Form 10-KSB for the Company's fiscal year ended
November 30, 1994).
10(n) Promissory Note issued by Fables-Innkeepers Management, Inc.
in the principal amount of $117,487.65 dated December 31, 1992
(incorporated by reference to Exhibit 10(n) to the Annual
Report on Form 10-KSB for the Company's fiscal year ended
November 30, 1994).
10(o) Amendment No. 5 to Management Agreement. (There is no written
Amendment No. 4 to Management Agreement.)
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Exhibit No. Description of Document
10(p) Consulting Agreement between the Company and Robert J.
Skandalaris, dated February 20, 1995.
27 Financial Data Schedule.
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EXHIBIT 3(ii)
RESTATED AND AMENDED
BYLAWS
OF
THOMAS EDISON INNS, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be in the
City of St. Clair, County of St. Clair, State of Michigan.
Section 2. Other Offices. The corporation may also have offices at
such other places both within and without the State of Michigan as the
board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the shareholders of
this corporation shall be held at the registered office or such other
place, either within or without the State of Michigan, as may be determined
from time to time by the board of directors.
Section 2. Annual Meeting of Shareholders. The annual meeting of
shareholders for election of directors and for such other business as may
properly come before the meeting, commencing with the year 1987, shall be
held on the third Tuesday of May, if not a legal holiday, and if a legal
holiday, then on the next business day following, at 10:00 am., local time,
or at such other date and time as shall be determined from time to time by
the board of directors, unless such action is taken by written consent as
provided in Article II, Section 12 of these bylaws. If the annual meeting
is not held on the date designated therefor, the board shall cause the
meeting to be held as soon thereafter as convenient.
Section 3. Order of Business at Annual Meeting. The order of
business at the annual meeting of the shareholders shall be as follows:
(a) Reading of notice and proof of mailing,
(b) Reports of Officers,
(c) Election of Directors,
(d) Transaction of other business mentioned in the notice,
(e) Adjournment,
provided that, in the absence of any objection, the presiding officer may
vary the order of business at his discretion.
Section 4. Notice of Meeting of Shareholders. Except as otherwise
provided in the Michigan Business Corporation Act (herein called the
"Act"), written notice of the time, place, and purpose of a meeting of
shareholders shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting, either personally or by mail, to each
shareholder of record entitled to vote at the meeting. When a meeting is
adjourned to another time or place, it is not necessary to give notice of
the adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken
and at the adjourned meeting only such business is transacted as might have
been transacted at the original meeting. However, if after the adjournment
the board of directors fix a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of
record on the new record date entitled to vote at the meeting.
Section 5. List of Shareholders Entitled to Vote. The officer or
agent having charge of the stock transfer books for shares of the
corporation shall make and certify a complete list of the shareholders
entitled to vote at a shareholders' meeting or any adjournment thereof.
The list shall:
(a) Be arranged alphabetically within each class and
series, with the address of, and the number of shares held by,
each shareholder.
(b) Be produced at the time and place of the meeting.
(c) Be subject to inspection by any shareholder during the
whole time of the meeting.
(d) Be prima facie evidence as to who are the shareholders
entitled to examine the list or to vote at the meeting.
Section 6. Special Meeting of Shareholders. A special meeting of
shareholders may be called at any time by the chief executive officer of
the corporation (See Article V, Section 4) or by a majority of the members
of the board of directors then in office, or by shareholders owning, in the
aggregate, not less than ten percent (10%) of all the shares entitled to
vote at such special meeting. The method by which such meeting may be
called is as follows: Upon receipt of a specification in writing setting
forth the date and objects of such proposed special meeting, signed by the
chief executive officer, or by a majority of the members of the board of
directors then in office, or by shareholders as above provided, the
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secretary of this corporation shall prepare, sign, and mail the notices
requisite to such meeting.
Section 7. Quorum of Shareholders. Unless a greater or lesser quorum
is provided in the articles of incorporation, in a bylaw adopted by the
shareholders, or in the Act, shares entitled to cast a majority of the
votes at a meeting constitute a quorum at the meeting. The shareholders
present in person or by proxy at such meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. Whether or not a quorum is present, the meeting
may be adjourned by a vote of the shares present.
Section 8. Vote of Shareholders. Each outstanding share is entitled
to one (1) vote on each matter submitted to a vote, unless otherwise
provided in the articles of incorporation. A vote may be cast either
orally or in writing. When an action, other than the election of
directors, is to be taken by vote of the shareholders, it shall be
authorized by a majority of the votes cast by the holders of shares
entitled to vote thereon, unless a greater plurality is required by the
articles of incorporation or the Act. Directors shall be elected by a
plurality of the votes cast at an election.
