Exhibit 99.2
May 7, 2001
Edgecliff Holdings, LLC
Casuarina Cayman Holdings Ltd.
Edgecliff Management, LLC
1994 William J. Yung Family Trust
Joseph Yung
William J. Yung
The 1998 William J. Yung and Martha A. Yung Family Trust
207 Grandview Drive
Fort Mitchell, Kentucky 41017
Attention: William J. Yung
Re: Standstill Agreement
Ladies and Gentlemen:
Each of you is either a stockholder of Lodgian, Inc. (the "Company")
or an affiliate of a stockholder of the Company (collectively, the "Yung
Stockholders"). William J. Yung has made a request to become a member of the
Board of Directors of the Company (the "Board"). For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Immediately following the Company's 2001 Annual Meeting of
Stockholders, the Board will elect William J. Yung as a director to fill the
vacancy created by the resignation of Michael A. Leven. Mr. Yung will thereupon
serve as a Class II director with his term of office expiring at the Company's
2003 Annual Meeting of Stockholders and until his successor shall have been duly
elected and qualified. If the Board forms an executive, management or similar
committee (other than the Company's current Office of the Chairman and any
special committee for purposes of a transaction or other matter involving a
conflict of interest), the Board will appoint Mr. Yung to such committee.
From the date of this Agreement until the earlier of (i) Mr. Yung's
election to the Board or (ii) the second anniversary of the date of this
Agreement, Mr. Yung shall have the right to attend all meetings (including
telephonic meetings) of the Board in a non-voting observer capacity, and in this
respect, shall receive copies of all notices and other materials provided to
directors; provided, however, that Mr. Yung hereby agrees to hold in confidence
and trust and to act in a fiduciary manner with respect to all information so
provided and/or obtained at such meetings.
2. The Yung Stockholders acknowledge and agree that the terms of this
Agreement and the transactions contemplated hereby will not be used to
facilitate an acquisition of control of the Company by the Yung Stockholders. As
a condition to the election of Mr. Yung to the Board, Mr. Yung shall execute and
deliver to the Company his written resignation from the Board and from the
boards of directors of any direct or indirect subsidiaries of the Company,
effective on the first to occur of (i) the first date that the Yung Stockholders
and their affiliates and associates cease to beneficially own (within the
meaning of Rule 13d-3 promulgated under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act")) at least 3% of the outstanding voting
securities of the Company and (ii) the later of (X) five calendar days following
receipt of written notice from the Company (a "Company Resignation Notice") to
the Yung Stockholders of a material breach by any of the Yung Stockholders of
any provision of this Agreement or (Y) if the Yung Stockholders deliver a
written objection to such notice to the Company no later than such fifth
calendar day pursuant to the immediately following paragraph, the calendar day
immediately following receipt of written notice of a final determination by a
panel of independent arbitrators selected pursuant to the immediately following
paragraph that any of the Yung Stockholders shall have materially breached any
provision of this Agreement.
Any of the Yung Stockholders shall have the right to object to a
Company Resignation Notice by delivering a written objection notice (an
"Objection Notice") to the Company no later than the fifth calendar day
following receipt of the Company Resignation Notice. If an Objection Notice is
delivered, the matter of resignation shall be definitively resolved through
expedited binding arbitration conducted in New York, New York by a panel of
three arbitrators. The Yung Stockholders, on the one hand, and the Company, on
the other hand, will each select an arbitrator no later than five business days
following the Company's receipt of the Objection Notice and such two arbitrators
will in turn select a third arbitrator no later than the tenth business day
following the Company's receipt of the Objection Notice. The arbitration will be
conducted in accordance with the then-current Commercial Arbitration Rules of
the American Arbitration Association. The determination of the panel shall be
made within 30 days following the Company's receipt of the Objection Notice and
shall be final and binding, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
3. Each of the Yung Stockholders jointly and severally agrees that,
for a period beginning on the date of this Agreement and ending (i) on the fifth
anniversary of the date of this Agreement, with respect to the matters
identified in clauses (a), (b), (h), (i) and (l) (or clauses (j), (k) and (m)
with respect to the foregoing matters) or (ii) on the earlier of (X) the date
that Mr. Yung is not re-nominated for election to the Board, (Y) ninety days
after the date that Mr. Yung voluntarily resigns from the Board and (Z) the
fifth anniversary of the date of this Agreement, with respect to the matters
identified in clauses (c), (d), (e), (f) and (g) (or clauses (j), (k) and (m)
with respect to the foregoing matters), each of the Yung Stockholders shall not,
and will cause their affiliates and associates not to, individually or
collectively, directly or indirectly:
(a) acquire, offer to acquire, or agree to acquire,
whether by purchase, tender or exchange offer or otherwise, any
securities or debt, direct or indirect rights or options to acquire
any securities or debt, or securities or instruments convertible into
