SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 17, 1995
THOMAS EDISON INNS, INC.
(Exact Name of Registrant as Specified in its Charter)
Michigan
(State or Other Jurisdiction
of Incorporation)
0-17442 38-2730460
(Commission File Number) (IRS Employer
Identification Number)
500 North Riverside
St. Clair, Michigan 48079
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (313) 329-2222
Item 1. Changes in Control of Registrant.
On or about July 17, 1995, Thomas Edison Inns, Inc. (the
"Company") received a copy of a report on Schedule 13D, which had been
submitted for filing with the Securities and Exchange Commission by TEI
Acquisition, Inc. ("TAI"). The Schedule 13D reports that TAI was formed to
acquire a majority, if not all, of the common stock, $.01 par value per
share, of the Company ("Common Stock"). The Schedule 13D indicates that
the sole shareholder of TAI is Investall, Inc., a Michigan corporation
("Investall"), and that the sole officer, director and shareholder of
Investall is Mr. Douglas F. Ziesemer.
According to the Schedule 13D, TAI entered into an agreement
dated July 6, 1995 (the "Stock Purchase Agreement"), with Donald W.
Reynolds, Debra A. Reynolds, Rebecca L. Reynolds-Awtrey, Thomas W.
Reynolds, Cynthia Distad and Innkeepers Management Company (collectively
the "Sellers") pursuant to which TAI agreed to acquire and the Sellers
agreed to sell to TAI 870,248 shares of Common Stock (the "Shares")
beneficially owned by the Sellers at a price of $8.50 per share. A copy of
the Stock Purchase Agreement is attached as Exhibit 99(b) to this Form 8-K.
The Shares represent 57.2% of the outstanding shares of Common Stock. The
Schedule 13D indicates that, because the Shares are currently pledged to
other parties, the closing of the purchase of the Shares will take place
when all approvals, consents and authorizations for a transfer of the
Shares to TAI have been obtained or TAI is otherwise satisfied with respect
to the necessity of the approvals, consents and authorizations. If the
closing does not take place by September 20, 1995, TAI has the option of
either terminating or extending the Stock Purchase Agreement. The Schedule
13D indicates that, concurrently with the execution of the Stock Purchase
Agreement, the Sellers granted TAI an Irrevocable Proxy to vote the Shares.
If the closing does not occur by September 20, 1995, and TAI elects to
terminate the Stock Purchase Agreement, the Irrevocable Proxy would also
terminate.
According to the Schedule 13D, TAI delivered a promissory note
(the "Note") to Donald W. Reynolds concurrently with the execution of the
Stock Purchase Agreement in the principal amount of $7,397,108,
representing the purchase price for the Shares. The Note obligates TAI to
make the following payments of principal to the Sellers: $2,000,000 on
September 20, 1995; and sixteen payments of $337,319.25 to be paid annually
on March 20 and September 20, commencing March 20, 1996, and ending
September 20, 2003. Interest will accrue at a rate of 8% per annum and is
to be paid at the time each payment of principal is made. At the closing
of the purchase of the Shares, the Note is to be secured by a pledge to the
Sellers of the Shares purchased by TAI under the Stock Purchase Agreement.
The Schedule 13D indicates that TAI intends to obtain additional
shareholders to assist in providing the funds that will be required to make
the payments required by the Note and also intends to obtain debt financing
to obtain funds needed to carry out its plan of acquiring additional shares
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of Common Stock. The Schedule 13D indicates that TAI has not finalized the
terms of participation for any investor, but anticipates that Strategic
Alliance Corporation ("SAC") will become the principal shareholder of TAI.
SAC is described as a private holding company based in Rockford, Illinois.
The Schedule 13D also indicates that TAI and SAC have had discussions with
lenders to obtain the debt financing necessary to acquire at least 80% of
the outstanding Common Stock, but that neither TAI nor SAC have entered
into any binding agreement for such financing.
The Company entered into a Letter of Intent with TAI dated June
16, 1995 (the "Letter of Intent"), in which TAI proposed to acquire the
Company by a merger of the Company with TAI. By its terms, the Letter of
Intent expired if the parties had not executed a definitive merger agreement
on or before July 7, 1995, unless that date was extended by mutual agreement
of the parties. The parties did not execute a definitive merger agreement
on or before July 7, 1995 and, as of July 17, 1995, the parties had not
discussed any extension of the July 7, 1995 deadline. According to the
Schedule 13D, however, TAI intends to proceed with its plans as outlined in
the Letter of Intent and as further described in the Schedule 13D. A copy
of the Letter of Intent is filed as Exhibit 99(a) to this Form 8-K. The
Schedule 13D also indicates that TAI may only be interested in acquiring
80%, as opposed to 100%, of the outstanding shares of Common Stock.
The Schedule 13D indicates that TAI is currently exploring and
may in the future continue to explore various alternatives with respect to
the Company in addition to those discussed above, including (i) the
acquisition of additional shares of Common Stock; (ii) an extraordinary
corporate transaction, such as a merger, reorganization or share exchange;
(iii) a change in the present board of directors of the Company; (iv) a
material change in the capitalization or dividend policy of the Company;
(v) any other material change in the Company's business or corporate
structure; and (vi) any action similar to those described in (i) through
(v). The Schedule 13D also indicates that TAI has had and anticipates that
it will continue to have discussions with the Company's management
concerning the Company.
Meritage Hospitality Group Incorporated ("Meritage"), a
shareholder of the Company, has filed a complaint against Sellers and, as
amended, the Company in the United States District Court for the Western
District of Michigan Southern Division (the "Court") challenging the voting
rights of the Shares. On July 21, 1995, the Court entered a temporary
restraining order that (i) prohibits Sellers from voting the Shares at any
meeting of the Company's shareholders and from executing any consent in
lieu of a meeting of shareholders with respect to the Shares pending a
hearing on August 1, 1995; (ii) prohibits the owners of the Shares or any
person or entity that claims to have voting rights to the Shares, including
TAI, from voting the Shares at any meeting of the Company's shareholders
and from executing any consent in lieu of a meeting of shareholders with
respect to the Shares pending a hearing on August 1, 1995; (iii) prohibits
Meritage and various other shareholders of the Company, other than the
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Sellers, from voting any shares of Common Stock at any meeting of the
Company's shareholders and from executing any consent in lieu of a meeting
of shareholders with respect to their stock pending a hearing on August 1,
1995; and (iv) prohibits the Company from recognizing or in any way giving
effect to any effort to vote any of the Common Stock that would be
inconsistent with (i) through (iii) above and from permitting record
ownership of any of the Shares to be transferred on the Company's books and
records, pending a hearing on August 1, 1995.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits. The following exhibits are filed as part of
this Current Report:
Exhibit No. Document
99(a) Letter of Intent between TAI and the
Company, dated June 16, 1995.
