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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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):
March 2, 1999
PATRIOT AMERICAN HOSPITALITY, INC.
(Exact Name of Registrant as specified in its charter)
DELAWARE 01-13127 94-0358820
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
1950 STEMMONS FREEWAY, SUITE 6001, DALLAS, TX
75234 (Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(214) 863-1000
WYNDHAM INTERNATIONAL, INC.
(Exact Name of Registrant as specified in its charter)
DELAWARE 01-13127-01 94-2872485
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
1950 STEMMONS FREEWAY, SUITE 6001, DALLAS, TX
75234 (Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(214) 863-1000
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ITEM 5. OTHER EVENTS
Patriot American Hospitality, Inc. ("Patriot"), whose shares are
paired and trade with those of its operating company, Wyndham International,
Inc. ("Wyndham," and together with Patriot, the "Company"), has entered into
a definitive securities purchase agreement with a group of investors
providing for a $1 billion equity investment in the Company. The investor group
includes affiliates of Thomas H. Lee Company; Apollo Real Estate Advisors,
L.P.; Apollo Management, L.P.; Beacon Capital Partners, Inc.; and Rosen
Consulting Group (together, the "Investors"). Under the terms of the
securities purchase agreement (a copy of which is filed herewith as EXHIBIT
99.1 and incorporated herein in its entirety), the Investors will purchase $1
billion of 9.75% convertible preferred stock, callable after six years, with
an initial conversion price of $8.59 per share (previously announced $8.75
per share as adjusted for Patriot's fourth quarter stock dividend). The
Company will have the ability to conduct a rights offering in which common
stockholders and, in certain circumstances, the limited partners of the
Company's operating partnerships can purchase up to $300 million of
convertible preferred stock with the same economic terms, which would reduce
the Investors' investment to $700 million. The Investors will initially own an
approximate 29% interest in the Company, assuming full subscription to the
rights offering by non-Investor stockholders.
James D. Carreker, Chairman and Chief Executive Officer of Wyndham has
been named to the additional position of Chief Executive Officer of Patriot.
Paul A. Nussbaum, has resigned his position as Chairman and Chief Executive
Officer of Patriot. He has been named Chairman Emeritus and will continue as a
director.
Upon consummation of the equity investment, the new Board of Directors
will consist of eight representatives from the current Company Boards, eight
representatives from the Investors, and three additional directors to be
mutually agreed-upon.
The Boards of Patriot and Wyndham have unanimously approved the
combination of the two companies (the "Restructuring") and conversion from a
paired-share real estate investment trust ("REIT") structure to a C
Corporation pursuant to a restructuring plan (a copy of which is filed
herewith as EXHIBIT 99.2 and incorporated herein in its entirety). Under the
terms of the restructuring plan, a newly formed subsidiary of Wyndham, a C
Corporation, will be merged into Patriot, a REIT, as a result of which Patriot
will become a wholly owned subsidiary of Wyndham.
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The equity investment and the Restructuring are subject to stockholder
approval and both are currently expected to be completed by June 30, 1999. The
equity investment is also subject to antitrust clearance and certain other
conditions and consents.
This Form 8-K contains forward-looking statements within the meaning
of Sections 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors that might cause such a difference include competition for guests
from other hotels, dependence upon business and commercial travelers and
tourism, the seasonality of the hotel industry, and the availability of
equity or debt financing at terms and conditions favorable to the Companies.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
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EXHIBIT NO. DESCRIPTION
----------- -----------
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99.1 Securities Purchase Agreement dated as of
February 18, 1999 by and among Patriot
American Hospitality, Inc., Wyndham
International, Inc., Patriot American
Hospitality Partnership, L.P., Wyndham
International Operating Partnership, L.P.
and the Investors named therein
99.2 Restructuring Plan
99.3 Form of Restated Certificate of
Incorporation of Wyndham International, Inc.
99.4 Form of Amended and Restated Bylaws of
Wyndham International, Inc.
99.5 Form of Certificate of Designation of Series
A Convertible Preferred Stock of Wyndham
International, Inc.
99.6 Form of Certificate of Designation of Series
B Convertible Preferred Stock of Wyndham
International, Inc.
99.7 Press Release dated March 1, 1999
99.8 Selected Pages from Analyst Presentation
Materials dated March 1, 1999 Prepared by
Chase Securities Inc.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrants have duly caused this report to be signed on their behalf
by the undersigned hereunto duly authorized.
Dated: March 2,1999 PATRIOT AMERICAN HOSPITALITY, INC.
/S/ JAMES D. CARREKER
-----------------------------------
By: James D. Carreker
Its: Chief Executive Officer
Dated: March 2, 1999 WYNDHAM INTERNATIONAL, INC.
/S/ JAMES D. CARREKER
-----------------------------------
By: James D. Carreker
Its: Chairman and Chief
Executive Officer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
99.1 * Securities Purchase Agreement dated as of February 18, 1999 by and
among Patriot American Hospitality, Inc., Wyndham International,
Inc., Patriot American Hospitality Partnership, L.P., Wyndham
International Operating Partnership, L.P. and the Investors named
therein
99.2 * Restructuring Plan
99.3 * Form of Restated Certificate of Incorporation of Wyndham
International, Inc.
99.4 * Form of Amended and Restated Bylaws of Wyndham International,
Inc.
99.5 * Form of Certificate of Designation of Series A Convertible
Preferred Stock of Wyndham International, Inc.
99.6 * Form of Certificate of Designation of Series B Convertible
Preferred Stock of Wyndham International, Inc.
99.7 * Press Release dated March 1, 1999
99.8 * Selected Pages from Analyst Presentation Materials dated March 1,
1999 Prepared by Chase Securities Inc.
</TABLE>
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*Filed herewith.
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Exhibit 99.1
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SECURITIES PURCHASE AGREEMENT
By and among
PATRIOT AMERICAN HOSPITALITY, INC.,
WYNDHAM INTERNATIONAL, INC.,
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P.,
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P.
and
THE INVESTORS NAMED HEREIN
Dated as of February 18, 1999
---------------------------
Series B Convertible Preferred Stock
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
Page
ARTICLE I
AUTHORIZATION AND SALE OF SHARES
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Section 1.1 Authorization............................................................3
Section 1.2 Issuance and Sale of Shares..............................................5
ARTICLE II
CLOSING
Section 2.1 Closing Date.............................................................5
Section 2.2 Further Assurances.......................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
Section 3.1 Organization and Qualification...........................................6
Section 3.2 Subsidiaries.............................................................7
Section 3.3 Capitalization...........................................................7
Section 3.4 Authority...............................................................10
Section 3.5 Consents and Approvals; Non-Contravention...............................12
Section 3.6 Enforceability of Transaction Documents.................................12
Section 3.7 SEC Reports.............................................................13
Section 3.8 Accountants.............................................................13
Section 3.9 Financial Statements....................................................13
Section 3.10 Absence of Certain Material Changes.....................................15
Section 3.11 Actions.................................................................15
Section 3.12 No Undisclosed Liabilities..............................................16
Section 3.13 Investment Company Act..................................................16
Section 3.14 Reporting...............................................................16
Section 3.15 Registration and Qualification..........................................16
Section 3.16 Indebtedness and Certain Other Contracts................................16
Section 3.17 No Defaults.............................................................17
Section 3.18 Violations of Law.......................................................18
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Section 3.19 Properties..............................................................18
Section 3.20 Intellectual Property...................................................21
Section 3.21 Taxes...................................................................22
Section 3.22 Employee Matters; ERISA.................................................25
Section 3.23 Environmental Matters...................................................27
Section 3.24 Labor Matters...........................................................29
Section 3.25 Year 2000 Compliance....................................................31
Section 3.26 Insurance...............................................................32
Section 3.27 Affiliate Transactions..................................................32
Section 3.28 Delaware General Corporation Law Section 203............................32
Section 3.29 Actions Regarding the Patriot Shareholder Rights Plan...................32
Section 3.30 Brokers and Finders; Transaction Expenses...............................33
Section 3.31 Opinion of Financial Advisor............................................33
Section 3.32 Full Disclosure.........................................................33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Section 4.1 Investment..............................................................34
Section 4.2 Rule 144................................................................35
Section 4.3 Organization of the Investors...........................................35
Section 4.4 Current Ownership.......................................................35
Section 4.5 No Voting Agreements....................................................35
Section 4.6 Authority of the Investors..............................................35
Section 4.7 Non-Contravention.......................................................35
Section 4.8 Brokers and Finders; Transaction Expenses...............................36
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 Conditions to Each Party's Obligation...................................37
Section 5.2 Conditions to the Investors' Obligation.................................37
Section 5.3 Conditions to the Obligations of the Companies and the Operating
Partnerships...........................................................................41
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ARTICLE VI
COVENANTS OF THE COMPANIES
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Section 6.1 Conduct of Business Pending the Closing.................................42
Section 6.2 Reporting...............................................................45
Section 6.3 Payment of Expenses.....................................................46
Section 6.4 Availability of Wyndham Common Stock....................................47
Section 6.5 Disclosure Documents; Stockholder and Partner Approvals.................47
Section 6.6 Restructuring Plan......................................................49
Section 6.7 No Solicitation of Competing Transactions...............................49
Section 6.8 Benefit Plans...........................................................51
Section 6.9 No General Solicitation.................................................52
Section 6.10 Preemptive Rights.......................................................52
Section 6.11 Non-Competition and Other Restrictions..................................53
Section 6.12 Access to Information...................................................54
Section 6.13 Rights Offering.........................................................55
Section 6.14 HSR Approval............................................................56
ARTICLE VII
COVENANTS OF THE INVESTORS
Section 7.1 Certain Restrictions....................................................56
Section 7.2 Quorum..................................................................57
Section 7.3 Transfers...............................................................58
Section 7.4 HSR Approval............................................................58
Section 7.5 No Voting Agreements....................................................58
Section 7.6 Board of Director Matters...............................................58
Section 7.7 Compliance with the New Wyndham Certificate and Series B
Certificate of Designation..............................................58
Section 7.8 Confidentiality.........................................................58
ARTICLE VIII
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Section 8.1 Restrictive Legend......................................................59
Section 8.2 Notice of Proposed Transfers............................................60
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ARTICLE IX
TERMINATION
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Section 9.1 Termination.............................................................61
ARTICLE X
INDEMNIFICATION
Section 10.1 Survival of Representations and Warranties..............................61
Section 10.2 Indemnification.........................................................62
Section 10.3 Terms of Indemnification................................................66
ARTICLE XI
MISCELLANEOUS
Section 11.1 Governing Law...........................................................68
Section 11.2 Jurisdiction; Forum; Service of Process; Waiver of Jury Trial...........68
Section 11.3 Successors and Assigns..................................................68
Section 11.4 Effectiveness...........................................................69
Section 11.5 Entire Agreement; Amendment.............................................70
Section 11.6 Notices, Etc............................................................70
Section 11.7 Certain Definitions.....................................................71
Section 11.8 Delays or Omissions.....................................................71
Section 11.9 Counterparts............................................................71
Section 11.10 Severability............................................................71
Section 11.11 Titles and Subtitles....................................................72
Section 11.12 No Public Announcement..................................................72
Section 11.13 Further Actions; Reasonable Efforts.....................................72
Section 11.14 Enforcement of Agreement................................................73
Exhibits
Exhibit A -- Restructuring Plan
Exhibit B -- Form of New Wyndham Certificate
Exhibit C -- Form of New Wyndham By-Laws
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Exhibit D -- Form of Wyndham Rights Plan
Exhibit E -- Forms of New Patriot OP Partnership Agreement and New
Wyndham OP Partnership Agreement
Exhibit F -- Form of Certificate of Designation for Series A Convertible
Preferred Stock
Exhibit G -- Form of Certificate of Designation for Series B Convertible Pre
ferred Stock
Exhibit H -- Form of Registration Rights Agreement
</TABLE>
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made
as of February 18, 1999 by and among Patriot American Hospitality, Inc., a
Delaware corporation ("Patriot"), Wyndham International, Inc., a Delaware
corpora tion ("Wyndham", and together with Patriot, the "Companies"), Patriot
American Hospitality, L.P., a Virginia limited partnership ("Patriot OP"), and
Wyndham International Operating Partnership, L.P., a Delaware limited
partnership ("Wyndham OP" and, together with Patriot OP, the "Operating
Partnerships"), and the parties identified on the signature page hereof as the
Investors (the "Investors").
WHEREAS, subject to the terms and conditions hereof, including
without limitation the Restructuring Plan attached hereto as Exhibit A (the
"Restructuring Plan"), pursuant to which (i) a restructuring of the Companies
and the Operating Partnerships will be implemented upon the completion of which
Wyndham will continue as a public company and Patriot will become a wholly owned
subsidiary of Wyndham, (ii) the pairing and cooperation agreements between
Wyndham and Patriot will be terminated (the "Pairing Termination") and Patriot's
status as a real estate investment trust will be terminated, effective as of
January 1, 1999 (the "REIT Termination"), (iii) shares of Wyndham's Class A
Common Stock, par value $0.01 per share (the "Wyndham Class A Common Stock"),
will be issued pursuant to the Merger, the Exchange Offers and the Patriot OP
Distribution (as each such term is defined in the Restructuring Plan)
(collectively, the "Restructuring Shares"), (iv) a reverse stock split of the
Wyndham Class A Common Stock will be implemented immediately following the
issuance of the Restructuring Shares (the "Reverse Stock Split") with the effect
that one share of Paired Common Stock (as defined in Section 3.3(c)) immediately
prior to the Merger will become one share of Wyndham Class A Common Stock
immediately following the Merger and the Reverse Stock Split, and (v) the
Companies' and the Operating Partnerships' indebtedness will be restructured
(the "Debt Restructuring"), all as set out in more detail in Section 5.2(k);
WHEREAS, subject to the terms and conditions hereof,
including without limitation the Restructuring Plan, the Certificate of
Incorporation of Wyndham will be amended and restated (the "Wyndham Charter
Amendment") in the form attached hereto as Exhibit B (the "New Wyndham
Certificate"), the By-Laws of Wyndham will be amended and restated in the form
attached hereto as Exhibit C (the "New Wyndham By-Laws"), a Shareholder Rights
Plan of Wyndham
<PAGE>
will be adopted substantially in the form attached hereto as Exhibit D (the
"Wyndham Rights Plan"), the Limited Partnership Agreement of Patriot OP (the
"Existing Patriot OP Partnership Agreement") will be amended and restated (the
"Patriot OP Restatement") in the form attached hereto either as Exhibit E-1 or
Exhibit E-2 (the "New Patriot OP Partnership Agreement") and the Limited
Partnership Agreement of Wyndham OP (the "Existing Wyndham OP Partnership
Agreement") will be amended and restated (the "Wyndham OP Restatement") in the
form attached hereto either as Exhibit E-3 or as Exhibit E-4 (the "New Wyndham
OP Partnership Agreement");
WHEREAS, subject to the terms and conditions hereof, Wyndham
may extend the Rights Offering (as defined in Section 6.14) to stockholders of
the Companies and limited partners of the Operating Partnerships pursuant to
which such stockholders and limited partners will be given the opportunity to
purchase an aggregate of up to 3,000,000 shares (the "Rights Offering Shares",
which term shall be deemed to include unless the context otherwise requires
additional Rights Offering Shares that are issued pursuant to the Series A
Certificate of Designation (as defined below)) of Series A Convertible Preferred
Stock, par value $0.01 per share (the "Series A Preferred Stock"), of Wyndham
convertible into shares of Wyndham Class A Common Stock and having the other
terms set forth in the Certificate of Designation attached hereto as Exhibit F
(the "Series A Certificate of Designation"), for an aggregate purchase price of
up to $300,000,000;
WHEREAS, subject to the terms and conditions hereof, Wyndham
will sell and the Investors will purchase (the "Investment") an aggregate of up
to 10,000,000 shares of Series B Convertible Preferred Stock, par value $0.01
per share (the "Series B Preferred Stock"), of Wyndham convertible into shares
of Wyndham Class B Common Stock, par value $0.01 per share (the "Wyndham Class B
Common Stock"), and having the other terms set forth in the Certificate of
Designation attached hereto as Exhibit G (the "Series B Certificate of
Designation"), for an aggregate purchase price of up to $1,000,000,000;
WHEREAS, the Investors will have the benefit of the
registration rights provided for in the Registration Rights Agreement being
executed simultaneously herewith in the form attached hereto as Exhibit H (the
"Registration Rights Agreement");
WHEREAS, the Board of Directors of Patriot has (i) received a
written opinion from its financial advisor that the Investment is fair to the
holders of
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the common stock, par value $0.01 per share, of Patriot ("Patriot Common Stock")
from a financial point of view, (ii) approved this Agreement, the Restructuring
Plan and the other transactions contemplated by this Agreement to which Patriot
or Patriot OP is a party and (iii) determined to recommend that the stockholders
of Patriot give the Patriot Stockholder Approval (as such term is defined in
Section 5.1(c)), the limited partners of Patriot OP give the Patriot Partnership
Approval (as such term is defined in the Restructuring Plan) and the relevant
securityholders accept the Exchange Offers; and
WHEREAS, the Board of Directors of Wyndham has (i) received a
written opinion from its financial advisor that the Investment is fair to the
holders of the common stock, par value $0.01 per share, of Wyndham ("Wyndham
Common Stock") from a financial point of view, (ii) approved this Agreement, the
Restructuring Plan and the other transactions contemplated by this Agreement to
which Wyndham or Wyndham OP is a party and (iii) determined to recommend that
the stockholders of Wyndham give the Wyndham Stockholder Approval (as such term
is defined in Section 5.1(d)), the limited partners of Wyndham OP give the
Wyndham Partnership Approval (as such term is defined in the Restructuring Plan)
and the relevant securityholders accept the Exchange Offers.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties set forth herein, the parties hereby
agree as follows:
ARTICLE I
AUTHORIZATION AND SALE OF SHARES
Section 1.1 AUTHORIZATION.
(a) Subject to obtaining the Stockholder Approval, Wyndham has
heretofore authorized the issuance and sale to the Investors at the Closing (as
defined in Section 2.1(a)) pursuant to this Agreement of an aggregate of up to
10,000,000 shares of Series B Preferred Stock (the "Shares") and the maximum
number of additional Shares as may be issued as provided in the Series B
Certificate of Designation. Unless the context otherwise requires, references in
this Agreement to the "Shares" shall be deemed to include additional shares of
Series B Preferred Stock that are issued pursuant to the Series B Certificate of
Designation.
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(b) Subject to any pro rata adjustment pursuant to Section
1.1(c), the number of Shares to be issued and sold to each Investor at the
Closing, and the "Investor Percentage" for such Investor, shall be the amounts
indicated on the signature page opposite such Investor's name on the signature
page hereof; PROVIDED, that each Investor may, upon three business days' notice
to the Companies in writing prior to the Closing, (i) assign its right but not
its obligation to purchase some or all of its Shares hereunder to one or more of
its directors, officers, employees, affiliates and investment funds or customer
accounts which are under the management of the Investors or their affiliates or
to one or more other Investors (collectively, the "Permitted Assignees") or (ii)
assign its right and obligation to purchase some or all of its Shares, with the
Companies' consent (not to be unreasonably withheld or delayed), to another
person, provided that no more than 25% in interest in the aggregate in the
rights and obligations to purchase Shares may be assigned to persons other than
Permitted Assignees prior to or following the Closing (any such assignees being
referred to as "Permitted Third Party Transferees"), and in the event of any
such assignment, the Investor Percentage for such Investor and the assignee
shall be appropriately adjusted and such Investor's and such assignee's
respective rights to receive fees hereunder shall also be adjusted in a similar
manner. Unless the context otherwise requires, references in this Agreement to
"Investors" shall be deemed to include Permitted Assignees and Permitted Third
Party Transferees under this Section 1.1(b), and all of their successors by
operation of law.
(c) If, prior to the Closing, either of the Companies or the
Subsidiaries sell the Identified Assets (as such term is defined in Section
1.1(c) of the letter of the Companies to the Investors to be dated as of the
Effective Date (as defined in Section 11.4) (the "Company Disclosure Letter"))
at or prior to the Closing for net cash proceeds (excluding for purposes of such
calculation any contingent payments to be received by the Companies or their
subsidiaries) in excess of the amounts set forth in Section 1.1(c) of the
Company Disclosure Letter, pursuant to definitive documentation satisfactory to
the Investors, whose consent shall not be unreasonably withheld or delayed
(which documentation shall not in any event include any indemnification or other
contingent payment obligation of the Companies or their subsidiaries which
survives the closing of the sale of such assets), the total number of Shares to
be purchased at the Closing may be reduced by the Companies by an amount equal
to the amount of such excess proceeds divided by 100 and the number of shares to
be purchased by each of the Investors shall be reduced by an amount determined
by multiplying the Investor Percentage for such Investor by the total number of
Shares as so reduced, rounded up to the nearest whole share. The Companies shall
give the Investors not less than 10 business days'
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written prior notice of any proposed reduction to be implemented pursuant to
this Section 1.1(c), which notice will include a detailed calculation of such
reduction, including of the net cash proceeds received or to be received by the
Companies in connection with the related disposition, certified by the Chief
Financial Officer or Treasurer of the Companies.
Section 1.2 ISSUANCE AND SALE OF SHARES. Upon the terms and
subject to the conditions set forth herein, on the Closing Date, in reliance on
the representations and warranties of the Investors contained herein, Wyndham
will issue and sell to each Investor and, in reliance on the representations and
warranties of the Companies and the Operating Partnerships contained herein,
such Investor will purchase from Wyndham, the number of Shares to be purchased
by such Investor at the Closing pursuant to Section 1.1, for a purchase price of
$100 per Share (the "Purchase Price").
ARTICLE II
CLOSING
Section 2.1 CLOSING DATE. The closing (the "Closing") of the
purchase and sale of the Shares contemplated hereby shall take place on such
date and at such time as agreed to by the Companies and the Investors but in no
event later than one business day following the date of the Stockholder
Approval, subject to satisfaction or waiver of all of the conditions set forth
in Article V (the date of the Closing is hereinafter referred to as the "Closing
Date"). The parties hereto agree that it is their mutual intent for the Closing
Date to occur on or before June 30, 1999, subject to the satisfaction or waiver
of the conditions set forth in Article V. The Closing shall be held at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York, or at such other place as agreed to by the Companies and the
Investors.
Delivery of the Shares to be purchased by each Investor
pursuant to this Agreement shall be made at the Closing by Wyndham delivering to
such Investor, against payment of the Purchase Price therefor, one certificate
representing the appropriate number of Shares (registered in the name of such
Investor), unless at least two business days prior to the Closing Date such
Investor shall have requested that Wyndham deliver more than one certificate
representing Shares, in which event Wyndham will deliver to such Investor the
number of certificates so requested, registered in the Investor's name or the
name of any assignee(s) designated in
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accordance with Section 1.1. Payment of the Purchase Price for the Shares to be
purchased by each Investor hereunder shall be made or caused to be made by such
Investor to Wyndham by delivery by wire transfer of immediately available funds
equal to the Purchase Price therefor.
Section 2.2 FURTHER ASSURANCES. From time to time following
the Closing, upon the request of any Investor, Wyndham shall execute and
deliver, or cause to be executed and delivered, to such Investor such other
instruments and take such other action as may be reasonably necessary to more
effectively vest in such Investor and put such Investor in possession of the
Shares purchased by such Investor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
As an inducement to the Investors to enter into this Agreement
and to consummate the transactions contemplated hereby, each of the Companies
and the Operating Partnerships, jointly and severally, represents and warrants
to the Investors as follows; PROVIDED that for all purposes of this Agreement no
representation or warranty set forth in this Article III shall fail to be true,
accurate, correct or complete in all material respects by reason of one or more
inaccuracies which individually would give rise to a Loss (as defined in Section
10.2(a)) of less than $50,000:
Section 3.1 ORGANIZATION AND QUALIFICATION. Each of the
Companies and the Subsidiaries (as hereinafter defined) is a corporation,
limited partnership or other legal entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization. Each of the Companies and the Subsidiaries has all requisite
corporate, partnership or other power and authority, and has been duly
authorized by all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, to own, lease and operate its
assets and properties and to conduct its business as it is now being conducted
and is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its assets and properties makes such qualification or licensing
necessary.
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Section 3.2 SUBSIDIARIES.
(a) The only direct or indirect subsidiaries of the Companies
are those listed on Section 3.2(a) of the Company Disclosure Letter. Except for
the ownership interests set forth in Section 3.2(a) of the Company Disclosure
Letter, neither of the Companies owns or controls, directly or indirectly, a 30%
or greater capital stock interest in a corporation, a general partnership
interest or a 30% or greater limited partnership interest in a partnership, or a
managing member or a 30% or greater membership interest in a limited liability
company, association or other entity or project. The entities listed on Section
3.2(a) of the Company Disclosure Letter (which include the Operating
Partnerships) are hereinafter referred to as the "Subsidiaries".
(b) Except for the entities listed on Section 3.2(a) or 3.2(b)
of the Company Disclosure Letter, neither of the Companies hold, directly or
indirectly, any equity interest or equity investment in any corporation,
partnership, association or other entity.
(c) Except as set forth in Section 3.2(c) of the Company
Disclosure Letter, all of the issued and outstanding shares of capital stock of
or other equity interests in each Subsidiary have been validly issued, are fully
paid and nonassessable and are owned, directly or indirectly, by the Companies
free and clear of any pledges, liens, claims, encumbrances, security interests,
charges and options of any nature whatsoever ("Liens") and there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
its capital stock or obligating it to grant, extend or enter into any such
agreement or commitment.
Section 3.3 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of
Patriot consists of (i) 650,000,000 shares of Patriot Common Stock, of which
155,524,662 shares are outstanding, (ii) 63,895,403 shares of Patriot Common
Stock are held as collateral for the counterparties to various agreements under
which the Companies or the Subsidiaries are obligated to issue or deliver as
collateral any of their equity
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securities (the "Forward Equity Contracts"), (iii) 7,754,076 shares of Patriot
Common Stock are subject to outstanding options and other awards pursuant to the
Companies' benefit plans, (iv) 750,000,000 shares of excess stock, par value
$0.01 per share, of which no shares are outstanding, and (v) 100,000,000 shares
of preferred stock, par value $0.01 per share (the "Patriot Preferred Stock"),
of which 10,000,000 shares are designated as Series A Convertible Preferred
Stock (the "Patriot Series A Preferred Stock") (4,860,876 shares of which are
issued and outstanding), 10,000,000 shares are designated as Series B Cumulative
Perpetual Preferred Stock (the "Patriot Series B Preferred Stock") (558,656
shares of which are issued and outstanding) and 2,500,000 shares are designated
as Series X Junior Participating Cumulative Preferred Stock (none of which is
issued and outstanding). As of the date hereof, the authorized capital stock of
Wyndham consists of (i) 650,000,000 shares of Wyndham Common Stock, which term
shall also refer collectively to the Wyndham Class A Common Stock and the
Wyndham Class B Common Stock), of which 155,524,662 shares are outstanding, (ii)
63,895,403 shares of Wyndham Common Stock are held as collateral under the
Forward Equity Contracts, (iii) 7,754,076 shares of Wyndham Common Stock are
subject to outstanding options and other awards pursuant to the Companies'
benefit plans, (iv) 750,000,000 shares of excess stock, par value $0.01 per
share, of which no shares are outstanding, and (v) 100,000,000 shares of
preferred stock, par value $0.01 per share (the "Wyndham Preferred Stock"), of
which 3,000,000 shares are designated as Series A Redeemable Convertible
Preferred Stock (the "Wyndham Series A Preferred Stock") (1,781,173 shares of
which are issued and outstanding) and 3,000,000 shares are designated as Series
B Redeemable Convertible Preferred Stock (the "Wyndham Series B Preferred
Stock") (1,781,181 shares are issued and outstanding). The owners of the Patriot
Preferred Stock and the Wyndham Preferred Stock and the number of shares held by
each of such owners as of the date hereof are listed on Section 3.3(a) of the
Company Disclosure Letter.
(b) A wholly owned subsidiary of Patriot is the sole general
partner of Patriot OP and Wyndham is the sole general partner of Wyndham OP. As
of the date hereof, the issued and outstanding limited partnership interests of
Patriot OP consist of (i) 125,949,649 common units (the "Patriot OP Common
Units") and (ii) 6,185,680 preferred units, 1,324,804 of which are designated as
Class A Preferred Units (the "Patriot OP Class A Preferred Units") and 4,860,876
of which are designated as Class B Preferred Units (the "Patriot OP Class B
Preferred Units" and, together with the Patriot OP Class A Preferred Units and
the Patriot OP Common Units, the "Patriot OP Units"). Section 3.3(b) of the
Company Disclosure Letter sets forth a complete and accurate list by the holder
thereof of the Patriot OP
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Units held by Patriot or affiliates of Patriot. As of the date hereof, the
issued and outstanding limited partnership interests of Wyndham OP consist of
(i) 123,629,185 common units (the "Wyndham OP Common Units"), and (ii) 2,695,995
preferred units, of which 784,377 units are designated as Class A Preferred
Units (the "Wyndham OP Class A Preferred Units"), 1,324,804 units are designated
as Class B Preferred Units (the "Wyndham OP Class B Preferred Units") and
586,814 units are designated as Class C Preferred Units (the "Wyndham OP Class C
Preferred Units" and, together with the Wyndham OP Common Units, the Wyndham OP
Class A Preferred Units and the Wyndham OP Class B Preferred Units, the "Wyndham
OP Units"). Section 3.3(b) of the Company Disclosure Letter sets forth a
complete and accurate list by the holder thereof of the Wyndham OP Units are
held by Wyndham or affiliates of Wyndham. The owners of the Patriot OP Units and
the Wyndham OP Units and the number of units held by each of such owners as of
the date hereof are listed on Section 3.3(b) of the Company Disclosure Letter.
(c) The outstanding shares of Patriot Common Stock and Wyndham
Common Stock trade together as a unit of one share of Patriot Common Stock and
one share of Wyndham Common Stock (the "Paired Common Stock"). Each of the
outstanding shares of Patriot Series A Preferred Stock and Wyndham Preferred
Stock is convertible into one share of Paired Common Stock. The outstanding
Patriot OP Common Units and Wyndham OP Common Units may only be redeemed by the
holders thereof as a unit of one Patriot OP Common Unit and one Wyndham OP
Common Unit (the "Paired Common Units") and upon the redemption of each Paired
Common Unit the Operating Partnerships may deliver cash or, at their election,
one share of Paired Common Stock. The Patriot OP Class A Preferred Units and the
Wyndham OP Class B Preferred Units may only be redeemed by the holders thereof
as a unit of one Patriot OP Class A Preferred Unit and one Wyndham OP Class B
Preferred Unit (the "Paired Preferred Units") and upon the redemption of each
Paired Preferred Unit the Operating Partnerships may deliver cash or, at their
election, one share of Paired Common Stock. Upon the redemption of each of the
outstanding Wyndham OP Class A Preferred Units and Wyndham OP Class C Preferred
Units (the "Tracking Preferred Units"), the Operating Partnerships may deliver
one share of Paired Common Stock. The shares of Patriot Series A Preferred
Stock, shares of Wyndham Preferred Stock, Paired Common Units, Paired Preferred
Units and Tracking Preferred Units are referred to herein collectively as the
"Paired Common Stock Equivalents." As of the date hereof, there are outstanding
155,524,662 shares of Paired Common Stock (excluding 63,895,403 shares of Paired
Common Stock issued as collateral to the
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counterparties under the Forward Equity Contracts) and 24,964,936 Paired Common
Stock Equivalents (collectively, the "Outstanding Paired Share Amount").
