EX-10.38 FORM OF PREFERRED SHARE EXCHANGE

Contract Categories: Business Finance - Share Agreements
EX-10.38 4 g87458a4exv10w38.txt EX-10.38 FORM OF PREFERRED SHARE EXCHANGE 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 Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Citigroup Global Markets Inc. ("Citigroup"), Banc of America Securities LLC, Legg Mason Wood Walker, Incorporated and Raymond James & 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 Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New York 10019, 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 Merrill Lynch as representative of the Underwriters until completion of the Offering. Immediately following the closing of the Offering, Merrill Lynch 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, Merrill Lynch 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 -2- 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. 3445 Peachtree Road, N.E. Suite 700 Atlanta, Georgia 30326 Attn: General Counsel Fax: (404) 364-0088 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 -3- 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. -4- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. COMPANY: LODGIAN, INC. By: -------------------------------- Name: Title: STOCKHOLDERS: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: --------------------------------- Authorized Signatory OAKTREE CAPITAL MANAGEMENT, LLC By: --------------------------------- Authorized Signatory BRE/HY FUNDING L.L.C. By: ---------------------------------- 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) - --------------------------------------------------------------------------------------------------------------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated 236,934 550,572 4 World Financial Center North Tower, 12th Floor New York, New York 10080 - ---------------------------------------------------------------------------------------------------------------------------- Oaktree Capital Management, LLC 892,541 2,074,029 333 South Grand Avenue 28th Floor Los Angeles, California 90071 - ---------------------------------------------------------------------------------------------------------------------------- BRE/HY Funding L.L.C. 394,889 917,617 345 Park Avenue 31st Floor New York, New York 10154
(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.