99(b) Stock Purchase Agreement between TAI and
Donald W. Reynolds, Debra A. Reynolds,
Rebecca L. Reynolds-Awtrey, Thomas W.
Reynolds, Cynthia Distad and Innkeepers
Management Company, dated July 6, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
THOMAS EDISON INNS, INC.
Date: August 1, 1995 By /s/ David C. Distad
David C. Distad
Vice President and Chief Financial
Officer (principal financial and
accounting officer)
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EXHIBIT INDEX
Exhibit No. Document
99(a) Letter of Intent between TAI and the
Company, dated June 16, 1995.
99(b) Stock Purchase Agreement between TAI and
Donald W. Reynolds, Debra A. Reynolds,
Rebecca L. Reynolds-Awtrey, Thomas W.
Reynolds, Cynthia Distad and Innkeepers
Management Company, dated July 6, 1995.
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EXHIBIT 99(a)
EXHIBIT 1
TEI ACQUISITION, INC.
June 16, 1995
Board of Directors
Thomas Edison Inns, Inc.
500 Thomas Edison Parkway
Port Huron, MI 48060-2900
Re: Acquisition of Thomas Edison Inns, Inc.
Dear Board Members:
This letter of intent ("Letter") contains the proposal of TEI
Acquisition, Inc., a Michigan corporation formerly known as BM-Woodbridge
Place 80, Inc. ("Newco"), to acquire Thomas Edison Inns, Inc., a Michigan
corporation ("TEI") by having a merger between TEI and Newco in which the
existing shareholders of TEI would, at their option, receive cash or notes
for their shares of TEI common stock. Pursuant to your request, we have
enclosed information about the principals of TEI and its ability to carry
out its obligations under the merger that is proposed hereunder. If you
desire additional information or have any questions or concerns, please
contact us at your earliest convenience.
This letter contemplates that if TEI is interested in pursuing
negotiations on this proposal, we would attempt to arrive at a written
definitive merger agreement (the "Definitive Agreement") that would contain
a precise acquisition price, all of the customary representations and
warranties, indemnification provisions, and the other terms and conditions
acceptable to Newco and TEI, along with such other documentation as may be
necessary or appropriate in conjunction with the Definitive Agreement. Any
commitment by Newco and TEI regarding this transaction will be subject to
negotiations, execution, and delivery of the Definitive Agreement. If the
parties have not executed a Definitive Agreement on or before July 7, 1995
(unless such date is mutually extended by TEI and Newco), all obligations
under this Letter shall terminate and the parties shall have no liability
to each other whatsoever.
1. The Merger. Pursuant to the Definitive Agreement, Newco would be
merged into TEI, with TEI being the surviving corporation. Each share of
TEI common stock that is outstanding immediately prior to the effective
date of the merger (other than any shares owned by Newco, which will be
canceled) will, at the option of the holder, be converted into the right to
receive: (a) $8.50 or (b) a note for a price per share and with payment
terms identical to the terms of the note that Newco will utilize to
purchase the shares of TEI common stock owned by Donald Reynolds. Each
share of common stock of Newco that is outstanding immediately prior to the
effective date of the merger will be converted into one share of TEI common
stock. Prior to the record date for the meeting of shareholders that TEI
would call to vote upon the merger with Newco, it is anticipated that Newco
might make a tender offer to acquire shares of TEI common stock. The
consideration to be paid pursuant to that tender offer would be the same as
the consideration that would be paid to the TEI shareholders pursuant to
the Definitive Agreement.
2. Conditions to be Satisfied by TEI. Newco's obligations to
proceed with the acquisition would be expressly conditioned upon the
occurrence or fulfillment of certain items to be negotiated by the parties
and set forth in the Definitive Agreement, including, but not limited to:
(a) Completion by Newco, its accountants, counsel, and
other experts of a customary due diligence review, with results
satisfactory to Newco, which review will be allowed to commence
immediately after this Letter is signed by the parties, which
will proceed thereafter with full and free access of Newco and
its advisors to all of TEI's properties, records, and business
operations during normal business hours.
(b) In accordance with Section 782(1)(b) of the Michigan
Business Corporation Act (the "MBCA"), TEI's Board of Directors
will adopt a resolution that will exempt from the requirements of
Section 780 of the MBCA any "business combination" (as defined in
Section 776(5) of the MBCA) between TEI and Newco or its existing
or future affiliates. That resolution will be adopted on or
before June 12, 1995, and will not be revoked or amended.
(c) In accordance with Section 794 of the MBCA, TEI's Board
of Directors will amend TEI's bylaws to provide that Chapter 7B
of the MBCA will not apply to any "control share acquisitions"
(as defined in Section 791 of the MBCA) that occur after the date
of the bylaw amendment. That amendment will be made on or before
June 12, 1995, and will not be revoked or amended.
(d) The truth, correctness, and accuracy as of the closing
date of TEI's representations and warranties contained in the
Definitive Agreement and TEI's performance of or compliance with
all covenants and other obligations required by the Definitive
Agreement to be performed or complied with by TEI as of the
closing date.
3. Other Conditions. Newco's obligations to proceed with the
acquisition would also be expressly conditioned upon the execution and
performance of satisfactory agreements with Donald Reynolds and/or Ronald
Skandalaris regarding the consideration to be issued to Mr. Reynolds in
exchange for his TEI shares and the voting of those shares in favor of the
merger with Newco.
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4. Finder's and Broker's Fees. Neither Newco or TEI is, or will be,
obligated to any person for any finder's or broker's fee or commission in
connection with the proposed acquisition other than pursuant to agreements
with Robert Skandalaris and Buckeye Resource and Management, Inc., copies
of which have been provided to Newco.