securities or debt, of the Company, if, after giving effect to the
acquisition of such securities or debt (whether or not actually
acquired), the Yung Stockholders and their affiliates and associates
would beneficially own (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) in excess of an aggregate of 14.9% of the then
outstanding voting securities of the Company or any shares of any
class of non-voting securities or debt of the Company; provided,
however, that any increase in the Yung Stockholders' percentage
ownership of voting securities of the Company due to a redemption or
repurchase by the Company of its securities shall not be deemed to be
an acquisition of the Company's securities;
(b) make any public announcement with respect to an offer
to acquire, or, unless required by law, an agreement to acquire,
whether by purchase or otherwise, any assets, direct or indirect
rights or options to acquire any assets, of the Company or any of its
subsidiaries or of any successor to or person in control of the
Company;
(c) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" to vote (as such terms
are used in the proxy rules of the Securities and Exchange Commission)
securities of the Company, or seek to advise or influence any person
or entity with respect to any voting of any securities of the Company
on any matter submitted, or to be submitted to, the stockholders of
the Company (other than by virtue of the participation of Mr. Yung on
the Board);
(d) seek, alone or in concert with others (other than by
virtue of the participation of Mr. Yung on the Board), (i) to call, or
participate in calling, any special meeting of the stockholders of the
Company, (ii) representation on the Board, except as specifically set
forth herein, (iii) the removal of any member of the Board or (iv) to
make any proposal to be considered and/or voted upon by the
stockholders of the Company;
(e) form, join or in any way participate in a "group"
(other than the Yung Stockholders and their affiliates and associates)
within the meaning of Section 13(d)(3) of the Exchange Act with
respect to any securities of the Company;
(f) execute any written consent as stockholders with
respect to the Company or any of its securities (except any such
consent solicited or recommended by the Board);
(g) act, alone or in concert with others, to control or
seek to control, change or influence the management, stockholders, the
Board or policies of the Company or nominate any person as a director
of the Company (in each case, other than by virtue of the
participation of Mr. Yung on the Board);
(h) arrange, or in any way participate in, any financing
for the purchase of any securities or debt or securities convertible
or exchangeable into or exercisable for any securities or debt or
assets of the Company or any of its subsidiaries, or acquire debt of
the Company or any of its subsidiaries, or advise, assist, encourage
or participate with any other person or entity in connection with
action inconsistent with this Agreement;
(i) solicit, negotiate with, or provide any information
to, any person, or make any public announcement, or make or submit a
proposal or offer (with or without conditions), alone or in concert
with others, with respect to (A) a merger, business combination,
restructuring, recapitalization, exchange offer, liquidation or
similar transaction involving the Company, (B) any other acquisition
of the Company, or (C) any acquisition of securities or debt of the
Company;
(j) propose any of the foregoing unless and until such
proposal is specifically invited or approved by the Company;
(k) publicly disclose any intention, plan or arrangement
inconsistent with any of the foregoing or request to amend, waive or
terminate any provision of this Agreement;
(l) take any action for the purpose of requiring the
Company to make a public announcement regarding the possibility of
business combination or merger involving the Company or any of its
subsidiaries; or
(m) take or cause others to take any action inconsistent
with the foregoing.
4. From the date of this Agreement until the date that Mr.
Yung is no longer a director of the Company, each of the Yung
Stockholders shall vote all of its securities of the Company in favor
of the director nominees proposed by the Board at the Company's 2001,
2002 and 2003 Annual Meetings of Stockholders.
5. All parties hereto agree and acknowledge that the Board
is placing material reliance on the terms of this Agreement as a basis
of and condition to the Board's election of Mr. Yung as a director of
the Company and that the Yung Stockholders are placing material
reliance on the terms of this Agreement as a basis of and a condition
to their agreement to the restrictions set forth paragraphs 2, 3, and
4 of this Agreement.
6. Each of the Yung Stockholders hereby acknowledges that
it is aware of the restrictions imposed by the United States
securities laws on the purchase and sale of securities by any person
who has received material, non-public information from the issuer of
such securities and on the communication of such information to any
other person when it is reasonably foreseeable that such other person
is likely to purchase or sell securities in reliance on such
information.
7. The Yung Stockholders jointly and severally represent
and warrant that they, together with their affiliates and associates,
beneficially own an aggregate of 3,157,050 shares of common stock of
the Company and such shares constitute all of the securities of the
Company beneficially owned by the Yung Stockholders and their
affiliates and associates.