Section 9. Record Date for Determination of Shareholders. For the
purpose of determining shareholders entitled to notice of and to vote at a
meeting of shareholders or an adjournment thereof, or to express consent or
to dissent from a proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of a dividend or
allotment of a right, or for the purpose of any other action, the board may
fix, in advance, a date as the record date for any such determination of
shareholders. The date shall not be more than sixty (60) nor less than ten
(10) days before the date of the meeting, nor more than sixty (60) days
before any other action. If a record date is not fixed (a) the record date
for determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be the close of business on the day next
preceding the day on which notice is given, or, if no notice is given, the
day next preceding the day on which the meeting is held, and (b) the record
date for determining shareholders for any purpose other than that specified
in subdivision (a) shall be the close of business on the day on which the
resolution of the board relating thereto is adopted. When a determination
of shareholders of record entitled to notice of or to vote at a meeting of
shareholders has been made as provided in this Section, the determination
applies to any adjournment of the meeting, unless the board fixes a new
record date under this Section for the adjourned meeting.
Section 10. Proxies. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may
authorize one or more other persons to act for him by proxy. A proxy shall
be signed by the shareholder or his authorized agent or representative. A
proxy is not valid after the expiration of three (3) years from its date
unless otherwise provided in the proxy.
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Section 11. Inspectors of Election. The board of directors, in
advance of a shareholders' meeting, may appoint one (1) or more inspectors
of election to act at the meeting or any adjournment thereof. If
inspectors are not so appointed, the person presiding at a shareholders'
meeting may, and on request of a shareholder entitled to vote thereat
shall, appoint one (1) or more inspectors. In case a person appointed
fails to appear or act, the vacancy may be filled by appointment made by
the board of directors in advance of the meeting or at the meeting by the
person presiding thereat. The inspectors shall determine the number of
shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, the validity and effect of proxies,
and shall receive votes, ballots or consents, hear and determine challenges
and questions arising in connection with the right to vote, count and
tabulate votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting or a
shareholder entitled to vote thereat, the inspectors shall make and execute
a written report to the person presiding at the meeting of any of the facts
found by them and matters determined by them. The report is prima facie
evidence of the facts stated and of the vote as certified by the
inspectors.
Section 12. Consent of Stockholders in Lieu of Meeting. The articles
of incorporation may provide that any action required or permitted by the
Act to be taken at an annual or special meeting of shareholders may be
taken without a meeting, without prior notice, and without a vote, if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting
at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to shareholders who have
not consented in writing. Any action required or permitted by the Act to
be taken at an annual or special meeting of shareholders may be taken
without a meeting, without prior notice, and without a vote, if all the
shareholders entitled to vote thereon consent thereto in writing.
Section 13. Participation in Meeting by Telephone. By oral or
written permission of a majority of the shareholders, a shareholder may
participate in a meeting of shareholders by conference telephone or similar
communications equipment by which all persons participating in the meeting
may hear each other if all participants are advised of the communications
equipment and the names of the participants in the conference are divulged
to all participants. Participation in a meeting pursuant to this Section
constitute presence in person at the meeting.
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ARTICLE III
DIRECTORS
Section 1. Number and Term of Directors. The number of directors
which shall constitute the whole board shall be not less than two nor more
than ten. The first board shall consist of five (5) directors.
Thereafter, the number of directors which shall constitute the board of
directors for each ensuing year shall be determined at the annual meeting
by vote of the shareholders prior to such election; provided, however, that
if a motion is not made and carried to increase or decrease the number of
directors, the board shall consist of the same number of directors as were
elected for the preceding year. The first board of directors shall hold
office until the first annual meeting of shareholders. At the first annual
meeting of shareholders and at each annual meeting thereafter the
shareholders shall elect directors to hold office until the succeeding
annual meeting, except in case of the classification of directors as
permitted by the Act. A director shall hold office for the term for which
he is elected and until his successor is elected and qualified, or until
his resignation or removal. Directors need not be shareholders.
Section 2. Vacancies. A position occurring in the board resulting
from a vacancy or an increase in the number of directors may be filled by
the affirmative vote of a majority of the remaining directors though less
than a quorum of the board for a term of office continuing only until the
next election of directors by the shareholders. If because of death,
resignation, or other cause, the corporation has no directors in office, an
officer, a shareholder, an executor, administrator, trustee or guardian of
a shareholder, or other fiduciary entrusted with like responsibility for
the person or estate of a shareholder, may call a special meeting of
shareholders in accordance with the articles of incorporation or these
bylaws.
Section 3. Removal. A director or the entire board may be removed at
any time, with or without cause, by vote of the holders of a majority of
the shares entitled to vote at an election of directors.
Section 4. Resignation. A director may resign by written notice to
the corporation. The resignation is effective upon its receipt by the
corporation or a subsequent time as set forth in the notice of resignation.
Section 5. Powers. The business and affairs of the corporation shall
be managed by its board of directors except as otherwise provided in the
Act or in the articles of incorporation.
Section 6. Location of Meetings. Regular or special meetings of the
board of directors may be held either within or without the State of
Michigan.