5. Effective Date. If approved by TEI's shareholders, the merger
would become effective on a date (the "Effective Date") as soon as
practicable after the shareholders meeting required to be held to vote upon
the merger with Newco, but in no event sooner than fulfillment of all the
conditions mentioned above. TEI will seek to hold that shareholders
meeting as soon as possible, in accordance with the requirements of the
MBCA and the regulations of the Securities and Exchange Commission.
6. Expenses. Each party will bear its own acquisition costs,
including without limitation, preparation of agreements and documents, the
fees and expenses of its acquisition advisors, brokers, finders, legal
counsel, appraisers, and independent accountants, whether or not the
acquisition contemplated herein is consummated.
7. Conduct of Business. During the period from the date hereof to
the termination of negotiations or the Effective Date, whichever is later,
TEI will:
(a) Conduct its business in the same manner as it has been
regularly, and is currently being, conducted;
(b) Use its best efforts to maintain its business and
employees, customers, assets, suppliers, licenses, and operations
as an ongoing concern in accordance with the past custom and
practice and to satisfy the conditions agreed upon herein by the
parties; and
(c) Not do any of the following: (i) amend any provisions
of its articles or by-laws (other than as set forth herein);
(ii) make any dividends or other distributions in respect of its
capital stock or purchase or redeem or agree to purchase or
redeem any shares of its capital stock; (iii) issue or sell any
shares of its capital stock or grant any options, warrants, or
other rights to purchase any such shares or any securities
convertible or exchangeable into such shares; (iv) issue or sell
any debt securities; (v) incur any obligations or liabilities
except in the ordinary course of business; (vi) mortgage, pledge,
or incur any lien or other charge or encumbrance as to any of its
properties or assets except in the ordinary course of business;
(vii) forgive or cancel any debts or claims or waive any rights
except in the ordinary course of business; (viii) take any action
or omit to take any action in order to comply with the terms and
conditions of any existing financing arrangements to which TEI is
a party; (ix) modify the terms or conditions of any financing
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arrangement of which TEI is a party; (x) enter into, amend,
modify, renew, or terminate any management agreement to which TEI
is a party; (xi) increase the salaries of any employees or
officers in excess of the amount in effect as of December 31,
1994, other than normal increases consistent with past practices;
(xii) adopt or amend any bonus, profit-sharing, compensation,
stock option, pension, retirement, or other similar plan
agreement or arrangement for the benefit of employees; or
(xiii) enter into any agreement for the provision or receipt of
consulting services.
8. Definitive Agreement. Within fifteen (15) days after:
(i) receipt of your acceptance of this Letter; (ii) receipt of copies of
the resolutions adopted pursuant to Sections 2(b) and 2(c) of this Letter;
and (iii) Newco's satisfaction that it will be able to resolve the
conditions set forth in Section 3, Newco's legal counsel will prepare a
preliminary draft of the Definitive Agreement for the acquisition and
submit the draft of review by you and your counsel.
9. Binding Nature. It is understood that this Letter merely
constitutes a statement of our initial proposal with respect to an
acquisition, does not contain all matters upon which agreement must be
reached in order for the acquisition to be consummated, and creates no
rights or obligations in favor of any party except for Paragraphs 2(a), 7,
8, and 11 hereof. A binding commitment with respect to any other terms of
the proposed acquisition will be only as set forth in the Definitive
Agreement. Except as set forth in this paragraph, until the Definitive
Agreement is finalized, properly executed and delivered, neither party
shall have any legally binding obligation to the other (whether under this
Letter or otherwise), including, but not limited to, a legal duty to
continue negotiations to reach such a Definitive Agreement, and either
party may discontinue negotiations at any time for any reason whatsoever.
10. Expiration. This Letter can only be accepted by TEI in writing
on or before 5:00 p.m. Detroit time on June 21, 1995.
11. Public Announcements. Except as required by law, TEI agrees not
to make any public statements with respect to the transactions contemplated
hereby without the prior approval of Newco. The parties understand and
agree that the rules and regulations of the Securities and Exchange
Commission will require TEI to disclose certain terms of this transaction.
Sincerely yours,
TEI ACQUISITION, INC.
By: /s/
Douglas F. Ziesemer, President
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The terms of this Letter are hereby accepted by TEI as of this _____ day of
June, 1995, pursuant to resolutions adopted by its Board of Directors on
June ____, 1995.
THOMAS EDISON INNS, INC.
By: /s/
Its:
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EXHIBIT 99(b)
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 6th day of July,
1995, by and between DONALD W. REYNOLDS and the other persons named on
Exhibit 1A hereto (collectively referred to herein as the "Shareholders")
and TEI ACQUISITION, INC., a Michigan corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, the Shareholders are the holders of 870,248 shares of
the common stock of Thomas Edison Inns, Inc., a Michigan corporation
("TEI");
WHEREAS, pursuant to the terms and conditions of this Agreement,
the Shareholders desire to sell and Purchaser desires to purchase all of
the shares of the common stock of TEI that are owned by the Shareholders
and listed on Exhibit 1A (the "TEI Shares").
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and conditions herein contained, the parties agree as
follows:
1. Purchase of TEI Shares. Subject to the terms and conditions of
this Agreement and based upon the warranties and representations herein
contained, the Shareholders shall sell all of the 870,248 TEI Shares to
Purchaser for an aggregate consideration of Seven Million Three Hundred
Ninety-Seven Thousand One Hundred Eight Dollars ($7,397,108), ($8.50 per
share) to be paid in the form of a promissory note in the form attached
hereto as Exhibit 1B to be delivered to and payable to Donald W. Reynolds,
for himself and as agent of all of the Shareholders (the "Purchaser's
Note") concurrently with execution of this Agreement. The number of the
TEI Shares owned by each Shareholder and the total purchase price to be
paid to each Shareholder are set forth in Exhibit 1A. The repayment of the
Purchaser's Notes will be secured by a pledge of the TEI Shares by
Purchaser pursuant to a pledge agreement in the form attached hereto as
Exhibit 1C (the "Pledge Agreement"). The Pledge Agreement provides for a
partial release of the shares that are pledged thereunder as payments are
made on the Purchaser Note. Upon execution of this Agreement, each of the
Sellers will deliver to Purchaser an irrevocable proxy in the form attached
hereto as Exhibit 1D.
2. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants that:
2.01 Incorporation and Good Standing. The Purchaser is a corporation
duly incorporated, validly existing, and in good standing under the laws of
the state of Michigan and has all requisite corporate power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own its
properties and assets and to carry on its business as it is presently being
conducted.