(d) All of the outstanding shares of capital stock of Patriot
and Wyndham and all of the outstanding Patriot OP Units and Wyndham OP Units are
duly authorized, validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, were not issued and
are not now in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities, and conform to the description thereof
in the SEC Reports. Except as set forth in Section 3.3(a) or 3.3(b) or disclosed
in Section 3.3(d) of the Company Disclosure Letter and except for the
transactions contemplated hereby, (i) there are not authorized, issued, reserved
for issuance or outstanding (A) any shares of capital stock, partnership
interests or other voting securities of any of the Companies or the Operating
Partnerships, (B) any securities convertible into or exchangeable or exercisable
for shares of capital stock, partnership interests or other voting securities of
the Companies or the Operating Partnerships, or any obligation of any of the
Companies or the Operating Partnerships to issue any capital stock, partnership
interests or other voting securities of any of the Companies or the Operating
Partnerships, or (C) any warrants, calls, options or other rights to acquire
from any of the Companies or the Operating Partnerships or any obligation of any
of the Companies or the Operating Partnerships to issue, any capital stock,
voting securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of any of the Companies or the Operating
Partnerships, and (ii) there are no outstanding obligations of any of the
Companies or the Operating Partnerships to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Except as set forth in Section 3.3(d) of
the Company Disclosure Letter, none of the Companies or the Subsidiaries is a
party to any agreement restricting the transfer of, relating to the voting of,
requiring registration of, or granting any preemptive or antidilutive rights
with respect to, any securities of the type referred to in the preceding
sentence.
Section 3.4 AUTHORITY.
(a) Each of the Companies, the Operating Partnerships and any
other Subsidiaries party thereto has all necessary corporate or partnership
power and corporate or partnership authority to enter into this Agreement and
the other agreements, documents and instruments to be executed by the Companies,
the Operating Partnerships and such other Subsidiaries, as the case may be, in
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furtherance of the transactions contemplated hereby, including, without
limitation, the commitment letter, dated as of the date of this Agreement, among
the Companies and the Investors (the "Equity Commitment Letter") and the
agreements, the forms of which are attached hereto as exhibits (such commitment
letter and attached agreements, collectively with this Agreement, the
"Transaction Documents"), and to consummate the transactions contemplated
hereby. Except for the Patriot Stockholder Approval and the Wyndham Stockholder
Approval and the approval of the amendment and restatement of the Existing
Patriot OP Partnership Agreement and the Existing Wyndham OP Partnership
Agreement in the manner contemplated by the Patriot OP Consent Solicitation and
the Wyndham OP Consent Solicitation (each as defined in the Restructuring Plan)
by the limited partners of each of Patriot OP and Wyndham OP holding a majority
of the limited partner interests in accordance with applicable law, which for
such purposes shall exclude limited partnership interests held by Patriot or
Wyndham but not exclude any limited partnership interests held by any other
affiliates of the Companies or the Investors (such approval relating to Patriot
OP shall hereinafter be referred to as the "Patriot Partner Approval" and such
approval relating to Wyndham OP shall hereinafter be referred to as the "Wyndham
Partner Approval") the execution and delivery of the Transaction Documents and
the consummation by the Companies, the Operating Partnerships and such other
Subsidiaries of the transactions contemplated thereby have been duly authorized
by all necessary corporate or partnership action on the part of the Companies,
the Operating Partnerships and such other Subsidiaries. The only component of
the Restructuring Plan for which the approval of the limited partners of Wyndham
or Patriot is required is the amendment and restatement of the Existing Patriot
OP Partnership Agreement and the Existing Wyndham OP Partnership Agreement in
the manner contemplated by the Patriot OP Consent Solicitation and the Wyndham
OP Consent Solicitation.
(b) The Shares, the Rights Offering Shares and the
Restructuring Shares have been duly authorized by Wyndham, and the Shares, the
Rights Offering Shares and the Restructuring Shares, when issued, sold and
delivered in accordance with this Agreement, will be validly issued, fully paid
and nonassessable. The shares of Wyndham Common Stock issuable upon conversion
of the Shares and the Rights Offering Shares have been duly authorized by
Wyndham and, when issued in accordance with the terms of the Shares and the
Rights Offering Shares will be validly issued, fully paid and nonassessable. The
shares of Wyndham Common Stock issuable on conversion of the Shares and the
Rights Offering Shares at the initial conversion price have been reserved for
issuance, and no further approval or authority of the stockholders or the Boards
of Directors under the Delaware General
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Corporation Law (the "DGCL") or the rules of the New York Stock Exchange (the
"NYSE"), other than the Stockholder Approval, will be required for such issuance
of Wyndham Common Stock. No preemptive rights or other rights to subscribe for
or purchase securities exist with respect to the issuance and sale of the
Shares, the Rights Offering Shares or the Restructuring Shares by Wyndham
pursuant to the Transaction Documents or the issuance of Wyndham Common Stock on
conversion of the Shares or the Rights Offering Shares.
Section 3.5 CONSENTS AND APPROVALS; NON-CONTRAVENTION. Other
than as identified in Section 3.5 of the Company Disclosure Letter, the
execution and delivery by the Companies, the Operating Partnerships and the
Subsidiaries of the Transaction Documents to which they are parties, the
performance of their obligations thereunder and the consummation by them of the
transactions contemplated thereby do not and will not (a) require the consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any government agency or body, domestic or
foreign, applicable to any of the Companies or the Subsidiaries or any of their
respective properties or assets, (b) require the consent or approval of any
party other than a court or government agency or body, (c) result in a breach of
any of the terms and provisions of, or constitute a default (or an event which
with notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any Lien upon any property or assets of
any of the Companies, the Operating Partnerships or the Subsidiaries pursuant to
any agreement, instrument, franchise, license or permit to which any of the
Companies or any of the Subsidiaries is a party or by which any of the
Companies, the Operating Partnerships or any of the Subsidiaries or their
respective properties or assets may be bound or (d) violate any judgment,
decree, order, statute, rule or regulation of any court or any federal, state,
local or foreign government, court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental
self-regulatory agency, commission or authority (a "Governmental Entity") or
body applicable to any of the Companies or the Subsidiaries or any of their
respective properties or assets. The execution, delivery and performance of the
Transaction Documents by the Companies, the Operating Partnerships and any other
Subsidiaries party thereto and the consummation of the transactions contemplated
thereby do not and will not violate or conflict with any provision of the
certificate of incorporation or by-laws, partnership agreements or similar
governing documents of the Companies or the Subsidiaries, as currently in
effect.
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Section 3.6 ENFORCEABILITY OF TRANSACTION DOCUMENTS. This
Agreement has been, and each of the other Transaction Documents to be executed
and delivered by the Companies, the Operating Partnerships or any other
Subsidiaries party thereto pursuant to this Agreement has been or will be, duly
and validly authorized, executed and delivered by the Companies, the Operating
Partnerships and any other Subsidiaries parties to such other Transaction
Documents, and this Agreement is, and such other Transaction Documents when so
executed and delivered will be, valid and binding obligations of the Companies,
the Operating Partnerships and such other Subsidiaries, enforceable against them
in accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws from time to time affecting the enforcement of creditors' rights generally.
Section 3.7 SEC REPORTS.
(a) Each of the Companies (including Patriot American
Hospitality, Inc., a Virginia corporation, the predecessor of Patriot) has
timely filed all documents required to be filed with the Securities and Exchange
Commission (the "SEC") (collectively, including all exhibits and schedules
thereto and documents incorporated therein by reference, the "SEC Reports"). As
of their respective dates, (i) the SEC Reports complied in all material respects
with the requirements of the Securities Act of 1933, as amended (including the
rules and regulations promulgated thereunder, the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (including the rules and regulations
promulgated thereunder, the "Exchange Act"), as applicable, and (ii) none of the
SEC Reports, or, to the knowledge of the Companies, any press release, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
(b) The Companies and the Subsidiaries are not parties to or
otherwise subject to any contracts or other agreements that were or are required
to be filed as exhibits to, or otherwise disclosed in, the Companies' filings
with the SEC and have not been so filed or disclosed.
Section 3.8 ACCOUNTANTS. Ernst & Young LLP are independent
accountants as required by the Securities Act.
Section 3.9 FINANCIAL STATEMENTS.
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(a) The combined financial statements of the Companies
included in the SEC Reports (collectively, the "Financial Statements"),
including without limitation the combined financial statements included in the
Annual Report on Form 10-K of the Companies for the year ended December 31, 1997
(the "Form 10-K") and the Quarterly Report on Form 10-Q of the Companies for
the quarter ended September 30, 1998 (the "Third Quarter 10-Q"), complied as to
form, as of their respective dates, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of interim financial statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto)
(collectively, "GAAP") and fairly present the consolidated and combined
financial positions of the Companies and their respective consolidated
subsidiaries as of the dates thereof and the consolidated and combined results
of operations and cash flows for the periods then ended (subject, in the case of
interim financial statements, to normal year-end audit adjustments).
(b) Section 3.9(b)(i) of the Company Disclosure Letter
contains a Statement of Pro Forma 1998 EBITDA for the Companies for the year
ended December 31, 1998, which is comprised of (a) the Companies' unaudited
actual earnings before interest, taxes, depreciation and amortization ("EBITDA")
for the year ended December 31, 1998 and (b) pro forma adjustments necessary to
present the EBITDA of companies acquired in 1998 as though they were acquired on
January 1, 1998, as described in Section 3.9(b)(i) of the Company Disclosure
Letter (the "Statement of EBITDA"). Section 3.9(b)(ii) of the Company Disclosure
Letter contains a Statement of Adjusted Pro Forma 1998 EBITDA for the Companies
for the year ended December 31, 1998 prepared on the same basis as the Statement
of EBITDA, adjusted to show the pro forma effects of planned transactions in
1999, as described in Section 3.9(b)(ii) (the "Planned Transactions") as though
such transactions occurred on January 1, 1998 (the "Adjusted Statement of
EBITDA"). Section 3.9(b)(iii) of the Company Disclosure Letter contains a
December 31, 1998 balance sheet, adjusted to show the pro forma effects of the
Planned Transactions, as described in Section 3.9(b)(iii) of the Company
Disclosure Letter, as though such transactions occurred on December 31, 1998
(the "Pro Forma December 31, 1998 Balance Sheet"). Section 3.9(b)(iv) of the
Company Disclosure Letter contains a projected Statement of EBITDA for the
Companies for each of the four quarters during the year ending December 31,
1999, which shall be used in determining the Companies' management incentive
compensation awards for 1999. The projected Statement of EBITDA reflects the
effects of the Planned Transactions as though such
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Planned Transactions occurred on January 1, 1999 as described in Section 3.9
(b)(iv) of the Company Disclosure Letter (the "Pro Forma Projected Statement of
EBITDA"). The actual EBITDA and balance sheet information included in the
Statement of EBITDA, the Adjusted Statement of EBITDA and the Pro Forma December
31, 1998 Balance Sheet was prepared from income statements and balance sheets
that were prepared in accordance with GAAP based on the books and records of the
Companies and the Subsidiaries, and to the knowledge of the Companies, presents
fairly the combined financial positions and EBITDA for the Companies and their
respective subsidiaries as of December 31, 1998 and for the year then ended. The
pro forma adjustments to the Statement of EBITDA, the Adjusted Statement of
EBITDA, the Pro Forma December 31, 1998 Balance Sheet and the Pro Forma
Projected Statement of EBITDA were properly prepared on the bases described in
Sections 3.9(b)(i), (ii), (iii) and (iv) of the Company Disclosure Letter. The
projected results of operations for the year ending December 31, 1999 included
in the Pro Forma Projected Statement of EBITDA were prepared in good faith based
on management's best estimates of the combined EBITDA for the Companies for the
year ending December 31, 1999 on the basis described in Section 3.9(b)(iv).
(c) Section 3.9(c) of the Company Disclosure Letter sets forth
a true and complete copy of the capital expenditure budget of the Companies and
the Subsidiaries for the year ending December 31, 1999 (the "Capital Expenditure
Budget").
Section 3.10 ABSENCE OF CERTAIN MATERIAL CHANGES. Except as
disclosed in Section 3.10 of the Company Disclosure Letter, since September 30,
1998, there has been no material adverse change in the business, properties,
prospects, operations, financial condition or results of operations of Patriot,
Wyndham and their respective subsidiaries, taken as a whole (a "Material Adverse
Change"), whether or not arising from transactions in the ordinary course of
business.
Section 3.11 ACTIONS. Except as described in Section 3.11 of
the Company Disclosure Letter, there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission, domestic or foreign, to which any of the
Companies or the Subsidiaries is a party or to which any property of any of the
Companies or the Subsidiaries is subject which involves a claim or potential
claim of more than $100,000, and to the knowledge of the Companies and the
Operating Partnerships, there is no valid basis for any such action, suit,
inquiry, proceeding or
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investigation. None of the Companies or the Subsidiaries is subject to any
judgment, order or decree which could reasonably be expected to result in a
Material Adverse Change.
Section 3.12 NO UNDISCLOSED LIABILITIES. Except (a) as set
forth in the SEC Reports filed prior to the date of this Agreement, (b) as set
forth in Section 3.12 of the Company Disclosure Letter, (c) as incurred in the
ordinary course of the hotel management or hospitality business of the
Companies, (d) for any expenses incurred in connection with transactions
contemplated by this Agreement or (e) for liabilities or obligations relating to
contractual obligations, indebtedness, litigation or other matters which are
covered by other representations and warranties in this Agreement or otherwise
identified in the Company Disclosure Letter, none of the Companies nor any of
the Subsidiaries has any liabilities or obligations (direct or indirect,
contingent or absolute, known or unknown, matured or unmatured), whether arising
out of contract, tort, statute or otherwise ("Liabilities"). The reserves
reflected on the balance sheet dated September 30, 1998 and the balance sheet
dated December 31, 1998 are appropriate and reasonable and have been calculated
in a manner consistent with past practice.
Section 3.13 INVESTMENT COMPANY ACT. None of the Companies nor
any of the Subsidiaries is (i) an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to regulation
under the Federal Power Act or the Interstate Commerce Act.
Section 3.14 REPORTING. Each of the Companies is subject to
Section 13 of the Exchange Act and is in compliance in all material respects
with the provisions of such section.
Section 3.15 REGISTRATION AND QUALIFICATION. Assuming the
accuracy of the representations and warranties made by the Investors set forth
in Article IV hereof, it is not necessary in connection with the offer, sale and
delivery of the Shares to the Investors in the manner contemplated by this
Agreement to register the Shares, or the shares of the Wyndham Common Stock
issuable upon conversion of the Shares, under the Securities Act or the
securities laws of any state thereof.
Section 3.16 INDEBTEDNESS AND CERTAIN OTHER CONTRACTS.
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(a) Set forth in Section 3.16(a) of the Company Disclosure
Letter is a list of the following:
(i) each agreement or other instrument evidencing
indebtedness for money borrowed (other than intercompany indebtedness),
capitalized leases, guarantees to which the Companies or the Subsidiaries is a
party or security interests of, by or affecting the property of either of the
Companies or any of the Subsidiaries, in each case under which the Companies or
the Subsidiaries are the obligors;
(ii) each contract of sale, purchase agreement,
contribution agreement or other agreement pursuant to which the Companies or the
Subsidiaries have purchased real property or other assets that contains any
continuing obligations of the Companies or their Subsidiaries to make payments
to or on behalf of another entity or to expend sums on improvements, each
agreement prohibiting or restricting the disposition of any such assets, and
each agreement containing any non-competition or non-solicitation provisions or
rights to repurchase or rights of first refusal; and
(iii) each Forward Equity Contract or other instrument
under which the Companies or the Subsidiaries are obligated to issue or deliver
as collateral any of their equity securities.
(b) Section 3.16(b) of the Company Disclosure Letter sets
forth the amount of principal and unpaid interest outstanding under each
agreement or other instrument evidencing indebtedness of the Companies and the
Subsidiaries, if any, that will accelerate or become due or result in a right on
the part of the holder of such indebtedness (with or without due notice or lapse
of time) to require prepayment, redemption or repurchase (i) on or prior to June
30, 1999 or (ii) as a result of the execution of the Transaction Documents or
the consummation of any of the transactions contemplated thereby. Except as set
forth in Section 3.16(b) of the Company Disclosure Letter, there are no other
agreements, arrangements or understandings that would require payments to be
made by any of the Companies or the Subsidiaries as a result of the execution of
the Transaction Documents or the consummation of any of the transactions
contemplated thereby. Except as set forth in Section 3.16(b) of the Company
Disclosure Letter, no indebtedness of the Companies or the Subsidiaries contains
any restriction upon the prepayment of any such indebtedness.
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Section 3.17 NO DEFAULTS. Except as disclosed in Section 3.17
of the Company Disclosure Letter, none of the Companies or the Subsidiaries is
in violation or default under any provision of its certificate of incorporation,
by-laws, partnership agreement or other organizational documents, or is in
breach of or default with respect to any provision of any agreement, judgment,
decree, order, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which it is a party or by which it or any of its
properties are bound; and there does not exist any state of facts which would
constitute an event of default on the part of any of the Companies or the
Subsidiaries as defined in such documents which, with notice or lapse of time or
both, would constitute a default.
Section 3.18 VIOLATIONS OF LAW.
(a) Except as identified in Section 3.18(a) of the Company
Disclosure Letter or otherwise identified in Sections 3.19, 3.20, 3.21, 3.22,
3.23 or 3.24 or in Sections 3.19, 3.20, 3.21, 3.22, 3.23 or 3.24 of the Company
Disclosure Letter, each of the Companies and the Subsidiaries is in compliance
and has complied in all material respects and at all times during the past three
years with all applicable federal, state and local statutes, codes, ordinances,
rules and regulations, judgments, decrees, orders, writs and injunctions of the
United States and all other countries and subdivisions thereof to the extent
applicable, and during such three year period, no notice, charge, claim, action
or assertion has been received by the Companies or the Subsidiaries or has been
filed, commenced or, to the knowledge of the Companies and the Subsidiaries,
threatened against the Companies or the Subsidiaries alleging any violation of
any of the foregoing.
(b) None of the Companies or the Subsidiaries has at any time
(i) made any unlawful contribution to any candidate for domestic or foreign
office or failed to disclose fully any contribution in violation of law or (ii)
made any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
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Section 3.19 PROPERTIES. Except as disclosed in Section 3.19
of the Company Disclosure Letter:
(a) The Companies, the Subsidiaries and the Joint Ventures (as
defined below) have (i) good and marketable fee simple title to, (ii) good and
valid ground leasehold interests in, and (iii) good and valid capital leasehold
interests in, all the properties (including all improvements thereon) as
indicated in Section 3.19(a) of the Company Disclosure Letter, which properties
constitute all the real estate properties owned in fee, ground leased or held
pursuant to capital leases by the Companies, the Subsidiaries and the Joint
Ventures (the "Owned Properties"). Each outstanding loan secured by one or more
of the Owned Properties (the "Mortgages") is listed opposite the Owned
Properties in Section 3.19(a) of the Company Disclosure Letter, and Section 3.19
(a) of the Company Disclosure Letter lists, individually, the lender, the unpaid
principal amount of the Mortgage and the accrued but unpaid interest, if
delinquent, on the Mortgage. The Owned Properties are not subject to any Lien of
any kind except for the Mortgages or Liens for non-delinquent real estate taxes
or assessments. Section 3.19(a) of the Company Disclosure Letter lists all joint
ventures or other entities that are not Subsidiaries in which the Companies or
the Subsidiaries have an equity ownership interest of at least 30%, and which
own or lease real estate property (the "Joint Ventures"), the Companies' or the
Subsidiaries' respective interests in the Joint Ventures and any commitments any
of the Companies or any of the Subsidiaries may have to make additional
investments or loans to the Joint Ventures.
(b) The leases of any real property (including all
improvements thereon) held under lease, as lessee, by the Companies, the
Subsidiaries or the Joint Ventures (the "Leased Properties") are in full force
and effect, and none of the Companies, the Joint Ventures or the Subsidiaries is
in default in respect of any of the terms or provisions of such leases or has
received notice of the assertion of any claim adverse to its rights as lessee
under such leases, or affecting or questioning its right to the continued
possession or use of the real property and buildings held under such leases or
of a default under such leases. The Leased Properties are listed in Section
3.19(b) of the Company Disclosure Letter and constitute all the real estate
properties leased by the Companies, the Subsidiaries and the Joint Ventures. The
Leased Properties, together with the Owned Properties, are herein referred to as
the "Properties."
(c) Section 3.19(c) of the Company Disclosure Letter lists all
leases (excluding intercompany leases and leases entered into in the ordinary
course
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of business with third party vendors for space at the Properties (E.G., gift
shop leases)) pursuant to which any of the Companies, the Subsidiaries or the
Joint Ventures, as lessor, leases its Properties (the "Third Party Leases").
None of the Companies, the Subsidiaries, the Joint Ventures or any tenant of any
of the Properties is in default under any of the Third Party Leases (and there
exists no event which, with the lapse of time or giving of notice, or both,
would constitute a default under any of such leases).
(d) Except as disclosed in Section 3.19(d) of the Company
Disclosure Letter, (i) no person has an option or right of first refusal to
purchase all or part of any Properties or any interest therein, (ii) none of the
Companies, the Subsidiaries nor the Joint Ventures has any take out or other
commitments to make, directly or indirectly, investments in, or extend loans in
connection with, any real estate properties and (iii) none of the Companies nor
their respective affiliates are, nor immediately following the Closing shall
they be, subject to any non-competition, geographical restriction or similar
agreement.
(e) Except as disclosed in Section 3.19(e) of the Company
Disclosure Letter, each of the Properties complies in all material respects with
all applicable codes, laws and regulations (including, without limitation,
building and zoning codes, laws and regulations and laws relating to access to
the Properties).
(f) Except as disclosed in Section 3.19(f) of the Company
Disclosure Letter, there are no pending or, to the knowledge of the Companies
and the Subsidiaries threatened condemnation proceedings, zoning changes, or
other proceedings or actions that will in any manner adversely affect the size
of, use of, improvements on, construction on or access to the Properties or any
property underlying indebtedness held by the Companies, the Subsidiaries or the
Joint Ventures, as lender from third party borrowers (the "Owned Mortgages").
The Owned Mortgages constitute all of the indebtedness from third party
borrowers secured by property held by the Companies, the Subsidiaries and the
Joint Ventures and is listed in Section 3.19(f) of the Company Disclosure
Letter, which list sets forth the borrower, outstanding loan amount, underlying
collateral, interest rate and delinquencies, if any, relating thereto.
(g) Except as disclosed in Section 3.19(g) of the Company
Disclosure Letter, (i) there are no structural defects relating to any of the
Properties, (ii) the building systems for the Properties are in good working
order and (iii) there is no physical damage to the Properties, in each case with
such exceptions as would not
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have a material adverse impact on the operation of the affected Property or
require capital expenditures not provided for in the Capital Expenditure Budget
or otherwise fully and completely covered by insurance.
(h) The Companies, the Subsidiaries or the Joint Ventures have
good title, licenses or leasehold interests in and to all personal property and
other assets that are required for the effective operation of the Properties in
the manner in which they currently are operated. The leases relating to any such
property are in full force and effect, and none of the Companies, the
Subsidiaries or the Joint Ventures is in default in respect of any of the terms
or provisions of such leases or has received notice of the assertion of any
claim adverse to its rights as lessee under such leases, or affecting or
questioning its right to the continued possession or use of such property or of
a default under such leases.
(i) Section 3.19(i) of the Company Disclosure Letter sets
forth (i) a comprehensive list of all management, franchise and similar
agreements wherein the Companies, the Subsidiaries or the Joint Ventures have
contracted with a third party, (ii) the Properties subject to such agreements,
(iii) the term of each of such agreements and (iv) agreed or asserted property
improvement plans with respect to each Property subject to such agreements and
the party responsible therefor. None of the Companies, the Subsidiaries or the
Joint Ventures or any third party of such agreements is in default thereunder
(and there exists no event which, with the lapse of time or giving of notice, or
both, would constitute a default under any of such agreements).
(j) Except as set forth in Section 3.19(j) of the Company
Disclosure Letter, none of the Companies, the Subsidiaries or the Joint Ventures
has entered into any contract, letter of intent, other agreement or instrument
or listing arrangement to purchase, sell or invest in, or to lend or borrow
money in connection with, real property, companies, partnerships, limited
liability companies or other entities, whether or not such real property and
entities are currently owned by the Companies, the Subsidiaries or the Joint
Ventures.
(k) Section 3.19(k) of the Company Disclosure Letter sets
forth (i) each Property that is subject to divestiture pursuant to the terms of
any agreement to which the Companies, the Subsidiaries or the Joint Ventures are
parties, including without limitation the Settlement Agreement, dated as of May
27, 1998, among Marriott International, Inc., Interstate Hotels Corporation,
Interstate Hotels Company, Patriot and Wyndham, as amended through the date of
this Agreement,
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including for such purposes the proposed amendments described in Section 3.19(k)
of the Company Disclosure Letter (the "Marriott Settlement Agreement"), and the
material terms of such divestiture and (ii) any taxes or indemnification
obligations for which the Companies, the Subsidiaries or the Joint Ventures will
be responsible by reason of each divestiture identified under clause (i).
Section 3.20 INTELLECTUAL PROPERTY. Set forth in Section 3.20
of the Company Disclosure Letter is a list of each trademark, trade name,
patent, copyright or other similar right that is owned by the Companies or the
Subsidiaries and each license or other agreement under which the Companies or
the Subsidiaries have valid rights to use trademarks, trade names, patents,
copyrights or other similar rights that are owned by others. Except as disclosed
in Section 3.20 of the Company Disclosure Letter, the Companies and the
Subsidiaries have sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals and governmental authorizations to conduct their businesses
as now conducted; and none of the Companies or the Subsidiaries has knowledge of
any infringement by it of any trademark, trade name, patent, copyright, license,
trade secret or other similar rights of others, and there is no claim being made
against either of the Companies or any of their Subsidiaries regarding
trademark, trade name, patent, copyright, license, trade secret or other
infringement.
Section 3.21 TAXES. Except as set forth in Section 3.21 of the
Company Disclosure Letter:
(a) Each of the Companies and the Subsidiaries has timely
filed (or there has been filed on its behalf) all Tax Returns required to be
filed by it under applicable law, and all such Tax Returns were and are true,
complete and correct in all material respects. Except to the extent adequately
reserved for in accordance with GAAP and reflected on the balance sheets of the
Companies dated December 31, 1998, all Taxes due and payable by the Companies or
any of the Subsidiaries have been timely paid in full.
(b) There are no Tax Liens upon the assets of any of the
Companies or the Subsidiaries except Liens for Taxes not yet due.
(c) Each of the Companies and the Subsidiaries has complied
with the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), relating to the withholding of Taxes, as well as similar provisions
under any other
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laws, and have, within the time and in the manner prescribed by law, withheld,
collected and paid over to the proper governmental authorities all amounts
required.
(d) No audits or other administrative proceedings or court
proceedings are presently pending or, to the knowledge of the Companies,
asserted with regard to any Taxes or Tax Returns of the Companies or any of the
Subsidiaries.
(e) None of the Companies or any of the Subsidiaries has
received a written ruling of a taxing authority relating to Taxes or entered
into a written and legally binding agreement with a taxing authority relating to
Taxes with any taxing authority.
(f) None of the Companies or the Subsidiaries has requested
any extension of time within which to file any Tax Return, which Tax Return has
not since been filed, and the statute of limitations for the assessment of
federal, state, local and foreign income Taxes has expired for all applicable
returns of the Companies and any of the Subsidiaries or those returns have been
examined by the appropriate taxing authorities for all periods.
(g) None of the Subsidiaries has agreed to and is required to
make any adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision) by reason of any change in any accounting method of such Subsidiary,
and there is no application pending with any taxing authority requesting
permission for any changes in any accounting method of any of the Subsidiaries.
To the knowledge of the Companies, the Internal Revenue Service (the "IRS") has
not proposed any such adjustment or change in accounting method.
(h) Neither Wyndham nor any of its Subsidiaries has filed, as
a common parent corporation of an affiliated group (within the meaning of
1504(a) of the Code), a consolidated return for federal income tax purposes on
behalf of itself and those Includible Subsidiaries (as described in Section
3.21(h) of the Company Disclosure Letter). None of the Subsidiaries are or have
ever been subject to the provisions of Section 1503(f) of the Code.
(i) Other than as set forth in Section 3.21(i) of the Company
Disclosure Letter, none of the Companies or any of the Subsidiaries is a party
to any agreement providing for the allocation or sharing of Taxes or
indemnification by the Companies or the Subsidiaries of any other person in
respect of Taxes. Section
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3.21(i) of the Company Disclosure Letter contains a brief description of the
terms of any such agreements.
(j) None of the Companies or any of the Subsidiaries is a
party to any agreement, contract, or arrangement that would result, individually
or in the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code.
(k) To the knowledge of the Companies, none of the Companies
or any of the Subsidiaries has or ever had any income which is includible in
computing the taxable income of a United States person (as determined under
Section 7701 of the Code) under Section 951 of the Code. To the knowledge of the
Companies, none of the Companies or any of the Subsidiaries is or has ever been
a Passive Foreign Investment Company within the meaning of Section 1297 of the
Code. To the knowledge of the Companies, none of the Companies or any of the
Subsidiaries are or have ever been a Personal Holding Company within the meaning
of Section 542 of the Code. To the knowledge of the Companies, there are no gain
recognition agreements, within the meaning of Treasury Regulation 1.367(a)-8 or
any predecessor provision, between the Companies or any of the Subsidiaries, on
one hand, and a stockholder of the Companies, on the other. There is no pending
or, to the knowledge of the Companies, threatened action, proceeding or
investigation by any taxing authority for assessment or collection of Taxes with
respect to the Companies or any of the Subsidiaries in any jurisdiction where
the Companies or the Subsidiaries has not filed a Tax Return. All dealings and
arrangements between and among the Companies and each Subsidiary and among the
Subsidiaries are at arm's length and consistent with arm's length dealings and
arrangements between or among unrelated, uncontrolled taxpayers.
(l) Commencing with its first taxable year ended December 31,
1983 and continuing through and including December 31, 1998, Patriot has been
organized, operated and duly qualified as a Real Estate Investment Trust (a
"REIT") under Section 856 of the Code. The Operating Partnerships and each other
Subsidiary which is a partnership, joint venture or limited liability company
has been treated since its formation and continues to be treated for federal
income tax purposes as a partnership and not as a corporation or as an
association taxable as a corporation.
(m) Williams Hospitality Group, Inc., as operator of the El
Conquistador Hotel, the Condado Plaza Hotel and the Hotel San Juan, El
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Conquistador Partnership, L.P., owner of the El Conquistador Hotel, Posadas de
San Juan Associates, owner of the Hotel San Juan, and Posadas de Puerto Rico
Associates, Inc., owner of the Condado Plaza are each qualified and will
continue to qualify under the Puerto Rico Tourism Development Act of 1993 for
(i) the 90% exemption on (A) municipal and Commonwealth taxes on personal and
real property, (B) license fees, excise taxes and other municipal taxes, (C)
income taxes on income derived from its tourist activity (not including casino
operations) and reinvestment thereof in said activities, income from the
investment of funds deposited in depository institutions as provided in section
2(l) of the regulations, (D) gain on sale of all of the assets used in the
tourist activity and (E) gain on the sale of stock or a partnership interests,
(ii) the 100% exemption on municipal construction excise taxes, and (iii) the
100% exemption on use or consumption taxes, for the taxable periods listed in
Section 3.21(m) of the Company Disclosure Letter.
