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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 13, 1996
MERITAGE HOSPITALITY GROUP INC.
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(Exact Name of Registrant as Specified in Charter)
Michigan
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(State or Other Jurisdiction
of Incorporation)
0-17442 38-2730460
__________________________ ________________________
(Commission File Number) (IRS Employer
Identification Number)
40 Pearl Street, N.W., Suite 900
Grand Rapids, Michigan 49503
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(Address of Principal Executive Offices) (Zip Code)
Registrant s telephone number, including area code: (616) 776-2600
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Item 5. Other Events
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All of the litigation described in Part I, Item 3 of the Company's Annual
Report on Form 10-KSB/A Amendment No. 2 for the fiscal year ended
November 30, 1995, identified as (i) the Derivative Proceeding, (ii)
the TAI Suit, and (iii) the Meritage Suit, was settled on August 13,
1996. As reported in Part II, Item 1 of the Company's Quarterly Report
on Form 10-QSB for the quarterly period ended May 31, 1996, the
Derivative Proceeding had been dismissed without prejudice on June 28,
1996.
Pursuant to this global settlement, Donald W. Reynolds (the Company's
former majority shareholder and president) and various parties affiliated
with him, have agreed to sell all 860,148 shares of Common Stock of the
Company owned by them, with a portion of the proceeds to be paid to other
parties to the litigation and, in certain instances, to the Company. The
Company will advance certain funds designed to facilitate the settlement
which will be repaid from the shares sold by the Reynolds's group. The
settlement agreement further provides that should the Reynolds's group be
unable to sell 200,000 shares by October 13, 1996, the Company will
purchase, at $4.30 per share, that number of shares necessary to provide
a sale by the Reynolds's Group of the 200,000 shares by that date. As of
August 19, 1996, commitments have been made for the purchase of at least
200,000 shares by October 13, 1996. The settlement agreement also
provides that should the Reynolds's group be unable to sell 475,124
shares of the stock by May 12, 1997, up to $175,000 of the monies
advanced by the Company to facilitate the settlement will be deemed to be
forgiven by the Company and returned to the Reynolds's group.
To facilitate the settlement, the Company's Board of Directors adopted a
resolution, effective August 13, 1996, to amend the Company s bylaws to
add a new article whereby the Company opted out of Chapter 7B of the
Michigan Business Corporation Act. Chapter 7B, also called the Control
Share Acquisition Act, defines control shares as shares that, when
added to previously owned shares, increase a person s percentage
ownership of voting stock to 20% or more, 33 1/3% or more, or a majority
or more of outstanding Common Stock. Under Chapter 7B, a person
purchasing control shares must receive shareholder approval or the
purchased shares may be non-voting shares. Pursuant to the Board's
resolution, the new article to the Company's bylaws cannot be amended
without the approval of 80% or more of the outstanding Common Stock
entitled to vote, so long as Mr. Reynolds owns, of record or
beneficially, title to 20% or more of the Company's outstanding Common
Stock.
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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 hereto duly authorized.
MERITAGE HOSPITALITY GROUP INC.
Dated: August 20, 1996 BY: /s/ Christopher B. Hewett
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Christopher B. Hewett
President and Chief Executive Officer