2.02 Authorization. The Board of Directors of the Purchaser has
approved this Agreement and the transactions contemplated hereby and has
authorized the execution and delivery of this Agreement by the Purchaser.
The Purchaser has full power, authority, and legal right to enter into this
Agreement and to consummate the transactions contemplated hereby and this
Agreement constitutes a legal, valid, and binding obligation of the
Purchaser enforceable in accordance with its terms.
2.03 Litigation. There is no action, suit, proceeding, or
investigation pending, at law or in equity, or to the knowledge of the
Purchaser's management, threatened, against or affecting the Purchaser
before or in any court, either state or federal, public board, or body
which calls into question the creation, organization, or existence of the
Purchaser, the validity of this Agreement or the authority of the Purchaser
to execute, deliver, and carry out the terms of this Agreement or which
judgment, order, or finding can reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) of the Purchaser.
3. Representations and Warranties of the Shareholders. Each
Shareholder jointly and severally represents and warrants to Purchaser
that:
3.01 Authorization. The execution of this Agreement has been duly
authorized by each of them and is binding upon them in accordance with its
terms. There is no agreement, judgment, or order which prevents any
Shareholder from executing, delivering, and carrying out the terms of this
Agreement except as referenced on Exhibit 1A.
3.02 Ownership of Shares. Each Shareholder is the owner of the number
of TEI Shares set opposite his name in Exhibit 1A and owns those shares
free and clear of any claims, liens, or encumbrances except as set forth on
Exhibit 1A.
3.03 SEC Periodic Reports are Accurate. To the best of their
knowledge, all of the statements made by TEI in the periodic reports it has
filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 are true and accurate.
3.04 Financial Statements.
(a) Attached hereto as Exhibit 3.04 are the audited balance
sheets of TEI as of November 30, 1994 and 1993, and related
audited statements of operation and changes in financial position
for the years then ended, including the notes thereto and the
unaudited balance sheets of TEI as of February 28, 1995 and 1994,
and the related unaudited statements of operation and changes in
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financial position for the periods then ended, including the
notes thereto (collectively referred to as the "TEI Financial
Statements").
(b) To the best of their knowledge, all such financial
statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout
the periods involved. To the best of their knowledge, as of the
date of any such balance sheets, except as and to the extent
reflected or reserved against therein, TEI did not have any
liabilities or obligations (absolute or contingent) which should
be reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly
the value of the assets of TEI in accordance with generally
accepted accounting principles. To the best of their knowledge,
such statements of operations present fairly the results of
operations of TEI for the periods indicated and such statements
of changes in financial position present fairly the information
which should be presented therein in accordance with generally
accepted accounting principles.
3.05 TEI Resolutions. Attached hereto as Exhibit 3.05 are the
resolutions that have been duly adopted by the Board of Directors of TEI to
opt out of the control share acquisition provisions of Chapter 7B of the
Michigan Business Corporation Act (the "MBCA") and to provide that the
"business combination" provisions of Chapter 7A of the MBCA shall not apply
to the Purchaser or its affiliates. Those resolutions were adopted on June
12, 1995, and have not been revoked or amended.
3.06 Financial Condition of Purchaser. Shareholders understand that
Purchaser does not currently have sufficient funds on hand with which to
make all payments that will be required to be made on the Purchaser's Note.
Shareholders understand that the ability of Purchaser to make all of those
payments will depend upon Purchaser obtaining additional funds from its
operations, debt, or equity financing or otherwise prior to the time that
those payments are required.
4. Conditions to Closing. The obligations of Purchaser to complete
the purchase of the TEI Shares from the Shareholders are subject to the
satisfaction of the following conditions precedent.
(a) As of the Closing, the resolutions set forth on Exhibit
3.05 shall be in full force and effect and shall not have been
revoked, amended, or superseded by TEI's Board of Directors;
(b) All of the warranties and representations of the
Shareholders shall be true as of the Closing; and
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(c) All approvals, consents, and authorizations necessary
for a transfer of the TEI Shares hereunder, including, without
limitation, from the persons listed on Exhibit 1A to whom certain
of the TEI Shares have been pledged, shall have been obtained or
Purchaser shall otherwise be satisfied with regard to the
necessity of, such approvals, consents, and authorizations.
5. The Closing. The closing of the sale (the "Closing") shall take
place at the offices of Donald W. Reynolds or at such other time or at such
other place as may be agreed upon by the parties hereto as soon as
practicable following satisfaction of the conditions precedent set forth in
Section 4 hereof. If the Closing has not occurred by September 20, 1995,
Purchaser may, at its sole option, terminate this Agreement or extend the
date for the Closing. Each Shareholder hereby appoints Donald W. Reynolds
as its attorney-in-fact to represent the Shareholder at the Closing to
deliver that Shareholder's TEI Shares and to receive and provide a receipt
for the payment of the purchase price of those shares.
6.01 Action by Shareholders at the Closing. At the Closing, the
Shareholders shall:
(a) deliver to Purchaser certificates for all of the TEI
Shares duly endorsed with all necessary transfer tax and other
revenue stamps, acquired at Shareholder's expense, affixed
thereto so as to make Purchaser the sole owner thereof, free and
clear of all liens, claims, and encumbrances; and
(b) deliver any and all certificates, agreements, consents,
releases, resolutions, or other instruments required by this
Agreement to be so delivered at or prior to the Closing together
with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby.
6.02 Action by Purchaser at the Closing. At the Closing, Purchaser
shall:
(a) deliver the Pledge Agreement to secure the payment of
the Purchaser's Note and deliver payment of any amounts then due
on the Purchaser's Note; and
(b) deliver any and all certificates, agreements, consents,
resolutions, or other instruments required by this Agreement to
be so delivered at or prior to the Closing together with such
other items as may be reasonably requested by the parties hereto
and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
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7. Survival of Agreements. All covenants, agreements,
representations, and warranties made herein shall survive execution and
delivery of this Agreement and the Closing hereunder.
8. Modifications, Waiver. No modification or waiver of any
provision of this Agreement or consent to any departure therefrom shall be
effective unless in writing and approved by all of the parties hereto.
9. Entire Agreement. This Agreement and the Exhibits hereto contain
the entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties, commitments, whether in writing or oral, prior
to the date hereof.
