SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 16, 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 June 27, 1995, Mr. Robert J. Skandalaris ("Mr.
Skandalaris") submitted for filing with the Securities and Exchange
Commission Amendment No. 1 to the Schedule 13D which he had previously
filed regarding an Irrevocable Option Agreement to Purchase Common Stock
and Irrevocable Proxy dated February 3, 1995, between Mr. Skandalaris and
Mr. Donald W. Reynolds ("Mr. Reynolds"). In the amended Schedule 13D,
Mr. Skandalaris reports that on June 16, 1995, Messrs. Reynolds and
Skandalaris entered into a series of agreements whereby the Irrevocable
Proxy was rescinded ab initio and the option was repurchased by
Mr. Reynolds for a $500,000 Promissory Note. The Promissory Note is a
demand note bearing interest at the rate of 8% per annum. As a result of
those agreements, Mr. Skandalaris reports that he no longer has voting or
dispositive power over any shares of Thomas Edison Inns, Inc. Based on the
foregoing, the Company believes that Mr. Reynolds has sole or shared voting
and dispositive power over 870,248 shares (approximately 57.4%) of the
Company's Common Stock. A copy of the (i) Rescission Agreement and
Amendment No. 1 to Irrevocable Option Agreement to Purchase Common Stock
and Irrevocable Proxy, and (ii) Purchase and Sale Agreement, both of which
were submitted as exhibits to Mr. Skandalaris' Amendment No. 1 to Schedule
13D, are filed herewith as exhibits.
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 furnished with the Current
Report:
<TABLE>
<CAPTION>
Exhibit No. Document
<S> <C>
99(a) Rescission Agreement and Amendment No. 1 to
Irrevocable Option Agreement to Purchase Common
Stock and Irrevocable Proxy between Mr. Donald W.
Reynolds and Mr. Robert J. Skandalaris, dated
June 16, 1995.
99(b) Purchase and Sale Agreement between Mr. Donald W.
Reynolds and Mr. Robert J. Skandalaris, dated
June 16, 1995.
</TABLE>
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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: June 30, 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
<TABLE>
<CAPTION>
Exhibit Document
<S> <C>
99(a) Rescission Agreement and Amendment No. 1
to Irrevocable Option Agreement to Purchase
Common Stock and Irrevocable Proxy
between Mr. Donald W. Reynolds and
Mr. Robert J. Skandalaris, dated June 16, 1995.
99(b) Purchase and Sale Agreement between
Mr. Donald W. Reynolds and
Mr. Robert J. Skandalaris, dated June 16, 1995.
</TABLE>
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[{951810009.0003.JMW}]
EXHIBIT 99(a)
RESCISSION AGREEMENT
AND
AMENDMENT NO. 1
TO IRREVOCABLE OPTION AGREEMENT TO
PURCHASE COMMON STOCK AND IRREVOCABLE PROXY
THIS RESCISSION AGREEMENT AND AMENDMENT NO. 1 TO IRREVOCABLE
OPTION AGREEMENT TO PURCHASE COMMON STOCK AND IRREVOCABLE PROXY (this
"Agreement"), is made and entered into this 16th day of June, 1995, between
ROBERT J. SKANDALARIS of 33 Bloomfield Hills Parkway, Suite 155, Bloomfield
Hills, Michigan 48304 ("Skandalaris") and DONALD W. REYNOLDS of
1459 Michigan Avenue, N.W., Grand Rapids, Michigan 49503 ("Reynolds").
W I T N E S S E T H :
WHEREAS, Reynolds and Skandalaris entered into that certain
Irrevocable Option Agreement to Purchase Common Stock and Irrevocable Proxy
dated February 3, 1995 (the "Option Agreement") pursuant to which
Skandalaris was granted an option (the "Option") to purchase the shares of
Thomas Edison Inns, Inc. (the "Company") owned of record and beneficially
by Reynolds (the "Stock") and purportedly was granted an irrevocable proxy
to vote the Stock;
WHEREAS, both Reynolds and Skandalaris were not properly informed
of the provisions of Chapter 7B of the Michigan Business Corporation Act
and its application to the irrevocable proxy which was purportedly granted
to Skandalaris pursuant to the Option Agreement and have each declared that
the irrevocable proxy purportedly granted did not carry out their mutual
intent and is void ab initio; and
WHEREAS, Reynolds and Skandalaris wish to rescind the irrevocable
proxy and amend the Option Agreement as provided herein effective as of the
original date of the Option Agreement.