(n) As used in this Section 3.21, (i) the term "Taxes" means
any federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including all net income, gross income, sales and use, ad
valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes or charges imposed by any Governmental Entity,
and includes any interest and penalties (civil or criminal) on or additions to
any such taxes, and (ii) the term "Tax Return" means a report, return or other
information required to be supplied to a Governmental Entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Companies or any of the
Subsidiaries.
Section 3.22 EMPLOYEE MATTERS; ERISA. Except as set forth in
Section 3.22 of the Company Disclosure Letter:
(a) Section 3.22(a) of the Company Disclosure Letter
contains a true and complete list of each written material employee benefit
plan, policy or agreement covering employees, former employees or directors
of any of the Companies or the Subsidiaries or their beneficiaries, or
providing benefits to such persons in respect of services provided to any
such entity, including without limitation any employee benefit plans within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and any employment, retention, severance or
change in control agreement, in each case that is sponsored, maintained or
contributed to or required to be contributed to by the
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Companies or the Subsidiaries or by any trade or business,
whether or not incorporated (an "ERISA Affiliate") that, together with either
Patriot or Wyndham or any of the Subsidiaries, would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA (collectively, the
"Benefit Plans"). Other than as set forth in Section 3.22(a) of the Company
Disclosure Letter, since December 31, 1997, there have been no new plans adopted
nor changes, additions or modification to any Benefit Plan. As of the date
hereof, none of the Companies or the Subsidiaries has any plans to adopt,
change, add or modify any Benefit Plan.
(b) All material contributions and other payments required to
have been made by any of the Companies or any of the Subsidiaries to any Benefit
Plan (or to any person pursuant to the terms thereof) have been made or the
amount of such payment or contribution obligation has been reflected in the
financial statements in the Third Quarter 10-Q.
(c) Each of the Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) or Section 501(c)(9) of the Code has been
determined by the IRS to be so qualified, and no circumstances exist that could
reasonably be expected to result in the revocation of any such determination.
Each of the Companies and the Subsidiaries and any ERISA Affiliate is in
compliance in all material respects with, and each of the Benefit Plans is and
has been operated in all material respects in compliance with, all applicable
laws, rules and regulations governing such plan, including, without limitation,
ERISA and the Code. Each Benefit Plan intended to provide for the deferral of
income, the reduction of salary or other compensation, or to afford other income
tax benefits, complies with the requirements of the applicable provisions of the
Code or other laws, rules and regulations required to provide such income tax
benefits. No prohibited transactions (as defined in Section 406 or 407 of ERISA
or Section 4975 of the Code) have occurred for which a statutory exemption is
not available with respect to any Benefit Plan, and which could give rise to
liability on the part of the Companies, any of the Subsidiaries, any ERISA
Affiliate, any Benefit Plan, or any fiduciary, party in interest or disqualified
person with respect thereto that would be material to either of the Companies or
would be material to either of the Companies if it were its liability.
(d) With respect to the Benefit Plans, individually and in the
aggregate, no event has occurred, there does not now exist any condition or set
of circumstances, that could subject the Companies, any of the Subsidiaries or
any ERISA Affiliate to any material liability arising under the Code, ERISA or
any other applicable law, or under any indemnity agreement to which the
Companies, any of
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the Subsidiaries or any ERISA Affiliate is a party, excluding liability relating
to benefit claims and funding obligations payable in the ordinary course.
(e) Other than continuation coverage required to be provided
under Section 4980B of the Code or Part 6 of Title I of ERISA or otherwise as
provided by state law, none of the Benefit Plans that are "welfare plans,"
within the meaning of Section 3(1) of ERISA, provides for any benefits with
respect to current or former employees for periods extending beyond their
retirement or other termination of service
(f) All amounts payable under the Benefit Plans are deductible
for federal income tax purposes. The consummation of the transactions
contemplated by the Transaction Documents will not, either alone or in
combination with another event undertaken by any of the Companies or the
Subsidiaries prior to the date hereof, (i) entitle any current or former
employee, agent, independent contractor or officer of the Companies or their
subsidiaries to severance pay, unemployment compensation or any other payment,
(ii) accelerate the time of payment or vesting or increase the amount of
compensation due any such employee, officer, agent or independent contractor, or
(iii) constitute a "change in control" under any Benefit Plan, and each of the
Companies and the Subsidiaries has taken all required actions to effect the
foregoing.
Section 3.23 ENVIRONMENTAL MATTERS. Except as set forth in
Section 3.23 of the Company Disclosure Letter:
(a) Each of the Companies, the Subsidiaries and the Joint
Ventures has been and is in material compliance with all applicable
Environmental Laws (as defined in Section 3.23(g)) and none of the Companies,
the Subsidiaries or the Joint Ventures has received any written communication
from any person or governmental authority that alleges that any of the
Companies, the Subsidiaries or the Joint Ventures has not been and is not in
compliance with applicable Environmental Laws. Compliance with all applicable
Environmental Laws will not require the Companies, the Subsidiaries or the Joint
Ventures to incur costs materially in excess of amounts reserved against in the
financial statements in the Third Quarter 10-Q or in excess of amounts budgeted
for such compliance as specifically reflected in the Capital Expenditure Budget
during the periods covered by the Third Quarter 10-Q or the Capital Expenditure
Budget, as the case may be.
(b) Each of the Companies, the Subsidiaries and the Joint
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Ventures has obtained or has applied for all environmental, health and safety
permits and governmental authorizations (collectively, the "Environmental
Permits") necessary for the conduct of their operations, and all such
Environmental Permits are in effect or, where applicable, a renewal application
has been timely filed and is pending agency approval, and each of the Companies,
the Subsidiaries and the Joint Ventures has been and is in material compliance
with all terms and conditions of all such Environmental Permits.
(c) There is no Environmental Claim (as defined in Section
3.23(g)) pending (i) against the Companies, the Subsidiaries or the Joint
Ventures, (ii) against any person or entity whose liability for any
Environmental Claim either of the Companies, the Subsidiaries or the Joint
Ventures has retained or assumed either contractually or by operation of law, or
(iii) against any real or personal property or operations which the Companies,
the Subsidiaries or the Joint Ventures own, lease or manage, in whole or in
part.
(d) There have been no Releases (as defined in Section
3.23(g)) of any Hazardous Material (as defined in Section 3.23(g)) that could
reasonably form the basis of any Environmental Claim against any of the
Companies, the Subsidiaries or the Joint Ventures or against any person or
entity whose liability for any Environmental Claim any of the Companies, the
Subsidiaries or the Joint Ventures has retained or assumed either contractually
or by operation of law.
(e) No remediation of Releases has occurred on any property
owned, leased or managed by the Companies, the Subsidiaries or the Joint
Ventures that could result in the assertion or creation of a Lien on said
property by any governmental body pursuant to an applicable Environmental Law,
nor has any such assertion of a Lien been made with respect thereto.
(f) To the knowledge of the Companies or the Operating
Partnerships, there are no past, present or anticipated future events,
conditions, circumstances, activities, practices, incidents, actions, or plans
relating to the Companies, the Subsidiaries or the Joint Ventures that may
interfere with or prevent compliance or continued compliance with applicable
Environmental Laws or which may give rise to any liability under the
Environmental Laws, or otherwise form the basis of any Environmental Claim.
(g) As used in this Section 3.23:
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(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, orders, claims, Liens, investigations, proceedings or notices of
noncompliance or violation by any person or entity (including any governmental
authority) alleging potential liability (including, without limitation,
potential responsibility for or liability for enforcement, investigatory costs,
cleanup costs, governmental response costs, removal costs, remediation costs,
natural resources damages, property damages, personal injury, bodily injury,
wrongful death or penalties) arising out of, based on or resulting from (A) the
presence, Release or threatened Release of any Hazardous Materials at any
location, whether or not owned, operated, leased or managed by any of the
Companies or the Subsidiaries; or (B) circumstances that form the basis of any
violation or alleged violation of any Environmental Law.
(ii) "Environmental Laws" means all federal, state
and local laws, rules and regulations relating to pollution, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or protection of human health and safety,
including, without limitation, laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum
or petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls ("PCBs"); (B) any chemicals, materials or substances which are now
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of similar
import under any Environmental Law and (C) any other chemical, material,
substance or waste, exposure to which is now prohibited, limited or regulated
under any Environmental Law in a jurisdiction in which the Companies or any of
the Subsidiaries operate.
(iv) "Release" means any spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal or leaching into the
atmosphere, soil, surface water or groundwater.
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(h) The Companies have heretofore delivered to the Investors a
list of all the environmental reports in the last five years relating to any of
the properties currently or formerly owned, leased or managed by any of the
Companies, the Subsidiaries or the Joint Ventures, and have delivered or made
available to the Investors for review copies of said environmental reports.
Section 3.24 LABOR MATTERS. Except as set forth in Section
3.24 of the Company Disclosure Letter: (i) none of the Companies or the
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization; (ii) to knowledge of the Companies and the Operating Partnerships,
no union claims to represent the employees of any of the Companies or the
Subsidiaries; (iii) none of the employees of any of the Companies or the
Subsidiaries is represented by any labor organization and the Companies have no
knowledge of any current union organizing activities among the employees of the
Companies or any of the Subsidiaries, nor does any question concerning
representation exist concerning such employees; (iv) none of the Companies nor
any of the Subsidiaries is the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages or conditions of employment; (v) there is no
strike, work stoppage, lockout or other labor dispute involving any of the
Companies or the Subsidiaries pending or threatened; (vi) no action, suit,
complaint, charge, arbitration, inquiry, proceeding or investigation by or
before any Governmental Entity brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor organization or other
representative of its employees is pending or, to the knowledge of the
Companies, threatened against any of the Companies or the Subsidiaries; (vii) to
the knowledge of the Companies, no grievance is threatened against any of the
Companies or the Subsidiaries; (viii) none of the Companies nor any of the
Subsidiaries is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Entity relating to employees or employment
practices; (ix) there are no written personnel policies, rules or procedures
applicable to employees of any of the Companies or the Subsidiaries, other than
those set forth in Section 3.24 of the Company Disclosure Letter, true and
correct copies of which have heretofore been delivered to the Investors; (x) the
Companies and the Subsidiaries are, and have at all times been, in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation; (xi) since the enactment of the Worker Adjustment
and Retraining
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Notification Act (the "WARN Act"), none of the Companies or the Subsidiaries has
effectuated (A) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of any of the Companies or the Subsidiaries; or (B) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of any of the Companies or the Subsidiaries, in either case, other than
in substantial compliance with the WARN Act; nor has any of the Companies or the
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation; and (xii) none of the
Companies nor any of the Subsidiaries is aware that it has any liability or
potential liability under the Multi-Employer Pension Plan Act.
Section 3.25 YEAR 2000 COMPLIANCE.
(a) Each of the Companies, the Operating Partnerships and the
Subsidiaries has (i) completed a review and assessment of all areas within its
business and operations that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by the Companies or
the Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timetable addressing the Year 2000 Problem on a
timely basis (the "Year 2000 Plan"), a true and complete copy of which is
attached to Section 3.25 of the Company Disclosure Letter, and (iii) to date
implemented the Year 2000 Plan in accordance with the timetable and the
expenditures set forth in the Year 2000 Plan. The Companies have inquired as to
the Year 2000 compliance of service contractors and suppliers and other third
parties with whom they conduct business and, to their knowledge, the effect of
the Year 2000 Problem on such third parties would not reasonably be expected to
adversely affect the Companies.
(b) All computer software, computer firmware, computer
hardware (whether general or special purpose), and other similar or related
items of automated, computerized, and/or software systems, that are used or
relied on by the Companies, the Operating Partnerships or by any of the
Subsidiaries in the conduct of their respective businesses will, on a timely
basis, be able to perform properly date-sensitive functions for all dates before
and after January 1, 2000 (that is, be "Year 2000 Compliant"). The costs of all
assessment, remediation, testing and integration related to the Year 2000 Plan
for becoming Year 2000 Compliant will not exceed the amounts as set forth in the
Year 2000 Plan.
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(c) All of the products and services sold, licensed, rendered,
or otherwise provided by the Companies, the Operating Partnerships or by any of
their Subsidiaries in the conduct of their respective businesses will be Year
2000 Compliant and none of the Companies, the Operating Partnerships nor any of
their Subsidiaries is and shall be subject to claims or liabilities arising from
their failure to do so.
(d) Except as set forth in Section 3.25(d) of the Company
Disclosure Letter, none of the Companies, the Operating Partnerships nor any of
their Subsidiaries has made other representations or warranties regarding the
ability of any product or service sold, licensed, rendered or otherwise provided
by any of them to be Year 2000 Compliant.
Section 3.26 INSURANCE. Each of the Companies and the
Subsidiaries maintains primary, excess and umbrella insurance of types and
amounts customary for its business against general liability, fire, workers'
compensation, products liability, theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which insurance is in
full force and effect and with respect to property insurance for assets for
which it is customary to have replacement cost coverage or there are coinsurance
provisions, the amount of such insurance is sufficient to provide for such
coverage or to prevent the application of the coinsurance provision.
Section 3.27 AFFILIATE TRANSACTIONS.
(a) Except as set forth in Section 3.27(a) of the Company
Disclosure Letter, there is no transaction and no transaction is now proposed,
to which the Companies or the Subsidiaries is or is to be a party in which any
current stockholder (holding in excess of 5% of the Companies' common stock or
any securities convertible into or exchangeable for such common stock), general
partner, limited partner (holding in excess of 5% of the limited partnership
interests), director or executive officer of the Companies or the Subsidiaries
has a direct or indirect interest.
(b) Messrs. Nussbaum, Lattin and Stewart hold the only equity
interests in the Crown Plaza/Ravinia and Wyndham Wyndwatch/Happauge not owned by
the Companies. Messrs. Nussbaum and Lattin have agreed to recontribute such
interests to the Companies in cancellation of the promissory notes between them
and the Companies entered into in connection with the organization of the
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entities holding such properties. After giving effect to such recontributions,
the Companies will have a controlling voting interest and a 99-2/3% economic
interest in the Crown Plaza/Ravinia and Wyndham Wyndwatch/Happauge.
Section 3.28 DELAWARE GENERAL CORPORATION LAW SECTION 203. The
Boards of Directors have taken such action as necessary to approve for purposes
of Section 203 of the DGCL the Transaction Documents and the transactions
contemplated thereby.
Section 3.29 ACTIONS REGARDING THE PATRIOT SHAREHOLDER RIGHTS
PLAN. Patriot has taken all actions necessary to amend the Patriot Rights Plan
as necessary to ensure that the Transaction Documents and the consummation of
any of the transactions contemplated thereby will not result in the distribution
of separate rights certificates or the occurrence of a "Distribution Date" under
the Patriot Rights Plan.
Section 3.30 BROKERS AND FINDERS; TRANSACTION EXPENSES.
(a) No agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by the Transaction Documents, except for the firms identified in
Section 3.30(a) of the Company Disclosure Letter, complete and accurate copies
of whose engagement letters have been provided to the Investors and will not be
amended, without the consent of the Investors, to (i) increase the fees and
expenses payable thereunder or (ii) extend the period for which services are to
be performed beyond the Closing Date.
(b) Section 3.30(b) of the Company Disclosure Letter sets
forth a good faith estimate by the Companies of fees and expenses (excluding
those expenses of the Investors reimbursable by the Companies, the "Transaction
Expenses"), by professional firm (for each such firm that has fees and expenses
in excess of $1,000,000) and by category of the transaction, that have been paid
by the Companies since September 30, 1998 or the Companies anticipate will be
payable by the Companies or the Subsidiaries in connection with the transactions
contemplated by this Agreement, the Companies' review and consideration of
alternative transactions, the restructuring of the Companies' consolidated
indebtedness, the Forward Equity Contracts and proposed or completed
acquisitions or divestitures.
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Section 3.31 OPINION OF FINANCIAL ADVISOR. The Companies have
received the opinion of Morgan Stanley & Co. Incorporated (the "Financial
Advisor"), dated the date hereof, to the effect that the Investment is fair,
from a financial point of view, to the holders of Patriot Common Stock and the
holders of Wyndham Common Stock.
Section 3.32 FULL DISCLOSURE. To the knowledge of the
Companies, the Companies have not failed to disclose to the Investors any facts
material to the business, properties, prospects, operations, financial condition
or results of operations of Patriot, Wyndham and their respective subsidiaries,
taken as a whole. To the knowledge of the Companies, no representation or
warranty by any of the Companies or the Operating Partnerships contained in this
Agreement and no statement contained in any document (including historical
financial statements and the Company Disclosure Letter), certificate or other
writing furnished or to be furnished by any of the Companies or the Operating
Partnerships to the Investors or any of its representatives pursuant to the
provisions hereof or in connection with the transactions, contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading. This Section
3.32 shall not apply to financial projections made by the Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
As an inducement to the Companies and the Operating
Partnerships to enter into this Agreement and to consummate the transactions
contemplated hereby, each Investor, severally but not jointly with the other
Investors, hereby represents and warrants to the Companies and the Operating
Partnerships as follows; PROVIDED that for all purposes of this Agreement no
representation or warranty set forth in this Article IV shall fail to be true
and complete or to have been breached in all material respects by reason of one
or more inaccuracies which individually would give rise to a Loss of less than
$50,000:
Section 4.1 INVESTMENT.
(a) Each Investor is acquiring Shares and the shares of
Wyndham Common Stock issuable upon conversion of such Shares for investment for
its own account, and not with a view to any distribution thereof in violation of
the securities
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laws. Each Investor understands that such Shares and the shares of Wyndham
Common Stock issuable upon conversion of such Shares have not been registered
under the Securities Act by reason of specific exemptions therefrom which depend
upon, among other things, the bona fide nature of the investment intent and the
accuracy of the Investor's representations as expressed herein.
(b) Each Investor's financial condition and investments are
such that it is in a position to hold such Shares and the shares of Wyndham
Common Stock issuable upon conversion of such Shares for an indefinite period,
bear the economic risks of the investment and withstand the complete loss of the
investment. Each Investor has extensive knowledge and experience in financial
and business matters and has the capability to evaluate the merits and risks of
such Shares and the shares of Wyndham Common Stock issuable upon conversion of
such Shares. Each Investor qualifies as an "accredited investor" as such term is
defined in Section 2(15) of the Securities Act and Regulation D promulgated
thereunder.
Section 4.2 RULE 144. Each Investor acknowledges that the
Shares to be purchased by the Investors and the shares of Wyndham Common Stock
issuable upon conversion of the Shares must be held indefinitely unless
subsequently registered under the Securities Act or any applicable state
securities laws or unless exemptions from such registrations are available. Each
Investor is aware of the provisions of Rule 144 promulgated under the Securities
Act which permit limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions.
Section 4.3 ORGANIZATION OF THE INVESTORS. Each Investor is
duly organized and validly existing under the laws of the jurisdiction of its
organization.
Section 4.4 CURRENT OWNERSHIP. Except as set forth on Section
4.4 of the letter of the Investors to the Companies to be dated as of the
Effective Date (the "Investor Disclosure Letter"), as of the date hereof, each
Investor represents that it does not beneficially own any capital stock of the
Companies or any partnership interests in the Operating Partnerships.
Section 4.5 NO VOTING AGREEMENTS. Except as disclosed in
Section 4.5 of the Investor Disclosure Letter, the Investors have not entered
into any voting agreement relating to the Shares prior to the date hereof.
Section 4.6 AUTHORITY OF THE INVESTORS.
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(a) Each Investor has the power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to comply with the terms, conditions and provisions hereof.
(b) The execution, delivery and performance of this Agreement
by each Investor has been duly authorized and approved by such Investor and does
not require any further authorization or consent of such Investor or its
beneficial owners. This Agreement is the legal, valid and binding agreement of
the Investor, enforceable against the Investor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws from time to time
affecting the enforcement of creditors' rights generally.
Section 4.7 NON-CONTRAVENTION. The execution, delivery and
performance of this Agreement by the Investors and the consummation of any of
the transactions contemplated hereby by the Investors will not (a) conflict with
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
Lien, charge or encumbrance upon any property or assets of the Investors
pursuant to any agreement, instrument, franchise, license or permit to which the
Investors are a party or by which any of its properties or assets may be bound
or (b) violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
applicable to each Investor or any of its properties or assets, other than such
breaches, defaults or violations that are not reasonably expected to impair the
ability of each Investor to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by each
Investor and the consummation of the transactions contemplated hereby by each
Investor does not and will not violate or conflict with any provision of the
organizational documents of such Investor, as currently in effect. Except for
filings under the HSR Act, no consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any government agency or body applicable to the Investors is required for the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
Section 4.8 BROKERS AND FINDERS; TRANSACTION EXPENSES.
(a) No agent, broker, investment banker, financial advisor or
other
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firm or person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by the Transaction Documents, except for Bear, Stearns & Co.
Inc., a complete and accurate copy of whose engagement letter has been
provided to the Companies and will not be amended, without the consent of the
Companies, to (i) increase the fees or epenses payable thereunder or (ii)
extend the period for which services are to be performed beyond the Closing
Date.
(b) Section 4.8(b) of the Investor Disclosure Letter sets
forth a good faith estimate by the Investors of the Transaction Expenses, by
professional firm (for each such firm that has fees and expenses in excess of
$1,000,000) and by category of the transaction, that have been paid by the
Investors since September 30, 1998 or the Investors anticipate will be payable
by the Investors in connection with the transactions contemplated by this
Agreement.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The
respective obligation of each party to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions:
(a) HSR APPROVAL. The applicable waiting period (and any
extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), relating to the transactions contemplated by
the Transaction Documents shall have been terminated or shall have expired.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction (collectively, "Restraints") preventing consummation of
any of the transactions contemplated hereby shall be in effect.
(c) PATRIOT STOCKHOLDER APPROVAL. The approval of holders of
the requisite number of the shares of Patriot Common Stock outstanding on the
record date (the "Record Date") for the Stockholders Meeting (as defined in
Section 6.5(a)(ii)) shall have been received for (i) the Merger and (ii) the
Pairing Termination, in accordance with the requirements of the DGCL and the
rules of the
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NYSE (the "Patriot Stockholder Approval").
(d) WYNDHAM STOCKHOLDER APPROVAL. The approval of holders
of the requisite number of the shares of Wyndham Common Stock outstanding on
the Record Date for the Stockholders Meeting shall have been received for (i)
the issuance of the Shares, the Restructuring Shares and the shares of
Wyndham Common Stock issuable upon conversion of the Shares, (ii) the Pairing
Termination, and (iii) the Wyndham Charter Amendment, in accordance with the
requirements of the DGCL and the rules of the NYSE (the "Wyndham Stockholder
Approval").
Section 5.2 CONDITIONS TO THE INVESTORS' OBLIGATION. The
obligation of each of the Investors to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of each of the Companies and the Operating Partnerships set forth
in this Agreement, in the aggregate, shall be true and complete in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date) and each of the Companies and
the Operating Partnerships shall have delivered to the Investors at the Closing
a certificate signed by its Chief Executive Officer and Chief Financial Officer
or Treasurer, dated the Closing Date, in form and substance reasonably
satisfactory to the Investors, to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS. The Companies and the
Operating Partnerships shall have performed in all material respects all
obligations required to be performed by any of them under this Agreement at or
prior to the Closing and each of the Companies and the Operating Partnerships
shall have delivered to the Investors at the Closing a certificate signed by its
Chief Executive Officer and Chief Financial Officer or Treasurer, dated the
Closing Date, in form and substance reasonably satisfactory to the Investors, to
the foregoing effect.
(c) MATERIAL ADVERSE CHANGE. Since September 30, 1998, there
shall not have occurred any event that could reasonably be expected to have a
Material Adverse Change (or development that is reasonably likely to result in
any Material Adverse Change) and each of the Companies and the Operating
Partnerships shall have delivered to the Investors at the Closing a certificate
signed by its Chief Executive Officer, dated the Closing Date, in form and
substance
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reasonably satisfactory to the Investors, to the foregoing effect.
(d) PROJECTED EBITDA. Earnings before interest, taxes,
depreciation and amortization ("EBITDA") of the Companies and their consolidated
subsidiaries, as adjusted for the items described in Section 5.2(d) of the
Company Disclosure Letter ("Adjusted EBITDA"), shall be set forth in a
certificate, dated the Closing Date, delivered to the Investors and signed by
the Chief Executive Officer of Wyndham. Adjusted EBITDA shall have been at least
the indicated amounts for the indicated periods in Section 5.2(d) of the Company
Disclosure Letter. For purposes of this Section 5.2(d), EBITDA and Adjusted
EDITDA shall be calculated in accordance with Section 5.2(d) of the Company
Disclosure Letter on a prorated basis which shall be measured through either (i)
the end of the calendar month immediately preceding the month in which the
Closing occurs if the Closing occurs following the 20th day of any calendar
month or (ii) the end of the second calendar month preceding the month in which
the Closing occurs if the Closing occurs on or prior to the 20th day of any
calendar month.
(e) RECEIPT OF CONSENTS. The Companies shall have obtained the
consents contemplated by Section 5.2(e) of the Company Disclosure Letter and a
copy of each such consent or evidence thereof reasonably satisfactory to the
Investors shall have been provided to the Investors at or prior to the Closing.
In obtaining such consents and amendments, the Companies, the Operating
Partnerships and the Subsidiaries shall have complied with Section 11.13.
(f) CAPITAL EXPENDITURE BUDGET. The Companies shall have made
on a timely basis the expenditures set forth under the caption "Maintenance
Capital Expenditures" in the Capital Expenditure Budget.
(g) YEAR 2000 COMPLIANCE. The Companies shall have delivered
to the Investors a certificate, dated the Closing Date and signed by the Chief
Executive Officer of Wyndham, to the effect that (i) the central reservation
system comprised of the facilities and systems set forth on Section 5.2(g)(i) of
the Company Disclosure Letter (the "Central Reservation System") is Year 2000
Compliant and (ii) with respect to all other facilities or systems identified on
Section 5.2(g)(ii) of the Company Disclosure Letter, as of the Closing Date, the
Year 2000 Plan has been implemented, and such plan's other enumerated
performance goals have been substantially achieved, in accordance with the
timetable as set forth on Schedule 5.2(g)(ii) of the Company Disclosure Letter;
excluding solely for purposes of this Section 5.2(g) any adverse developments to
the extent attributable to the failure of
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third parties which have the effect, subsequent to the mailing of the Disclosure
Document in connection with the Stockholders' Meeting, of causing the Companies
to fail to satisfy this condition.
(h) RESTRUCTURING PLAN. The Restructuring Plan shall have been
completed in accordance with its terms.
(i) MARRIOTT SETTLEMENT AGREEMENT. The Companies shall have
completed the divestiture of the third party hotel management business
previously conducted by Interstate Hotels Corporation in accordance with the
Marriott Settlement Agreement (including any extension to the term thereof and
any other amendment, in each case approved in advance by the Investors), without
incurring any penalties, fees or damages thereunder for failure to complete such
divestiture in a timely fashion or modifying the transactions contemplated
thereby without the consent of the Investors; PROVIDED, that the Investors shall
respond within five business days following their receipt of any request by the
Companies to obtain the Investors' consent to any proposed modification of the
Marriott Settlement Agreement under this Section 5.2(i), and provided further
that the Investors shall be deemed to have consented to any amendment which has
the sole effect of extending the completion of such divestiture until not later
than June 20, 1999.
(j) "PROJECT D" DIVESTITURE. Either (i) the Companies shall
have completed the divestiture of the "Project D" assets in accordance with the
Purchase and Sale Agreement, dated December 15, 1998 and amended December 22,
1998, January 31, 1999, February 5, 1999, February 10, 1999 and as of February
15, 1999 (the "Project D Agreement"), among Patriot, Patriot OP and PW Holding
I, LLC, without incurring any penalties, fees or damages thereunder for failure
to complete such divestiture in a timely fashion or modifying the transactions
contemplated thereby without the consent of the Investors; PROVIDED, that the
Investors shall respond within five business days following their receipt of any
request by the Companies to obtain the Investors' consent to any proposed
modification of the Project D Agreement under this Section 5.2(j), or (ii) the
divestiture of such assets shall not have been completed due to a failure of the
conditions thereto which failure is not caused by a breach by the Companies.
(k) FINANCING. The Companies shall have entered into
definitive agreements with respect to (i) a new $1.8 billion senior bank
facility (the "Bank Facility") substantially on the terms set forth in the
commitment letter, dated as of February 19, 1999, among The Chase Manhattan Bank
("Chase"), Chase Securities,
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Inc. ("CSI") and Patriot and without giving effect to any "market flex"
provisions contained in such commitment letter (other than with respect to the
re-allocation of commitments (without reduction of the total amount of the Bank
Facility and the IRL Facility described below) and the increases in pricing
solely to the extent agreed therein) and (ii) $650 million of fully underwritten
increasing rate loans (the "IRL Facility"), substantially on the terms set forth
in the commitment letter, dated as of February 19, 1999, among Chase, CSI, Bear,
Stearns & Co. Inc. ("Bear Stearns"), The Bear Stearns Companies Inc. ("BSC") and
Patriot, all such definitive agreements to be in forms reasonably acceptable to
the Investors and without giving effect to any "market flex" provisions
contained in such commitment letter (other than with respect to the
re-allocation of commitments (without reduction of the total amount of the Bank
Facility and the IRL Facility described below) and the increases in pricing
solely to the extent agreed therein); PROVIDED, that the IRL Facility may be
replaced in whole or in part by the issuance of debt securities (the "Debt
Securities"), the aggregate amount of which may exceed the original amount of
the IRL Facility, substantially on the terms set forth in the engagement letter,
dated as of February 19, 1999, among CSI, Bear Stearns, Patriot and Wyndham,
with all definitive agreements (including the Debt Securities) to be in forms
reasonably acceptable to the Investors. The initial fundings under such
facilities shall have occurred and the proceeds of such fundings, together with
the proceeds from the issuance of the Shares, shall have been applied as
specified in such commitment letters. At the time of the Closing, the Companies
will have outstanding the full amount of mortgage debt permitted under the Bank
Facility and the IRLs.
(l) NYSE LISTING. The Restructuring Shares and the shares of
Wyndham Class A Common Stock issuable upon conversion of the Shares shall have
been approved for listing on the NYSE, subject to official notice of issuance.
(m) OPINIONS OF COUNSEL. The Investors shall have received at
the Closing opinions dated the Closing Date of counsel to the Companies, in form
and substance reasonably satisfactory to the Investors taking into account, if
such counsel so desires, the ABA Guidelines regarding legal opinions, covering
the matters set forth in Schedule 5.2(m) of the Company Disclosure Letter.
Section 5.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANIES AND
THE OPERATING PARTNERSHIPS. The respective obligation of the Companies and the
Operating Partnerships to consummate the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of the Investors set forth in this Agreement shall be true and
complete in all material respects, in each case as of the date of this Agreement
and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date).
(b) PERFORMANCE OF OBLIGATIONS. The Investors shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing.