10. Successors and Assigns. All of the terms of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
11. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall
constitute one instrument. Each party shall receive a duplicate original
of the counterpart copy or copies executed by it.
12. Governing Law and Forum. This Agreement shall be governed by the
laws of the state of Michigan without regard to its principles of conflicts
of laws.
13. Severability. In the event any provision of this Agreement or
the application of such provision to any party shall be held by a court of
competent jurisdiction to be contrary to law, the remaining provisions of
this Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by persons thereunto duly authorized as of the date first above
written.
TEI ACQUISITION, INC.
By /s/ Douglas Ziesmer
Douglas Ziesmer, President
SHAREHOLDERS
/s/ Donald W. Reynolds
Donald W. Reynolds
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/s/ Debra A. Reynolds
Debra A. Reynolds
/s/ Rebecca L. Reynolds-Awtrey
Rebecca L. Reynolds
/s/ Thomas W. Reynolds
Thomas W. Reynolds
/s/ Cynthia L. Distad
Cynthia L. Distad
INNKEEPERS MANAGEMENT
COMPANY
By: /s/ Donald W. Reynolds
Donald W. Reynolds
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OTHER EXHIBITS TO STOCK PURCHASE AGREEMENT
Exhibit 1B Form of Purchaser's Note. See Exhibits to Schedule 13D.
Exhibit 1C Form of Pledge Agreement. See Exhibits to Schedule 13D.
Exhibit 1D Form of Irrevocable Proxy. See Exhibits to Schedule 13D.
Exhibit 3.04 Financial Statements of TEI. See financial statements in
Form 10-K for year ended November 30, 1994, and Form 10-Q
for quarter ended February 28, 1995.
Exhibit 3.05 TEI Resolutions Adopted June 12, 1995. See attached.
EXHIBIT 1A
<TABLE>
<CAPTION>
Number of Purchase Price
Name TEI Shares to be Received Notes(1)
<S> <C> <C> <C>
Donald W. Reynolds 747,850 $ 6,356,725 <F5>
Deborah A. Reynolds and
Donald W. Reynolds, JT. TEN 10,000 $ 85,000 <F3>
Rebecca L. Reynolds and
Donald W. Reynolds, JT. TEN 10,000 $ 85,000
Thomas W. Reynolds and
Donald W. Reynolds, JT. TEN 10,000 $ 85,000 <F2>
Cynthia L. Distad and
Donald W. Reynolds, JT. TEN 10,000 $ 85,000 <F4>
Innkeepers Management Company 82,398 $ 700,404 <F3><F5>
Total 870,248 $7,397,108
<FN>
<F1> Certain of the TEI Shares listed below are also pledged to Robert
Skandalaris.
<F2> Pledged to First National Bank of Macomb County.
<F3> 34,052 shares pledged to Old Kent Bank.
<F4> Pledged to Old Kent Bank.
<F5> An aggregate of 470,016 shares are pledged to Old Kent Bank, 123,850
shares are pledged to First of America Bank, and 200,000 shares are
pledged to Independent Bank.
</FN>
</TABLE>
EXHIBIT 1B
PROMISSORY NOTE
$7,397,108 July ___, 1995
Grand Rapids, Michigan
FOR VALUE RECEIVED, TEI ACQUISITION, INC., a Michigan corporation
("Purchaser"), promises to pay to the order of DONALD W. REYNOLDS
("Seller") the principal sum of SEVEN MILLION THREE HUNDRED NINETY SEVEN
THOUSAND ONE HUNDRED EIGHT DOLLARS ($7,397,108.00), with interest from
the date hereof at the rate of eight percent (8.0%) per annum. The Seller has
accepted this Note on behalf of himself and the other persons who are
sellers under a Stock Purchase Agreement of even date (the "Stock Purchase
Agreement") between Seller and those persons as sellers and Purchaser as
purchaser. The principal and interest owed hereunder shall be payable as
follows: $2,000,000 of principal shall be paid on September 20, 1995, and
16 payments of $337,319.25 of principal shall be paid on March 20 and
September 20 of each year, commencing March 20, 1996. In the event the
closing under Stock Purchase Agreement has not yet occurred on the date
when a payment of principal is due, that payment due date shall be extended
to the date of closing under the Stock Purchase Agreement. All accrued
interest hereunder shall be paid at the time of each payment of principal
is due. Notwithstanding the foregoing, the entire principal balance and
accrued interest shall be paid in full on or before September 20, 2003. If
any installment of principal or interest on this Note is not paid in full
when due, the entire unpaid indebtedness of this Note (both principal and
accrued interest) shall bear interest from that due date at the rate of ten
percent (10%) per annum.
Interest payable on this Note shall be computed on the basis of
the actual number of days elapsed divided by the number of days in the then
current year. Whenever any payment of principal or interest to be made in
respect hereof becomes due on a weekend or legal holiday, the maturity
thereof shall be extended to the next succeeding day and interest on any
such principal amount shall accrue at the applicable rate during such
extension.
All payments of principal and interest on this Note shall be made
in lawful money of the United States of America in immediately available
funds at the office of Seller located at 1459 Michigan Street, N.E., Grand
Rapids, Michigan 49503, or at such other place as any holder of this Note
may designate by notice to Purchaser not less than 5 days prior to the date
when such payment is due and payable.
In the event that any amount payable hereunder is determined to
be interest in excess of the maximum interest rate permitted by applicable
law, it shall be reduced to such maximum.
Purchaser's obligations under this Note are expressly subject to
the terms and conditions of the Stock Purchase Agreement. Pursuant to a
Stock Pledge Agreement between Purchaser and Seller to be delivered at the
closing under the Stock Purchase Agreement (the "Pledge Agreement"), the
repayment of the principal and interest of this Note shall be secured by a
pledge by Purchaser to Seller of certain shares of stock of Thomas Edison
Inns, Inc., a Michigan corporation, that will be owned by Purchaser (the
"Collateral"). Reference is hereby made to the Pledge Agreement for a
statement of the rights and powers of Seller thereunder and a description
of the Collateral.