NOW, THEREFORE, Reynolds and Skandalaris promise and agree as
follows:
1. Reynolds and Skandalaris hereby rescind the irrevocable proxy
portion of the Option Agreement declaring it void ab initio.
2. The title of the Option Agreement is amended to read "IRREVOCABLE
OPTION AGREEMENT TO PURCHASE COMMON STOCK."
3. Recital B of the Option Agreement is hereby stricken and the
following is substituted in its place:
"B. Reynolds has approached Skandalaris and has offered to
grant him an irrevocable option to purchase the Stock."
4. The final sentence of Section 3 of the Option Agreement titled
"Term" is hereby amended by striking the parenthetical "(as well as the
irrevocable proxy)."
5. The legend in Section 9 of the Option Agreement titled "Legend"
is hereby amended by striking the words "and Irrevocable Proxy."
6. Section 8 of the Option Agreement titled "Irrevocable Proxy" is
hereby stricken and the following is substituted in its place:
"8. Sale of Option. Notwithstanding the provisions of
Section 3 of this Agreement, at any time prior to the expiration
of the term of this Agreement, provided Skandalaris has not
previously given Reynolds notice of exercise of the Option,
Reynolds may purchase the Option by paying to Skandalaris the sum
of Five Hundred Thousand Dollars ($500,000) and reimbursing
Skandalaris for legal expenses incurred in documenting the sale
of the Option to Reynolds."
7. Except as modified in Sections 2 through 6 of this Agreement, the
Option Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have signed this Agreement on the
day and year first above written, effective as of February 3, 1995.
/s/Robert J. Skandalaris
Robert J. Skandalaris
/s/Donald W. Reynolds
Donald W. Reynolds
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[{951800006.0004.JMW}]
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EXHIBIT 99(b)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), is made and
entered into this 16th day of June, 1995, between ROBERT J. SKANDALARIS of
33 Bloomfield Hills Parkway, Suite 155, Bloomfield Hills, Michigan 48304
("Skandalaris") and DONALD W. REYNOLDS of 1459 Michigan Avenue, N.E., Grand
Rapids, Michigan 49503 ("Reynolds").
W I T N E S S E T H :
WHEREAS, Reynolds and Skandalaris entered into that certain
Irrevocable Option Agreement to Purchase Common Stock and Irrevocable Proxy
dated February 3, 1995, as amended on June 16, 1995, and retitled
Irrevocable Option Agreement to Purchase Common Stock (the "Option
Agreement") pursuant to which Skandalaris was granted an option (the
"Option") to purchase the shares of Thomas Edison Inns, Inc. (the
"Company") owned of record and beneficially by Reynolds (the "Stock");
WHEREAS, pursuant to Section 8 of the Option Agreement
Skandalaris granted Reynolds the right to repurchase the option for the sum
of $500,000 plus reimbursement of legal expenses incurred in documenting
the sale; and
WHEREAS, Reynolds has agreed to repurchase the Option and
Skandalaris has agreed to sell the same to Reynolds.
NOW, THEREFORE, parties promise and agree as follows:
1. Purchase and Sale of Options. On the terms and subject to the
conditions set forth in this Agreement, Skandalaris shall sell and convey
to Reynolds, and Reynolds shall purchase from Skandalaris, the Option.
2. Purchase Price. The purchase price for the Option shall be Five
Hundred Thousand Dollars ($500,000) which shall be paid according to and by
delivery of Reynolds' promissory note in the form attached as Exhibit A and
secured by the collateral therein described which shall be a first and
primary lien security interest and encumbrance against such collateral
subordinate and subject only to prior encumbrances thereon held by
Skandalaris and/or Reynolds.
3. Closing. The closing of the purchase and sale shall take place
under mutual delivery of the executed promissory note from Reynolds to
Skandalaris and an original copy of the Option Agreements marked canceled
and signed by Skandalaris from Skandalaris to Reynolds.