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Section 7. Organization Meeting of Board. The first meeting of each
newly elected board of directors shall be held at the place of holding the
annual meeting of shareholders, and immediately following the same, for the
purpose of electing officers and transacting any other business properly
brought before it, provided that the organization meeting in any year may
be held at a different time and place than that herein provided by a
consent of a majority of the directors of such new board. No notice of
such meeting shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be present,
unless said meeting is not held at the place of holding and immediately
following the annual meeting of shareholders.
Section 8. Regular Meeting of Board. Regular meetings of the board
of directors may be held without notice at such time and at such place as
shall from time to time be determined by the board.
Section 9. Special Meeting of Board. Special meetings of the board
of directors may be called by the chief executive officer, or by a majority
of the persons then comprising the board of directors, at any time by means
of notice of the time and place thereof to each director, given not less
than twenty-four (24) hours before the time such special meeting is to be
held.
Section 10. Committees of Directors. The board of directors may
designate one (1) or more committees, each committee to consist of one or
more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace an
absent or disqualified member at a meeting of the committee. In the
absence or disqualification of a member of a committee, the members thereof
present at a meeting and not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors creating such committee, may exercise
all the powers and authority of the board of directors in the management of
the business and affairs of the corporation. However, such a committee
does not have the power or authority to amend the articles of
incorporation, adopt an agreement of merger or consolidation, recommend to
the shareholders the sale, lease, or exchange of all or substantially all
of the corporation's property and assets, recommend to the shareholders a
dissolution of the corporation or a revocation of a dissolution, amend the
bylaws of the corporation, fill vacancies in the board of directors, or fix
compensation of the directors serving on the board or on a committee; and,
unless the resolution of the board of directors creating such committee or
the articles of incorporation expressly so provides, such a committee does
not have the power or authority to declare a dividend or to authorize the
issuance of stock. Any such committee, and each member thereof, shall
serve at the pleasure of the board of directors.
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Section 11. Quorum and Required Vote of Board and Committees. At all
meetings of the board of directors, or of a committee thereof, a majority
of the members of the board then in office, or of the members of a
committee thereof, constitutes a quorum for transaction of business. The
vote of the majority of members present at a meeting at which a quorum is
present constitutes the action of the board or of the committee unless the
vote of a larger number is required by the Act. Amendment of these bylaws
by the board requires the vote of not less than a majority of the members
of the board then in office. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 12. Action by Written Consent. Action required or permitted
to be taken pursuant to authorization voted at a meeting of the board of
directors or a committee thereof, may be taken without a meeting if, before
or after the action, all members of the board or of the committee consent
thereto in writing. The written consents shall be filed with the minutes
of the proceedings of the board or committee. The consent has the same
effect as a vote of the board or committee for all purposes.
Section 13. Compensation of Directors. The board of directors, by
affirmative vote of a majority of directors in office and irrespective of
any personal interest of any of them, may establish reasonable compensation
of directors for services to the corporation as directors or officers, but
approval of the shareholders is required if the articles of incorporation,
these bylaws or any provisions of the Act so provide.
Section 14. Participation in Meeting by Telephone. By oral or
written permission of a majority of the board of directors, a member of the
board of directors or of a committee designated by the board may
participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
Section constitutes presence in person at the meeting.
ARTICLE IV
NOTICES
Section 1. Notice. Whenever any notice or communication is required
to be given by mail to any director or shareholder under any provision of
the Act, or of the articles of incorporation or of these bylaws, it shall
be given in writing, except as otherwise provided in the Act, to such
director or shareholder at the address designated by him for that purpose
or, if none is designated, at his last known address. The notice or
communication is given when deposited, with postage thereon prepaid, in a
post office or official depository under the exclusive care and custody of
the United States postal service. The mailing shall be registered,
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certified, or other first class mail except where otherwise provided in the
Act. Written notice may also be given in person or by telegram, telex,
radiogram, cablegram, or mailgram, and such notice shall be deemed to be
given when the recipient receives the notice personally, or when the
notice, addressed as provided above, has been delivered to the company, or
to the equipment transmitting such notice. Neither the business to be
transacted at, nor the purpose of, a regular or special meeting of the
board of directors need be specified in the notice of the meeting.
Section 2. Waiver of Notice. When, under the Act or the articles of
incorporation or these bylaws, or by the terms of an agreement or
instrument, a corporation or the board or any committee thereof may take
action after notice to any person or after lapse of a prescribed period of
time, the action may be taken without notice and without lapse of the
period of time, if at any time before or after the action is completed the
person entitled to notice or to participate in the action to be taken or,
in case of a shareholder, by his attorney-in-fact, submits a signed waiver
of such requirements. Neither the business to be transacted at, nor the
purpose of, a regular or special meeting of the board of directors need be
specified in the waiver of notice of the meeting. Attendance of a person
at a meeting of shareholders, in person or by proxy, or of a director at a
meeting constitutes a waiver of notice of such meeting, except when the
person or director attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
Section 1. Selection. The board of directors, at its first meeting
and at each meeting following the annual meeting of shareholders, shall
elect or appoint a president, a secretary, and a treasurer. The board of
directors may also elect or appoint a chairman of the board, one (1) or
more vice presidents and such other officers, employees, and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from
time to time by the board. Two (2) or more offices may be held by the same
person but an officer shall not execute, acknowledge, or verify an
instrument in more than one (1) capacity.