The occurrence of any one or more of the following which has not
been cured by Purchaser within thirty (30) days after notice of intent to
declare a default is sent by Seller shall constitute a default hereunder by
Purchaser: (a) the non-payment, when due, of any principal or interest
payment to be made pursuant to this Note whether at maturity, upon
acceleration, or otherwise; (b) if any act of bankruptcy is committed,
general assignment for the benefit of creditors is made or proceeding under
any insolvency or bankruptcy law is filed by or against Purchaser; or (c)
if Seller in good faith reasonably believes that the ability of Purchaser
to satisfy its obligations hereunder is, or will soon be, impaired, time
being of the essence. Purchaser shall give prompt notice to Seller of any
of the events set forth in (b) of the preceding sentence.
In the event of a default hereunder, the holder hereof may at any
time thereafter, without notice or demand, declare that the entire unpaid
principal amount of this Note and all accrued and unpaid interest thereon
shall become immediately due and payable, whereupon all such amounts shall
become forthwith due and payable without any further notice, presentment,
or demand of payment, all of which are hereby expressly waived. The
acceptance by Seller of any payment in an amount less than the amount then
due shall be deemed an acceptance on account only, and the failure to pay
the entire amount due shall be and continue to be an event of default, and
at any time thereafter and until the entire amount due has been paid.
Seller shall be entitled to exercise all rights conferred upon it in this
Note in the event of a default.
In the event of a default hereunder, the Purchaser hereby agrees
to pay all reasonable costs and expenses incurred by the Seller in
connection with the enforcement and collection of this Note (including,
without limitation, actual attorney's fees and expenses).
The remedies of the Seller under this Note are cumulative, are in
addition to any other remedies provided for by law or in equity, and may,
to the extent permitted by law, be exercised concurrently or separately,
and the exercise of any one remedy shall not be deemed an election of such
remedy or to preclude the exercise of any other remedy.
The Purchaser shall have the right and option to make prepayments
of principal, in whole or in part, in advance of maturity, at such time or
times and in such amount or amounts as it may elect, without premium or
penalty. All payments received by Seller shall first be applied against
-2-
accrued interest, with the balance applied against the payments of
principal due hereunder in the order of their maturities.
The Purchaser and all guarantors of this Note hereby jointly and
severally waive presentment, demand, notice of dishonor, protest, and
notice of protest of this Note and each of the foregoing hereby jointly and
severally agree that no extension of time, renewal, waivers, or
modifications granted by the holder hereof with respect to the payment or
other provisions of this Note, whether with or without notice, shall affect
the obligation of any party hereto.
This Note has been executed in the State of Michigan and its
interpretation and construction shall be governed by the internal laws of
the State of Michigan.
WITNESS TEI ACQUISITION, INC.
By:
Doug Ziesmer, President
-3-
EXHIBIT 1C
PLEDGE AGREEMENT
THIS AGREEMENT made and entered into as of this ___ day of
__________, 1995 by and between TEI ACQUISITION, INC., a Michigan
corporation (the "Pledgor") and DONALD W. REYNOLDS, on behalf of himself
and the other persons listed on the attached Exhibit A (the "Secured
Party").
W I T N E S S E T H :
WHEREAS, Pledgor has given Secured Party a promissory note dated
July __, 1995, in the principal amount of $7,397,108 (the "Note"), as
payment of the purchase price of 870,248 shares (the "Pledged Shares") of
the common stock of Thomas Edison Inns, Inc., a Michigan corporation (the
"Company") that were sold by Secured Party to Pledgor; and
WHEREAS, Pledgor wishes to grant further security and assurance
to Secured Party in order to secure performance of the Note and to that
effect has agreed to pledge to Secured Party all of its right, title, and
interest in and to the Pledged Shares.
NOW, THEREFORE, in consideration of the foregoing and for $1.00
and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto mutually agree as follows:
1. Pledge of Shares. As security for the full payment of the Note,
the Pledgor shall deliver, pledge, and assign to Secured Party and creates
a security interest in all of its right, title, and interest in and to the
Pledged Shares. All of the capital stock of the Company that Pledgor owns
beneficially or of record as of the date hereof is presently represented by
the stock certificates which shall be delivered to Secured Party. Secured
Party shall maintain possession and custody of the certificates
representing the Pledged Shares. Pledgor has also delivered to Secured
Party an assignment separate from certificate in the form attached hereto
as Exhibit B for each certificate representing the Pledged Shares that has
been signed by Pledgor with its signature guaranteed by an authorized
officer of a bank or brokerage house.
2. Inducing Representations of Pledgor. Pledgor represents and
warrants to Secured Party that:
(a) Pledgor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Shares and such shares
are and will remain free and clear of all pledges, liens,
security interests, and other encumbrances and restrictions on
the transfer and assignment thereof, except those set forth in
this Agreement and any other liens that are agreed to by Secured
Party;
(b) Other than this Agreement, there is no outstanding
options, warrants, or other agreements with respect to the
Pledged Shares; and
(c) The execution and delivery of this Pledge Agreement by
Pledgor will not result in a violation of any mortgage,
indenture, contract, instrument, judgment, decree, order,
statute, rule, or regulation to which the Pledgor or the Pledged
Shares is subject.
3. Administration of Security. The following provisions shall
govern the administration of the Pledged Shares:
(a) Pledgor shall be entitled to vote or consent with
respect to the Pledged Shares in any manner not inconsistent with
this Pledge Agreement.
(b) Upon the occurrence, and during the continuance of, an
Event of Default (as used herein, "Event of Default" shall mean
the occurrence of any default under the Note, or the failure of
Pledgor to satisfy any obligation under this Pledge Agreement),
at any time, or from time to time, after the date hereof, that
Pledgor, as record and beneficial owner of the Pledged Shares,
shall have received or shall have become entitled to receive, any
cash dividends, redemption payments, or other distributions, or
any securities or property (including cash) by way of stock-split,
spin-off, split-up, or as a result or reclassification,
combination of shares or the like, or any reorganization, merger,
or consolidation of the Company, then and in each case, Pledgor
shall deliver to Secured Party, and Secured Party shall be
entitled to receive and retain, all such securities or property
as part of the Pledged Shares as additional security.
(c) Pledgor shall immediately upon request by Secured Party
and in confirmation of the security interests hereby created,
execute and deliver to Secured Party such further instruments,
assurances, and agreements, in form and substance as Secured
Party shall request.