4. Representations and Warranties of Skandalaris. Skandalaris
represents and warrants to Reynolds that he has not assigned any of his
rights under the Option Agreements to any third party or parties and agrees
to indemnify and hold Reynolds harmless against a claim of any third party
or parties claiming any rights, directly or indirectly, as an assignee of
Skandalaris under the Option Agreements.
5. Mutual Release. Except for any written agreement between
Skandalaris and Reynolds, including, without limitation, that certain
Demand Business Loan Note dated February 28, 1995, Skandalaris and Reynolds
each releases the other and the other's heirs, legal representatives,
successors, and assigns and agrees to hold them harmless from and against
all claims, obligations, causes of action, and liabilities of every kind
and description, whether absolute or contingent, and whether or not known
as of the date of this Agreement, which arose prior to the date of this
Agreement, which either Skandalaris or Reynolds may have against the other.
6. Other. This Agreement contains the entire agreement between the
parties regarding the subject matter herein; cannot be modified except in
writing and signed by Skandalaris and Reynolds; shall be binding on
Skandalaris and Reynolds and their legal representatives, heirs,
successors, and assigns; may not be assigned by either party; can be
specifically enforced; and shall be governed by Michigan law.
IN WITNESS WHEREOF, the parties have signed this Agreement on the
day and year first above written.
/s/ Robert J. Skandalaris
Robert J. Skandalaris
/s/ Donald W. Reynolds
Donald W. Reynolds
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EXHIBIT A
DEMAND BUSINESS LOAN NOTE
$500,000 Date: June 15, 1995
Due on Demand Grand Rapids, Michigan
FOR VALUE RECEIVED, the undersigned (the "Borrowers"), jointly
and severally, promise to pay on demand to the order of Robert J.
Skandalaris ("Lender") at 33 Bloomfield Hills Parkway, Suite 155,
Bloomfield Hills, Michigan, 48304, the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000), plus interest computed on the basis of the
actual number of days elapsed in a year of 360 days at the rate of
eight percent (8%) per annum (the "Note Rate"), and at the rate of three
percent (3%) per annum above the Note Rate upon and during the continuation
of an Event of Default (defined below) or after maturity (whether by demand
or otherwise). Accrued and unpaid interest shall be added to the principal
balance of this Note every 90 days.
The Borrowers agree to promptly pay to Lender, for application to
amounts then owing under this Note, any proceeds received by the Borrowers
or their pro rata portion of proceeds received by any affiliate controlled
by either Borrower, from any sales of assets out of the ordinary course of
business by Borrower or such affiliate, including without limitation, sales
by or of Forest Hills Golf Club, Inc. and Fables - Innkeepers Management,
Inc., net of any payment of debt secured by the asset being sold.
In no event shall the interest rate exceed the maximum rate
allowed by law; any interest payment which would for any reason be deemed
unlawful under applicable law shall be applied to principal.
To secure the payment of this Note the Borrowers pledge and grant
to Lender a continuing security interest in the following described
property and all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"): (i) all
securities and instruments pledged to Lender under the Pledge Agreements
from Borrowers, Tony Lakos, Inc. and Cynthia L. Distad, the amendments to
which have been executed simultaneously herewith; and (ii) all property or
securities declared or acknowledged to constitute security for any past,
present or future liability of either Borrower to the Lender. Each
Borrower represents the execution and delivery of this Note and the
performance of the obligations it imposes do not violate any law, do not
conflict with any agreements by which he or she is bound, do not require
the consent or approval of any governmental authority or any third party,
and that this Note is a valid and binding agreement, enforceable according
to its terms. Each Borrower further represents that all balance sheets,
profit and loss statements, and other financial statements furnished to
Lender are accurate and fairly reflect the financial condition of the
organizations and persons to which they apply on their effective dates,
including contingent liabilities of every type, which financial condition
has not changed materially and adversely since those dates.
