EXHIBIT 10.9
PREFERRED SHARE EXCHANGE AGREEMENT
THIS PREFERRED SHARE EXCHANGE AGREEMENT (this "Agreement") is entered
into as of June 22, 2004, by and among Lodgian, Inc., a Delaware corporation
(the "Company"), and the record and/or beneficial 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, each of the Stockholders agrees to transfer and exchange, or use
reasonable efforts to cause its custodian, if applicable, to transfer and
exchange, with the Company the number of shares of Preferred Stock owned of
record or beneficially 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, or to their
custodian, as directed by the applicable Stockholder, 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, or shall deliver an irrevocable instruction to its custodian, as
applicable, directing it to deliver, its Exchange Shares, together with an
executed stock power, to be held in escrow by Wachovia Bank, N.A. ("Wachovia"),
transfer agent for the Company, until completion of the Offering. Immediately
following the closing of the Offering, Wachovia shall release the Exchange
Shares from escrow to the Company and the Company shall issue and deliver to
each Stockholder, or to their custodian, as directed by the applicable
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, Wachovia shall release the Exchange Shares to the applicable
Stockholders or their custodian, if applicable.
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, WARRANTIES AND UNDERTAKINGS OF STOCKHOLDER.
5.1 Validity. Each Stockholder represents and warrants to the
Company on its own behalf, and not on behalf of the other Stockholders, that
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. Each Stockholder agrees, on its own behalf and
not on behalf of the other Stockholders, that if such 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
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.
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(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 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.
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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: /s/ Daniel E. Ellis
-------------------------------------------
Name: Daniel E. Ellis
Title: Senior Vice President and General
Counsel
STOCKHOLDERS:
OCM REAL ESTATE OPPORTUNITIES FUND II, L.P.
By: Oaktree Capital Management, LLC, its
General Partner
By: /s/ Philip Hofmann
-------------------------------------------
Name: Philip Hofmann
Title: Managing Director
By: /s/ Marc Porosoff
-------------------------------------------
Name: Marc Porosoff
Title: Senior Vice President, Legal
OCM REAL ESTATE OPPORTUNITIES FUND III, L.P.
By: OCM Real Estate Opportunities Fund III GP,
LLC, its general partner
By: Oaktree Capital Management, LLC, its
managing member
By: /s/ Philip Hofmann
---------------------------------------
Name: Philip Hofmann
Title: Managing Director
By: /s/ Marc Porosoff
--------------------------------------
Name: Marc Porosoff
Title: Senior Vice President, Legal
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OCM REAL ESTATE OPPORTUNITIES FUND IIIA, L.P.
By: OCM Real Estate Opportunities Fund III GP,
LLC, its general partner
By: Oaktree Capital Management, LLC, its
managing member
By: /s/ Philip Hofmann
---------------------------------------
Name: Philip Hofmann
Title: Managing Director
By: /s/ Marc Porosoff
--------------------------------------
Name: Marc Porosoff
Title: Senior Vice President, Legal
BRE/HY FUNDING L.L.C.
By: /s/ Dennis J. McDonagh
-------------------------------------------
Name: Dennis J. McDonagh
Title: Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Michael Nash
-------------------------------------------
Name: Michael Nash
Title:
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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
STOCKHOLDER NAME AND ADDRESS STOCK STOCK (1) COMMON STOCK STOCK (2)
- ---------------------------- ---------------- --------------- ------------- ---------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 236,933 $ 6,608,902 629,420 $ 6,608,902
4 World Financial Center
North Tower, 12th Floor
New York, New York 10080
OCM Real Estate Opportunities Fund II, L.P. 747,789 $20,858,488 1,986,523 $20,858,488
333 South Grand Avenue
28th Floor
Los Angeles, California 90071
OCM Real Estate Opportunities Fund III, L.P. 100,829 $ 2,812,479 267,855 $ 2,812,479
333 South Grand Avenue
28th Floor
Los Angeles, California 90071
OCM Real Estate Opportunities Fund IIIA, L.P. 3,118 $ 86,972 8,283 $ 86,972
333 South Grand Avenue
28th Floor
Los Angeles, California 90071
BRE/HY Funding L.L.C 394,889 $11,014,855 1,049,034 $11,014,855
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 is valued at the public offering price of
the Securities set forth in Schedule B to the Purchase Agreement.