(d) Subject to any sale by Secured Party or other
disposition by Secured Party of the Pledged Shares or other
property pursuant to this Pledge Agreement, the Pledged Shares
and any other property then held as part of the Pledged Shares,
in accordance with the provisions of this Pledge Agreement, shall
be returned to Pledgor upon full payment, satisfaction, and
termination of the Note. In addition, upon each payment of
-2-
principal and accrued interest that is made upon the Note, the
Pledgor shall be entitled to have released from this Pledge
Agreement a number of Pledged Shares equal to the original number
of Pledged Shares multiplied by a fraction, the numerator of
which is the amount of the principal payment of the Note which is
then being made and the denominator of which is the original
principal balance of the Note.
4. Remedies.
Upon the occurrence of any Event of Default:
(a) Secured Party may instruct Pledgor to register the
Pledged Shares in the name of Secured Party or in the name of
Secured Party's nominee if it has not already done so.
(b) Secured Party may exercise all voting and corporate
rights with respect to said Pledged Shares and may exercise any
and all rights of conversion, exchange, subscription, or any
other rights, privileges, or options pertaining to any of the
Pledged Shares as if Secured Party were the absolute owner
thereof, including, without limitation, the right to exchange, at
its discretion, any and all of the Pledged Shares upon the
merger, consolidation, reorganization, recapitalization, or other
readjustment of the Company. Secured Party shall have the right
to deposit and deliver any and all of the Pledged Shares to any
committee, depository, transfer agent, registrar, or other
designated agency upon such terms and conditions as Secured Party
may choose, all without liability. However, Secured Party shall
have no duty to exercise any of the aforesaid rights, privileges,
or options and shall not be responsible for any failure to do so
or delay in doing so.
(c) In addition to all the rights and remedies of a secured
party under the Uniform Commercial Code, Secured Party shall have
the right, and without demand of performance or other demand,
advertisement or of notice of any kind (except the notice
specified below of time and place of public or private sale) to
or upon the Pledgor or any other person (all and each of which
demands, advertisements, and/or notices are hereby expressly
waived to the extent permitted by law), to proceed to forthwith
collect, receive, appropriate, and realize upon the Pledged
Shares, or any part thereof, and to proceed to forthwith sell,
assign, give option or options to purchase, contract to sell, or
otherwise dispose of and deliver the Pledged Shares or any part
thereof in one or more parcels at public or private sale or sales
at any stock exchange, broker's board, or at any of Secured
Party's offices or elsewhere on such terms (including, without
limitation, a requirement that any purchaser of all or any part
-3-
of the Pledged Shares shall be required to purchase the shares
constituting the Pledged Shares solely for investment and without
any intention to make a distribution thereof) as Secured Party,
in its sole and absolute discretion, may deem best. The
foregoing disposition may be for cash or on credit or for future
delivery without assumption of any credit risk, with the right of
Secured Party to purchase all or any part of the Pledged Shares
so sold at any such sale or sales, public or private, free of any
right or equity which is hereby expressly waived or released by
the Pledgor.
(d) All of Secured Party's rights and remedies, including,
but not limited to, the foregoing, shall be cumulative and not
exclusive and shall be enforceable alternatively, successively,
or concurrently as Secured Party may deem expedient.
(e) Pledgor recognizes that Secured Party may be unable to
effect a public sale of all or part of the Pledged Shares by
reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Act"), but may be compelled to resort to
one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire the
Pledged Shares for their own account, for investment, and not
with a view to the distribution or resale thereof. Pledgor
agrees that private sales so made may be at prices and on other
terms less favorable to the seller than if the Pledged Shares
were sold at public sale, and that Secured Party has no
obligation to delay the sale of any Pledged Shares for the period
of time necessary to permit the registration of the Pledged
Shares for public sale under the Act. Pledgor agrees that a
private sale or sales made under the foregoing circumstances
shall be deemed to have been made in a commercially reasonable
manner, provided, however, Pledgor shall receive at least thirty
(30) days' written notice of the time and place of each proposed
private sale.
(f) If any consent, approval, or authorization of any
state, municipal, or other governmental department, agency, or
authority should be necessary to effectuate any sale or other
disposition of the Pledged Shares, or any partial disposition of
the Pledged Shares, Pledgor will execute all such applications
and other instruments as may be required in connection with
securing any such consent, approval, or authorization, and will
otherwise use its best efforts to secure the same.
(g) Upon any sale or other disposition, Secured Party shall
have the right to deliver, assign, and transfer to the purchaser
thereof the Pledged Shares so sold or disposed of. Each
purchaser, at any such sale or other disposition (including
Secured Party), shall hold the Pledged Shares free from any claim
-4-
or right or whatever kind, including any equity or right of
redemption of Pledgor. Pledgor specifically waives all rights of
redemption, stay, or appraisal which it had or may have under any
rule or law or statute now existing or hereafter adopted.
(h) Secured Party shall not be obligated to make any sale
or other disposition, unless the terms hereof shall be
satisfactory to it. Secured Party, may, without notice or
publication, adjourn any private or public sale, and, upon five
(5) days' prior notice to Pledgor, hold such sale at any time or
place to which the same may be so adjourned. In case of any sale
of all or any part of the Pledged Shares, on credit or future
delivery, the Pledged Shares so sold may be retained by Secured
Party until the selling price is paid by the purchaser thereof,
but the Secured Party shall incur no liability in case of the
failure of such purchaser to take up and pay for the property so
sold and, in case of any such failure, such property may again be
sold as herein provided.
5. Disposition of Proceeds.
(a) The proceeds of any sale or disposition of all or any
part of the Pledged Shares shall be applied by Secured Party in
the following order:
(i) to the payment in full of the costs and expenses
of such sale or sales, collections, and the protection,
declaration, and enforcement of any security interest
granted hereunder, including the reasonable compensation of
Secured Party's agents and attorneys;
(ii) to the payment of the unpaid principal and
interest on the Note in such order as Secured Party may
elect; and
(iii) to the payment to Pledgor of any surplus then
remaining from such proceeds, subject to the rights of any
holder of liens on the Pledged Shares of which Secured Party
has actual notice.
(b) In the event that the proceeds of any sale or other
disposition are insufficient to cover the principal of, and
interest on, the Note, plus costs and expenses of the sale or
other disposition, Pledgor shall remain liable for any
deficiency.
6. General Provisions.
(a) Secured Party, or its designee, is hereby appointed the
attorney-in-fact of Pledgor for the purpose of carrying out the
-5-
provisions of this Pledge Agreement and taking any action and
executing any instrument which Secured Party reasonably may deem
necessary and advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable as one coupled
with an interest.