(c) OFFICERS' CERTIFICATES. Each of the Investors shall have
delivered to the Companies a certificate signed by an executive officer of such
Investor, dated the Closing Date, in form and substance reasonably satisfactory
to the Companies, to the effect that (i) as of the date hereof and as of the
Closing Date, the representations and warranties of such Investor set forth in
this Agreement, in the aggregate, are true and complete in all material respects
and (ii) the obligations of such Investor to be performed hereunder on or prior
to the Closing Date have been performed in all material respects.
(d) OPINION OF COUNSEL. The Companies shall have received at
the Closing opinions dated the Closing Date of counsel to the Investors, in form
and substance reasonably satisfactory to the Companies taking into account, if
such counsel so desires, the ABA Guidelines regarding legal opinions, covering
the matters set forth in Schedule 5.3(d) of the Investor Disclosure Letter.
ARTICLE VI
COVENANTS OF THE COMPANIES
As an inducement to the Investors to enter into this Agreement
and to consummate the transactions contemplated hereby, the Companies and the
Operating Partnerships hereby covenant with the Investors as follows:
Section 6.1 CONDUCT OF BUSINESS PENDING THE CLOSING.
(a) Except as set forth in Section 6.1 of the Company
Disclosure Letter or as otherwise expressly contemplated by this Agreement or as
consented to by the Investors in writing, during the period from the date of
this Agreement through and including the Closing Date, the Companies and the
Operating
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Partnerships shall, and shall cause the Subsidiaries to, carry on
their respective businesses in the ordinary course consistent with past practice
and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, shall use reasonable
efforts to preserve intact their current business organizations, use reasonable
efforts to keep available the services of their current officers and other
employees and use reasonable efforts to preserve their relationships with those
persons having business dealings with them. Without limiting the generality of
the foregoing, except as set forth in Section 6.1 of the Company Disclosure
Letter or as otherwise expressly contemplated by this Agreement, including
without limitation the Restructuring Plan, or as consented to by the Investors
in writing, during the period from the date of this Agreement
through the Closing Date, the Companies and the Operating Partnerships shall
not, and shall not permit any of the Subsidiaries to:
(i) other than dividends and distributions by a
direct or indirect wholly owned Subsidiary to the Companies or one of their
wholly owned Subsidiaries, (A) declare, set aside or pay any dividends (payable
in cash, stock, property or otherwise) on, make any other distributions in
respect of, or enter into any agreement with respect to the voting of, any of
its capital stock or partnership or other equity interests, (B) split, combine
or reclassify any of its capital stock or partnership or other equity interests
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or partnership or
other equity interests, or (C) purchase, redeem or otherwise acquire any capital
stock or partnership or other equity interests in the Companies or any of the
Subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities, PROVIDED that the Companies may
redeem partnership units in Patriot OP and Wyndham OP to the extent required
under the applicable limited partnership agreement, provided that any such
redemption is effected solely with shares of Paired Common Stock (unless
otherwise agreed to in writing by the Investors);
(ii) other than issuances of shares of Paired Common
Stock pursuant to the terms of Paired Share Equivalents or Options (as defined
in Section 6.8(a)) outstanding as of the date of this Agreement and disclosed
pursuant to this Agreement, issue, deliver, sell, pledge or otherwise encumber
or subject to any Lien any of its shares of capital stock or partnership or
other equity interests or any other voting securities or any securities
convertible into, exercisable for or exchangeable with, or any rights, warrants
or options to acquire, any such shares, voting securities or convertible
securities;
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(iii) amend its certificate of incorporation,
by-laws, partnership agreement or other comparable organizational documents or
amend the Patriot Rights Plan;
(iv) acquire any business (whether by merger,
consolidation, purchase of assets or otherwise) or acquire any equity interest
in any person not an affiliate (whether through a purchase of stock,
establishment of a joint venture or otherwise);
(v) other than as identified in Section 6.1(a)(v) of
the Company Disclosure Letter, (A) sell, lease, exchange, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of any of its
real properties or other assets, (B) enter into any new franchise agreements
with the Companies or any Subsidiary as the franchisor, (C) enter into any new
joint ventures or similar projects, or (D) enter into any new development
projects;
(vi) change its methods of accounting (or underlying
assumptions) in effect at December 31, 1997, except as required by changes in
GAAP or law or regulation or as disclosed in the SEC Reports filed prior to the
date of this Agreement, or change any of its methods of reporting income and
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns of the Companies for the taxable
years ended December 31, 1997, except as required by changes in law or
regulation;
(vii) create, renew, amend, terminate or cancel, or
take any other action that could reasonably be expected to result in the
creation, renewal, amendment, termination or cancellation of any agreement or
instrument that is material to the Companies and their respective subsidiaries,
taken as a whole;
(viii) incur any indebtedness for borrowed money;
(ix) enter into any new capital or take out
commitments or increase any existing capital or take out commitments (except as
set forth in the Capital Expenditure Budget);
(x) other than with respect to the individual
previously disclosed to the Investors, but only to the extent previously
approved by the Investors in writing and except as set forth on Section 3.22(a)
of the Company Disclosure Letter, (A) grant to any current or former director,
executive officer or other key
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employee of the Companies or any Subsidiary any increase in compensation, bonus
or other benefits (other than increases in base salary in the ordinary course of
business consistent with past practice or arising due to a promotion or other
change in status and consistent with generally applicable compensation
practices), (B) grant to any such current or former director, executive officer
or other employee any increase in severance or termination pay, (C) amend or
adopt any employment, deferred compensation, consulting, severance, termination
or indemnification agreement with any such current or former director, executive
officer or employee, (D) amend, adopt or terminate any Benefit Plan, except as
may be required to retain qualification of any such plan under Section 401(a) of
the Code or (E) make any additions or changes to the Companies' senior
management at the level of divisional President or higher;
(xi) except pursuant to agreements or arrangements in
effect on the date hereof or as otherwise contemplated by this Agreement which
have been disclosed in Section 6.1 of the Company Disclosure Letter, pay, loan
or advance any amount to, or sell, transfer or lease any properties or assets
(real, personal or mixed, tangible or intangible) to, or purchase any properties
or assets, or enter into any agreement or arrangement with, any of its officers
or directors or any affiliate or the immediate family members or associates of
any of its officers or directors, other than payment of compensation at current
salary, incentive compensation and bonuses and other than properly authorized
business expenses in the ordinary course of business, in each case consistent
with past practice;
(xii) settle or compromise any pending or threatened
suit, action or claim (A) asserted by one or more stockholders of the Companies
or the Subsidiaries or one or more limited partners of the Operating
Partnerships, (B) that involves amounts, individually in or in the aggregate, in
excess of $100,000 net of insurance or (C) which relates to the transactions
contemplated by the Transaction Documents (excluding the obtaining of any
consents under the Restructuring Plan);
(xiii) permit any material insurance policy naming
the Companies or any Subsidiary as a beneficiary or a loss payable payee to be
canceled or terminated;
(xiv) enter into or amend in a manner adverse to the
Investors any new agreement which has a non-competition, geographical
restriction or similar covenant; or
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(xv) authorize, or commit or agree to take, any of
the foregoing actions.
(b) Without limiting the foregoing, the Companies and the
Operating Partnerships shall, and shall cause the Subsidiaries to, (i) make the
expenditures set forth under the caption "Maintenance Capital Expenditures" in
the Capital Expenditure Budget, and (ii) implement the performance goals in
accordance with the timetable set forth in Section 5.2(g)(ii) of the Company
Disclosure Letter.
Section 6.2 REPORTING. The Companies shall, so long as the
Shares or the shares of Wyndham Common Stock issuable upon conversion thereof
are outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, file reports and other information with the
SEC under Section 13 or 15(d) of the Exchange Act.
Section 6.3 PAYMENT OF EXPENSES.
(a) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Companies and the
Operating Partnerships hereby agree, jointly and severally, (i) to pay all costs
and expenses incident to the performance of the obligations of the Companies and
the Operating Partnerships hereunder, including those in connection with (A) the
issuance, transfer and delivery of the Shares or the shares of Wyndham Common
Stock issuable upon conversion thereof to the Investors, including any transfer
or similar taxes payable with respect thereto, (B) the qualification of the
Shares or the shares of Wyndham Common Stock issuable upon conversion thereof
under state or foreign securities or Blue Sky laws, (C) the cost of printing the
certificates for the Shares or the shares of Wyndham Common Stock issuable upon
conversion thereof and (D) the costs and charges of any transfer agent,
registrar, trustee or fiscal paying agent, and (ii) to promptly pay, upon the
Closing or the termination of this Agreement (other than as set forth in Section
6.3(c)), all out-of-pocket costs and expenses up to an aggregate of $25 million
(including any such payments made to the Investors prior to the date hereof or
through the Closing Date), including fees and expenses of advisors, accountants,
attorneys, consultants and other parties whom the Investors have engaged to
assist them in connection with a possible investment in the Companies, incurred
by the Investors in connection with the evaluation, negotiation and consummation
of this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby or incurred by them in connection with any
litigation that relates to the transactions contemplated by this Agreement.
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(b) Without limiting the foregoing, the Companies shall pay
the Investors, as reimbursement of their out-of-pocket costs and expenses, (i)
$2,500,000 on the Effective Date, except to the extent that the Companies
provide evidence reasonably satisfactory to the Investors demonstrating that the
Companies have paid such amount prior to the date of this Agreement and (ii)
$7,500,000 as soon as practicable following the date of this Agreement using the
first proceeds from mortgage indebtedness of the Companies or the Subsidiaries
received after the Effective Date.
(c) Each of the following obligations is independent of and
not limited in any way by the Companies' or the Operating Partnerships'
obligations in respect of any of the other following obligations: (i) the
payment obligation under Section 6.3(a); (ii) the reimbursement of $2.5 million
of the Investors' costs and expenses that the Companies have heretofore
reimbursed or are reimbursing on the Effective Date (as defined below) of this
Agreement; (iii) the separate fees that are payable pursuant to the Equity
Commitment Letter; (iv) the separate fee that may become payable pursuant to
Section 6.7; and (v) the Companies' and the Operating Partnerships'
indemnification obligations under Section 10.2 and any adjustment to the
conversion price of the Shares pursuant to the Series B Certificate of
Designation.
Section 6.4 AVAILABILITY OF WYNDHAM COMMON STOCK. Wyndham
shall at all times reserve and keep available out of its authorized but unissued
common stock, for the purpose of effecting the conversion of the Shares, the
full number of shares of Wyndham Common Stock then issuable upon the conversion
of the Shares. Wyndham will, from time to time, in accordance with the laws of
the State of Delaware, increase the authorized amount of Wyndham Common Stock if
at any time the number of shares of Wyndham Common Stock remaining unissued and
available for issuance shall be insufficient to permit conversion of the Shares.
Section 6.5 DISCLOSURE DOCUMENTS; STOCKHOLDER AND PARTNER
APPROVALS.
(a) Each of Patriot and Wyndham shall, in accordance with
applicable law and its Certificate of Incorporation and By-Laws:
(i) promptly file with the SEC confidential (to the
extent required to be so filed and permitted by law), preliminary copies of the
disclosure documents to be sent to securityholders in connection with the
transactions
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contemplated by this Agreement (the "Disclosure Documents") and use its
reasonable efforts to obtain the clearance by the SEC of those Disclosure
Documents requiring clearance by the SEC as promptly as practicable thereafter;
(ii) promptly and duly call, give notice of, convene
and hold not later than 50 calendar days following the clearance of the
Disclosure Documents by the SEC a meeting of its stockholders for the purpose of
obtaining the Patriot Stockholder Approval and the Wyndham Stockholder Approval
(each, a "Stockholders Meeting");
(iii) except to the extent such Board of Directors
determines in good faith, after consultation with outside counsel, that contrary
action is required by such Board of Directors' fiduciary duties under applicable
law, recommend the Patriot Stockholder Approval in the case of Patriot, the
Wyndham Stockholder Approval in the case of Wyndham, the Patriot Partner
Approval in the case of Patriot OP, the Wyndham Partner Approval in the case of
Wyndham OP and the acceptance by stockholders and limited partners of the
Exchange Offers, and include in the Disclosure Documents such recommendations
and the written opinion of the Financial Advisor that the financial
consideration to be received upon the sale of the Series B Preferred Stock is
fair, from a financial point of view, to the stockholders of the Companies, and
take all lawful action to solicit such approvals and acceptances; and
(iv) as promptly as practicable following the
clearance by the SEC of the Disclosure Documents requiring such clearance cause
the definitive Disclosure Documents to be mailed to its stockholders and the
limited partners of the Operating Partnerships.
(b) The Companies may, prior to the mailing of the Disclosure
Documents to stockholders in connection with the Stockholders' Meeting, deliver
to the Investors an updated Company Disclosure Letter dated as of the date
thereof (the "Updated Company Disclosure Letter") which supplements the Company
Disclosure Letter to reference all items that would have been required to be
disclosed in the Company Disclosure Letter had they been known at the time of
execution and delivery of this Agreement. Within 10 business days following
receipt of the Updated Company Disclosure Letter, the Investors will notify the
Companies whether the Investors believe that a Material Adverse Change has
occurred based on the information that has been provided to the Investors in the
Updated Company Disclosure Letter. Under no circumstances shall such a
notification of the Investors'
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determination affect in any way the Investors' right to assert that the
condition set forth in Section 5.2(a) or 5.2(c) has not been satisfied and shall
not affect in any way the Investors' rights to indemnification pursuant to
Section 10.2. In making their determination as to whether the condition set
forth in Section 5.2(a) or 5.2(c) has not been satisfied for purposes of this
Section 6.5(b), the Investors shall be deemed to have relied solely on the
information provided in the Company Disclosure Letter and the Updated Company
Disclosure Letter and to have knowledge only of the events or items set forth on
the Company Disclosure Letter and the Updated Company Disclosure Letter, if any.
Under no circumstance shall the Investors be held liable for any notification
given pursuant to this Section 6.5(b), including without limitation in a
circumstance where a contrary determination is made by the Investors at or prior
to the Closing.
(c) The Companies shall use reasonable efforts to ensure that
the Disclosure Documents (including without limitation any SEC Reports
incorporated by reference therein), the Exchange Offers, the Patriot OP Consent
Solicitation and the Wyndham OP Consent Solicitation shall comply with all
applicable federal or other securities laws, except that the Companies shall
have no obligation as to information provided by the Investors.
(d) The filing with the SEC, or the transmission to any of the
Companies' securityholders, of any Disclosure Document, or any amendment
thereof, relating to the transactions contemplated by this Agreement shall be
subject to the prior approval of the Investors and their counsel, which approval
shall not be unreasonably withheld or delayed.
Section 6.6 RESTRUCTURING PLAN. At or prior to the Closing,
the Companies shall use reasonable efforts to take all actions necessary to
effect the actions set forth in the Restructuring Plan.
Section 6.7 NO SOLICITATION OF COMPETING TRANSACTIONS.
(a) Except as expressly permitted in writing by the Investors,
the Companies shall not, nor shall they authorize or permit any of the
Subsidiaries or any of the Companies' or the Subsidiaries' directors, officers,
employees, representatives, agents and advisors (including any investment
banker, financial advisor, attorney, accountant or other representative retained
by any of them), directly or indirectly, to (i) solicit, initiate, encourage
(including by way of furnishing nonpublic information), respond to (other than
by bare statement, without any further detail or
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explanation, that they are not permitted to respond), or take any other action
designed to facilitate, any inquiries or the making of any proposal with respect
to any merger, consolidation, transfer of substantial assets, sale or exchange
of shares or similar transaction (except as set forth in Section 6.7 of the
Company Disclosure Letter) (collectively, a "Competing Transaction"), (ii)
participate in any substantive discussions or negotiations regarding any
Competing Transaction or (iii) enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Competing Transaction. Upon execution of this Agreement, the Companies and the
Subsidiaries shall immediately cease any existing activities, discussions or
negotiations with any parties heretofore conducted with respect to any of the
foregoing. Notwithstanding the foregoing, the Companies will not be precluded
from providing information to, or discussing, negotiating and executing
agreements with, any person or entity that makes a written proposal pursuant to
which such other person or entity would (i) make a significant equity investment
in the Companies, (ii) acquire all or a substantial portion of the assets of the
Companies or (iii) acquire the Companies, if and to the extent that the Boards
of Directors of the Companies reasonably determine in good faith (after
consultation with outside counsel) that they are required to do so by their
fiduciary duties.
(b) The Companies shall promptly (but in any event within 24
hours) advise the Investors in writing of any inquiries, discussions,
negotiations, proposals or requests for information received on or after the
date of this Agreement relating to any Competing Transaction, the material terms
and conditions thereof and the identity of the person making such request or
Competing Transaction. The Companies shall promptly advise the Investors of any
development relating to any inquiries, discussions, negotiations, proposals or
requests for information relating to a Competing Transaction, whether the
original inquiries, discussions, negotiations, proposals or requests for
information occurred before, on or after the date of this Agreement.
(c) If, prior to the Closing or during the 180-day period
following any termination of this Agreement, either of the Companies or any
Subsidiary enters into any other agreement or agreements with a third party (a
"Third Party"), without the prior consent of the Investors, providing for the
issuance of equity or other securities convertible into or exchangeable or
exercisable for equity, in one or a series of transactions, with aggregate net
proceeds of at least $50 million or providing for or contemplating any merger,
consolidation, transfer of substantial assets, any tender or exchange offer to
acquire securities of the Companies or similar transaction involving the
Companies (a "Third Party Agreement"), and the
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Companies shall have not have consummated the transactions contemplated hereby
other than solely by reason of the Investors being unwilling to proceed with the
Closing notwithstanding that the conditions to their obligations set forth in
Article V have been satisfied, the Companies agree to pay to the Investors
within five business days after the entry by either of the Companies or any
Subsidiary into any Third Party Agreement, in addition to any amounts otherwise
provided hereunder, an aggregate amount (the "Breakup Fee") in cash equal to $30
million; PROVIDED, that, if the Third Party is (a) Hilton Hotels Corporation
("Hilton"), (b) any subsidiary or affiliate of Hilton, (c) any financial advisor
or financing source of Hilton or a subsidiary or affiliate thereof working on
behalf of, or with, Hilton in connection with the transactions contemplated by a
Third Party Agreement or (d) any entity that has an agreement, arrangement or
understanding with Hilton or any of the foregoing, or any group including any of
the foregoing, which agreement, arrangement or understanding provides for work
on behalf of, or with, Hilton in connection with the transactions contemplated
by a Third Party Agreement, the Third Party Agreement shall be deemed to include
not only those agreements set forth above but also any agreement contemplating
an asset purchase from or provision of financing to or financial support in
favor of the Companies and the Breakup Fee shall be an amount in cash equal to
$50 million; and provided further that the term "Third Party Agreement" shall
not include any agreement that provides solely for the sale of any
of the assets listed on Section 6.7(c) of the Company Disclosure Letter. The
Breakup Fee shall be paid as liquidated damages to the various Investors in
accordance with their respective Investor Percentages. The Companies agree that
(i) actual damages relating to the foregoing are impossible to determine with
certainty and (ii) such sum is a reasonable estimate of the Investors' damages
(and shall be deemed when paid, together with the payment of the fees
contemplated by the Equity Commitment Letter and the reimbursement of expenses
pursuant to Section 6.3, to have fully reimbursed the Investors for all such
damages) arising from lost opportunities, executive time and other causes.
Section 6.8 BENEFIT PLANS.
(a) Each option ("Option") granted under the Stock Incentive
Plans (as defined below) or granted pursuant to the stock option agreements
covered by the Form S-8 Registration Statement (File No. 333-41927) filed with
the SEC on December 10, 1997 to acquire shares of the Paired Common Stock that
is outstanding immediately prior to the Closing Date, shall, after giving effect
to the Merger and the Reverse Stock Split, become and represent an option to
acquire the same number of shares of Wyndham Class A Common Stock at the same
exercise
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price per share of Wyndham Common Stock; PROVIDED, HOWEVER, that in the
case of any Option to which Section 421 of the Code applies by reason of its
qualification as an incentive stock option under Section 422 of the Code, the
conversion formula shall be adjusted if necessary to comply with Section 424(a)
of the Code. Except as provided above, each Option shall be exercisable upon the
same terms and conditions as were applicable to the Option immediately prior to
the Closing Date. "Stock Incentive Plans" means the Wyndham International, Inc.
1997 Stock Incentive Plan, the Patriot American Hospitality, Inc. 1997 Stock
Incentive Plan, the Patriot American Hospitality, Inc. 1995 Stock Incentive
Plan, the Wyndham Hotel Corporation Amended and Restated 1996 Long Term
Incentive Plan, the Cal Jockey Incentive Plan, the Bay Meadows Operating Company
1988 Stock Option Plan and the Patriot American Hospitality, Inc. Non-Employee
Directors' Incentive Plan.
(b) Each other outstanding award made pursuant to the Stock
Incentive Plans which provide for grants of equity-based awards in respect of
shares of Paired Common Stock (the "Other Awards") shall be amended or converted
into a similar equity-based award solely in respect of shares of Wyndham Common
Stock, with such appropriate adjustments to the terms of such Other Awards to
preserve the value inherent therein with no detrimental effects on the holders
thereof.
(c) Prior to the Closing Date, the Companies shall amend the
terms of each of the Stock Incentive Plans, to the extent necessary or
appropriate, to give effect to the provisions of this Section 6.8 and to reflect
the transactions contemplated by the Transaction Documents.
(d) Prior to the Closing Date, the Companies shall (i) amend
the Patriot American Hospitality/Wyndham International Employee Savings and
Retirement Plan (the "Savings Plan") to provide that the investment alternative
to invest in shares of Paired Common Stock shall become an investment
alternative to invest in shares of Wyndham Common Stock and (ii) take all such
action necessary to effectuate any such amendments.
(e) Prior to the Closing Date, the Companies shall use their
reasonable efforts to amend the agreements listed in Section 6.8(e) of the
Company Disclosure Letter to remove from such agreements the requirement that
the Companies establish and fund "rabbi trusts" to satisfy obligations of the
Companies under such agreements (the "Rabbi Trust Amendments").
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Section 6.9 NO GENERAL SOLICITATION. None of the Companies,
their affiliates (as defined in Rule 501(b) under the Securities Act) or any
person acting on their behalf will offer to sell, sell or solicit any offer to
buy the Shares by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act that would require the registration of the Shares under
the Securities Act unless the Shares are so registered.
Section 6.10 PREEMPTIVE RIGHTS. Until the fifth anniversary of
the Closing Date, for so long as the Investors own Shares or Wyndham Common
Stock acquired upon conversion of Shares or pursuant to this Section 6.10
together representing or convertible into more than 15% of the fully diluted
shares of Wyndham Common Stock, they shall have a preemptive right after the
Closing Date, upon any issuance after the Closing Date of Wyndham Common Stock
(other than those issued upon the conversion, exercise or exchange of any
securities convertible into, exercisable for or exchangeable with Wyndham Common
Stock) or securities which are issued after the date hereof convertible into,
exercisable for or exchangeable with Wyndham Common Stock (including any Patriot
OP Units or Wyndham OP Units redeemable for Wyndham Common Stock issued after
the date hereof but excluding any shares issued upon conversion of Series A
Preferred Stock, Series B Preferred Stock or Class B Common Stock), to purchase
the same percentage of such securities as the percentage of the outstanding
Wyndham Common Stock (including for such purpose shares issuable upon conversion
of the Shares and the Rights Offering Shares) then held by the Investors
(assuming for such purpose the full conversion of all Shares then held by the
Investors, including any Shares issued to the Investors as dividends on the
Shares, and any Shares issuable to the Investors as a dividend on the Shares for
the dividend period in which the Investors' ownership is measured, prorated for
the number of days elapsed during such period); PROVIDED that to the extent that
one or more of the Investors do not exercise such preemptive rights in full, the
unexercised portion of such Investors' preemptive rights shall be allocated
among the other Investors pro rata in accordance with the number of the shares
of Wyndham Common Stock (including any shares issuable upon conversion of the
Shares) then held by them. In connection with this preemptive right, Wyndham
shall provide written notice to each Investor within ten business days following
the end of each fiscal quarter of Wyndham of all issuances by Wyndham or its
Subsidiaries giving rise to preemptive rights during such fiscal quarter and the
Investors shall provide written notice to Wyndham of the extent to which they
are exercising their preemptive rights and their interest in exercising
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preemptive rights that are not being exercised by other Investors and close any
transaction relating to the exercise of preemptive rights hereunder on the 20th
business day following receipt of such notice by Wyndham. Any preemptive right
not exercised by the end of such period will expire, lapse and be of no effect.
This Section 6.10 will not apply to the Rights Offering or to any other equity
issuance by Wyndham during the six month period following the Closing.
Section 6.11 NON-COMPETITION AND OTHER RESTRICTIONS. From and
after the Closing, for so long as the Investors beneficially own an aggregate of
5% of the outstanding shares of Wyndham Common Stock (including shares of
Wyndham Common Stock issuable upon conversion of Shares and Rights Offering
Shares), Wyndham shall not, and shall not permit the Subsidiaries to, without
the approval of a majority of the Class B Directors (as defined in the New
Wyndham Certificate), enter into or amend any new agreement which has a
non-competition, geographical restriction or similar covenant that will apply to
and restrict the activities of any of the Investors.
Section 6.12 ACCESS TO INFORMATION.
(a) The Companies and the Operating Partnerships shall, and
shall cause the Subsidiaries to, afford to each Investor (including for such
purposes only those Permitted Third Party Transferees with an investment in the
Companies of at least $20 million) and to the officers, employees, accountants,
counsel, financial advisors and other representatives of such Investor,
reasonable access during normal business hours from the date hereof until and
after the Closing to all the properties, books, contracts, commitments,
personnel, reports and records of or relating to the Companies or the
Subsidiaries, and the Companies and the Operating Partnerships shall, and shall
cause the Subsidiaries to, furnish promptly to the Investors, any financing
source identified by the Investors in connection with the transactions
contemplated hereby and to any other person that the Investor may reasonably
request (i) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws, (ii) such weekly, monthly, quarterly, annual and other
operating reports, financial reporting packages and other operational and/or
financial information sent to management or the Board of Directors of the
Companies or to the banks with whom the Companies and the Subsidiaries maintain
credit facilities or lines of credit and (iii) all other information concerning
its business, properties and personnel as the Investors may reasonably request.
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(b) In addition to the foregoing, the Companies and the
Operating Partnership shall, and shall cause the Subsidiaries to, permit the
Investors to monitor the status of the Year 2000 Plan in the following manner,
without limitation, by: (i) providing semi-monthly updates to the designated
representatives of the Investors on the progress of the Year 2000 Plan
(including the amount of expenditures made on such plan to that date), (ii)
notifying the Investors of whether the Companies or any of the Subsidiaries
intend to deviate in any material respects from the Year 2000 Plan, (iii) if a
deviation from the Year 2000 Plan is contemplated, consulting with designated
representatives of the Investors to determine if such deviation is in the best
interest of the Companies, and (iv) coordinating with the Investors and their
representatives to develop modifications, if any, to the Year 2000 Plan. For
purposes of this Section 6.12(b), the Investors' designated representatives
shall be such persons as the Investors shall identify to the Companies.
(c) No review pursuant to this Section 6.12 shall subject the
Investors or their representatives or agents to any responsibility for the
Companies' compliance or failure to comply with the Year 2000 Plan or affect any
representation or warranty given by the Companies or the Operating Partnerships
hereunder.
Section 6.13 RIGHTS OFFERING. If and when so determined
following the Closing by the vote of a majority of the Class A Directors and
Class C Directors (each as defined in the New Wyndham Certificate), voting
together, Wyndham may conduct a single rights offering (the "Rights Offering")
in which the holders of the Wyndham Class A Common Stock and if the approvals to
the Patriot OP Consent Solicitation and the Wyndham OP Consent Solicitation are
received, the Patriot OP Units and the Wyndham OP Units (collectively, the
"Eligible Holders") will be eligible to participate, provided that the record
date for the Rights Offering (the "Record Date") shall be established and
announced in accordance with the applicable provisions of Rule 10b-17
promulgated under the Exchange Act and the applicable rules of the NYSE and the
Rights Offering may not be consummated any later than 170 days following the
Closing Date. In the Rights Offering, the Eligible Holders will be offered
transferable rights to purchase for cash at par up to $300 million in Series A
Preferred Stock with an issuance date on the date of consummation of the closing
of the Rights Offering; provided, however, that if the Companies shall have sold
the Identified Assets prior to or at the closing of the Rights Offering for net
cash proceeds in excess of the amounts set forth in Section 1.1(c) of the
Company Disclosure Letter and shall apply such excess proceeds (i) to reduce the
number of Shares in accordance with Section 1.1(c) or (ii) to redeem the Shares
in accordance with the Series B Certificate of Designation, then the maximum
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offering amount of the Rights Offering shall be reduced by the amount of such
excess proceeds. The rights to purchase shall be allocated among the Eligible
Holders pro rata based on the respective numbers of shares of Wyndham Class A
Common Stock held by such Eligible Holders on the Record Date or that would be
received by such Eligible Holder upon redemption of the Patriot OP Units or
Wyndham OP Units held by them on the Record Date (rounded down in the case of
fractional shares of Series A Preferred Stock to the nearest whole number of
shares) and shall not be reallocated in the event that not all Eligible Holders
exercise their right to purchase in full. The Rights Offering will provide that
any exercise thereof is irrevocable. The Companies will use reasonable efforts
to ensure that the Rights Offering will be conducted in compliance with all
applicable securities laws. Unless otherwise determined by the vote of a
majority of the Class A Directors and the Class C Directors, voting together,
the shares of Series A Preferred Stock shall be listed on the NYSE, the NASDAQ
National Market System or other national securities exchange, subject to
satisfying the eligibility requirements thereof.
Section 6.14 HSR APPROVAL. Wyndham shall cooperate with each
Investor in obtaining as soon as practicable all necessary governmental consents
and approvals, including without limitation, termination or expiration of the
waiting period under the HSR Act.
ARTICLE VII
COVENANTS OF THE INVESTORS
Section 7.1 CERTAIN RESTRICTIONS.
(a) Each of the Investors, severally but not jointly,
covenants with the Companies that, for a period commencing on the Closing and
continuing through the sixth anniversary of the Closing, such Investors will
not, directly or indirectly, through one or more intermediaries or otherwise,
purchase, acquire, own or hold any shares of Wyndham Common Stock or any
securities which are convertible into or exchangeable or exercisable for Wyndham
Common Stock (excluding any shares that are owned by the Investors as of the
date hereof as set forth on Section 7.1(a) of the Investor Disclosure Letter),
unless such shares or securities were purchased or acquired in a purchase or
acquisition which (i) is made directly from Wyndham in a transaction which is
approved in advance by vote of a majority of the Class A Directors and Class C
Directors, voting together, including without limitation under
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Section 6.10, or from another Investor, (ii) is a dividend on the Shares or a
conversion of the Shares, (iii) is made pursuant to the Rights Offering or upon
conversion of the Rights Offering Shares acquired pursuant thereto, (iv) is made
by one or more affiliates of any Investor over whom such Investor does not
control investment or voting decisions and such Investor does not hold over 50%
of the outstanding voting power of such affiliate, or (v) is of non-voting
preferred stock of the Companies; PROVIDED, HOWEVER, that notwithstanding
anything to the contrary contained herein, the foregoing restriction shall not
be deemed to be violated or applicable if the numbers of shares of Wyndham
Common Stock or securities which are convertible into or exchangeable or
exercisable for Wyndham Common Stock beneficially owned directly or indirectly
through one or more intermediaries or otherwise, in the aggregate, by the
Investors is increased solely as a result of any stock dividend, stock split,
split-up, recapitalization, merger or other change in the corporate or capital
structure of Wyndham or any other action taken solely by Wyndham.