Section 2. Compensation. The salaries of all officers, employees,
and agents of the corporation shall be fixed by the board of directors;
provided, however, that the board may delegate to the officers the fixing
of compensation of assistant officers, employees, and agents.
Section 3. Term, Removal, and Vacancies. Each officer of the
corporation shall hold office for the term for which he is elected or
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appointed and until his successor is elected or appointed and qualified, or
until his resignation or removal. An officer elected or appointed by the
board of directors may be removed by the board with or without cause at any
time. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a
subsequent time specified in the notice of resignation. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors.
Section 4. Chief Executive Officer. At the first meeting of each
newly-elected board of directors, the board shall designate the chairman of
the board or president as the chief executive officer of the corporation;
provided, however, that if a motion is not made and carried to change the
designation, the designation shall be the same as the designation for the
preceding year; provided, further, that the designation of the chief
executive officer may be changed at any special meeting of the board of
directors. The president shall be the chief executive officer whenever the
office of chairman of the board is vacant. The chief executive officer
shall be responsible to the board of directors for the general supervision
and management of the business and affairs of the corporation and shall see
that all orders and resolutions of the board are carried into effect. The
chairman of the board or president who is not the chief executive officer
shall be subject to the authority of the chief executive officer, but shall
exercise all of the powers and discharge all of the duties of the chief
executive officer, during the absence or disability of the chief executive
officer.
Section 5. Chairman of the Board of Directors. If the board of
directors elects or appoints a chairman of the board, he shall be elected
or appointed by, and from among, the membership of, the board of directors.
He shall preside at all meetings of the shareholders, of the board of
directors and of any executive committee. He shall perform such other
duties and functions as shall be assigned to him from time to time by the
board of directors. He shall be, ex officio, a member of all standing
committees. Except where by law the signature of the president of the
corporation is required, the chairman of the board of directors shall
possess the same power and authority to sign all certificates, contracts,
instruments, papers, and documents of every conceivable kind and character
whatsoever in the name of and on behalf of the corporation which may be
authorized by the board of directors. During the absence or disability of
the president, or while that office is vacant, the chairman of the board of
directors shall exercise all of the powers and discharge all of the duties
of the president.
Section 6. President. The president shall be elected or appointed
by, and from among the membership of, the board of directors. During the
absence or disability of the chairman of the board, or while that office is
vacant, the president shall preside over all meetings of the board of
directors, of the shareholders and of any executive committee, and shall
perform all of the duties and functions, and when so acting shall have all
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powers and authority, of the chairman of the board. He shall be, ex
officio, a member of all standing committees. The president shall, in
general, perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors.
Section 7. Vice Presidents. The board of directors may elect or
appoint one or more vice presidents. The board of directors may designate
one or more vice presidents as executive or senior vice presidents. Unless
the board of directors shall otherwise provide by resolution duly adopted
by it, such of the vice presidents as shall have been designated executive
or senior vice presidents and are members of the board of directors in the
order specified by the board of directors (or if no vice president who is a
member of the board of directors shall have been designated as executive or
senior vice president, then such vice presidents as are members of the
board of directors in the order specified by the board of directors) shall
perform the duties and exercise the powers of the president during the
absence or disability of the president. The vice presidents shall perform
such other duties as may be delegated to them by the board of directors,
any executive committee, or the president.
Section 8. Secretary. The secretary shall attend all meetings of the
stockholders, and of the board of directors and of any executive committee,
and shall preserve in the books of the corporation true minutes of the
proceedings of all such meetings. He shall safely keep in his custody the
seal of the corporation and shall have authority to affix the same to all
instruments where its use is required or permitted. He shall give all
notice required by the Act, these bylaws or resolution. He shall perform
such other duties as may be delegated to him by the board of directors, any
executive committee, or the president.
Section 9. Treasurer. The treasurer shall have custody of all
corporate funds and securities and shall keep in books belonging to the
corporation full and accurate accounts of all receipts and disbursements;
he shall deposit all moneys, securities, and other valuable effects in the
name of the corporation in such depositories as may be designated for that
purpose by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the president and the
board of directors whenever requested an account of all his transactions as
treasurer and of the financial condition of the corporation. If required
by the board of directors he shall keep in force a bond in form, amount,
and with a surety or sureties satisfactory to the board of directors,
conditioned for faithful performance of the duties of his office, and for
restoration to the corporation in case of his death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money,
and property of whatever kind in his possession or under his control
belonging to the corporation. He shall perform such other duties as may be
delegated to him by the board of directors, any executive committee, or the
president.