(b) Secured Party and its assigns shall have no obligation
in respect of the Pledged Shares, except to hold and dispose of
the same in accordance with the terms of this Pledge Agreement.
(c) Any notice required to be given or made to a party
hereunder must be in writing and delivered in person or sent by
first class mail or express delivery to the address of each party
appearing below its signature hereto. Addresses for notice
purposes may be changed by giving a notice of the new address.
(d) No failure on the part of Secured Party to exercise,
and no delay in exercising, any right, power, or remedy hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise by Secured Party of any right, power, or remedy
hereunder preclude any other or future exercise thereof, or the
exercise of any other right, power, or remedy. The remedies
herein provided are cumulative and are not exclusive of any
remedies provided by law or any other agreement. The
representations, covenants, and agreements of Pledgor herein
contained shall survive the date hereof.
(e) Neither this Pledge Agreement nor the provisions hereof
can be changed, waived, or terminated except in writing signed by
both parties.
(f) This Pledge Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective
successors, legal representatives, and assigns.
(g) This Pledge Agreement may be executed in two or more
counterparts and shall be governed by, and construed in
accordance with, the internal laws of the state of Michigan.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the date first above written.
WITNESSES: PLEDGOR:
TEI ACQUISITION, INC.
By:
Douglas Ziesemer, President
-6-
SECURED PARTY:
Donald W. Reynolds
-7-
EXHIBIT A
Donald W. Reynolds
Deborah A. Reynolds and
Donald W. Reynolds, JT. TEN
Rebecca L. Reynolds and
Donald W. Reynolds, JT. TEN
Thomas W. Reynolds and
Donald W. Reynolds, JT. TEN
Cynthia L. Distad and
Donald W. Reynolds, JT. TEN
Innkeepers Management Company
EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned does (do) hereby sell,
assign, and transfer to _______________________________________ (Social
Security or Taxpayer Identification Number _______________), ________
shares of the common stock of Thomas Edison Inns, a Michigan corporation
(the "Company"), represented by Certificate Number(s)
______________________________________, standing in the name of the
undersigned on the books of the Company.
The undersigned does (do) hereby irrevocably constitute and
appoint ______________________________________________________ as attorney
to transfer the said stock on the books of the Company, with full power of
substitution in the premises.
TEI ACQUISITION, INC.
Dated:
Douglas Ziesemer, President
Signature(s) Guaranteed By
NOTE: The signature(s) to this Assignment must correspond with the
name(s) as written on the face of the certificate(s) in every
particular without alteration. The signature(s) to this
Assignment must also be guaranteed by a bank, trust company, or
stock exchange member recognized by the Company's transfer agent.
EXHIBIT 1D
IRREVOCABLE PROXY
The undersigned, being the owners of shares of capital stock of
Thomas Edison Inns, a Michigan corporation (the "Company"), have entered
into a Stock Purchase Agreement dated July 6, 1995, between the undersigned
as sellers and TEI Acquisition, Inc., a Michigan corporation ("TAI") as
purchaser (the "Stock Purchase Agreement") whereby the undersigned have
agreed to sell to TAI an aggregate of 870,248 shares of the Company's
common stock owned by the undersigned. The attached Exhibit A shows the
number of shares of the Company's common stock owned by the undersigned.
The attached Exhibit A shows the number of shares of the Company's common
stock owned by each of the undersigned. The undersigned do hereby jointly
and severally constitute and appoint Douglas F. Ziesemer or any other
person designated by TAI as our true and lawful attorneys for us and in our
name, place, and stead, with full power of substitution, to vote as our
proxies all our shares in the Company, at any and all meetings, regular or
special, of the stockholders of the Company or any adjournments thereof,
giving and granting to our said attorneys all the powers we would possess
if personally present. We hereby jointly and severally ratify and confirm
all acts that attorney or its substitutes shall lawfully do or cause to be
done by virtue hereof; and hereby revoke any proxy or proxies heretofore
given by us to any person or persons whatsoever.
This proxy is being granted in accordance with the terms of the
Stock Purchase Agreement. Accordingly, this proxy shall be deemed to be
coupled with an interest and will therefore by irrevocable without the
consent of TAI. Not withstanding the foregoing, pursuant to the terms of
the Stock Purchase Agreement, this proxy will terminate upon the
termination of the Stock Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by persons thereunto duly authorized as of the date first above
written.
Donald W. Reynolds
Deborah A. Reynolds
Rebecca L. Reynolds
Thomas W. Reynolds
Cynthia L. Distad
INNKEEPERS MANAGEMENT
COMPANY
By
Donald W. Reynolds
-2-
EXHIBIT A
Shares Owned by Each Person Granting Proxy to TAI
<TABLE>
<CAPTION>
Number of
Name Shares
<S> <C>
Donald W. Reynolds 747,850
Deborah A. Reynolds and
Donald W. Reynolds, JT.TEN 10,000
Rebecca L. Reynolds and
Donald W. Reynolds, JT.TEN 10,000
Thomas W. Reynolds and
Donald W. Reynolds, JT.TEN 10,000
Cynthia L. Distad and
Donald W. Reynolds, JT.TEN 10,000
Innkeepers Management Company 82,398
Total 870,248
</TABLE>
EXHIBIT 3.05
PROPOSED RESOLUTIONS TO BE ADOPTED BY
THE BOARD OF DIRECTORS OF
THOMAS EDISON INNS, INC.
Opt out of Chapter 7A of MBCA.
RESOLVED, that pursuant to 782(1)(b) of the Michigan Business
Corporation Act (the "MBCA"), the requirements of Section 780 of the MBCA
shall not apply to any "business combination" (as defined in Section 776(5)
of the MBCA) of any type between the Company and TEI Acquisition, Inc.
and/or its existing or future affiliates.
Opt out Chapter 7B of MBCA.
RESOLVED, that pursuant to Article IX of the Company's Bylaws and
Section 794 of the MBCA, the following new Article X shall be added to the
Company's Bylaws to "opt out" of the provisions of Chapter 7B of the MBCA.
ARTICLE X
CONTROL SHARE ACQUISITIONS
Chapter 7B of the Michigan Business Corporation Act (MCLA 450.1790 -
450.1799) shall not apply to control share acquisitions (as defined in MCLA
450.1791) that occur after June 12, 1995, the date this Article X was
adopted.