Notwithstanding the foregoing, (x) any Investor, Permitted Assignee or Permitted
Third Party Transferee, or any of their respective affiliates may, to the extent
not prohibited by law, acquire Wyndham's publicly-traded securities in the
ordinary course of their regular market-making activities, if any, or engage in
business as investment advisors or broker-dealers for the accounts of their
customers (such activities, "Ordinary Trading Activities"), and (y) any
individual who is an employee, partner or stockholder of any of the Investors
may purchase shares of Wyndham Common Stock for his or her individual account
(held for investment purposes), provided that at no time shall any such
individual acquire beneficial ownership of in excess of 100,000 shares of
Wyndham Common Stock, including shares of Wyndham Common Stock issuable upon
conversion, exchange or exercise of securities which are convertible into or
exchangeable or exercisable for shares of Wyndham Common Stock (subject to
equitable adjustment in the event of a stock split or reclassification of the
Wyndham Common Stock), exclusive of shares identified in Section 7.1(a) of the
Investor Disclosure Letter or which may otherwise be acquired consistent with
this Section 7.1.
(b) Each of the Investors, severally but not jointly,
covenants with the Companies that such Investor will not (i) make any public
announcement (except as required by law in respect of actions permitted hereby)
or proposal or offer whatsoever (including, but not limited to, any
"solicitation" of "proxies" as such terms are defined or used in Regulation 14A
of the Exchange Act) with respect to, (x) any form of business combination or
similar or other extraordinary transaction involving the Companies or any
affiliate thereof, including, without limitation, a merger, tender or exchange
offer or liquidation of the Companies' assets, or (y) any
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form of restructuring, recapitalization or similar transaction with respect to
the Companies or any affiliate thereof or (ii) make any proposal to seek
representation on the Board of Directors or otherwise to seek to control or
influence the management, Board of Directors or policies of Wyndham or any
affiliate thereof.
(c) Within five business days following a written request
therefor by Wyndham, each Investor shall notify Wyndham in writing of the number
of shares of each class or series of capital stock of Wyndham beneficially owned
by such Investor and such Investor's Permitted Assignees, as well as in each
case the nature of such beneficial ownership.
Section 7.2 QUORUM. Each of the Investors covenants that, for
so long as the Investors beneficially own a sufficient number of shares of the
Series B Preferred Stock and the Wyndham Class B Common Stock to have the right
to designate at least two directors to the Board of Directors of Wyndham, such
Investor will be present in person or represented by proxy with respect to all
securities of Wyndham beneficially owned by such Investor at any duly called
meeting of the stockholders of Wyndham for the purpose of constituting a quorum
for the transaction of business.
Section 7.3 TRANSFERS. The Investors covenant with the
Companies that the Investors will not, individually or in the aggregate,
transfer or attempt to transfer more than 25% of the Shares to one or more
Permitted Third Party Transferees (such percentage to include any Shares
previously transferred to any Permitted Third Party Transferee prior to the
Closing Date under Section 1.1); PROVIDED, that the Investors shall not be
restricted from any transfer or attempted transfer pursuant to which Shares are
converted into Series A Preferred Stock or any other conversion of Shares.
Section 7.4 HSR APPROVAL. The Investors shall cooperate with
the Companies in obtaining as soon as practicable all necessary governmental
consents and approvals, including without limitation, termination or expiration
of the waiting period under the HSR Act.
Section 7.5 NO VOTING AGREEMENTS. The Investors covenant with
the Companies that, for so long as the Investors beneficially own a sufficient
number of shares of Wyndham Common Stock to have the right to designate any
directors to the Board of Directors of Wyndham, the Investors will not enter
into any voting agreement relating to the Shares, except with respect to the
allocation, election and
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removal of directors of the Board of Directors of Wyndham.
Section 7.6 BOARD OF DIRECTOR MATTERS. The Investors agree
that no individual Investor will nominate or select, or have the right to
nominate or select, more than five directors to the Board of Directors of
Wyndham.
Section 7.7 COMPLIANCE WITH THE NEW WYNDHAM CERTIFICATE AND
SERIES B CERTIFICATE OF DESIGNATION. Each Investor agrees, severally but not
jointly, to comply with the provisions of, and to perform their obligations set
forth in the New Wyndham Certificate and the Series B Certificate of
Designation, including without limitation, their voting obligations set forth
therein, whether or not any such provision is valid.
Section 7.8 CONFIDENTIALITY. During the period from the date
of this Agreement through and including the Closing Date, each of the Investors
covenants with the Companies that any of the information furnished or otherwise
obtained, directly or indirectly, by such Investor, its directors, officers,
partners, employees, agents or representatives including, without limitation,
attorneys, accountants, partners, experts and consultants (collectively,
"Representatives") and all reports, analysis, compilations, data, studies or
other documents prepared by such Investor or its Representatives containing or
based, in whole or in part, on any such furnished information (collectively, the
"Information") will be kept strictly confidential and will not, without the
prior written consent of the Companies, be disclosed to any other individual,
corporation, partnership, joint venture, trust or association in any manner
whatsoever, in whole or in part and will not be used for n in connection with
the Restructuring and the purchase and sale of Shares described herein; provided
that if any Investor determines, based on the advice of counsel, that it is
legally obligated to release the Information, such Investor may do so after
notice to and consultation with the Companies.
ARTICLE VIII
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Section 8.1 RESTRICTIVE LEGEND. Each certificate representing
(a) the Shares, (b) shares of Series A Preferred Stock or Wyndham Common Stock
issuable upon conversion of any Shares, and (c) any other securities issued in
respect of the Shares or Wyndham Common Stock issued upon conversion of any
Shares
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upon any stock split, stock dividend, recapitalization, merger, consolidation or
similar event (each of the foregoing securities in clauses (a) through (c) being
referred to herein as "Restricted Securities"), shall (unless otherwise
permitted by the provisions of Section 8.2) be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to the legend
required under any applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR EXEMPTION
THEREFROM UNDER SAID ACT OR LAWS. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY. PURSUANT TO SUCH AGREEMENT, CERTAIN
TRANSFERS MAY NOT BE MADE UNLESS AT THE TIME OF SUCH TRANSFER ONE OR
MORE DIRECTORS OF THE COMPANY APPOINTED PURSUANT TO SUCH AGREEMENT
SUBMIT THEIR RESIGNATION FROM THE BOARD OF DIRECTORS.
Wyndham will promptly, upon request, remove any such legend when no longer
required by the terms of this Agreement or by applicable law.
Section 8.2 NOTICE OF PROPOSED TRANSFERS. Prior to any
proposed transfer of any Restricted Securities, unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
each Investor shall give written notice to Wyndham of its intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall be accompanied by either
(a) a written opinion of legal counsel (who shall be reasonably satisfactory to
Wyndham) addressed to Wyndham and reasonably satisfactory to Wyndham to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act or (b) a "no action" letter from
the SEC to the effect that the transfer of such securities without registration
will not result in a recommendation by the staff of the SEC that action be taken
with respect thereto, whereupon, in each case, such Investor shall be entitled
to transfer such Restricted Securities in accordance with the terms of the
notice
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delivered by such Investor to Wyndham. Unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, each
certificate to be issued to evidence the Restricted Securities transferred as
herein provided shall bear the appropriate restrictive legend set forth in
Section 8.1 except that such certificate shall not bear such restrictive legend
if, (i) in the opinion of counsel for such Investor, such legend is not required
in order to establish compliance with any provisions of the Securities Act, (ii)
a period of at least one year has elapsed since the later of the date the
Restricted Securities were acquired from Wyndham or from an affiliate of
Wyndham, and such Investor represents to Wyndham that it is not an affiliate of
Wyndham and has not been an affiliate during the preceding three months and
shall not become an affiliate of Wyndham without resubmitting the Restricted
Securities for reimposition of the legend, or (iii) the Restricted Securities
have been sold pursuant to Rule 144(k) under the Securities Act and the
certificate is accompanied by a representation by the Investor that it is not an
affiliate of Wyndham, has not been an affiliate during the three-month period
prior to the sale and has held the Restricted Securities for more than two
years.
ARTICLE IX
TERMINATION
Section 9.1 TERMINATION. Notwithstanding anything contained
herein to the contrary, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual written consent of the Investors and the
Companies;
(b) by the Investors or the Companies if the Closing has not
occurred on or before July 31, 1999 and this Agreement has not previously been
terminated; PROVIDED, that the right to terminate the Agreement under this
Section 9.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date; or
(c) by the Investors or the Companies if, at the Stockholders
Meeting, the Stockholder Approval is not obtained.
In the event that this Agreement shall be terminated pursuant
to this
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Article IX, all further obligations of the parties under this Agreement, other
than the obligations set forth in Article X and Sections 6.3, 6.7(c) and Article
XI, shall be terminated without further liability of any party to any other
party, provided that nothing herein shall relieve any party from liability for
its willful breach of this Agreement.
ARTICLE X
INDEMNIFICATION
Section 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Companies, the Operating Partnerships and
the Investors contained herein, including the Company Disclosure Letter, or any
certificate or instrument delivered in connection herewith at or prior to the
Closing shall survive the Closing (even if the damaged party knew or had reason
to know of any misrepresentation or breach of warranty at the time of Closing)
until, through and including the 90th day following the filing by Wyndham of a
Form 10-K containing the audited consolidated financial statements of Wyndham
for the fiscal year ending December 31, 1999 (the "Cut-off Date"); PROVIDED,
HOWEVER, that (a) the representations and warranties set forth in Sections 3.1,
3.4, 4.3 and 4.4 shall survive indefinitely, and (b) the representations and
warranties set forth in Section 3.21 shall survive until 90 days following the
expiration of the applicable statute of limitations (giving effect to any
extensions thereof). The parties' respective covenants and agreements set forth
herein shall survive indefinitely unless otherwise set forth therein or herein
(except for those set forth in Sections 6.1, 6.5, 6.6, 6.7, 6.8, 6.9 and 6.14,
each of which will survive until the Cut-off Date). The Closing shall not be
deemed in any way to constitute a waiver by any party of any powers, rights or
remedies it may have with respect to any obligations of the other parties
hereunder, including without limitation with respect to any misrepresentation or
breach of warranty known to such party at the time of the Closing. No claim
shall be made with respect to any representation, warranty, covenant or
agreement after it ceases to survive except that in the event that any member of
the Investor Indemnified Group (as defined below) (i) receives notice of or
identifies any matter which provides a reasonable basis for a claim to
indemnification hereunder within the applicable period provided in this Section
10.1, and (ii) provides notice to the Companies of the receipt of such notice or
of the matter so identified, and such claim shall not have been finally resolved
before the expiration of the applicable period referred to in this Section 10.1,
any representation, warranty, covenant or agreement that is the basis for such
claim shall continue to survive with respect to such claim and shall remain a
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basis for indemnity as to such claim until such claim is finally resolved.
Section 10.2 INDEMNIFICATION.
(a) For purposes of this Agreement, "Losses" shall mean all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, diminution in value, costs and expenses (net of insurance
reimbursement actually received by the Companies after taking into account any
related deductibles and premium increases and net of any tax benefit (such as
additional deductions due to increased liability for interest) from the payment
or from the related underlying liability with respect to which the payment is
made), including without limitation interest, penalties and attorneys' fees and
expenses, asserted against, resulting to, or imposed upon or incurred by the
Companies or the Investor Indemnified Group, or any member thereof, directly or
indirectly, by reason of, relative to, or resulting from any inaccuracy of any
representation or warranty (without taking into account any qualification as to
materiality in such representations or warranties) or any breach or violation of
any covenant or agreement of the Companies, the Operating Partnerships or any
Subsidiary contained in the Transaction Documents or any certificate or other
document delivered by the Companies or the Operating Partnerships in connection
with the Closing, including, without limitation, any claims relating to the
Companies, the Operating Partnerships, the Subsidiaries or any properties
(former or current) owned, leased or managed by any of the foregoing.
Notwithstanding the foregoing, Losses relating to one or more inaccuracies of
any representation or warranty (but not with respect to any breach of any
covenant or agreement) which would give rise individually to a Loss of less than
$50,000 shall be deemed not to be a Loss for which indemnification is required
under this Section 10.2, except to the extent it is a Covered Loss (each such
Loss a "De Minimis Exclusion").
Without limiting the foregoing, Losses shall include, without
limitation, (i) amounts incurred by the Companies or the Operating Partnerships
as compared to the Companies' or the Operating Partnerships' business,
properties, prospects, operations, financial condition or results of operation
as represented and warranted pursuant to Article III, (ii) amounts expended by
the Companies to attain Year 2000 Compliance in excess of the amounts provided
for in the Year 2000 Plan, (iii) payments made or required to be made (other
than (A) commitment fees payable to the Investors or to the parties to the Bank
Facility, (B) indebtedness to be repaid or refinanced in connection with the
transactions contemplated hereby and (C) professional fees incurred in
connection with the transactions contemplated hereby) to third parties as a
result of the consummation of the transactions contemplated
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hereby, including without limitation payments made to third parties in order to
obtain the consent of any party to the transactions contemplated hereby or
amendments or terminations of existing agreements as contemplated by this
Agreement and payments required to be made to third parties as a result of the
failure to obtain the consent of any party as a result of the consummation of
the transactions contemplated by the Transaction Documents or the amendment or
termination of any existing agreement, whether or not the Investors were aware
of any such consent, amendment or termination, (iv) if the number of shares of
Wyndham Common Stock outstanding after effecting the Restructuring Plan exceeds
the Outstanding Paired Share Amount (but before giving effect to the issuance of
the Shares and the Rights Offering Shares), the fair market value of the shares
of Wyndham Common Stock constituting such excess, (v) payments made to the
holders of Series B Preferred Stock of Patriot in redemption of their shares in
excess of the stated amount of such shares, (vi) payments made in connection
with the defense, settlement or disposition of any suit, action, claim or
proceeding commenced by a current or former stockholder of the Companies or
current or former limited partner of the Operating Partnerships arising out of
or related to (A) this Agreement or the transactions contemplated hereby,
whether arising before or after the Closing, and (B) any action or failure to
act by the Companies or the Subsidiaries at or prior to the Closing (including
without limitation in connection with any registration rights, redemption rights
or similar agreement), whether asserted before or after the Closing (the amounts
set forth in clauses (iii), (iv), (v) and (vi) being referred to as "Covered
Losses"), and (vii) if the Management Agreement, dated as of May 10, 1995, as
amended, with respect to the Wyndham Anatole (the "Anatole Management Contract")
shall be terminated prior to May 10, 2004 pursuant to Section 12.2(2)(ii) of the
Anatole Management Agreement (a "Covered Anatole Termination"), $1.25 million
per fiscal quarter for each full or partial three month period (prorated for the
number of days elapsed in any partial three month period) remaining in such
period following the Covered Anatole Termination. The fair market value of the
amount of diminutions of the earnings stream for, or other value of, real estate
assets, other property or contracts, and the amount of increased expenditures,
including without limitation for Year 2000 Compliance, reflagging costs and
property improvement plans or programs required from third parties, will be
taken into account in determining Losses.
(b) (i) The Companies and the Operating Partnerships hereby
agree, jointly and severally, to indemnify, defend and hold harmless the
Investors and their respective directors, officers, employees, affiliates and
associates (the "Investor Indemnified Group") from and against any and all
Losses; provided, however, that (i)
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any indemnification in respect of breaches of representations and warranties
shall be operative and effective only to the extent the amount of all Losses, in
the aggregate, relating thereto, exceed $20 million (the "First Basket") and
(ii) any indemnification in respect of Covered Losses shall be operative and
effective only to the extent that such Covered Losses, in the aggregate, exceed
$25 million (the "Second Basket"); PROVIDED, FURTHER, that (i) indemnification
in respect of Losses relating to a Covered Anatole Termination will not be
subject to the First Basket or the Second Basket and (ii) indemnification in
respect of Losses relating to breaches of covenants and agreements will not be
subject to the First Basket or the Second Basket or subject to the Cap (as
defined below). In the event that Losses in excess of the Second Basket have
been incurred, the Companies and the Operating Partnerships may, at their
election, choose to allocate the unused portion of the First Basket to increase
the Second Basket by an amount not to exceed the unused amount of the First
Basket. Required indemnification payments by the Companies to the Investors
under this Section 10.2(b)(i) with respect to Losses described in Section
10.2(a) shall not exceed $150 million (the "Cap") (other than with respect to
payments expressly excluded from the Cap). The application of all
indemnification payments under this Section 10.2 toward the Cap (other than with
respect to payments that are expressly excluded from the Cap, which shall not be
so applied), shall equal the product of (i) the amount of Loss with respect to
each such indemnification payment and (ii) a fraction, (A) the numerator of
which is another fraction, (x) the numerator of which is the difference between
(I) 1,000,000,000 and (II) the product of (X) the number of shares of Series B
Preferred Stock redeemed in the Rights Offering (which in no event shall be
greater than 3,000,000) and (Y) the Stated Amount (as defined in the Series B
Certificate of Designation), and (y) the denominator of which shall be 8.59, and
(B) the denominator of which is 283,440,377. Notwithstanding the foregoing, no
further indemnification payments under this Section 10.2 shall be due or payable
at such time as the cumulative amount of such indemnification payments paid and
applied toward the Cap pursuant to the foregoing formula equals the lesser of
(i) $150 million and (ii) $155.7 million times a fraction, (A) the numerator of
which is the difference between (x) 10,000,000 and (y) the number of shares of
Series A Preferred Stock outstanding immediately following the closing of the
Rights Offering (which in no event shall be greater than 3,000,000), and the (B)
denominator of which shall be 10,000,000.
(ii) The Companies and the Operating Partnerships hereby
agree, jointly and severally, to indemnify, defend and hold harmless the
Investor Indemnified Group from and against any and all Losses specifically
defined for purposes of this Section 10.2(b)(ii) relating to (A) the entry by
the Companies or any
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Subsidiary into a closing agreement with, or the issuance of a ruling by, the
IRS related to the hotel listed in Section 3.21(l) of the Company Disclosure
Letter in connection with Patriot's organization, operation or qualification as
a REIT for the year ended December 31, 1998, if such Losses exceed $2 million;
and/or (B) other than failures that are effectively cured by the closing
agreement referred to in clause (A) above, any failure of Patriot to be duly
organized, operated and qualified as a REIT for the taxable year ended December
31, 1998 if such failure is related to or results from the hotel or the
operations of the hotel listed in Section 3.21(l) of the Company Disclosure
Letter. For purposes of this Section 10.2(b)(ii), Losses shall include without
limitation payment of taxes and related penalties and interest, shall not be
reduced for any De Minimus Exclusion and shall not require any inaccuracy of any
representation or warranty or any breach or violation of any covenant or
agreement. The indemnification provided under this Section 10.2(b)(ii) shall be
determined without regard to the First Basket or the Second Basket and will not
be subject to the Cap.
(c) The Companies' obligations to make payments pursuant to
this Section 10.2 shall be satisfied as an adjustment to the conversion price of
the Shares as provided in Section 8(b)(iii) of the Series B Certificate of
Designation; PROVIDED, that any payments in respect of a Covered Anatole
Termination shall be satisfied in cash and may not be satisfied through a
conversion price adjustment.
(d) To the extent that the conversion price of the Shares is
to be adjusted pursuant to this Section 10.2, such adjustment shall be made in
accordance with the Series B Certificate of Designation.
(e) In the event that any counterparties to the Forward Equity
Contracts sell shares released as collateral under the Forward Equity Contracts
after December 31, 1998 (the "Forward Equity Contract Shares") with net proceeds
to the Companies of less than $8.75 per share, Losses shall be deemed to include
the difference between $8.75 and the weighted average price at which Forward
Equity Contract Shares were credited, multiplied by the number of shares so
released. The Losses set forth in this Section 10.2(e) shall not be subject to
the First Basket or the Second Basket or subject to the Cap.
(f) The rights and remedies of the Investors with respect to
the representations and warranties of the Companies and the Operating
Partnerships, including without limitation the matters referred to in this
Section 10.2, are limited to their rights under this Article X, and the
Investors shall have no independent or other
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rights or remedies with respect thereto, including without limitation the right
of rescission.
Section 10.3 TERMS OF INDEMNIFICATION. The obligations and
liabilities of the Companies and the Operating Partnerships with respect to
Claims by third parties will be subject to the following terms and conditions:
(a) the Investors will give the Companies prompt notice of any
Claims asserted against, resulting to, imposed upon or incurred by the
Investors, directly or indirectly, and the Companies will undertake the defense
thereof by representatives of their own choosing which are reasonably
satisfactory to the Investors; PROVIDED, that the failure of the Investors to
give notice as provided in this Section 10.3 shall not relieve the Companies and
the Operating Partnerships of their obligations under this Article X, except to
the extent that such failure has materially and adversely affected the rights of
the Companies;
(b) if within a reasonable time after notice of any Claim, the
Companies fail to defend, the Investors will have the right to undertake the
defense, compromise or settlement of such Claims on behalf of and for the
account and at the risk of the Companies, subject to the right of the Companies
to assume the defense of such Claim at any time prior to settlement, compromise
or final determination thereof;
(c) if there is a reasonable probability that a Claim may
materially and adversely affect an Investor other than as a result of money
damages or other money payments, such Investor will have the right at its own
expense to defend (provided that the indemnifying party shall continue to
control the defense and the indemnified party shall have the right to
participate in such defense), or co-defend, such Claim;
(d) with respect to any Claim to which any Investor is
specifically named, the Companies on one hand and any Investor on the other will
not, without the prior written consent of the other, settle or compromise any
Claim or consent to entry of any judgment relating to any such Claim;
(e) with respect to any Claim asserted against an Investor,
such Investor will have the right to employ one counsel of its choice in each
applicable jurisdiction (if more than one jurisdiction is involved) to represent
such Investor if, in such Investor's counsel's reasonable judgment, a conflict
of interest between such
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Investor and the indemnifying party exists in respect of such Claim, and in that
event the fees and expenses of such separate counsel, with respect to such
Claim, shall be paid by such indemnifying party; and
(f) the Companies will provide the Investors reasonable access
to all records and documents of the Companies relating to any Claim.
ARTICLE XI
MISCELLANEOUS
Section 11.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF).
Section 11.2 JURISDICTION; FORUM; SERVICE OF PROCESS; WAIVER
OF JURY TRIAL. With respect to any suit, action or proceeding ("Proceeding")
arising out of or relating to this Agreement each of the Companies, the
Operating Partnerships and the Investors (including without limitation their
Permitted Assignees and Permitted Third Party Transferees) hereby irrevocably:
(a) submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York, the United States District
Court for the District of Delaware, or any state court located in the State of
Delaware, County of Newcastle (the "Selected Courts") and waives any objection
to venue being laid in the Selected Courts whether based on the grounds of FORUM
NON CONVENIENS or otherwise;
(b) consents to service of process in any Proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, or
by recognized international express carrier or delivery service, to the
Companies, the Operating Partnerships or the Investors at their respective
addresses referred to in Section 11.6 hereof; PROVIDED, HOWEVER, that nothing
herein shall affect the right of any party hereto to serve process in any other
manner permitted by law; and
(c) waives, to the fullest extent permitted by law, any right
it may have to a trial by jury in any Proceeding.
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Section 11.3 SUCCESSORS AND ASSIGNS. Except as otherwise
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors by operation of law and permitted assigns of the
parties hereto. No assignment of this Agreement may be made by any party at any
time, whether or not by operation of law, without the other parties' prior
written consent, except that each Investor may assign any of its rights
hereunder to one or more of its Permitted Assignees or Permitted Third Party
Transferees or to the other Investors or any of their Permitted Assignees or
Permitted Third Party Transferees without the Companies' consent provided that
such other Investor or Permitted Assignee or Permitted Third Party Transferees
expressly agrees in writing with the Companies to assume all of the assigning
Investor's obligations hereunder; PROVIDED, that any transfer of Shares
permitted hereunder, other than to a Permitted Assignee or Permitted Third Party
Transferee of an Investor or to the other Investors, shall not entitle the
transferee to the rights of the transferring Investor under this Agreement other
than the registration rights pursuant to the Registration Rights Agreement.
Section 11.4 EFFECTIVENESS. On or prior to February 22, 1999,
the Companies will provide to the Investors a complete and accurate copy of the
definitive Company Disclosure Letter and the Investors will provide to the
Companies a complete and accurate copy of the definitive Investor Disclosure
Letter. For purposes of this Section 11.4, the "Review Deadline" shall mean (i)
11:59 p.m., Eastern Standard Time, on February 27, 1999 if the definitive
Company Disclosure Letter is delivered to counsel to the Investors prior to 9:00
a.m., Eastern Standard Time, on February 22, 1999 and (ii) 12:00 p.m., Eastern
Standard Time, on February 28, 1999 if the definitive Company Disclosure Letter
is delivered to counsel to the Investors after 9:00 a.m. but prior to 5:00 p.m.,
Eastern Standard Time, on February 22, 1999. This Agreement, the Registration
Rights Agreement and the Equity Commitment Letter shall become effective and
binding on the Investors and the Companies only if at or prior to the Review
Deadline (a) the Investors notify the Companies in writing that the definitive
Company Disclosure Letter is acceptable to them, (b) the Investors notify the
Companies in writing that the Investors have entered into separate transaction
support agreements with each of Karim Alibhai, Harlan Crow, Milton Fine, Rolf
Ruhfus and Sherwood Weiser evidencing the support of such individuals as
stockholders of the Companies and/or limited partners of the Operating
Partnerships for the transactions contemplated by this Agreement and (c) the
Investors shall have received reimbursement for $2.5 million of their expenses
to date in compliance with Section 6.3(b). The first date on which the
requirements of each of clauses (a), (b) and (c) of the previous sentence are
met shall be the "Effective Date"; PROVIDED, that, at their election, upon
written notice to the
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Companies at or prior to the Review Deadline, the Investors may deem the
Effective Date to occur if only the requirements of clause (a), or clauses (a)
and (b), or clauses (a) and (c) are met within such period. The intent of this
Section 11.4 is that the Effective Date shall not occur unless the Investors and
the Companies have agreed on a definitive Company Disclosure Letter, and, in all
such events, any such agreement must have occurred (if at all) at or prior to
the Review Deadline. Notwithstanding the foregoing, the provisions of paragraph
2 of the Letter of Intent, dated as of December 15, 1998 and amended through the
date of this Agreement (the "Letter of Intent"), among the Companies and the
Investors shall continue in full force and effect until (i) 11:59 p.m., Eastern
Standard Time, on February 28, 1999 or (ii) if earlier, the Effective Date.
Unless and until the Effective Date shall have occurred, the provisions of
paragraph 3 of the Letter of Intent shall survive and continue in full force and
effect. If the Effective Date shall not occur, the provisions of paragraph 3 of
the Letter of Intent shall survive and continue in full force and effect.
Section 11.5 ENTIRE AGREEMENT; AMENDMENT. Other than as
provided in Section 11.4, this Agreement and the other Transaction Documents
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof, and except as provided in Section 11.4, the
Letter of Intent shall not survive the execution of this Agreement. Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the Companies and by Investors who have made commitments to purchase
at least two-thirds of the Shares. Notwithstanding the foregoing, any amendment,
waiver or other modification to this Agreement that would adversely affect any
Investor may be effected only with the approval of all of the Investors.
Section 11.6 NOTICES, ETC. All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand delivery, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to the Investor, at the most current address given by the Investor to the
Companies by means of a notice given in accordance with the provisions of this
Section 11.5, which address initially is, with respect to the Investor as of the
date hereof, the address set forth next to Investor's name on the signature
pages hereof, with a copy to Randall H. Doud, Esq., telecopier number (212)
735-2000, and with respect to each Investor who becomes such after the date
hereof, the address of such Investor in the stock records of the Companies, and
(ii) if to the Companies or the Operating Partnerships, at 1950 Stemmons
Freeway, Suite 6001, Dallas, Texas 75207, telecopier number (214) 863-
70
<PAGE>
1527, Attention: General Counsel, with a copy to Gilbert G. Menna, P.C.,
telecopier number (617) 523-1231. All such notices and communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt is confirmed,
if telecopied; and on the next business day, if timely delivered to a courier
guaranteeing overnight delivery.
Section 11.7 CERTAIN DEFINITIONS. As used herein, the
following terms shall have the meanings set forth below:
(a) "knowledge of the Companies" shall mean the knowledge of
any director or executive officer of the Companies and those individuals
identified on Section 11.7(a) of the Company Disclosure Letter, after due
inquiry;
(b) "beneficial ownership" shall have the meaning as such term
is used in Rule 13d-3 promulgated under the Exchange Act; and
(c) unless otherwise specified herein, references throughout
this Agreement to the "consent" of the Investors shall mean the consent of the
Investors who have made commitments to purchase at least two-thirds of the
Shares.
Section 11.8 DELAYS OR OMISSIONS. Except as expressly provided
herein, no delay or omission to exercise any right, power or remedy accruing to
the Companies, the Operating Partnerships or the Investors upon any breach or
default of any party under this Agreement, shall impair any such right, power or
remedy of the Companies, the Operating Partnerships or the Investors nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of the Companies, the
Operating Partnerships or the Investors of any breach or default under this
Agreement, or any waiver on the part of any such party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to the Companies, the Operating
Partnerships or the Investors shall be cumulative and not alternative.
Section 11.9 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which may be executed by only one of the
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<PAGE>
parties hereto, each of which shall be enforceable against the party
actuallyexecuting such counterpart, and all of which together shall constitute
one instrument.
Section 11.10 SEVERABILITY. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 11.11 TITLES AND SUBTITLES. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. The terms "affiliate"
and "associate" shall have the meanings ascribed to them in Rule 12b-2
promulgated under the Exchange Act.
Section 11.12 NO PUBLIC ANNOUNCEMENT. None of the Companies,
the Operating Partnerships, the Subsidiaries or the Investors shall make any
press release, public announcement or filing with any Governmental Entity
concerning the transactions contemplated by the Transaction Documents, except as
and to the extent that any such party shall be obligated to make any such
disclosure by this Agreement, by law or by the NYSE and then only after
consultation with the other regarding the basis of such obligation and the
content of such press release, public announcement or filing or as the parties
shall mutually agree. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by the Transaction
Documents shall be in the form heretofore agreed to by the parties.
Section 11.13 FURTHER ACTIONS; REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions hereof, each
of the parties agrees to use its reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by the Transaction Documents, including without
limitation (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from governmental or regulatory entities and the making
of all necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
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<PAGE>
lawsuits or other legal proceedings, whether judicial or administrative,
challenging any of the Transaction Documents or the consummation of the
transactions contemplated thereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity or
any Restraint vacated or reversed, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, the Transaction Documents; PROVIDED
that, in connection with the foregoing, the Companies and the Subsidiaries shall
reimburse the Investors for any costs and expenses incurred by them in
connection with the foregoing.
(b) In connection with and without limiting the foregoing, the
parties shall use reasonable efforts (i) to take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Transaction Documents or any of the other transactions
contemplated hereby or thereby and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Transaction Documents or any
other transaction contemplated thereby, to take all action necessary to ensure
that the transactions contemplated by the Transaction Documents may be
consummated as promptly as practicable on the terms contemplated thereby and
otherwise to minimize the effect of such statute or regulation on the
transactions contemplated by the Transaction Documents.