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Section 10. Assistant Secretaries and Assistant Treasurers. The
assistant secretary or assistant secretaries, in the absence or disability
of the secretary, shall perform the duties and exercise the powers of the
secretary. The assistant treasurer or assistant treasurers, in the absence
or disability of the treasurer, shall perform the duties and exercise the
powers of the treasurer. Any assistant treasurer, if required by the board
of directors, shall keep in force a bond as provided in Section 9, Article
V. The assistant secretaries and assistant treasurers, in general, shall
perform such duties as shall be assigned to them by the secretary or by the
treasurer, respectively, or by the board of directors, any executive
committee, or the president.
Section 11. Delegation of Authority and Duties by Board of Directors.
All officers, employees, and agents shall, in addition to the authority
conferred, or duties imposed, on them by these bylaws, have such authority
and perform such duties in the management of the corporation as may be
determined by resolution of the board of directors not inconsistent with
these bylaws.
ARTICLE VI
INDEMNIFICATION
Section 1. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by
or in the right of the corporation) by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation or its shareholders, and with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 2. Actions in the Right of the Corporation. The corporation
shall indemnify any person who was or is a party to or is threatened to be
made a party to any threatened, pending, or completed action or suit by or
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in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation or its shareholders
and except that no indemnification shall be made in respect of any claim,
issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
Section 3. Mandatory and Permissive Payments.
(a) To the extent that a director, officer, employee, or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred
to in Sections 1 or 2 of this Article VI, or in defense of any
claim, issue, or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(b) Any indemnification under Sections 1 or 2 of this
Article VI (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee, or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in Sections 1
and 2 of this Article VI. Such determination shall be made in
either of the following ways:
(1) By the board of a majority vote of a quorum
consisting of directors who were not parties to such action,
suit, or proceeding.
(2) If such quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors, so directs,
by independent legal counsel who may be the regular counsel
of the corporation in a written opinion.
(3) By the shareholders.
Section 4. Expense Advances. Expenses incurred in defending a civil
or criminal action, suit, or proceeding described in Sections 1 or 2 of
-12-
this Article VI may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in subsection (b) of Section 3 of this Article VI upon receipt of
an undertaking by or on behalf of the director, officer, employee, or agent
to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation.
Section 5. Validity of Provisions. A provision made to indemnify
directors or officers of any action, suit, or proceeding referred to in
Sections 1 or 2 of this Article VI whether contained in the articles of
incorporation, these bylaws, a resolution of shareholders or directors, an
agreement or otherwise, shall be invalid only insofar as it is in conflict
with Sections 1 to 5 of this Article VI. Nothing contained in Sections 1
to 5 of this Article VI shall affect any rights to indemnification to which
persons other than directors and officers may be entitled by contract or
otherwise by law. The indemnification provided in Sections 1 to 5 of this
Article VI continues as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
Section 6. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
any liability asserted against him and incurred by him in any such capacity
or arising out of his status as such, whether or not the corporation would
have power to indemnify him against such liability under Sections 1 to 5 of
this Article VI.
Section 7. Constituent Corporation. For the purposes of this Article
VI, references to the corporation include all constituent corporations
absorbed in a consolidation or merger and the resulting or surviving
corporation, so that a person who is or was a director, officer, employee,
or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise shall stand in the same position under the provisions of
this Article VI with respect to the resulting or surviving corporation as
he would if he had served the resulting or surviving corporation in the
same capacity.
ARTICLE VII
STOCK AND TRANSFERS
Section 1. Share Certificates: Required Signatures. The shares of
the corporation shall be represented by certificates signed by the chairman
of the board of directors, vice chairman of the board of directors,
-13-
president or a vice president and which also may be signed by another
officer of the corporation. The certificates may be sealed with the seal
of the corporation or a facsimile of the seal. The signatures of the
officers may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation
itself or its employee. If an officer who has signed or whose facsimile
signature has been placed upon a certificate ceases to be an officer before
the certificate is issued, it may be issued by the corporation with the
same effect as if he were the officer at the date of issue.
Section 2. Share Certificates: Required Provisions. A certificate
representing shares of the corporation shall state upon its face:
(a) That the corporation is formed under the laws of this
state.
(b) The name of the person to whom issued.
(c) The number and class of shares, and the designation of
the series, if any, which the certificate represents.
(d) The par value of each share represented by the
certificate, or a statement that the shares are without par
value.
A certificate representing shares issued by a corporation which is
authorized to issue shares of more than one class shall set forth on its
face or back or state that the corporation will furnish to a shareholder
upon request and without charge a full statement of the designation,
relative rights, preferences, and limitations of the shares of each class
authorized to be issued, and if the corporation is authorized to issue any
class of shares in series, the designation, relative rights, preferences,
and limitations of each series so far as the same have been prescribed and
the authority of the board to designate and prescribe the relative rights,
preferences, and limitations of other series.