8. It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach or threatened breach of this
Agreement. Each party hereto shall be entitled to equitable relief by
way of injunction or specific performance if any other party or any of
their respective officers, directors, investment bankers, attorneys,
accountants or other representatives breach, or threaten to breach,
any of the provisions of this Agreement, such remedy by way of
equitable relief being cumulative, and not exclusive, of any other
remedies and/or rights that the complaining party shall be entitled to
exercise. It is further understood and agreed that no failure or delay
by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
9. In the event of any dispute between the parties hereto
regarding the performance or interpretation of this Agreement, the
prevailing party shall be entitled to its reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which
such party may be entitled.
10. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of
the State of New York, without regard to the principles of conflict of
laws.
11. All the terms and provisions of this Agreement shall
inure to the benefit of and shall be enforceable by the successors and
assigns of the parties hereto.
12. This Agreement contains the entire understanding of
the parties with respect to its subject matter and supersedes Section
1(c) of that certain Exclusivity Agreement dated as of December 26,
2000 between the Company and Edgecliff Holdings, LLC. There are no
restrictions, agreements, promises, representations, warranties,
covenants or understandings other than those expressly set forth
herein. This Agreement may be amended only by a written instrument
duly executed by the parties or their respective successors or
assigns.
13. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given if so given) by hand delivery,
cable, telecopy (confirmed in writing) or telex, or by mail
(registered or certified, postage prepaid, return receipt requested)
to the respective parties as follows:
If to the Company:
Lodgian, Inc.
3445 Peachtree Road, N.E.
Suite 700
Atlanta, GA 30326
Attention: General Counsel
With a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attention: Dennis J. Block, Esq.
If to the Yung Stockholders:
c/o William J. Yung
207 Grandview Drive
Fort Mitchell, Kentucky 41017
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: James M. Dubin, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
14. This Agreement may be executed in counterparts, each
of which shall be an original, but each of which together shall
constitute one and the same Agreement. Copies of executed counterparts
transmitted by telecopy or other electronic transmission service shall
be considered original executed counterparts, provided receipt of
copies of such counterparts is confirmed.
15. The Company represents and warrants that it has the
corporate power and authority to execute, deliver and carry out the
terms and provisions of this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby. This Agreement has been duly
authorized by the Company's Board. The Company represents and warrants
that this Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company, enforceable in accordance with its terms. Each of the
Yung Stockholders that is not a natural person represents and warrants
on its own behalf that it has the power and authority to execute,
deliver and carry out the provisions of this Agreement and to
consummate the transactions contemplated hereby. Each of the Yung
Stockholders that is not a natural person represents and warrants on
its own behalf that this Agreement has been duly authorized, executed
and delivered, and constitutes its valid and binding obligation, and
is enforceable against it in accordance with its terms. Each of the
Yung Stockholders who is a natural person represents and warrants on
its own behalf that he has the power and authority to execute, deliver
and carry out the provisions of this Agreement and to consummate the
transactions contemplated hereby. Each of the Yung Stockholders who is
a natural person represents and warrants on its own behalf that this
Agreement has been duly executed and delivered, constitutes his valid
and binding obligation, and is enforceable against him in accordance
with its terms.
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Kindly confirm that the foregoing represents our understanding and
agreement in respect of this matter by signing below where indicated and
returning the signed copy.
Sincerely,
LODGIAN, INC.
By: /s/ Thomas Arasi
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Thomas Arasi
President and Chief Executive Officer
The undersigned Yung Stockholders hereby agree to the foregoing this 7th, day of
May, 2001.
EDGECLIFF HOLDINGS, LLC. CASUARINA CAYMAN HOLDINGS LTD.
By /s/ William J. Yung By /s/ William J. Yung
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Name: William J. Yung Name: William J. Yung
Title: President Title: President
EDGECLIFF MANAGEMENT, LLC 1994 WILLIAM J. YUNG FAMILY TRUST
By /s/ William J. Yung By: The Fifth Third Bank, as trustee
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Name: William J. Yung
Title: President By: /s/ Timothy A. Rodgers
--------------------------------
Name: Timothy A. Rodgers
Title: Trust Officer
/s/ Joseph Yung /s/ William J. Yung
- ------------------------------------ ---------------------------------
Joseph Yung William J. Yung
1998 WILLIAM J. YUNG AND MARTHA A.
YUNG FAMILY TRUST
By: The Fifth Third Bank, as trustee
By: /s/ Timothy A. Rodgers
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Name: Timothy A. Rodgers
Title: Trust Officer