Section 11.14 ENFORCEMENT OF AGREEMENT. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions and other equitable remedies to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any of the Selected Courts, this being in addition to any
other remedy to which they are entitled at law or in equity. Any requirements
for the securing or posting of any bond with respect to such remedy are hereby
waived by each of the parties hereto.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused the
foregoing Agreement to be executed under seal by one of its duly authorized
officers as of the date first above written.
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/Paul A. Nussbaum
-------------------------------
Name: Paul A. Nussbaum
Title:Chairman and Chief Executive Officer
Address: 1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
WYNDHAM INTERNATIONAL, INC.
By: /s/James D. Carreker
-------------------------------
Name: James D. Carreker
Title:Chairman and Chief Executive Officer
Address: 1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
PATRIOT AMERICAN HOSPITALITY
PARTNERSHIP, L.P.
By: PAH GP, INC., its General Partner
By: /s/Paul A. Nussbaum
-------------------------------
Name: Paul A. Nussbaum
Title:Chairman and Chief Executive Officer
Address: 1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
<PAGE>
WYNDHAM INTERNATIONAL OPERATING
PARTNERSHIP, L.P.
By: Wyndham International, Inc., its General
Partner
By: /s/James D. Carreker
-------------------------------
Name: James D. Carreker
Title:Chairman and Chief Executive Officer
Address: 1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
[Remainder of page intentionally left blank]
<PAGE>
INVESTORS:
APOLLO REAL ESTATE
INVESTMENT FUND III, L.P.
By: Apollo Real Estate Advisors III, L.P.,
its General Partner
By: Apollo Real Estate Capital
Advisors III, Inc., its General Partner
By: /s/Ricardo Koenigsberger
------------------------------------------
Name: Ricardo Koenigsberger
Title:Vice President
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors, IV, L.P., its General
Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Marc Rowan
------------------------------------------
Name: Marc Rowan
Title: Vice President, Apollo Capital Mgmt., Inc.
Address: 1301 Avenue of the Americas
38th Floor
New York, New York 10019
Number of Shares to Be Purchased: 4,750,000
Investor Percentage: 47.5
<PAGE>
THOMAS H. LEE EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, LLC
By:/s/Scott Sperling
------------------------------------------
Name: Scott Sperling
Title: Managing Director
Address: 75 State Street
Suite 2600
Boston, Massachusetts 02109
Number of Shares to Be Purchased: 3,243,632
Investor Percentage: 32.43632
THOMAS H. LEE FOREIGN FUND IV, L.P.
By: THL Equity Advisors IV, LLC
By:/s/Scott Sperling
------------------------------------------
Name: Scott Sperling
Title: Managing Director
Address: 75 State Street
Suite 2600
Boston, Massachusetts 02109
Number of Shares to Be Purchased: 1,179,915
Investor Percentage: 1.179915
THOMAS H. LEE CHARITABLE
INVESTMENT L.P.
By: THL Equity Advisors IV, LLC
By: /s/Scott Sperling
------------------------------------------
Name: Scott Sperling
Title: Managing Director
Address: 75 State Street
Suite 2600
Boston, Massachusetts 02109
Number of Shares to Be Purchased: 19,275
Investor Percentage: 0.19275
<PAGE>
THL-CCI LIMITED PARTNERSHIP
By: THL Equity Advisors IV, LLC
By: /s/Scott Sperling
------------------------------------------
Name: Scott Sperling
Title: Managing Director
Address: 75 State Street
Suite 2600
Boston, Massachusetts 02109
Number of Shares to Be Purchased: 12,529,330
Investor Percentage: 12.529330
BEACON CAPITAL PARTNERS, L.P.
By: Beacon Capital Partners, Inc., its General
Partner
By: /s/John C. Halsted
------------------------------------------
Name: John C. Halsted
Title: Senior Vice President
Address: 1 Federal Street
26th Floor
Boston, Massachusetts 02110
Number of Shares to Be Purchased: 1,500,000
Investor Percentage: 15
<PAGE>
STRATEGIC REAL ESTATE INVESTMENTS I,
L.L.C.
By: /s/Kenneth T. Rosen
-------------------------------------------
Name: Kenneth T. Rosen
Title: Manager
Address: 1995 University Avenue
Suite 550
Berkeley, California 94704
Number of Shares to Be Purchased: 250,000
Investor Percentage: 2.5
<PAGE>
Exhibit 99.2
EXHIBIT A
RESTRUCTURING PLAN
Set forth below are the various transactions that will be implemented
as part of the Restructuring Plan; PROVIDED, that the Restructuring Plan may be
amended by agreement of the Companies and the Investors, each party agreeing to
be reasonable in considering any proposed amendment pursuant to which each of
the tax and other objectives of the Restructuring Plan are fully met and the
costs to the Companies of obtaining any necessary consents are not increased.
Completion of the investment in the Shares and all of the other steps below will
be cross-conditioned and occur simultaneously. Capitalized terms used herein
without definition shall have the meanings ascribed to them in the Securities
Purchase Agreement to which this Restructuring Plan is attached.
1. Wyndham forms a new wholly owned Delaware subsidiary the sole purpose
of which is to complete the Merger ("Acquisition Sub").
2. Wyndham extends an offer (the "Wyndham OP Offer") to the holders of
Wyndham OP Common Units and Wyndham OP Preferred Units as of the Record
Date to exchange the newly issued, registered shares of Wyndham Common
Stock for each Wyndham OP Unit. The Wyndham OP Offer will provide that
it can be accepted by a limited partner whether or not the limited
partner also accepts the Patriot OP Offer described below. The Wyndham
OP Offer will be subject to there being no more than 1.7 million
Wyndham OP Units outstanding and held by persons other than Wyndham
following the Wyndham OP Offer (unless waived by the Investors).
3. Wyndham extends an offer (the "Wyndham Preferred Stock Offer") to the
holders of the Wyndham Series A Preferred Stock and the Wyndham Series
B Preferred Stock as of the Record Date to exchange newly issued,
registered shares of Wyndham Class A Common Stock for each share of
Wyndham Preferred Stock. The Wyndham Preferred Stock Offer will not be
subject to any minimum exchange amount.
4. In the event that any holder of the Wyndham Preferred Stock fails to
accept the Wyndham Preferred Stock Offer, Wyndham immediately calls the
remaining shares of Wyndham Preferred Stock for redemption and in
connec-
<PAGE>
tion therewith delivers newly issued, registered shares of Wyndham
Common Stock for each share of Wyndham Preferred Stock.
5. Wyndham extends an offer (the "Patriot OP Offer" and, together with the
Wyndham OP Offer and the Wyndham Preferred Stock Offer, the "Exchange
Offers") to the holders of the Patriot OP Common Units and Patriot OP
Preferred Units as of the Record Date to exchange newly issued,
registered shares of Wyndham Common Stock for each Patriot OP Unit. The
Patriot OP Offer will provide that it can be accepted by a limited
partner whether or not the limited partner also accepts the Wyndham OP
Offer. The Patriot OP Offer will be subject to there being no more than
1.7 million Patriot OP Units outstanding and held by persons other than
PAH LP, Inc. or PAH GP, Inc. following the Patriot OP Offer (unless
waived by the Investors).
6. In the event of the effectiveness of the amendments contemplated in the
Patriot OP Consent Solicitation, Patriot OP makes a non-pro rata
distribution (the "Patriot OP Distribution") of the voting stock of PAH
Interest Holdings, Inc., PAH WMC Holdings, Inc. and PAH IP Holdings,
Inc., PAH Westmont CI Holdings, Inc., PAH Xerxes Holdings, Inc., PAH
Columbus Holdings, Inc., PAH Franchise Holdings, Inc. and PAH
Pittsburgh CI Holdings, Inc. (the "D Subsidiary Stock") held by Patriot
OP to PAH LP, Inc. ("PAH LP"), through which Patriot holds its limited
partnership interest in Patriot OP, and there is no adjustment to any
limited partnership interests in Patriot OP by reason of the Patriot OP
Distribution. In the event that the amendments contemplated in the
Patriot OP Consent Solicitation do not become effective and any limited
partners fail to accept the Patriot OP Offer, Patriot OP makes a pro
rata distribution of the D Subsidiary Stock to its limited partners,
including without limitation in connection with a partial redemption of
such partner's partnership interests in Patriot OP. Pursuant to mergers
of the D Subsidiaries with newly formed subsidiaries of Wyndham in
which the D Subsidiaries are the surviving entities, the stockholders
of the D Subsidiaries receive newly issued, registered shares of
Wyndham Common Stock for their shares of stock of the D Subsidiaries.
7. In connection with the Patriot OP Offer, Patriot seeks the consent (the
"Patriot OP Consent Solicitation") of the holders of more than 50% of
the Patriot OP Common Units and holders of more than 50% of the Patriot
OP Preferred Units (in each case excluding those owned directly or
indirectly by Patriot) to amend and restate the Existing Patriot OP
Partnership Agreement in such a manner as to include the following
provisions, presented as a
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<PAGE>
unified proposal (the "Patriot OP Consent Package"): (i) limit the
right of the limited partners to receive distributions to the
equivalent amount and timing of dividends on shares of Wyndham Common
Stock and permit non-pro rata distributions of assets (including, in
the case of the Patriot OP Consent Solicitation, the Patriot OP
Distribution) to one or more partners without adjusting limited
partnership percentages; (ii) modify the conversion factor provision to
permit Patriot to make an equitable adjustment to the conversion factor
to the extent that holders of Patriot OP Units receive distributions in
excess of those received by the holders of the Wyndham Common Stock on
the Share Amount of shares; and (iii) eliminate the restrictions on the
ability of Patriot to merge with another entity. In connection with the
Wyndham OP Offer, Wyndham seeks the consent (the "Wyndham OP Consent
Solicitation") of the holders of more than 50% of the Wyndham OP
Common Units and holders of more than 50% of the Wyndham OP Preferred
Units (in each case excluding those owned directly or indirectly by
Wyndham) to amend and restate the Existing Wyndham OP Partnership
Agreement in such a manner as to include parallel revisions to those
set forth in the Patriot OP Consent Package (the "Wyndham OP Consent
Package"). Each of Patriot and Wyndham also amends its Partnership
Agreement without the need for limited partner approval in the
following respects, whether or not the necessary consents to the
Patriot OP Consent Package or the Wyndham OP Consent Package,
respectively, are received: (i) modify the conversion factor to specify
that each of the Patriot OP Units and the Wyndham OP Units will be
convertible into an adjusted amount of Wyndham Common Stock following
completion of the Restructuring which amount is so specified in the
amendment; (ii) eliminate any other provisions that are REIT or paired
share specific; (iii) eliminate the restrictions on transfers and
redemptions by holders of Patriot OP Units to the extent permissible
while retaining the ability of the holders of Patriot OP Units to
continue tax deferral; (iv) add a provision granting to the holders of
Patriot OP Units the right to participate in any rights offering made
available to the holders of shares of Wyndham Common Stock (including
the Rights Offering); (v) eliminate the requirement that Patriot must
contribute all proceeds of equity issuances to Patriot OP; (vi)
eliminate the restrictions on issuances of OP Units to Patriot; and
(vii) eliminate the requirement that administrative expenses relating
to Patriot assets outside Patriot OP not be reimbursable by Patriot OP.
The form of the Patriot OP Restatement that will be effective if the
Patriot OP Consent Package is approved is set forth in Exhibit E-1 to
the Securities Purchase Agreement. The form of the Patriot OP
Restatement that will be effective if the Patriot OP Consent Package is
not approved is set forth in Exhibit E-2 to
3
<PAGE>
the Securities Purchase Agreement. The form of the Wyndham OP
Restatement that will be effective if the Wyndham OP Consent Package
is approved is set forth in Exhibit E-3 to the Securities Purchase
Agreement. The form of the Wyndham OP Restatement that will be
effective if the Wyndham OP Consent Package is not approved is set
forth in Exhibit E-4 to the Securities Purchase Agreement. The
foregoing amendments will be binding on the holders of the Patriot
OP Units and the Wyndham OP Units not exchanged in the Wyndham OP
Offer.
8. Upon receipt of the Stockholder Approval and the necessary filings with
the Secretary of State of Delaware, the following become effective: (a)
the merger of Acquisition Sub with and into Patriot (the "Merger"),
with Patriot as the survivor and each existing share of Patriot Common
Stock and Patriot Preferred Stock being exchanged for newly issued,
registered shares of Wyndham Common Stock; (b) the Pairing Termination;
(c) the Wyndham Charter Amendment, including without limitation the
Reverse Stock Split; and (d) the designation of the Series A Preferred
Stock and the Series B Preferred Stock. No fractional shares will be
issued in the Reverse Stock Split. Any fractional shares will be
aggregated and sold, and the proceeds thereof will be distributed pro
rata to the stockholders entitled thereto. The Patriot Rights Plan will
expire immediately prior to the Merger.
9. If requested by the Investors in connection with the Stockholder
Approval, the Companies will appoint a proxy agent or dealer-manager
mutually agreed to among the Investors and the Companies.
10. The Wyndham Rights Plan is adopted. Wyndham Rights attach to each share
of Wyndham Common Stock and Wyndham Preferred Stock outstanding at the
close of business on the date of the Wyndham Rights Plan.
11. The Investors purchase their respective Shares.
12. Wyndham takes all actions necessary to ensure that: (a) the size of its
Board of Directors is increased to 19 directors, consisting of (i)
eight directors selected by the Companies, composed of Messrs. Karim
Alibhai, Leonard Boxer, James Carreker, Harlan Crow (or at Harlan
Crow's election prior to the Closing, Susan Groenteman), Milton Fine,
Paul Nussbaum, Rolf Ruhfus and Sherwood Weiser, or others designated by
the Companies, to serve as the Class A Directors, (ii) three directors,
one or more of whom may be current directors, to be mutually selected
by the Companies and the Investors who
4
<PAGE>
shall be "independent directors" (within the meaning of the New Wyndham
Certificate), to serve as the Class C Directors, and (C) eight
directors selected by the Investors, composed of Messrs. William Mack,
Marc Rowan, Lee Neibart, Thomas H. Lee, Scott Schoen, Scott Sperling,
Alan Leventhal and Kenneth Rosen, or others designated by the
Investors, to serve as the Class B Directors; and (b) current directors
of the Boards of Directors of Patriot and Wyndham not continuing as
directors will resign. The division of the Class A, Class B and Class C
directors within each of Class I, Class II and Class III will be
established by agreement of all of the directors prior to the 30th
calendar day following the date of the Securities Purchase Agreement.
13. Wyndham arranges on terms and conditions reasonably acceptable to the
Investors for a Directors and Officers Insurance Policy that provides
for (a) coverage for post-Closing acts and omissions in an amount
reasonably acceptable to the Investors and (b) the maximum amount of
coverage for pre-Closing acts or omissions for a period of three years
following the Closing that can be purchased at an annual cost of 150%
of the existing annual cost.
14. Immediately upon receipt of the proceeds from the sale of Shares on the
Closing Date, the Companies use such proceeds first, to effect a final
settlement of all of their obligations under each of (a) the Purchase
Price Adjustment Mechanism Agreement, dated as of April 6, 1998, among
the Companies and PaineWebber Financial Products, Inc. ("PWFP"), as
amended, and the Purchase Agreement, dated as of April 6, 1998, among
the Companies, PWFP and PaineWebber Incorporated ("PWI"), as amended,
(b) the Purchase Price Adjustment Mechanism, dated as of December 31,
1997, among the Companies and UBS AG, London Branch, as successor to
Union Bank of Switzerland, London Branch, acting through its agent,
Warburg Dillon Read LLC (collectively, "UBS"), as amended, and the
Purchase Agreement, dated as of December 31, 1997 among the Companies
and UBS, as successor to UBS Limited and Union Bank of Switzerland,
London Branch, as amended, and (c) the Purchase Price Adjustment
Mechanism Agreement, dated as of February 26, 1998, among the Companies
and NationsBanc Mortgage Capital Corporation, as successor to NMS
Services, Inc. ("Nations"), as amended, and the Purchase Agreement,
dated as of February 26, 1998, among the Companies and Nations, as
successor to NMS Securities, Inc., as amended. Anything else in this
Agreement to the contrary notwithstanding, the parties hereto agree
that the obligations in this paragraph are for the express benefit of
PWI, PWFP, UBS and Nations, each as third party beneficiaries, and
acknowledge that PWI, PWFP, UBS and Nations are forebearing from taking
5
<PAGE>
certain actions and otherwise acting in reliance upon the obligations
set forth in this paragraph.
15. The net proceeds of the Investment, taken together with the proceeds of
the Bank Facility, the IRLs and any alternative financing approved by
the Investors are used (a) first, as specified in paragraph 14, (b)
second, to repay specified indebtedness, and (c) third, the payment of
fees and reimbursement of expenses pursuant to Section 6.3 of the
Securities Purchase Agreement and pursuant to the Commitment Letter and
(d) fourth, to fund general corporate activities.
6
<PAGE>
Exhibit 99.3
EXHIBIT B
FORM OF RESTATED
CERTIFICATE OF INCORPORATION
OF
WYNDHAM INTERNATIONAL, INC.
Wyndham International, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The name of the Corporation is Wyndham International, Inc. The date of
the filing of its original Certificate of Incorporation with the
Secretary of State of the State of Delaware was January 27, 1983 (the
"Original Certificate of Incorporation"). The name under which the
Corporation filed the Original Certificate of Incorporation was Bay
Meadows Operating Company. An Amended and Restated Certificate of
Incorporation (the "Second Certificate") was filed with the Secretary
of State of the State of Delaware on July 1, 1997, pursuant to which,
among other things, the name of the Corporation was changed to Patriot
American Hospitality Operating Company. An Amended and Restated
Certificate of Incorporation (the "Third Certificate") was filed with
the Secretary of State of the State of Delaware on January 5, 1998,
pursuant to which, among other things, the name of the Corporation was
changed to Wyndham International, Inc.
2. This Restated Certificate of Incorporation (the "Certificate") amends,
restates and integrates the provisions of the Third Certificate, was
duly adopted by the Board of Directors of the Corporation in accordance
with the provisions of Sections 242 and 245 of the Delaware General
Corporation Law, as amended from time to time (the "DGCL"), and was
duly adopted by the stockholders of the Corporation in accordance with
the applicable provisions of Sections 242 and 245 of the DGCL.
3. Upon the filing of this Restated Certificate of Incorporation, each
share of Common Stock, par value $0.01 per share, of the Corporation
shall be reclassified and without any further action by the Corporation
or any stockholder shall become one share of Class A Common Stock, par
value $0.01 per share, of the Corporation (the "Class A Common Stock").
4. The text of the Third Certificate is hereby amended and restated in its
entirety to provide as herein set forth in full.
<PAGE>
I.
NAME
The name of the corporation is Wyndham International, Inc.
II.
PURPOSES
The nature of business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act for which corporations may be
organized under the DGCL.
III.
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
IV.
CAPITAL STOCK
The Corporation shall have the authority to issue [ ] shares of Class A
Common Stock, [ ] shares of Class B common stock, par value $.0l per share (the
"Class B Common Stock"), and 150,000,000 shares of preferred stock, par value
$.0l per share (the "Preferred Stock"). The Class A Common Stock and Class B
Common Stock are herein referred to collectively as the "Common Stock." Except
as otherwise provided herein, all shares of Class A Common Stock and Class B
Common Stock will be identical and will entitle the holders thereof to the same
rights and privileges. The rights, preferences, voting powers and the
qualifications, limitations and restrictions of the authorized stock shall be as
follows:
A. COMMON STOCK.
1. VOTING RIGHTS. Except as provided in Article V below, (i)
each share of Common Stock shall be entitled to one vote on all matters
submitted to a vote at any meeting of stockholders and (ii) the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation (or, if any holders of shares of
Preferred Stock are entitled to vote together with the holders of Common Stock
on any matter, as a single class with such holders of Preferred Stock on such
matter).
2
<PAGE>
2. DIVIDEND RIGHTS. Subject to the rights of holders of
Preferred Stock and subject to any other provisions of this Certificate or any
amendment hereto, holders of Common Stock shall be entitled to receive such
dividends and other distributions in cash, stock or property of the Corporation
as may be declared thereon by the Board of Directors from time to time. The
holders of the Class A Common Stock and the Class B Common Stock will be
entitled to receive, to the extent permitted by law, and to share equally and
ratably, share for share, such dividends as may declared from time to time by
the Board of Directors, whether payable in cash, property or securities of the
Corporation; provided, however, that if the dividends that are declared are
payable in shares of Class A Common Stock or Class B Common Stock, such
dividends will be declared at the same rate on each class of stock, and the
dividends payable to holders of Class A Common Stock will be paid in Class A
Common Stock and the dividends payable to holders of Class B Common Stock will
be paid in Class B Common Stock.
3. LIQUIDATION RIGHTS. In the event of the voluntary or
involuntary liquidation, dissolution, distribution of assets or other winding
up of the Corporation, after distribution in full of preferential amounts, if
any, to be distributed to the holders of shares of Preferred Stock or any other
class or series of stock having a preference as to liquidating distributions
over the Class A Common Stock and the Class B Common Stock, the holders of the
Class A Common Stock and the Class B Common Stock shall be entitled to share
equally and ratably, share for share, in all of the remaining assets of the
Corporation, of whatever kind available for distribution to stockholders. A
consolidation or merger of the Corporation with or into any other corporation or
corporations shall not be deemed to be a liquidation, dissolution or winding-up
of the Corporation as those terms are used in this Section.
4. ACTION WITHOUT A MEETING. Except as provided in the
Certificate of Designation governing the Series B Preferred Stock and except for
actions of the Series B Preferred Stock and the Class B Common Stock voting
together in connection with the election or removal of directors pursuant to
Article V below, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and the ability of the
stockholders to consent in writing is hereby specifically denied.
5. VOLUNTARY CONVERSION INTO CLASS A COMMON STOCK. From and
after the Voting Restriction Termination Date, each share of Class B Common
Stock shall be convertible, at the option of the holder thereof, into one fully
paid and non-assessable share of Class A Common Stock. In addition, as to any
particular Investor, all but not less than all shares of Class B Common Stock
beneficially owned by such Investor shall be convertible, at the option of such
Investor, into the same number of fully paid and non-assessable shares of Class
A Common Stock, provided that at the time of conversion such Investor shall not
beneficially own any shares of Series B Preferred Stock, shall not have any
agreement or understanding with the other Investors as to the voting of their
shares of Preferred Stock or Common Stock, and shall so notify the Corporation
in writing. The holder of any shares of Class B Common Stock may exercise its
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right to convert such shares into shares of Class A Common Stock by surrendering
for such purpose to the Corporation, at its principal office or at such other
office or agency maintained by the Corporation for that purpose, a certificate
or certificates representing the shares of Class B Common Stock to be converted
duly endorsed to the Corporation in blank accompanied by a written notice
stating that such holder elects to convert all or, if permitted by Section
IV(A)(5), a specified whole number of such shares in accordance with the
provisions of this Section IV(A)(5). The Corporation will pay any and all
documentary, stamp or similar issue or transfer tax and any other taxes that may
be payable in respect of any issue or delivery of shares of Class A Common Stock
on conversion of Class B Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within three Business Days after the surrender of
such certificate or certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes (or the demonstration to the
satisfaction of the Corporation that such taxes are inapplicable), the
Corporation shall deliver or cause to be delivered (i) certificates registered
in the name of such holder representing the number of validly issued, fully paid
and nonassessable full shares of Class A Common Stock to which the holder of
shares of Class B Common Stock so converted shall be entitled and (ii) if less
than the full number of shares of Class B Common Stock evidenced by the
surrendered certificate or certificates are being converted, a new certificate
or certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares converted.
Such conversion shall be deemed to have been made at the close of business on
the date of receipt of such notice and of such surrender of the certificate or
certificates representing the shares of Class B Common Stock to be converted so
that the rights of the holder thereof as to the shares being converted shall
cease except for the right to receive shares of Class A Common Stock, and the
person entitled to receive the shares of Class A Common Stock shall be treated
for all purposes as having become the record holder of such shares of Class A
Common Stock at such time.
6. AUTOMATIC CONVERSION OF CLASS B COMMON STOCK. Each share of
Class B Common Stock shall automatically be converted into one fully paid and
non-assessable share of Class A Common Stock upon the sale or other transfer, by
operation of law or otherwise, of such share of Class B Common Stock to any
individual or entity other than an Investor (as defined in Article V below). Any
conversion pursuant to this Section IV(A)(6) shall be deemed to have been
effected at the time the transfer occurred (the "Conversion Time"). At the
Conversion Time, the certificate or certificates that represented immediately
prior thereto the shares of Class B Common Stock which were so converted (the
"Converted Class B Common Stock") shall, automatically and without further
action, represent the same number of shares of Class A Common Stock. Holders of
Converted Class B Common Stock shall deliver their certificates, duly endorsed
in blank or accompanied by proper instruments of transfer, to the principal
office of the Corporation or the office of any transfer agent for shares of the
Class B Common Stock, together with a written notice setting out the name or
names and denominations in which the certificate or certificates representing
such shares are to be issued and including instructions for delivery thereof.
Upon such delivery, the Corporation or its transfer agent shall promptly issue
and deliver a certificate or certificates representing the number of shares of
Class A Common Stock to which such holder of shares of Class B Common Stock is
entitled by reason of such
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conversion, and shall cause such shares of Class A Common Stock to be registered
in the name of such holder. The person entitled to receive shares of Class A
Common Stock issuable upon conversion shall be treated for all purposes as the
record holder of such shares of Class B Common Stock at and as of the Conversion
Time, and the rights of such person as a holder shares of Class B Common Stock
that have been converted shall cease and terminate at and as of the Conversion
Time. In the event of any proposed transfer to an entity other than an Investor,
the transferring Investor shall notify the Corporation of the date of the
proposed transfer at least three Business Days prior thereto, the number of
shares of Class B Common Stock to be so transferred and the identity of the
transferee.
7. AUTOMATIC TERMINATION OF SEPARATE CLASSES OF COMMON STOCK.
At such time as there shall be no remaining outstanding shares of Series B
Preferred Stock or Class B Common Stock, the Class B Common Stock shall no
longer be an authorized class of Common Stock and the Class A Common Stock shall
be redenominated as the "Common Stock."
B. PREFERRED STOCK. The Preferred Stock may be issued from time to time
in one or more series, with such distinctive designations, rights and
preferences as shall be stated and expressed herein or in the resolution or
resolutions providing for the issue of shares of a particular series, and in
such resolution or resolutions providing for the issue of shares of such series,
the Board of Directors, or any duly authorized committee thereof, is expressly
authorized to fix or establish the basis for determining:
1. The annual or other periodic dividend rate for such series,
the dividend payment dates, the date from which dividends on all shares of such
series issued shall be cumulative, and the extent of participation rights, if
any;
2. The redemption price or prices, if any, for such series and
other terms and conditions on which such series may be retired and redeemed;
3. The obligation, if any, of the Corporation to purchase and
retire or redeem shares of such series as a sinking fund or otherwise, and the
terms and conditions of any such redemption;
4. The designation and maximum number of shares of such series
issuable;
5. The right to vote, if any, with holders of shares of any
other class or series, either generally or as a condition to specified corporate
action;
6. The amount payable upon shares in the event of involuntary
liquidation;
7. The amount payable upon shares in the event of voluntary
liquidation;
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8. The rights, if any, of the holders of shares of such series
to convert such shares into other classes of stock of the Corporation, or to
exchange such shares for other securities or assets, and the terms and
conditions of any such conversion or exchange;
9. The preemptive or preferential right to purchase or
subscribe to any shares of any class or series of capital stock of the
Corporation; and
10. Such other rights as may be specified by the Board of
Directors and not prohibited by law.
C. PREEMPTIVE RIGHTS. Other than as specifically authorized in the
certificate of designation establishing the terms of a series of Preferred Stock
or in an agreement approved by the Board of Directors, holders of shares of any
class or series of capital stock shall not be entitled to any preemptive or
preferential right to purchase or subscribe to (i) any shares of any class or
series of capital stock of the Corporation, whether now or hereafter authorized,
(ii) any warrants, rights or options to purchase any such capital stock or (iii)
any obligations convertible into any such capital stock or into warrants, rights
or options to purchase any such capital stock.
D. AMBIGUITY. In the case of an ambiguity in the application of the
provisions of this Article IV, the Board of Directors shall have the power to
determine the application of the provisions of this Article IV with respect to
any situation based on the facts known to it.
E. SEVERABILITY. Each provision of this Article IV shall be severable
and an adverse determination as to any such provision shall in no way affect the
validity of any other provision.
V.
DIRECTORS
A. DEFINED TERMS. The following defined terms shall have the meaning
specified below:
1. "Class A Director Nominating Committee" shall mean a
committee of the Board of Directors which consists of each of the Class C
Directors then in office and the same number (but not less than one) of Class A
Directors then in office (who shall be selected by a majority vote of the Class
A Directors then in office) for the purpose of nominating the Corporation's
nominees as Class A Directors.
2. "Class A Directors" shall mean those persons elected as the
initial Class A Directors pursuant to the Purchase Agreement and such other
persons elected as Class A Directors to the Board of Directors pursuant to
Section V(E) or Section V(H). The Corporation's nominees to be elected as Class
A Directors at any meeting of the Corporation's stockholders shall be selected
by the Class A Director Nominating Committee.
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3. "Class B Directors" shall mean those persons elected as the
initial Class B Directors as contemplated by the Purchase Agreement and such
other persons as are elected as Class B Directors pursuant to Section V(E) or
Section V(H). The Corporation's nominees to be elected as Class B Directors at
any meeting of the Corporation's stockholders shall be selected by a nomination
committee composed solely of the Class B Directors then in office.
4. "Class C Directors" shall mean those persons elected as the
initial Class C Directors as contemplated by the Purchase Agreement and such
other persons as are elected to the Board of Directors as Class C Directors
pursuant to Section V(E) or Section V(H), which directors shall not be employed
by any of the Class A Directors or the Class B Directors or be employed by the
employers or affiliates of any of the Class A Directors or the Class B
Directors, or have any economic relationship requiring disclosure under the
Exchange Act with any of the Class A Directors or the Class B Directors or the
employers or affiliates of any of the Class A Directors or the Class B
Directors. The Corporation's nominees to be elected as Class C Directors at any
meeting of the Corporation's stockholders shall be selected by a nomination
committee composed solely of the Class C Directors then in office.
5. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
6. "Investors" shall mean, collectively, Apollo Real Estate
Investment Fund III, L.P., Apollo Investment Fund IV, L.P., Thomas H. Lee Equity
Fund IV, L.P., Thomas H. Lee Foreign Fund IV, L.P., Thomas H. Lee Charitable
Investment L.P., THL-CCI Limited Partnership, Beacon Private Equity, Inc.,
Beacon Capital Partners, L.P. and Strategic Real Estate Investments I, L.L.C.,
together with each of their Permitted Assignees and Permitted Third Party
Transferees (as each such term is defined in the Purchase Agreement), and all of
their respective successors by operation of law.
7. "Purchase Agreement" shall mean the Securities Purchase
Agreement, dated as of February 18, 1999, which provides, among other things,
for the issuance of the Series B Preferred Stock.