Section 3. Replacement of Lost or Destroyed Share Certificates. The
corporation may issue a new certificate for shares or fractional shares in
place of a certificate theretofore issued by it, alleged to have been lost
or destroyed, and the board of directors may require the owner of the lost
or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any
claim that may be made against it on account of the alleged lost or
destroyed certificate or the issuance of such new certificate.
Section 4. Registered Shareholders. The corporation shall have the
right to treat the registered holder of any share as the absolute owner
thereof, and shall not be bound to recognize any equitable or other claim
to, or interest in, such share on the part of any other person, whether or
-14-
not the corporation shall have express or other notice thereof, save as may
be otherwise provided by the statutes of Michigan.
Section 5. Transfer Agent and Registrar. The board of directors may
appoint a transfer agent and a registrar in the registration of transfers
of its securities.
Section 6. Regulations. The board of directors shall have power and
authority to make all such rules and regulations as the board shall deem
expedient regulating the issue, transfer, and registration of certificates
for shares in this corporation.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends or other Distributions in Cash or Property. By
action of the board of directors, the corporation may declare and pay
dividends or make other distributions in cash, bonds, or property,
including the shares or bonds of other corporations, on its outstanding
shares, except when currently the corporation is insolvent or would thereby
be made insolvent, or when the declaration, payment, or distribution would
be contrary to any restriction contained in the articles of incorporation.
Dividends may be declared or paid and other distributions may be made out
of surplus only. A dividend paid or any other distribution made, in any
part, from sources other than earned surplus, shall be accompanied by a
written notice (a) disclosing the amounts by which the dividend or
distribution affects stated capital, capital surplus, and earned surplus,
or (b) if such amounts are not determinable at the time of the notice,
disclosing the approximate effect of the dividend or distribution upon
stated capital, capital surplus and earned surplus and stating that the
amounts are not yet determinable.
Section 2. Reserves. The board of directors shall have power and
authority to set apart, out of any funds available for dividends, such
reserve or reserves, for any proper purpose, as the board in its discretion
shall approve, and the board shall have the power and authority to abolish
any reserve created by the board.
Section 3. Voting Securities. Unless otherwise directed by the
board, the chairman of the board or president, or in the case of their
absence or inability to act, the vice presidents, in order of their
seniority, shall have full power and authority on behalf of the corporation
to attend and to act and to vote, or to execute in the name or on behalf of
the corporation a consent in writing in lieu of a meeting of shareholders
or a proxy authorizing an agent or attorney-in-fact for the corporation to
attend and vote at any meetings of security holders of corporations in
which the corporation may hold securities, and at such meetings he or his
-15-
duly authorized agent or attorney-in-fact shall possess and may exercise
any and all rights and powers incident to the ownership of such securities
and which, as the owner thereof, the corporation might have possessed and
exercised if present. The board by resolution from time to time may confer
like power upon any other person or persons.
Section 4. Checks. All checks, drafts, and orders for the payment of
money shall be signed in the name of the corporation in such manner and by
such officer or officers or such other person or persons as the board of
directors shall from time to time designate for that purpose.
Section 5. Contracts, Conveyances, Etc. When the execution of any
contract, conveyance, or other instrument has been authorized without
specification of the executing officers, the chairman of the board,
president or any vice president, and the secretary or assistant secretary,
may execute the same in the name and on behalf of this corporation and may
affix the corporate seal thereto. The board of directors shall have power
to designate the officers and agents who shall have authority to execute
any instrument in behalf of this corporation.
Section 6. Corporate Books and Records. The corporation shall keep
books and records of account and minutes of the proceedings of its
shareholders, board of directors and executive committees, if any. The
books, records, and minutes may be kept outside this state. The
corporation shall keep at its registered office, or at the office of its
transfer agent within or without this state, records containing the names
and addresses of all shareholders, the number, class, and series of shares
held by each and the dates when they respectively became holders of record
thereof. Any of such books, records, or minutes may be in written form or
in any other form capable of being converted into written form within a
reasonable time. The corporation shall convert into written form without
charge any such record not in such form, upon written request of a person
entitled to inspect them.
Section 7. Fiscal Year. The fiscal year of the corporation shall
be fixed by resolution of the board of directors.
Section 8. Seal. If the corporation has a corporate seal, it shall
have inscribed thereon the name of the corporation and the words "Corporate
Seal" and "Michigan." The seal may be used by causing it or a facsimile to
be affixed, impressed, or reproduced in any other manner.
ARTICLE IX
AMENDMENTS
Section 1. The shareholders or the board of directors may amend or
repeal the bylaws or adopt new bylaws unless power to do so is reserved
exclusively to the shareholders by the articles of incorporation. Such
-16-
action may be taken by written consent or at any meeting of shareholders or
the board of directors; provided that if notice of any such meeting is
required by these bylaws, the notice of the meeting shall contain notice of
the proposed amendment, repeal, or new bylaws. Any bylaw hereafter made by
the shareholders shall not be altered or repealed by the board.
