Exhibit 10.38
FORM OF PREFERRED SHARE EXCHANGE AGREEMENT
THIS PREFERRED SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into
as of June 21, 2004, by and among Lodgian, Inc., a Delaware corporation (the
"Company"), and the stockholders of the Company identified on Annex I (each a
"Stockholder" and collectively the "Stockholders").
RECITALS
WHEREAS, the Company has entered into a Purchase Agreement (the "Purchase
Agreement") with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx"), Citigroup Global Markets Inc. ("Citigroup"),
Banc of America Securities LLC, Xxxx Xxxxx Xxxx Xxxxxx, Incorporated and Xxxxxxx
Xxxxx & Associates, Inc., as representatives of the underwriters (the
"Underwriters"), providing for the public offering (the "Offering") of shares
(the "Securities") of the Company's common stock, par value $0.01 per share (the
"Common Stock");
WHEREAS, the Company has filed a registration statement on Form S-1 with
the United States Securities and Exchange Commission for the purpose of
effectuating the Offering (the "Registration Statement") and from a portion of
the proceeds of the Offering, shares of the Company's Series A Preferred Stock,
par value of $0.01 per share ("Preferred Stock") will be redeemed for cash; and
WHEREAS, the Stockholders deem it necessary and desirable to forego
receiving cash for a portion of their shares of Preferred Stock and to maintain
a portion of their investment in the Company, presently represented by shares of
Preferred Stock, in the form of shares of Common Stock.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. DEFINITIONS. Each capitalized term used herein and not otherwise
defined shall have the meaning given to it in the Registration Statement.
2. EXCHANGE OF STOCK. Immediately following the closing of the Offering,
the Stockholders agree to transfer and exchange with the Company the number of
shares of Preferred Stock owned by such Stockholders, as specifically set forth
opposite each such Stockholder's name on Annex I (as to each Stockholder, the
"Exchange Shares") and Company agrees to issue to the Stockholders that number
of shares of Common Stock specified opposite each such Stockholder's name on
Annex I (as to each Stockholder, the "Shares") in amounts determined as provided
on Annex I.
3. CLOSING; DELIVERABLES.
3.1 Closing. The exchange of the Shares shall take place at the
offices of Sidley Xxxxxx Xxxxx & Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at a closing (the "Closing") on the day of and immediately following
the closing of the Offering on the Closing Date, as defined in the Purchase
Agreement.
3.2 Transactions and Documents at Closing. Upon signing this
Agreement, each Stockholder has surrendered its Exchange Shares, together with
an executed stock power, to be held in escrow by Xxxxxxx Xxxxx as representative
of the Underwriters until completion of the Offering. Immediately following the
closing of the Offering, Xxxxxxx Xxxxx shall release the Exchange Shares from
escrow to the Company and the Company shall issue and deliver to each
Stockholder a certificate for the Shares specified on Annex I. If the Purchase
Agreement is terminated or the closing of the Offering does not occur prior to
July 31, 2004, Xxxxxxx Xxxxx shall release the Exchange Shares to the
Stockholders.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Stockholder as follows:
4.1 Validity. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject,
as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles.
4.2 Common Stock. At the time of the Closing and after giving effect
to the transactions contemplated by this Agreement, the authorized Common Stock
of the Company will be as described in the Registration Statement. All of the
outstanding shares of Common Stock are, and at the Closing will be, validly
issued and outstanding, fully paid and non-assessable.
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.
Each Stockholder represents and warrants to the Company as follows:
5.1 Validity. This Agreement has been duly executed and delivered by
the Stockholder and constitutes the legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect affecting
the enforcement of creditors' rights generally and to general equity principles.
5.2 Stock Legends. If a Stockholder is presently an affiliate (as
that term is defined in SEC Rule 144 under the Securities Act of 1933) or if
the Exchange Shares are "restricted securities" (as defined in Rule 144), the
Exchange Shares shall bear legends in substantially the following terms:
(i) THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
THE SECURITIES LAWS OF ANY STATE AND ARE BEING EXCHANGED IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO SECTION 3(A)(9) THEREOF.
(ii) THE SHARES ARE SUBJECT TO RESTRICTION ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT PURSUANT TO REGISTRATION OR EXEMPTION FROM SUCH REGISTRATION. THE
SHARES WILL BEAR A LEGEND TO SUCH EFFECT. STOCKHOLDER FURTHER UNDERSTANDS THAT
THE EXEMPTION FROM REGISTRATION AFFORDED BY RULE 144 UNDER THE SECURITIES ACT
DEPENDS ON THE SATISFACTION OF VARIOUS CONDITIONS AND THAT, IF APPLICABLE, RULE
144 AFFORDS THE BASIS OF SALES OF THE SHARES IN LIMITED AMOUNTS UNDER CERTAIN
CONDITIONS.
(iii) THE SHARES BEING EXCHANGED HEREUNDER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY
OR ADEQUACY OF THIS OFFERING.
6. MISCELLANEOUS.
6.1 Further Assurances. From time to time after Closing, the
Stockholders and the Company, without charge, shall perform such other acts, and
shall execute and acknowledge and shall furnish such other instruments,
documents, materials and information, as the other party may reasonably request
in order to confirm the consummation of the transaction provided for in this
Agreement.
6.2 Notices. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent (i) by first class certified mail,
postage prepaid, (ii) by a nationally recognized overnight courier service or
(iii) by telecopy, in each case addressed to such party at the address or
telecopy number set forth below or such other address or telecopy number as may
hereafter be designed in writing by the addressee to the addressor listing all
parties:
If to the Company: Lodgian, Inc.
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
If to a Stockholder: At the address set forth on Annex I
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications
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shall be deemed to have been received (i) in the case of personal delivery, on
the date of such delivery, (ii) in the case of mailing, on the fifth business
day following the date of such mailing, (iii) in the case of courier service, on
the next business day following the date of such transmission and (iv) in the
case of telecopy, upon confirmed receipt.
6.3 Entire Agreement; Modifications. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
may not be amended or modified nor any provisions waived except in a writing
signed by the Company and Stockholder.
6.4 Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any party hereto.
6.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures of
the undersigned parties will have the same force and effect as original
signatures.
6.6 Severability. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
or legality of the remainder of this Agreement.
6.7 Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the state of New York excluding choice-of-law principles of the law of such
state that would require the application of the laws of a jurisdiction other
than the state of New York.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
LODGIAN, INC.
By:
--------------------------------
Name:
Title:
STOCKHOLDERS:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
---------------------------------
Authorized Signatory
OAKTREE CAPITAL MANAGEMENT, LLC
By:
---------------------------------
Authorized Signatory
BRE/HY FUNDING L.L.C.
By:
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Authorized Signatory
ANNEX I
Stockholders
PRE-EXCHANGE PRE-EXCHANGE POST-EXCHANGE POST-EXCHANGE
NUMBER OF SHARES VALUE OF SHARES NUMBER OF VALUE OF SHARES
OF PREFERRED OF PREFERRED SHARES OF OF COMMON STOCK
STOCKHOLDER NAME AND ADDRESS STOCK STOCK (1) COMMON STOCK (2)
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Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated 236,934 550,572
4 World Financial Center
Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Oaktree Capital Management, LLC 892,541 2,074,029
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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BRE/HY Funding L.L.C. 394,889 917,617
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(1) Each share of Preferred Stock is valued at 104% of the sum of its
liquidation value plus accrued and unpaid dividends as of the date of the
Preferred Share Exchange.
(2) Each share of Common Stock shall be valued at the initial public offering
price of the Securities set forth in Schedule B to the Purchase Agreement.