8. "Voting Restriction Termination Date" shall mean the date
that is the earlier to occur of such time as (a) the Investors shall
beneficially own (as defined in Section 13(d) of the Exchange Act and the rules
thereunder) no shares of Series B Preferred Stock and less than 20% of the then
outstanding Common Stock or (b) any of the Series B Preferred Stock shall have
been called for redemption pursuant to the second sentence of Section 5(a) of
the Certificate of Designation governing the Series B Preferred Stock, provided
that at such time the Investors do not have any agreement or understanding among
them as to the mandatory voting of their shares of Preferred Stock or Common
Stock other than with respect to the election and removal of directors or the
selection or allocation of the Class B Directors.
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B. GENERAL POWERS. Except as otherwise expressly provided in this
Certificate, the property, affairs and business of the Corporation shall be
managed under the direction of the Board of Directors and, except as otherwise
expressly provided by law, the By-Laws or this Certificate, all of the powers of
the Corporation shall be vested in such Board.
C. NUMBER OF DIRECTORS. The number of directors of the Corporation
shall be fixed initially at 19 and shall be subject to reduction as provided in
Section V(C), shall be subject to increase as provided in the terms of any
Preferred Stock issued by the Corporation and shall be subject to adjustment as
otherwise may be determined by unanimous approval of the Board of Directors then
in office.
D. REDUCTION IN NUMBER OF CLASS B DIRECTORS. Notwithstanding the
foregoing, if: at any time (i) the Investors beneficially own shares of Common
Stock (including shares of Common Stock issuable upon conversion of securities
convertible, exchangeable or exercisable for shares of Common Stock)
representing less than 50% and at least 43.33% of the shares of Common Stock
issuable upon conversion of securities originally issued to the Investors, the
number of Class B Directors will be reduced to seven Class B Directors; (ii) the
Investors beneficially own shares of Common Stock (including shares of Common
Stock issuable upon conversion of securities convertible, exchangeable or
exercisable for shares of Common Stock) representing less than 43.33% and at
least 36.66% of Common Stock issuable upon conversion of securities originally
issued to the Investors, the number of Class B Directors will be reduced to six
Class B Directors; (iii) the Investors beneficially own shares of Common Stock
(including shares of Common Stock issuable upon conversion of securities
convertible, exchangeable or exercisable for shares of Common Stock)
representing less than 36.66% and at least 30.00% of the Common Stock issuable
upon conversion of the securities originally issued to the Investors, the number
of Class B Directors will be reduced to five Class B Directors; (iv) the
Investors beneficially own shares of Common Stock (including shares of Common
Stock issuable upon conversion of securities convertible, exchangeable or
exercisable for shares of Common Stock) representing less than 30.00% and at
least 23.33% of the Common Stock issuable upon conversion of the securities
originally issued to the Investors, the number of Class B Directors will be
reduced to four Class B Directors; (v) the Investors beneficially own shares of
Common Stock (including shares of Common Stock issuable upon conversion of
securities convertible, exchangeable or exercisable for shares of Common Stock)
representing less than 23.33% and at least 16.66% of the Common Stock issuable
upon conversion of the securities originally issued to the Investors, the number
of Class B Directors will be reduced to three Class B Directors; (vi) the
Investors beneficially own shares of Common Stock (including shares of Common
Stock issuable upon conversion of securities convertible, exchangeable or
exercisable for shares of Common Stock) representing less than 16.66% and at
least 10.00% of the Common Stock issuable upon conversion of the securities
originally issued to the Investors, the number of Class B Directors will be
reduced to two Class B Directors; and (vii) the Investors beneficially own
shares of Common Stock (including shares of Common Stock issuable upon
conversion of securities convertible, exchangeable or exercisable for shares of
Common Stock) representing less than 10.00% of the Common Stock issuable upon
conversion of the securities originally
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issued to the Investors, the number of Class B Directors will be reduced to zero
Class B Directors. Any reduction in the number of Class B Directors will reduce
the number of total directors by the same amount. A director need not be a
stockholder of the Corporation. Within ten business days after a transfer of
shares of Common Stock (or securities convertible, exchangeable or exercisable
for Common Stock) of the Corporation by any of the Investors to a person other
than another Investor, the transferring Investor will provide written notice of
such transfer to the Corporation, which notice shall state the identity of the
transferee, the date of the transfer, the number of shares transferred and the
nature of any relationship between the transferring Investor and the transferee;
PROVIDED, that in the event of such a transfer that would cause the number of
Class B Directors to be reduced in accordance with the foregoing schedule,
neither such transfer nor subsequent such transfers shall become effective
unless and until such time as the number of Class B Directors then in office
shall be reduced in accordance with the foregoing schedule, whether by
resignation or otherwise.
E. ELECTION OF DIRECTORS
1. CLASS A DIRECTORS. Prior to each annual meeting of
stockholders, the Corporation's nominees for Class A Directors shall be
nominated by the Class A Director Nominating Committee. The Class A Directors
shall be elected (a) at all times prior to the Voting Restriction Termination
Date, by the holders of a plurality of the votes represented by the shares of
Class A Common Stock present in person or represented by proxy at such meeting
and entitled to vote on the election of Class A Directors and (b) at all times
from and after the Voting Restriction Termination Date, by the holders of a
plurality of the votes represented by the shares of the Class A Common Stock,
the Class B Common Stock and the Series B Preferred Stock, voting together as a
single class, present in person or represented by proxy at such meeting and
entitled to vote on the election of Class A Directors. Until the Classified
Board Sunset Date, each Class A Director so elected shall at the time of such
election be designated as a Class A-I Director, a Class A-II Director or a Class
A-III Director and shall hold office for a term expiring at the annual meeting
of stockholders determined as set forth in Section V(E)(4),
2. CLASS B DIRECTORS. Prior to each annual meeting of
stockholders, the Corporation's nominees for Class B Directors shall be
nominated by a majority of the Class B Directors then in office. The Class B
Directors shall be elected by the vote of holders of a plurality of the votes
represented by the shares of Series B Preferred Stock and Class B Common Stock,
voting together as a single class, present in person or by proxy at such meeting
and entitled to vote on the election of Class B Directors. Until the Classified
Board Sunset Date, each Class B Director so elected shall at the time of such
election be designated as a Class B-I Director, a Class B-II Director or a Class
B-III Director and shall hold office for a term expiring at the annual meeting
of stockholders determined as set forth in Section V(E)(4),
3. CLASS C DIRECTORS. Prior to each annual meeting of
stockholders, the Corporation's nominees for the Class C Directors shall be
nominated by vote of a majority of the Class C Directors then in office. The
Class C Directors shall be elected by the vote of holders of
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a plurality of the votes represented by the shares of Class A Common Stock,
Class B Common Stock and Series B Preferred Stock, voting together as a single
class, present in person or represented by proxy at such meeting and entitled to
vote on the election of Class C Directors; PROVIDED that until the Voting
Restriction Termination Date, (i) in the event that the only persons nominated
for election as a Class C Director are those nominated for election by the
Corporation, if there shall be more votes against any person's election than in
favor of such person's election, then such person shall not be elected to the
Board of Directors and the position on the Board of Directors for which such
person was nominated shall remain vacant, and (ii) in the event that there are
persons nominated for election as a Class C Director in addition to those
nominated for election by the Corporation, then all shares of the Series B
Preferred Stock and of the Class B Common Stock, and all shares of Class A
Common Stock held by Class A Directors or their affiliates voted at the meeting,
shall be voted in proportion to the votes cast for such persons by other holders
of the Class A Common Stock. Until the Classified Board Sunset Date, each Class
C Director so elected shall at the time of such election be designated as a
Class C-I Director, a Class C-II Director or a Class C-III Director and shall
hold office for a term expiring at the annual meeting of stockholders determined
as set forth in Section V(E)(4).
4. CLASSIFICATION BY TERM OF OFFICE. The Class A Directors
shall be divided into three classes, designated Class A-I, Class A-II and Class
A-III, with three Class A-I Directors, two Class A-II Directors and three Class
A-III Directors. The Class B Directors shall be divided into three classes,
designated Class B-I, Class B-II and Class B-III, with three Class B-1
Directors, two Class B-II Directors and three Class B-III Directors. The Class C
Directors shall be divided into three classes, designated Class C-I, Class C-II
and Class C-III, with one Class C-1 Director, one Class C-II Director and one
Class C-III Director. The term of the initial Class A-I, Class B-I and Class C-I
Directors shall terminate on the date of the annual meeting of stockholders of
the Corporation in 2000, the term of the initial Class A-II, Class B-II and
Class C-II Directors shall terminate on the date of the annual meeting of
stockholders of the Corporation in 2001 and the term of the initial Class A-III,
Class B-III and Class C-III Directors shall terminate on the date of the annual
meeting of stockholders of the Corporation in 2002. At the annual meeting of
stockholders of the Corporation in 2000, successors to the Class A-I, Class B-I
and Class C-I Directors whose terms expire at that annual meeting shall be
elected for a three year term. At the annual meeting of stockholders of the
Corporation in 2001, successors to the Class A-II, Class B-II and Class C-II
Directors whose terms expire at that annual meeting shall be elected for a two
year term. At each annual meeting of stockholders of the Corporation beginning
in 2002, successors to the directors whose terms expire at that annual meeting
shall be elected for a one year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional directors of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting of stockholders for the year in which his term
expires and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement, disqualification or removal
from office.
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F. DIRECTORS ELECTED BY HOLDERS OF PREFERRED STOCK. Notwithstanding the
foregoing, whenever, pursuant to the provisions of Article IV, the holders of
any one or more series of Preferred Stock shall have the right, voting
separately as a series or together with holders of other such series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate and any certificates of designation
applicable thereto, and, other than the Class B Directors, such directors so
elected shall not be divided into classes pursuant to Section C of this Article
V.
During any period when the holders of any series of Preferred Stock
have the right to elect additional directors as provided for or fixed pursuant
to the provisions of Article IV of this Certificate, then upon commencement and
for the duration of the period during which such right continues: (a) the then
otherwise total authorized number of directors of the Corporation shall
automatically be increased by such specified number of directors, and the
holders of such Preferred Stock shall be entitled to elect the additional
directors so provided for or fixed pursuant to said provisions and (b) each such
additional director shall serve until such director's successor shall have been
duly elected and qualified, or until such director's right to hold such office
terminates pursuant to said provisions, whichever occurs earlier, subject to
such director's earlier death, disqualification, resignation or removal. Except
as otherwise provided by the Board of Directors in the resolution or resolutions
establishing such series, whenever the holders of any series of Preferred Stock
having such right to elect additional directors are divested of such right
pursuant to the provisions of such stock, the terms of office of all such
additional directors elected by the holders of such stock, or elected to fill
any vacancies resulting from the death, resignation, disqualification or removal
of such additional directors, shall forthwith terminate and the total and
authorized number of directors of the Corporation shall be reduced accordingly.
G. REMOVAL OF DIRECTORS; QUALIFICATION. Subject to the rights, if any,
of any class or series of stock to elect directors and to remove any director
whom the holders of any such stock have the right to elect, any director
(including persons elected by directors to fill vacancies in the Board of
Directors) may be removed from office only by the affirmative vote of the
holders of at least a majority of the votes represented by the shares then
entitled to vote in the election of such director (with the Series B Preferred
Stock and Class B Common Stock subject to the same limitations on voting as in
the case of an election of directors). At least 30 days prior to any meeting of
stockholders at which it is proposed that any director be removed from office,
written notice of such proposed removal shall be sent to the director whose
removal will be considered at the meeting.
H. VACANCIES. Subject to the rights, if any, of the holders of any
class or series of stock to elect directors and to fill vacancies in the Board
of Directors relating thereto, any and all vacancies in the Board of Directors,
however occurring, including, without limitation, by reason of an increase in
the size of the Board of Directors, or the death, resignation, disqualification
or removal of a director, shall be filled (i) in the case of the Class A
Directors, either (A) by the nomination by the Class A Director Nominating
Committee and election by the same stockholder
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vote as is required for the election of Class A Directors or (B) by the vote of
a majority of all of the remaining Class A Directors then in office, (ii) in the
case of the Class B Directors, either (A) by the nomination by a majority of the
remaining Class B Directors and election by the same stockholder vote as is
required for the election of Class B Directors or (B) by the vote of a majority
of all of the remaining Class B Directors then in office, and (iii) in the case
of the Class C Directors, either (A) by the nomination by a majority of the
remaining Class C Directors and selection by the same stockholder action as is
required for the election of Class C Directors or (B) by the unanimous vote of
all the Class C directors then in office. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full term
of the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been duly
elected and qualified or until such director's earlier resignation or removal.
Subject to the rights, if any, of the holders of any series of Preferred Stock,
when the number of directors is increased or decreased, the Board of Directors
shall determine the class or classes to which the increased or decreased number
of directors shall be apportioned; provided, however, that no decrease in the
number of directors shall shorten the term of any incumbent director. In the
event of a vacancy in the Board of Directors, the remaining directors, except as
otherwise provided by law, may exercise the powers of the full Board of
Directors until such vacancy is filled.
I. POWER OF DIRECTORS. Any decision pursuant to the Shareholder Rights
Agreement, dated as of [ ], 1999 between the Corporation and American Stock
Transfer and Trust Company, a New York corporation, or any successor agreement
thereto, made by a majority of a specified group or groups of directors which
group or groups do not include all of the directors of the Corporation shall be
valid notwithstanding the provisions of Section 141 of the DGCL.
VI.
LIMITATION OF LIABILITY
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director or as such a member, except for liability (a) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (b)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the director derived an improper personal benefit. If the
DGCL is amended after the effective date of this Certificate to authorize
corporate action further eliminating or limiting the personal liability of
directors or the person or persons exercising or performing any of the powers
or duties otherwise conferred or imposed upon directors of the Corporation,
then the liability of the director of the Corporation or the person or persons
exercising or performing any of the powers or duties otherwise conferred or
imposed upon directors of the Corporation shall be eliminated or limited to the
fullest extent permitted by the DGCL, as so amended.
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Any amendment or repeal of this Article VI by either (i) the
stockholders of the Corporation or (ii) an amendment to the DGCL shall not
adversely affect any right or protection existing at the time of such amendment
or repeal with respect to any acts or omissions occurring before such amendment
or repeal of a person serving as a director at the time of such amendment or
repeal.
VII.
INDEMNIFICATION
A. GENERAL RIGHT TO INDEMNIFICATION. The Corporation shall
indemnify its directors and officers to the fullest extent authorized or
permitted by law, as now or hereafter in effect, and such right to
indemnification shall continue as to a person who has ceased to be a director or
officer of the Corporation and shall inure to the benefit of his or her heirs,
executors and personal and legal representatives; provided, however, that,
except for proceedings to enforce rights to indemnification, the Corporation
shall not be obligated to indemnify any director or officer (or his or her
heirs, executors or personal or legal representatives) in connection with a
proceeding (or part thereof) initiated by such person unless such proceeding (or
part thereof) was authorized or consented to by the Board of Directors. The
right to indemnification conferred by this Article VII shall include the right
to be paid by the Corporation the expenses incurred in defending or otherwise
participating in any proceeding in advance of its final disposition. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article VII to directors and officers of the Corporation. The rights to
indemnification and to the advance of expenses conferred in this Article VII
shall not be exclusive of any other right which any person may have or hereafter
acquire under this Certificate of Incorporation, the Bylaws of the Corporation,
any statute, agreement, vote of stockholders or disinterested directors or
otherwise.
B. AMENDMENT OR REPEAL. So long as the Investors as holders of
Series B Preferred Stock or Class B Common Stock are entitled to have at least
two Class B Directors on the Board of Directors, this Article VII may only be
amended or repealed with the affirmative vote of a majority of the Class B
Directors. Further, any amendment or repeal of this Article VII by the
stockholders of the Corporation shall not adversely affect any rights to
indemnification and to the advancement of expenses of a director or officer of
the Corporation existing at the time of such amendment or repeal with respect to
any acts or omissions occurring prior to such amendment or repeal.
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VIII.
AMENDMENT OF BYLAWS
A. AMENDMENT BY THE BOARD OF DIRECTORS. Except as otherwise provided by
law or this Certificate, the Bylaws of the Corporation may be amended or
repealed by the Board of Directors by the affirmative vote of a majority of the
directors then in office.
B. AMENDMENT BY THE STOCKHOLDERS. The Bylaws of the Corporation may be
amended or repealed at any annual meeting of stockholders, or special meeting of
stockholders called for such purpose, by the affirmative vote of the majority of
the shares present in person or represented by proxy at such meeting and
entitled to vote on such amendment or repeal, voting together as a single class.
IX.
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed in this Restated Certificate of
Incorporation, the Corporation's Bylaws or as otherwise provided by law, and all
rights herein conferred upon stockholders are granted subject to such
reservation.
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I, [Name], [Title of Officer] of the Corporation, for the purpose of
amending and restating the Corporation's Certificate of Incorporation pursuant
to the General Corporation Law of the State of Delaware, do make this
certificate, hereby declaring and certifying that this is my act and deed on
behalf of the Corporation this [ ] day of [ ], 1999.
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Exhibit 99.4
EXHIBIT C
FORM OF
AMENDED AND RESTATED
BYLAWS
OF
WYNDHAM INTERNATIONAL, INC.
ARTICLE I.
DEFINITIONS
For purposes of these Bylaws, the following words shall have the
meanings set forth below:
(a) "Certificate" shall mean the Restated Certificate of
Incorpora tion of the Corporation, as amended from time to time, including any
Certificates of Designation for any series of stock of the Corporation.
(b) "Corporation" shall mean Wyndham International, Inc.
(formerly "Patriot American Hospitality Operating Company").
(c) "DGCL" shall mean the Delaware General Corporation Law, as
amended from time to time.
(d) "Public Announcement" shall mean: (i) disclosure in a
press release reported by the Dow Jones News Service, Associated Press or
comparable national news service, (ii) a report or other document filed publicly
with the Securities and Exchange Commission (including, without limitation, a
Form 8-K) or (iii) a letter or report sent to stockholders of record of the
Corporation at the time of the mailing of such letter or report.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
2.1 PLACES OF MEETINGS. All meetings of the stockholders shall be held
at such place, either within or without the State of Delaware, as from time to
time may be fixed by the Board of Directors.
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2.2 ANNUAL MEETINGS. The annual meeting of the stockholders, for the
election of directors and transaction of such other business as may come
properly before the meeting, shall be held at such date and time as shall be
determined by the Board of Directors.
2.3 SPECIAL MEETINGS. A special meeting of the stockholders for any
purpose or purposes may be called at any time only by the Chairman of the Board,
the Chief Executive Officer or by a majority of the Board of Directors. At a
special meeting no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting.
2.4 NOTICE OF MEETINGS: ADJOURNMENTS. A written notice of each annual
meeting stating the hour, date and place of such annual meeting shall be given
by the Secretary or an Assistant Secretary of the Corporation (or other person
authorized by these Bylaws or by law) not less than 10 days nor more than 60
days before the annual meeting, to each stockholder entitled to vote thereat and
to each stockholder who, by law or under the Certificate or under these Bylaws,
is entitled to such notice, by delivering such notice to him or her or by
mailing it, postage prepaid, addressed to such stockholder at the address of
such stockholder as it appears on the stock transfer books of the Corporation.
Such notice shall be deemed to be delivered when hand delivered to such address
or deposited in the mail so addressed, with postage prepaid.
Notice of all special meetings of stockholders shall be given in the
same manner as provided for annual meetings, except that the written notice of
all special meetings shall state the purpose or purposes for which the meeting
has been called.
Notice of an annual meeting or special meeting of stockholders need not
be given to a stockholder if a written waiver of notice is signed before or
after such meeting by such stockholder or if such stockholder attends such
meeting, unless such attendance was for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any annual meeting or special meeting of stockholders need
be specified in any written waiver of notice.
The Board of Directors may postpone and reschedule any previously
scheduled annual meeting or special meeting of stockholders and any record
date with respect thereto, regardless of whether any notice or public
disclosure with respect to any such meeting has been sent or made pursuant to
this Section 2.4 or otherwise. In no event shall the Public Announcement of
an adjournment, postponement or
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rescheduling of any previously scheduled meeting of stockholders commence a new
time period for the giving of a stockholder's notice under Section 2.9 of these
Bylaws.
When any meeting is convened, the presiding officer of the meeting may
adjourn the meeting if (a) no quorum is present for the transaction of business,
(b) the Board of Directors determines that adjournment is necessary or
appropriate to enable the stockholders to consider fully information that the
Board of Directors determines has not been made sufficiently or timely available
to stockholders or (c) the Board of Directors determines that adjournment is
otherwise in the best interests of the Corporation. When any annual meeting or
special meeting of stockholders is adjourned to another hour, date or place,
notice need not be given of the adjourned meeting, other than an announcement at
the meeting at which the adjournment is taken, of the hour, date and place to
which the meeting is adjourned; PROVIDED HOWEVER, that if the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote thereat and each stockholder who, by law
or under the Certificate or under these Bylaws, is entitled to such notice.
2.5 QUORUM. Except as otherwise required by the Certificate, any number
of stockholders together holding at least a majority of the outstanding shares
of capital stock entitled to vote with respect to the business to be transacted,
who shall be present in person or represented by proxy at any meeting duly
called, shall constitute a quorum for the transaction of business. If less than
a quorum shall be in attendance at the time for which a meeting shall have been
called, the meeting may be adjourned from time to time by a majority of the
stockholders present or represented by proxy.
2.6 VOTING AND PROXIES. Unless otherwise provided in the Certificate or
by law, stockholders shall have one vote for each share of stock entitled to
vote owned by them of record according to the stock transfer books of the
Corporation. Stockholders may vote either in person or by written proxy, but no
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. Proxies shall be filed with the secretary of
the meeting before being voted. Except as otherwise limited therein or as
otherwise provided by law, proxies shall entitle the persons authorized thereby
to vote at any adjournment of such meeting, but they shall not be valid after
final adjournment of such meeting. A proxy with respect to stock held in the
name of two or more persons shall be valid if executed by or on behalf of any
one of them unless at or prior to the exercise of the proxy the Corporation
receives a specific written notice to the contrary from any one
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of them. A proxy purporting to be executed by or on behalf of a stockholder
shall be deemed valid, and the burden of proving invalidity shall rest on the
challenger.
2.7 ACTION AT MEETING. When a quorum is present, any matter before any
meeting of stockholders shall be decided by the affirmative vote of the majority
of shares present in person or represented by proxy at such meeting and entitled
to vote on such matter, except where a larger vote is required by law, by the
Certificate or by these Bylaws. Any election of any director by stockholders
shall be determined by a plurality of the votes of the shares present in person
or represented by proxy at the meeting and entitled to vote on the election of
such director, except where a larger vote is required by law, by the Certificate
or by these Bylaws. The Corporation shall not directly or indirectly vote any
shares of its own stock; PROVIDED, HOWEVER, that the Corporation may vote shares
which it holds in a fiduciary capacity to the extent permitted by law.
2.8 STOCKHOLDER LIST. The officer or agent having charge of the stock
transfer books of the Corporation shall make, at least 10 days before every
annual meeting or special meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting or any adjournment thereof, in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
for the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the hour, date and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
2.9 STOCKHOLDER PROPOSALS. No business may be transacted at an annual
meeting of stockholders, other than business that is either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors (or any duly authorized committee thereof), (b) otherwise
properly brought before the annual meeting by or at the direction of the Board
of Directors (or any duly authorized committee thereof) or (c) otherwise
properly brought before the annual meeting by any stockholder of the Corporation
(i) who is a stockholder of record on the date of the giving of the notice
provided for in this Section 2.9 and on the record date for the determination of
stockholders entitled to vote at such annual meeting and who is otherwise
entitled to vote at the meeting and (ii) who complies with the notice procedures
set forth in this Section 2.9. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a stockholder,
such stockholder must have given timely notice thereof in
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proper written form to the Secretary of the Corporation. A stockholder's notice
shall be timely if delivered to, or mailed to and received by, the Corporation
at its principal executive office not less than 75 days nor more than 105 days
prior to the anniversary date of the immediately preceding annual meeting (the
"Anniversary Date"); PROVIDED, HOWEVER, that in the event the annual meeting is
scheduled to be held on a date that is not within 30 days before or 60 days
after the Anniversary Date, a stockholder's notice shall be timely if delivered
to, or mailed to and received by, the Corporation at its principal executive
office not later than the close of business on the 10th day following the day on
which Public Announcement of the date of such annual meeting is first made by
the Corporation.
A stockholder's notice to the Secretary of the Corporation shall set
forth as to each matter proposed to be brought before an annual meeting: (i) a
brief description of the business the stockholder desires to bring before such
annual meeting and the reasons for conducting such business at such annual
meeting, (ii) the name and address, as they appear on the stock transfer books
of the Corporation, of the stock holder proposing such business, (iii) the class
and number of shares of the capital stock of the Corporation beneficially owned
by the stockholder proposing such business, (iv) the names and addresses of the
beneficial owners, if any, of any capital stock of the Corporation registered in
such stockholder's name on such books, and the class and number of shares of the
capital stock of the Corporation beneficially owned by such beneficial owners,
(v) a description of all arrangements or under standings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business, (vi) a representation
that such stockholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting and (vii) any material
interest of the stockholder proposing to bring such business before such meeting
(or any other stockholders known to be supporting such proposal) in such
proposal.
If the Board of Directors or a designated committee thereof determines
that any stockholder proposal was not made in a timely fashion in accordance
with the provisions of this Section 2.9 or that the information provided in a
stockholder's notice does not satisfy the information requirements of this
Section 2.9 in any material respect, such proposal shall not be presented for
action at the annual meeting in question. If neither the Board of Directors nor
such committee makes a determi nation as to the validity of any stockholder
proposal in the manner set forth above, the presiding officer of the annual
meeting shall determine whether the stockholder proposal was made in accordance
with the terms of this Section 2.9. If the presiding officer determines that any
stockholder proposal was not made in a timely fashion in accordance with the
provisions of this Section 2.9 or that the
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information provided in a stockholder's notice does not satisfy the information
requirements of this Section 2.9 in any material respect, such proposal shall
not be presented for action at the annual meeting in question. If the Board of
Directors, a designated committee thereof or the presiding officer determines
that a stockholder proposal was made in accordance with the requirements of this
Section 2.9, the presiding officer shall so declare at the annual meeting and
ballots shall be provided for use at the meeting with respect to such proposal.
Notwithstanding the foregoing provisions of this Section 2.9, a
stockholder shall also comply with all applicable requirements of the Exchange
Act, and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.9, and nothing in this Section 2.9 shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
2.10 INSPECTORS OF ELECTIONS. The Corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the
presiding officer shall appoint one or more inspectors to act at the meeting.
Any inspector may, but need not, be an officer, employee or agent of the
Corporation. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall perform such duties as are required by the DGCL,
including the counting of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors. The presiding officer may review all
determinations made by the inspectors, and in so doing the presiding officer
shall be entitled to exercise his or her sole judgment and discretion and he or
she shall not be bound by any determinations made by the inspectors. All
determinations by the inspectors and, if applicable, the presiding officer,
shall be subject to further review by any court of competent jurisdiction.
2.11 PRESIDING OFFICER. The Chairman of the Board, if one is elected,
or if not elected or in his or her absence, the Chief Executive Officer, shall
preside at all annual meetings or special meetings of stockholders and shall
have the power, among other things, to adjourn such meeting at any time and from
time to time, subject to Sections 2.4 and 2.5 of this Article II. The order of
business and all other matters of procedure at any meeting of the stockholders
shall be determined by the presiding officer.
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ARTICLE III.
DIRECTORS
3.1 GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed under the direction of the Board of Directors
and, except as otherwise expressly provided by law, the Certificate or these
Bylaws, all of the powers of the Corporation shall be vested in such Board.
3.2 NUMBER OF DIRECTORS. The number of directors of the Corporation
shall be fixed pursuant to the Certificate.
3.3 ELECTION AND REMOVAL OF DIRECTORS; QUORUM.
(a) Directors shall be elected by a plurality of the votes
cast in the manner provided for in Article V of the Certificate.
(b) Any and all vacancies in the Board of Directors, however
occurring, including, without limitation, by reason of an increase in the size
of the Board of Directors, or the death, resignation, disqualification or
removal of a director, shall be filled in the manner set forth in the
Certificate.
(c) Unless otherwise provided for by law or in the
Certificate, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office only by the
affirmative vote of the holders of at least a majority of the votes represented
by the shares then entitled to vote in the election of such director.
(d) At any meeting of the Board of Directors, a majority of
the number of directors then in office shall constitute a quorum for the
transaction of business. However, if less than a quorum is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time,
and the meeting may be held as adjourned without further notice, except that
when any meeting of the Board of Directors, either regular of special, is
adjourned for 30 days or more, notice of the adjourned meeting shall be give as
in the case of the original meeting.
3.4 MEETINGS OF DIRECTORS. Subject to the provisions of the
Certificate, meetings of the Board of Directors shall be held at places within
or without the State of Delaware and at times fixed by resolution of the Board
of Directors, or upon call of the Chairman of the Board or the Chief Executive
Officer and the Secretary of the Corporation or officer performing the
Secretary's duties shall give not less than 24
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hours' notice by letter, facsimile, telegraph or telephone (or in person) of all
meetings of the Board of Directors, provided that notice need not be given of
the annual meeting or of regular meetings held at times and places fixed by
resolution of the Board of Directors. Subject to the provisions of the
Certificate, meetings may be held at any time without notice if all of the
directors are present, or if those not present waive notice in writing either
before or after the meeting; PROVIDED, HOWEVER, that attendance at a meeting for
the express purpose of objecting at the beginning of a meeting to the
transaction of any business because the meeting is not lawfully convened shall
not be considered a waiver of notice.
3.5 NOMINATIONS. Nominations of candidates for election as directors of
the Corporation at any annual meeting may be made only (a) in the manner
provided for in Article V of the Certificate, or (b) by any holder of record
(both as of the time notice of such nomination is given by the stockholder as
set forth below and as of the record date for the annual meeting in question) of
any shares of the capital stock of the Corporation entitled to vote at such
annual meeting who complies with the timing, informational and other
requirements set forth in this Section 3.5. Only persons nominated in accordance
with clause (a) of the preceding sentence or the procedures set forth in this
Section 3.5 shall be eligible for election as directors at an annual meeting.
Nominations, other than those made in the manner provided for in
Article V of the Certificate shall be made pursuant to timely notice in writing
to the Secretary of the Corporation as set forth in this Section 3.5. A
stockholder's notice shall be timely if delivered to, or mailed to and received
by, the Corporation at its principal executive offices of the Corporation (a) in
the case of an annual meeting, not less than 75 days nor more than 105 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders; PROVIDED, HOWEVER, that in the event that the annual meeting is
called for a date that is not within 30 days before or 60 days after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the 10th day following the day
on which such notice of the date of the annual meeting was mailed or Public
Announcement of the date of the annual meeting was made, whichever first
occurs; and (b) in the case of a special meeting of stockholders called for the
purpose of electing directors, not later than the close of business on the 10th
day following the day on which such notice of the date of the special meeting
was mailed or Public Announcement of the date of the special meeting was made,
whichever first occurs.
