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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
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 27, 1997
SHOLODGE, INC.
(Exact name of registrant as specified in its charter)
Tennessee 0-19840 62-1015641
(States or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
Incorporation)
217 West Main Street
Gallatin, Tennessee 37066
(Address of principal executive offices)
Registrant's telephone number, including area code: (615) 452-7200
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ITEM 5. OTHER EVENTS
The board of directors of ShoLodge, Inc. (the "Company") has
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, no par value (the "Common Shares"), of the
Company. The dividend is payable on July 15, 1997 (the "Record Date"), to the
shareholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of the Company's
Series A Subordinated Preferred Stock ("Preferred Share") at a price of $60.00
per one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and SunTrust Bank,
Atlanta, as Rights Agent (the "Rights Agent"). A complete description of the
Rights is set forth in the Rights Agreement, a copy of which is filed as Exhibit
4.1 to this Form 8-K. The Rights Agreement is incorporated herein by reference
and this summary is qualified in its entirety by reference thereto.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding Common Shares without the prior approval of the board of directors,
including a majority of "Continuing Directors," as that term is defined in the
Rights Agreement, or (ii) 10 business days (or such later date as may be
determined by action of the board of directors before such time as any person or
group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of a Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on July 15, 2007 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or
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unless the Rights are earlier redeemed or exchanged by the Company, in each case
as described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then-current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
before the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to an aggregate
dividend of the greater of (i) 100 times the dividend declared per Common Share
and (ii) a cumulative quarterly dividend of $1.00. In the event of liquidation,
the holders of the Preferred Shares will be entitled to receive, in preference
to shares of all junior classes of the Company's stock, the greater of (i) $1.00
per share and (ii) an aggregate payment of 100 times the payment made per Common
Share. Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions. A complete description of the
Preferred Shares is set forth in the Company's Articles of Amendment to Charter
(the "Articles"), a copy of which is filed as Exhibit 4.2 to this Form 8-K. The
Articles are incorporated herein by reference and the summary of the terms of
the Preferred Shares set forth herein is qualified in its entirety by reference
thereto.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preferred Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
If the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that any person
or group of affiliated or
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associated persons becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will from the date of the
first public announcement of the Acquiring Person's acquisition have the right
to receive upon exercise that number of Common Shares having a market value of
two times the exercise price of the Right or, if there is an insufficient number
of authorized and unissued Common Shares to allow the full exercise of the
Rights, a package of other securities or property of the Company and/or cash
which the board of directors determines with the advice of an investment banking
firm to be equivalent to such number of Common Shares.
At any time after any Person becomes an Acquiring Person and
before the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the board of directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one Common Share, or one
one-hundredth of a Preferred Share (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day before the date of
exercise.
At any time before the close of business ten days after the
date of the first public announcement of the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the board of directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"), payable in cash or in shares of the Company's stock. If, however, there
is an Acquiring Person at the time, a majority of Continuing Directors must
concur in the redemption of the Rights. The redemption of the Rights may be made
effective at such time on such basis with such conditions as the board of
directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the board of
directors of the Company without the consent of the holders of the Rights,
including an amendment to lower certain thresholds described above to not less
than the greater of (i) the sum of .001% plus the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%, except
that from and after such time as there is an Acquiring Person no such amendment
may adversely affect the interests of the holders of the Rights.
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Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors. The Rights
should not interfere with any merger or other business combination approved by
the Company's Board of Directors prior to the time that the person or group
became an Acquiring Person, since until such time the Rights may be redeemed by
the Company at a price of $0.01 each.
ITEM 7(c) EXHIBITS. The following items are filed as exhibits to this Form 8-K:
Exhibit No. Description of Document
4.1 Rights Agreement dated as of June 27, 1997 between
ShoLodge, Inc. and SunTrust, Atlanta, as Rights
Agent, including Exhibit A thereto (Form of Articles
of Amendment to the Charter creating Series A
Subordinated Preferred Stock), Exhibit B thereto
(Form of Right Certificate and Forms of Assignment
and Election to Purchase) and Exhibit C thereto
(Summary of Rights to Purchase Preferred Shares).
Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form 8-A filed
July 3, 1997.
4.2 Articles of Amendment to the Charter of the Registrant, as filed
on July 1, 1997, creating Series A Subordinated Preferred Stock.
Incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form 8-A filed July 3, 1997.
4.3 Form of press release announcing the declaration of the rights.
Incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form 8-A filed July 3, 1997.
4.4 Form of letter to shareholders announcing the declaration of the
rights. Incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement on Form 8-A filed July 3, 1997.
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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 thereunto duly authorized.
SHOLODGE, INC.
Date: July 3, 1997 By:/s/ Michael A. Corbett
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Michael A. Corbett
Its:Chief Financial Officer