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Whether or not Lender has made demand, this Note shall become due
immediately without notice, at Lender's option, if any of the following
events ("Event of Default") occurs:
1. A Borrower or any guarantor of this Note ("Guarantor")
fails to pay when due any amount payable under this Note or under
any agreement or instrument evidencing debt to any creditor;
2. A Borrower or any Guarantor (a) fails to observe and
perform any other term of this Note; (b) makes any materially
incorrect or misleading representation, warranty, or certificate
to Lender; (c) makes any materially incorrect or misleading
representation in any financial statement or other information
delivered to Lender; or (d) defaults under the terms of any
agreement or instrument relating to any debt for borrowed money
(other than the debt evidenced by this Note) such that the
creditor declares the debt due before its maturity;
3. A Borrower or any Guarantor defaults under the terms of
any pledge agreement, mortgage, security agreement, or any other
document executed as part of the loan evidenced by this Note, or
any guaranty of the loan evidenced by this Note becomes
unenforceable in whole or in part, or any Guarantor fails to
promptly perform under its guaranty;
4. A Borrower or any Guarantor becomes insolvent or unable
to pay its debts as they become due;
5. A Borrower or any Guarantor (a) makes an assignment for
the benefit of creditors; (b) consents to the appointment of a
custodian, receiver, or trustee for itself or for a substantial
part of its assets; or (c) commences any proceeding under any
bankruptcy, reorganization, liquidation, insolvency or similar
laws of any jurisdiction;
6. A custodian, receiver, or trustee is appointed for a
Borrower or any Guarantor or for a substantial part of its assets
without its consent and is not removed within 60 days after such
appointment.
7. Proceedings are commenced against a Borrower or any
Guarantor under any bankruptcy, reorganization, liquidation, or
similar laws of any jurisdiction, and such proceedings remain
undismissed for 60 days after commencement or a Borrower or
Guarantor consents to the commencement of such proceedings;
8. Any judgment is entered against a Borrower or any
Guarantor, or any attachment, levy, or garnishment is issued
against any property of a Borrower or any Guarantor; or
9. A Borrower or any Guarantor dies.
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If this Note is not paid at maturity, whether by demand,
acceleration or otherwise, Lender shall have all the rights and remedies
provided by any law or agreement. Any requirement of reasonable notice
shall be met if Lender sends the notice to the Borrowers at least seven
(7) days prior to the date of sale, disposition or other event giving rise
to the required notice. Lender is authorized to cause all or any part of
the Collateral to be transferred to or registered in its name or in the
name of any other person, firm or corporation, with or without designation
of the capacity of such nominee. The Borrower shall be liable for any
deficiency remaining after disposition of any Collateral. The Borrowers
are liable to Lender for all reasonable costs and expenses of every kind
incurred in the making or collection of this Note, including, without
limitation, reasonable attorneys' fees and court costs. These costs and
expenses shall include, without limitation, any costs or expenses incurred
by Lender in any bankruptcy, reorganization, insolvency or other similar
proceeding.
Each endorser and any other party liable on this Note severally
waives demand, presentment, notice of dishonor and protest, and consents to
any extension or postponement of time of its payment without limit as to
the number or period, to any substitution, exchange or release of all or
part of the Collateral, to the addition of any party, and to the release or
discharge of, or suspension of any rights and remedies against, any person
who may be liable for the payment of this Note. No delay on the part of
Lender in the exercise of any right or remedy shall operate as a waiver.
No single or partial exercise by Lender of any right or remedy shall be
effective unless in writing and signed by Lender, nor shall a waiver on one
occasion by construed as a bar to or waiver of that right on any future
occasion.
The Borrowers shall be jointly and severally liable, and the term
"Borrower" shall mean any one or more of them. This Note shall be binding
on the Borrowers and their respective executor, personal representative,
heirs, successors and assigns, and shall inure to the benefit of Lender,
his executor, personal representative, heirs, successors and assigns. Any
reference to Lender shall include any holder of this Note. This Note is
delivered in the State of Michigan and governed by Michigan law. Section
headings are for convenience of reference only and shall not affect the
interpretation of this Note.
LENDER AND THE BORROWERS, AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
ANY LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY RELATED
INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
NOTE OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS, WHETHER ORAL OR
WRITTEN, OR ACTIONS OF EITHER OF THEM. NEITHER LENDER NOR THE BORROWERS
SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE
DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER
LENDER OR THE BORROWERS EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF
THEM.
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BORROWERS:
/s/Donald W. Reynolds
Donald W. Reynolds
/s/Betty J. Reynolds
Betty J. Reynolds
Address:
1459 Michigan Avenue, N.W.
Grand Rapids, Michigan 49503
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