ARTICLE X
CONTROL SHARE ACQUISITIONS
Chapter 7B of the Michigan Business Corporation Act (M.C.L.A. Sections
450.1790 - 450.1799) shall not apply to control share acquisitions (as defined
in M.C.L.A. Section 450.1791) that occur after June 12, 1995, the date this
Article X was adopted.
-17-
EXHIBIT 10(o)
MANAGEMENT AGREEMENT AMENDMENT NO. 5
This Agreement is made this 28th day of February, 1995 between
Thomas Edison Inns, Inc., a Michigan corporation ("Inns"), St. Clair Inns,
Inc., a Michigan corporation ("St. Clair"), Spring Lake Inn, Inc., a
Michigan corporation ("Spring Lake"), Thomas Edison Inn, Incorporated, a
Michigan corporation ("Thomas Edison") and the Innkeepers Management
Company ("Manager").
R E C I T A L S
A. The undersigned parties have executed a Management Agreement
effective December 1, 1986 as amended by Agreements dated December 8, 1987,
November 18, 1988, February 25, 1992 and February 11, 1995 (as amended the
"Agreement"), which provides that for the management of certain hotels
owned by St. Clair, Spring Lake and Thomas Edison as set forth in such
Agreement.
B. Although the parties have most recently amended the Agreement to
extend the term of the Agreement to December 1, 1996 and continue the
existing management fee of 3% of gross revenues, the parties hereto have
agreed to amend the Agreement to revise those terms pursuant to the
Agreement and Amendment dated February 28, 1995 among Robert J. Skandalaris
("Skandalaris"), Donald Reynolds and the parties hereto.
C. Inns has entered into a consulting agreement with Skandalaris to
provide certain financial services to the Hotels.
D. The parties have agreed to, among other things, reduce the
management fee from 3% to 2% of gross revenues to reflect the reduction of
services to be provided by Manager as a result of consulting services to be
provided by Skandalaris.
Agreements. In consideration of the foregoing, the undersigned
parties hereby agree:
1. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Agreement.
2. Paragraph 2 of the Agreement is hereby amended such that
beginning March 1, 1995, the term of the Agreement shall be to December 1,
1996, provided, however, that the Agreement may be terminated by Inns,
St. Clair, Spring Lake and Thomas Edison at any time upon 30 days prior written
notice to Manager.
3. Paragraph 10 of the Agreement is hereby amended such that
beginning March 1, 1995, the Manager's sole compensation for its services
hereunder shall be a management fee, in respect of each fiscal year of each
Hotel (or portion of such fiscal year) from March 1, 1995 until the
Agreement is terminated, equal to 2% of the Gross Revenues derived from the
operations of the Hotels. Manager shall be reimbursed for all permitted
expenditures on behalf of Inns or the Hotels.
4. Except as specifically amended hereby, the remaining terms of the
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date written above.
Innkeepers Management Company
By: /s/Donald W. Reynolds
Its: President
Thomas Edison Inns, Inc.
By: /s/Donald W. Reynolds
Its: President
St. Clair Inn, Inc.
By: /s/Donald W. Reynolds
Its: President
Spring Lake Inn, Inc.
By: /s/Donald W. Reynolds
Its: President
Thomas Edison Inn, Incorporated
By: /s/Donald W. Reynolds
Its: President
-2-
EXHIBIT 10(p)
CONSULTING AGREEMENT
THIS AGREEMENT made February 20, 1995, by and between Robert J.
Skandalaris (the "Consultant") and Thomas Edison Inns, Inc., a Michigan
corporation (the "Corporation").
R E C I T A L S :
A. The Corporation is in the business of and desires to engage Consultant
to use his best efforts to maintain and further develop such a business for the
benefit of the Corporation in accordance with this Agreement.
B. The Consultant desires to act as a consultant to the Corporation in
accordance with this Agreement.
NOW, THEREFORE, in consideration of the agreements, covenants and
conditions contained herein and in the Redemption Agreement the parties hereby
agree as follows:
1. Engagement of the Consultant. The Corporation hereby engages the
Consultant and the Consultant hereby accepts the engagement of the Corporation
to act as a consultant of the Corporation for a one (1) year term beginning on
the date of this Agreement. The Consultant shall utilize his talents to provide
the consulting services contemplated in this Agreement.
2. Duties of the Consultant. As reasonably requested, the Consultant
will provide all necessary and reasonable services to the Corporation as may
from time-to-time be assigned to him by the Board of Directors or officers of
the Corporation, including, but not limited to, the following:
(a) Make recommendations to the Corporation regarding long-term
planning and operational efficiencies.
(b) Make recommendations to the Corporation regarding customers
development and marketing strategies.
(c) Make recommendations to the Corporation regarding personnel
matters.
(d) Make recommendations to the Corporation regarding financial
matters.
(e) Assist the Corporation in locating and interpreting past
financial and other business records as necessary.
The Consultant shall devote the needed time, attention, and skill to
the business of the Corporation. PROVIDED, HOWEVER, notwithstanding the
foregoing, the Consultant shall not be required to devote more than one hundred
(100) hours of time under this Agreement.
The Corporation shall be entitled to all of the benefits, profits or
other issues arising from or incident to all work, services and advice of the
Consultant. Such services shall only be provided at the direction of the
Corporation. If the Consultant requests that such direction be put in writing,
the Corporation shall do so.
3. Performance and Employee Relationship. The Consultant may subcontract
or provide other representatives to perform his duties specified in this
Agreement. It is specifically agreed that George Skandalaris may provide some or
all of the services to be provided by Consultant under this Agreement. The
Consultant (and all of his subcontractors, representatives and employees) shall
be an independent contractor and shall not be deemed to be the agent, employee,
partner, or joint venturer of the Corporation and shall not hold himself out as
the agent, employee, partner or joint venturer of the Corporation.
4. Compensation. The Corporation shall pay the Consultant as full
compensation for all services to be rendered by the Consultant as follows:
(a) Seventeen Thousand and Five Hundred Dollars ($17,500) per month
during the term of this contract.
5. Confidentiality. All trade secrets, customer lists, supplier lists,
financial information and all books and records regarding the Corporation
acquired by the Consultant, or coming within his custody or control during the
course of his services to the Corporation and the Consultant shall, upon
request, relinquish the same and shall not be entitled to make use of the same
for any purpose. The Consultant shall not at any time or in any manner,
directly or indirectly, divulge, disclose or communicate to any firm, person,
corporation or entity, in any manner whatsoever, any information concerning or
relating to the business of the Corporation, including without limitation, the
Corporation's customer lists or any other matters affecting or relating to the
business of the Corporation, including without limitation, the prices it obtains
or has obtained from the sale of its services, its manner of operation, its
plans, processes, marketing and sales strategy and methods, or other data,
without regard to whether all of the foregoing matters will be deemed
confidential, material or important. Anything to the contrary notwithstanding,
the parties hereto hereby stipulate that any and all knowledge, data and
information gathered by or in the possession of the Consultant and the operation
of the business of the Corporation is deemed important, material and
confidential, and gravely affects the effective and successful conduct of the
business of the Corporation and the Corporation's goodwill and that any breach
of the terms of this Paragraph shall be deemed a material breach of this
Agreement.
6. Expenses. The Consultant shall not incur any expense on behalf of the
Corporation without the Corporation's prior consent. In the event that the
Consultant shall incur any out-of-pocket expenses approved by the Corporation in
connection with his services to the Corporation, the same shall be reimbursed
forthwith upon presentation by the Consultant to the Corporation.
7. Attorneys' Fees. The Corporation and the Consultant hereby each agree
to pay the other party's costs and expenses, including reasonable attorneys'
-2-
fees, incurred in connection with successfully enforcing any of the provisions
of this Agreement.
8. Assignment. This Agreement shall not be assignable by the Corporation
or the Consultant.
9. Entire Agreement. This Agreement embodies the entire agreement
between the parties in connection with matters described herein and there are no
oral agreements existing between the parties relating to the matters described
herein which are not expressly set forth herein and covered hereby.
10. Modification. This Agreement may not be modified except in writing
signed by all parties.
11. Governing Law. This Agreement shall be governed by the laws of the
State of Michigan.
12. Binding Effect. This Agreement is binding on and shall inure to the
benefit of the parties to this Agreement and their respective successors, but it
may be not assigned by any party without the consent of the others.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of
the date and year first above written.
Consultant: Corporation:
ROBERT J. SKANDALARIS THOMAS EDISON INNS, INC.
By: /s/Robert J. Skandalaris By: /s/Donald Reynolds
Robert J. Skandalaris Donald Reynolds
Its: President
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF THOMAS EDISON
INNS, INC. AND SUBSIDIARIES FOR THE PERIOD ENDED MAY 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 1,954,491
<SECURITIES> 0
<RECEIVABLES> 459,241
<ALLOWANCES> 24,000
<INVENTORY> 193,061
<CURRENT-ASSETS> 3,403,650
<PP&E> 469,957
<DEPRECIATION> 613,900
<TOTAL-ASSETS> 18,697,969
<CURRENT-LIABILITIES> 1,539,897
<BONDS> 11,954,336
<COMMON> 15,200
0
0
<OTHER-SE> 4,528,544
<TOTAL-LIABILITY-AND-EQUITY> 18,697,969
<SALES> 6,015,511
<TOTAL-REVENUES> 6,553,482
<CGS> 6,853,057
<TOTAL-COSTS> 6,853,057
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 732,651
<INCOME-PRETAX> (1,032,226)
<INCOME-TAX> (350,900)
<INCOME-CONTINUING> (681,326)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (681,326)
<EPS-PRIMARY> (0.45)
<EPS-DILUTED> (0.45)
</TABLE>