A stockholder's notice to the Secretary of the Corporation shall set
forth as to each person whom the stockholder proposes to nominate for election
or re-election as a director: (1) the name, age, business address and residence
address of such person;
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(2) the principal occupation or employment of such person; (3) the class and
number of shares of the capital stock of the Corporation which are beneficially
owned by such person on the date of such stockholder notice; and (4) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. A
stockholder's notice to the Secretary of the Corporation shall further set forth
as to the stockholder giving such notice: (1) the name and address, as they
appear on the stock transfer books of the Corporation, of such stockholder and
of the beneficial owners (if any) of the capital stock of the Corporation
registered in such stockholder's name and the name and address of other
stockholders known by such stockholder to be supporting such nominee(s); (2) the
class and number of shares of the capital stock of the Corporation which are
held of record, beneficially owned or represented by proxy by such stockholder
and by any other stockholders known by such stockholder to be supporting such
nominee(s) on the record date for the annual meeting in question (if such date
shall then have been made publicly available) and on the date of such
stockholder's notice; (3) a description of all arrangements or understandings
between such stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or nominations
are to be made by such stockholder and (4) any other information relating to
such stockholder that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice must be accompanied by
a written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
If the Board of Directors or a designated committee thereof determines
that any stockholder nomination was not made in accordance with the terms of
this Section 3.5 or that the information provided in a stockholder's notice does
not satisfy the informational requirements of this Section 3.5 in any material
respect, then such nomination shall not be considered at the annual meeting in
question. If neither the Board of Directors nor such committee makes a
determination as to whether a nomination was made in accordance with the
provisions of this Section 3.5, the presiding officer of the annual meeting
shall determine whether a nomination was made in accordance with such
provisions. If the presiding officer determines that any stockholder nomination
was not made in accordance with the terms of this Section 3.5 or that the
information provided in a stockholder's notice does not satisfy the
informational requirements of this Section 3.5 in any material respect, then
such nomination shall not be considered at the annual meeting in question. If
the Board of Directors, a designated committee thereof or the presiding officer
determines that a
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nomination was made in accordance with the terms of this Section 3.5, the
presiding officer shall so declare at the annual meeting and ballots shall be
provided for use at the meeting with respect to such nominee.
Notwithstanding anything to the contrary in the second paragraph of
this Section 3.5, in the event that the number of directors to be elected to the
Board of Directors is increased and there is no Public Announcement by the
Corporation naming all of the nominees for director or specifying the size of
the increased Board of Directors at least 90 days prior to the Anniversary Date,
a stockholder's notice required by this Section 3.5 shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if such notice shall be delivered to, or mailed to and received by,
the Corporation at its principal executive office not later than the close of
business on the 10th day following the day on which such Public Announcement is
first made by the Corporation.
No person shall be elected by the stockholders as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 3.5. Election of directors at an annual meeting need not be by
written ballot, unless otherwise provided by the Board of Directors or presiding
officer at such annual meeting. If written ballots are to be used, ballots
bearing the names of all the persons who have been nominated for election as
directors at the annual meeting in accordance with clause (a) of the first
sentence of this Section 3.5 or the procedures set forth in this Section 3.5
shall be provided for use at the annual meeting.
3.6 VOTING.
(a) The action of the majority of the directors present at a
meeting at which a quorum is present shall be the action of the Board of
Directors, unless a larger vote is required for such action by the Certificate,
these Bylaws or by law.
(b) Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if all members
of the Board of Directors consent thereto in writing. Such written consent shall
be filed with the records of the meetings of the Board of Directors and shall be
treated for all purposes as a vote at a meeting of the Board of Directors.
3.7 MANNER OF PARTICIPATION. Directors may participate in meetings of
the Board of Directors by means of conference telephone or similar
communications equipment by means of which all directors participating in the
meeting can hear each other, and participation in a meeting in accordance
herewith shall constitute presence in person at such meeting for purposes of
these Bylaws.
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3.8 COMPENSATION. By resolution of the Board of Directors, directors
may be allowed a fee and expenses for attendance at all meetings, but nothing
herein shall preclude directors from serving the Corporation in other capacities
and receiving compensation for such other services.
ARTICLE IV.
COMMITTEES
In addition to such committees as may be established by the Certificate
and subject to the provisions of the Certificate, the Board of Directors may, by
resolution duly adopted, establish one or more standing or special committees of
the Board of Directors as it may deem advisable, and the members, terms and
authority of such committees shall be set forth in the resolutions establishing
the same.
ARTICLE V.
OFFICERS
5.1 ELECTION OF OFFICERS; TERMS. Subject to the provisions of the
Certificate, the officers of the Corporation shall be elected by the Board of
Directors and shall include a Chief Executive Officer, a President, one or more
Vice Presidents, a Secretary and a Treasurer or a Chief Financial Officer. Other
officers, including Chairman of the Board, Executive Vice Presidents and Senior
Vice Presidents, may be elected by the Board of Directors, and assistant and
subordinate officers may from time to time be elected by the Board of Directors.
Subject to the provisions of the Certificate, all officers shall hold office
until the next annual meeting of the Board of Directors and until their
successors are duly elected and qualified. The Chairman of the Board shall be
chosen from among the directors. Any two officers may be combined in the same
person as the Board of Directors may determine.
5.2 REMOVAL OF OFFICERS; VACANCIES. Subject to the provisions of the
Certificate, any officer of the Corporation may be removed with or without
cause, at any time, by the Board of Directors. Vacancies shall be filled by the
Board of Directors.
5.3 DUTIES. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be
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conferred by the Board of Directors or as provided in the Certificate. The Board
of Directors may require any officer to give such bond for the faithful
performance of his or her other duties as the Board of Directors may see fit.
5.4 DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him or her by these Bylaws or by the Board of Directors.
5.5 DUTIES OF THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
of the Corporation shall be responsible for the execution of the policies of the
Board of Directors, shall serve as the Chairman of the Executive Committee (if
one is established) and shall have direct supervision over the business of the
Corporation and its several officers, subject to the ultimate authority of the
Board of Directors. He or she shall be a director, and, except as otherwise
provided in these Bylaws or in the resolutions establishing such committees or
as provided in the Certificate, he or she shall be EX OFFICIO a member of all
committees of the Board of Directors. He or she may sign and execute in the name
of the Corporation share certificates, deeds, mortgages, bonds, contracts or
other instruments except in cases where the signing and the execution thereof
shall be expressly delegated by the Board of Directors or by these Bylaws to
some other officer or agent of the Corporation or shall be required by law
otherwise to be signed or executed. In addition, he or she shall perform all
duties incident to the office of the Chief Executive Officer and such other
duties as from time to time may be assigned to him or her by the Board of
Directors.
5.6 DUTIES OF THE PRESIDENT. Unless the Board of Directors, by
resolution duly adopted, designates some other person to serve as the Chief
Operating Officer of the Corporation, the President shall serve as Chief
Operating Officer and shall have direct supervision over the business of the
Corporation and its several officers, subject to the authority of the Board of
Directors and the Chairman of the Board, and shall consult with and report to
the aforementioned officer. The President may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or shall be required by law otherwise to be signed or
executed. In addition, he or she shall perform all duties incident to the office
of the President and such other duties as from time to time may be assigned to
him or her by the Board of Directors or the Chairman of the Board.
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5.7 DUTIES OF THE VICE PRESIDENTS. Each Vice President, if any, shall
have such powers and duties as may from time to time be assigned to him or her
by the Chairman of the Board or the Board of Directors. When there shall be more
than one Vice President of the Corporation, the Board of Directors may from time
to time designate one of them to perform the duties of the President in the
absence of the President. Any Vice President may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts or other instruments
authorized by the Board of Directors, except where the signing and execution of
such documents shall be expressly delegated by the Board of Directors or the
Chairman of the Board to some other officer or agent of the Corporation or shall
be required by law or otherwise to be signed or executed.
5.8 DUTIES OF THE TREASURER OR CHIEF FINANCIAL OFFICER. The Treasurer
or Chief Financial Officer shall have charge and custody of and be responsible
for all funds and securities of the Corporation, and shall cause all such funds
and securities to be deposited in such banks and depositories as shall be
designated by the Board of Directors. He or she shall be responsible (i) for
maintaining adequate financial accounts and records in accordance with generally
accepted accounting practices, (ii) for the preparation of appropriate operating
budgets and financial statements, (iii) for the preparation and filing of all
tax returns required by law and (iv) for the performance of all duties incident
to the office of Treasurer of Chief Financial Officer and such other duties as
from time to time may be assigned to him or her by the Board of Directors, the
Audit Committee or the Chairman of the Board. The Treasurer or Chief Financial
Officer may sign and execute in the name of the Corporation share certificates,
deeds, mortgages, bonds, contracts or other instruments, except where the
signing and execution of such documents shall be expressly delegated by the
Board of Directors or the Chairman of the Board to some other officer or agent
of the Corporation or shall be required by law or otherwise to be signed or
executed.
5.9 DUTIES OF THE SECRETARY. The Secretary shall act as secretary of
all meetings of the Board of Directors, all committees of the Board of Directors
and stockholders of the Corporation. He or she shall (i) keep and preserve the
minutes of all such meetings in permanent books, (ii) ensure that all notices
required to be given by the Corporation are duly given and served, (iii) have
custody of the seal of the Corporation and shall affix the seal or cause it to
be affixed to all share certificates of the Corporation and to all documents the
execution of which on behalf of the Corporation under its corporate seal is duly
authorized in accordance with law or the provisions of these Bylaws, (iv) have
custody of all deeds, leases, contracts and other important corporate documents,
(v) have charge of the books, records and papers of the Corporation relating to
its organization and management as a Corporation, (vi) see that all reports,
statements and other documents required by law (except tax
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returns) are properly filed and (vii) in general, perform all duties incident to
the office of Secretary and such other duties as from time to time may be
assigned to him or her by the Board of Directors or the Chairman of the Board.
ARTICLE VI.
CAPITAL STOCK
6.1 CERTIFICATES. Each stockholder shall be entitled to a certificate
of the capital stock of the Corporation in such form as may from time to time be
prescribed by the Board of Directors. Such certificate shall be signed by the
Chairman of the Board; the President or a Vice President and by the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary. The
Corporation seal and the signatures by the Corporation's officers, the transfer
agent or the registrar may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, the certificate may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the time of its issue. Every certificate for shares of
stock which are subject to a restriction on transfer (as provided in Article IV
of the Certificate) and every certificate issued when the Corporation is
authorized to issue more than one class or series of stock shall contain such
legend with respect thereto as is required by law.
6.2 LOST, DESTROYED AND MUTILATED CERTIFICATES. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such stockholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
6.3 TRANSFER OF STOCK. The stock of the Corporation shall be
transferable or assignable only on the stock transfer books of the Corporation
by the holder in person or by attorney on surrender of the certificate for such
shares duly endorsed and, if sought to be transferred by attorney, accompanied
by a written power of attorney to have the same transferred on the stock
transfer books of the Corporation. The Corporation will recognize, however, the
exclusive right of the person registered on its stock transfer books as the
owner of shares to receive dividends and to vote as such owner.
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6.4 FIXING RECORD DATE. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend, or to make
a determination of stockholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not less than 10 nor
more than 60 days prior to the date on which the particular action requiring
such determination of stockholders, is to be taken. If no record date is fixed
for the determination of stockholders entitled to notice of or to vote at a
meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled to notice of or to
vote at any meeting of stockholders has been made as provided in this section,
such determination shall apply to any adjournment thereof.
ARTICLE VII.
INDEMNIFICATION
7.1 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDING OTHER THAN THOSE
BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 7.3 of this Article
VII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was a director or officer of the Corporation serving at the request of the
Corporation as a director or officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding.
7.2 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDING BY OR IN THE
RIGHT OF THE CORPORATION. Subject to Section 7.3 of this Article VII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or
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was a director or officer of the Corporation, or is or was a director or officer
of the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery of the State of Delaware
or such other court shall deem proper.
7.3 AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this
Article VII (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director or officer is proper in the circumstances because such person has met
the applicable standard of conduct set forth in Section 7.1 or Section 7.2 of
this Article VII, as the case may be. Such determination shall be made (i) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (ii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however, that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith, without the necessity of authorization in
the specific case.
7.4 INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 7.3 of this Article VII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery of the State of Delaware or any
other court of competent jurisdiction in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 7.1 and
7.2 of this Article VII. The basis of such indemnification by a court shall
be a determination by such court that indemnification of the director or
officer is proper in the circumstances because such person has met the
applicable standards of conduct set forth in Section 7.1 or 7.2 of this
Article VII, as the case may be. Neither a contrary determination in the
specific case under Section 7.3 of this Article VII nor the absence of any
determination thereunder shall be a defense to
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such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 7.4 shall be given to
the Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
7.5 EXPENSES PAYABLE IN ADVANCE. The Corporation shall advance all
expenses incurred by a director or officer in defending or investigating a
threatened or pending action, suit or proceeding within 10 days after the
receipt by the Corporation of a written statement from such director or officer
requesting such advance or advances from time to time, whether prior to or after
final disposition of such action, suit or proceeding. Such statement or
statements shall reasonably evidence the expenses incurred by such director or
officer and shall be preceded or accompanied by an undertaking by or on behalf
of such director or officer to repay any expenses so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified against such expenses.
7.6 NON-EXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article VII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
the Certificate of Incorporation or any By-Law, agreement, contract, vote of
stockholders or disinterested directors or pursuant to the direction (howsoever
embodied) of any court of competent jurisdiction or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of the persons specified in Section 7.1 and 7.2 of this Article VII shall be
made to the fullest extent permitted by law. The provisions of this Article VII
shall not be deemed to preclude the indemnification of any person who is not
specified in Section 7.1 or 7.2 of this Article VII but whom the Corporation has
the power or obligation to indemnify under the provisions of the DGCL, or
otherwise.
7.7 INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation
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would have the power or the obligation to indemnify such person against such
liability under the provisions of this Article VII.
7.8 CERTAIN DEFINITIONS. For purposes of this Article VII, references
to "the Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors or
officers, so that any person who is or was a director or officer of such
constituent corporation, or is or was a director or officer of such constituent
corporation serving at the request of such constituent corporation as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article VII with
respect to the resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence had continued.
For purposes of this Article VII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries.
7.9 SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
7.10 LIMITATIONS OF INDEMNIFICATION. Notwithstanding anything contained
in this Article VII to the contrary, except for proceedings to enforce rights to
indemnification (which shall be governed by Section 7.5 hereof), the
Corporation shall not be obligated to indemnify any director or officer (or his
or her heirs, executors or personal or legal representatives) or advance
expenses in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
7.11 INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to
the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this Article VII on
directors and officers of the Corporation.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 SEAL. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal" and the name of the Corporation.
8.2 FISCAL YEAR. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Direc tors.
8.3 CHECKS, NOTES AND DRAFTS. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
8.4 AMENDMENT OF BYLAWS.
(a) AMENDMENT BY DIRECTORS. Except as provided otherwise by
law or the Certificate, these Bylaws may be amended or repealed by the Board of
Directors by the affirmative vote of a majority of the directors then in office.
(b) AMENDMENT BY STOCKHOLDERS. These Bylaws may be amended or
repealed at any annual meeting of stockholders, or special meeting of
stockholders called for such purpose, by the affirmative vote of a majority of
the shares present in person or represented by proxy at such meeting and
entitled to vote on such amendment or repeal, voting together as a single
class.
8.5 VOTING OF STOCK HELD. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the Chief
Executive Officer may from time to time appoint an attorney or attorneys or
agent or agents of the corporation, in the name and on behalf of the
Corporation, to cast the vote that the Corporation may be entitled to cast as a
stockholder or otherwise in any other corporation, any of whose securities may
be held by the Corporation, at meetings of the holders of the shares or other
securities of such other corporation, or to consent in writing to any action by
any such other corporation; and the Chief Executive Officer shall instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent and may execute or cause to be executed on behalf of the
Corporation, and under its corporate seal or otherwise, such written proxies,
consents, waivers or other instruments as may be necessary or proper in the
premises.
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In lieu of such appointment, the Chief Executive Officer may himself or herself
attend any meetings of the holders of shares or other securities of any such
other corporation and there vote or exercise any or all power of the Corporation
as the holder of such shares or other securities of such other corporation.
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Exhibit 99.5
EXHIBIT F
---------
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
WYNDHAM INTERNATIONAL, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Wyndham International, Inc., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in its
Restated Certificate of Incorporation, as amended (the "Restated Certificate of
Incorporation"), and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors (the
"Board of Directors") has adopted the following resolution creating a series of
its Preferred Stock, par value $.01 per share, designated as Series A
Convertible Preferred Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $.01
per share, of the Corporation be hereby created, and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. DESIGNATION AND AMOUNT; RANK.
(a) DESIGNATION AND AMOUNT. The shares of such series shall be
designated as the "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
31,840,000 shares of Series A Preferred Stock. Section 10 contains the
definitions of certain defined terms used herein.
(b) RANK. The Series A Preferred Stock shall, with respect to
dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation, rank (i) senior (to the extent set forth herein)
to all Junior Stock; (ii) on a parity with Parity Stock; and (iii) junior to all
Senior Stock.
<PAGE>
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive on each Dividend Payment Date in respect of the Dividend
Period ending on such Dividend Payment Date (but excluding such Dividend Payment
Date) (i) commencing on the first Dividend Payment Date following the closing of
the Rights Offering (as defined in the Purchase Agreement) and continuing
through the sixth anniversary of the Series B Preferred Stock Issuance Date, (A)
cumulative dividends payable in cash on each such Dividend Payment Date equal to
the then applicable Cash Percentage of the Stated Amount of each share of the
then outstanding Series A Preferred Stock, and (B) cumulative dividends payable
in additional shares of Series A Preferred Stock on each such Dividend Payment
Date equal to the then applicable PIK Percentage of the Stated Amount of each
share of the then outstanding Series A Preferred Stock; provided that with
respect to the Initial Dividend Period, the dividends set forth in clause (A)
above shall be prorated based on the number of days in such period, (ii)
commencing with the first Dividend Period occurring after the sixth anniversary
of the Series B Preferred Stock Issuance Date and continuing through the tenth
anniversary of the Series B Preferred Stock Issuance Date, or earlier redemption
or conversion of the Series B Preferred Stock, (A) cumulative dividends payable
entirely in cash on each such Dividend Payment Date at a rate per annum equal to
9.75% of the Stated Amount of each share of the then outstanding Series A
Preferred Stock or (B) upon the vote of a majority of the Class A Directors and
Class C Directors with respect to each dividend, cumulative dividends payable
entirely in additional shares of Series A Preferred Stock on each such Dividend
Payment Date at a rate per annum equal to 9.75% of each share of the then
outstanding Series A Preferred Stock; provided that (y) with respect to any such
dividend that is to be paid in cash, the dividend payable on the Series B
Preferred Stock on the corresponding Dividend Payment Date shall be paid in cash
and (z) with respect to any such dividend that is to be paid in additional
shares of Series A Preferred Stock, the dividend payable on the Series B
Preferred Stock on the corresponding Dividend Payment Date shall be paid in
additional shares of Series B Preferred Stock, and (iii) commencing with the
first Dividend Period occurring after the tenth anniversary of the Series B
Preferred Stock Issuance Date, cumulative dividends payable entirely in cash on
each such Dividend Payment Date at a rate per annum equal to 9.75% of the Stated
Amount of each share of the then outstanding Series A Preferred Stock. If cash
dividends on the Series A Preferred Stock are in arrears and unpaid for a period
of 60 days or more, then an additional amount of dividends shall accrue at a
rate per annum equal to 2.00% of the Stated Amount of each share of the then
outstanding Series A Preferred Stock (the "Default Rate") from the last Dividend
Payment Date on which cash dividends were to be paid in full until such time as
all cash dividends in arrears have been paid in full, such additional dividends
to be cumulative and payable in shares of Series A Preferred Stock (including
fractional shares) at the Stated Amount. Any reference herein to "cumulative
dividends" or "accrued dividends" or similar phrases means that such dividends
are fully cumulative and accumulate and accrue on a daily basis (computed on the
basis of a 360-day year of twelve 30-day months) and compound quarterly on the
Dividend Payment Dates at the rate indicated above (the "Dividend Rate") and in
the manner set forth herein, whether or not they have been declared and whether
or not there are profits, surplus or other funds of the Corporation
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legally available for the payment of dividends. All dividends payable in
additional shares of Series A Preferred Stock shall be paid through the issuance
of additional shares of Series A Preferred Stock (including fractional shares)
at the Stated Amount.
(b) In case the Corporation shall at any time or from time to
time declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of stock or other securities or property
or rights or warrants to subscribe for securities of the Corporation or any of
its Subsidiaries by way of dividend or spin off) on the Common Stock, other than
any dividend or distribution of shares of Common Stock covered by Section
8(b)(i), the Rights Offering or any issuance of rights pursuant to the Rights
Plan, as it may be amended from time to time, or any successor shareholder
rights agreement of the Corporation, then, and in each such case (a "Triggering
Distribution"), the holders of shares of Series A Preferred Stock shall be
entitled to receive from the Corporation, with respect to each share of Series A
Preferred Stock held, in addition to the dividends payable under Section 2(a),
the same dividend or distribution received by a holder of the number of shares
of Common Stock into which such share of Series A Preferred Stock is convertible
on the record date for such dividend or distribution, after giving effect to
the contemporaneous issuance of any additional shares of Series A Preferred
Stock as described in Section 2(a) above with respect to Accrued Dividends
provided, however, that with respect to a fraction (i) the numerator of which
shall be the Cash Percentage and (ii) the denominator of which shall be 2.4375%,
multiplied by the Stated Amount of each share of the Series A Preferred Stock
then outstanding, the Corporation may pay any portion of such dividend or
distribution in additional shares of Series A Preferred Stock valued at the
Stated Amount thereof. Any such dividend or distribution shall be declared,
ordered, paid or made on the Series A Preferred Stock at the same time such
dividend or distribution is declared, ordered, paid or made on the Common Stock
and shall be in addition to any dividends payable under Section 2(a).
(c) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any Parity
Stock for any period unless the Accrued Dividends have been or contemporaneously
are declared and paid in full, or declared and, if payable in cash, a sum in
cash Set Apart for Payment, on the Series A Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of such full dividends on
such Parity Stock. If any dividends are not so paid, all dividends declared upon
shares of the Series A Preferred Stock and any other Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on the
Series A Preferred Stock and such Parity Stock shall in all cases bear to each
other the same ratio that the Accrued Dividends per share on the Series A
Preferred Stock and the accrued dividends on such Parity Stock bear to each
other.
(i) So long as any share of the Series A Preferred
Stock is outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Stock (other than dividends in Junior
Stock to the holders of Junior Stock), or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Stock or any warrants,
rights, calls
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or options exercisable for or convertible into any of the Junior Stock whether
in cash, obligations or shares of the Corporation or other property (other than
in exchange for Junior Stock), and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to purchase or
redeem any of the Junior Stock or any such warrants, rights, calls or options
(other than in exchange for Junior Stock) unless the Accrued Dividends on the
Series A Preferred Stock for all Dividend Periods ended on or prior to the date
of such payment in respect of Junior Stock have been or contemporaneously are
paid in full.
(ii) So long as any share of the Series A Preferred
Stock is outstanding, the Corporation shall not (except with respect to
dividends as permitted by Section 2(c)(i)) make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Parity Stock or any
warrants, rights, calls or options exercisable for or convertible into any of
the Parity Stock, and shall not permit any corporation or other entity directly
or indirectly controlled by the Corporation to purchase or redeem any of the
Parity Stock or any such warrants, rights, calls or options unless the Accrued
Dividends on the Series A Preferred Stock for all Dividend Periods ended on or
prior to the date of such payment in respect of Parity Stock have been or
contemporaneously are paid in full.
Section 3. VOTING RIGHTS.
(a) Except for any voting rights provided elsewhere herein or
by law, the holders of shares of Series A Preferred Stock shall not be entitled
to voting rights.
(b) If (i) cash dividends on the Series A Preferred Stock are
in arrears and unpaid for six quarterly Dividend Periods, whether or not
consecutive and such failure thereafter continues (the period during which such
failure shall continue being referred to herein as a "Voting Period") and (ii)
the holders of Series B Preferred Stock no longer have the right to elect any
directors under Sections V(D) and V(E) of the Restated Certificate of
Incorporation, then the number of directors constituting the Board of Directors
shall be increased by the number, if any, necessary to permit the holders of the
Series A Preferred Stock and Series B Preferred Stock, voting as a single class,
to elect a minimum of two directors upon such default. If the holders of Series
A Preferred Stock and Series B Preferred Stock are entitled to elect directors
pursuant to the preceding sentence, as soon as practicable after the
commencement of the Voting Period, the Corporation shall call a special meeting
of the holders of Series A Preferred Stock and Series B Preferred Stock by
mailing a notice of such special meeting to such holders, such meeting to be
held not more than 30 days after the date of mailing of such notice. If the
Corporation fails to send a notice, the meeting may be called by any such holder
on like notice. The record date for determining the holders entitled to notice
of and to vote at such special meeting shall be the close of business on the
fifth business day preceding the day on which such notice is mailed. At any such
special meeting and at each meeting of holders of shares of Series A Preferred
Stock and Series B Preferred Stock held during a Voting Period at which
directors are to be elected (or with respect to any action by written consent in
lieu of a meeting of stockholders), such holders,
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voting as a single class on a one-vote-per-share basis (to the exclusion of the
holders of all other securities and classes of capital stock of the
Corporation), shall be entitled to elect such directors. The terms of office of
all persons who are directors of the Corporation at the time of a special
meeting of the holders of Series A Preferred Stock and Series B Preferred Stock
to elect directors shall continue, notwithstanding the election at such meeting
of the additional directors that such holders are entitled to elect, and the
persons so elected, together with the remaining incumbent directors, shall
constitute the duly elected directors of the Corporation. The Voting Period
shall terminate at such time as all cumulative cash dividends in respect of all
previously completed full Dividend Periods that are in arrears on the Series A
Preferred Stock and the Series B Preferred Stock have been paid in full in cash
or until non-cumulative cash dividends in respect of all previously completed
full Dividend Periods that are in arrears on the Series A Preferred Stock and
Series B Preferred Stock have been paid regularly for at least one year.
Simultaneously with the termination of a Voting Period the terms of office of
the directors elected by the holders of the Series A Preferred Stock and Series
B Preferred Stock pursuant to this Section 3(b) and Section 3(c) of the Series B
Certificate of Designation shall terminate, the remaining directors shall
constitute the directors of the Corporation and the voting rights of such
holders to elect additional directors pursuant to this Section 3(b) and Section
3(c) of the Series B Certificate of Designation shall cease.
Section 4. CERTAIN RESTRICTIONS.
(a) Whenever the Corporation shall have not redeemed the
shares of Series A Preferred Stock on the date such redemption is required by
Section 5 (a "Redemption Default"), thereafter and until all redemption payments
shall have been made or all necessary funds shall have been Set Apart for
Payment, if and so long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not, nor shall it permit any of its
Subsidiaries other than wholly-owned Subsidiaries to: (A) declare or pay
dividends, or make any other distributions, on any shares of Junior Stock other
than dividends or distributions payable in Junior Stock; (B) declare or pay
dividends, or make any other distributions, on any shares of Parity Stock,
except dividends paid ratably on the Series A Preferred Stock and all Parity
Stock on which dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled; (C) redeem or
purchase or otherwise acquire for consideration (other than Junior Stock) any
shares of Junior Stock or Parity Stock (other than, with respect to Parity
Stock, ratably with the Series A Preferred Stock); or (D) purchase or otherwise
acquire for consideration any shares of Series A Preferred Stock, other than
purchases ratably among all holders of the Series A Preferred Stock.
(b) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
Section 4(a), purchase or otherwise acquire such shares at such time and in such
manner.
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Section 5. REDEMPTION.
(a) Except as provided in this Section 5(a), the Corporation
shall have no right to redeem any shares of Series A Preferred Stock. At any
time after the sixth anniversary of the Series B Preferred Stock Issuance Date,
the Corporation shall have the right, at its sole option and election, to redeem
all, or part, of the outstanding shares of Series A Preferred Stock by paying
therefor in cash 101% of the Stated Amount thereof plus all Accrued Dividends
thereon to the date of redemption; provided that in the event of any partial
redemption, at least 1,000,000 shares of Series A Preferred Stock shall remain
outstanding after giving effect to such partial redemption and the Series A
Preferred Stock must be redeemed pro rata based on the holders' respective
holdings of Series A Preferred Stock. Notwithstanding the provisions of this
Section 5(a), the Corporation shall have no right to redeem the shares of Series
A Preferred Stock pursuant to this Section 5(a) until the Corporation shall have
reserved from its authorized and unissued Class A Common Stock such number of
shares of Class A Common Stock as shall be sufficient to effect the conversion
of all then outstanding shares of Series A Preferred Stock into Class A Common
Stock.
(b) In the event there occurs a Change in Control, the
Corporation shall offer to purchase from each holder all of the Series A
Preferred Stock held by such holder for an amount in cash equal to the greatest
of (i) the Liquidation Preference of the shares of Series A Preferred Stock held
by the holder, (ii) in case of any Change in Control in which the shares of
Series A Preferred Stock are not converted into (or entitled to receive) any
cash, securities or property, the amount of the cash that such holder of the
Series A Preferred Stock would have received had it converted its Series A
Preferred Stock (including for such purposes any shares of Series A Preferred
Stock issuable in respect of Accrued Dividends) into shares of Common Stock
immediately prior to such Change in Control and received in respect of all such
shares cash at the same effective value per share of Common Stock as is being
paid by or on behalf of the acquiror of shares or assets in such transaction,
plus Accrued Dividends payable in cash to the extent not otherwise reflected
pursuant to the parenthetical phrase of this clause (ii), and (iii) in all other
cases, the Fair Market Value (as defined below) of the cash, securities and
other property that such holder of the Series A Preferred Stock would have
received had it converted its Series A Preferred Stock (including for such
purposes any shares of Series A Preferred Stock issuable in respect of Accrued
Dividends) into shares of Common Stock immediately prior to such Change in
Control, plus Accrued Dividends payable in cash to the extent not otherwise
reflected pursuant to the parenthetical phrase of this clause (iii), (the
greatest of (i), (ii) and (iii) above being referred to as the "Change in
Control Redemption Price"), in each case by delivery of a notice of such offer
(a "Change in Control Redemption Offer") within five Business Days following the
Change in Control. In the event of a Change in Control, each holder of Series A
Preferred Stock shall have the right (but not the obligation) to require the
Corporation to purchase any or all of the Series A Preferred Stock held by such
holder for an amount in cash equal to the Change in Control Redemption Price.
Each holder of Series A Preferred Stock shall also be permitted, until the fifth
Business Day following a Change in Control, to convert all, and not less than
all, of the shares of Series A Preferred Stock held by such holder (including
shares of Series A Preferred
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Stock issuable to such holder as Accrued Dividends that have accelerated or will
accelerate as a result of a Change in Control) pursuant to Section 8 below;
provided that any shares of Common Stock issuable upon conversion of any Series
A Preferred Stock converted pursuant to this sentence after a Change in Control
has occurred shall be entitled to receive the same amount of cash, securities
and other property in connection with such Change in Control as the Common Stock
outstanding prior to the Change in Control. In the event a holder of Series A
Preferred Stock does not elect to have all of its shares of Series A Preferred
Stock either (i) redeemed by the Corporation pursuant to Section 5 or (ii)
converted pursuant to Section 8 below, in each case in connection with a
specific Change in Control event, then no dividends shall be deemed to have been
accelerated in connection with such Change in Control. In the event that any
holder does not elect to convert or redeem such holder's shares of Series A
Preferred Stock pursuant to the foregoing sentence, such holder shall retain any
rights it has to convert or redeem its shares of Series A Preferred Stock in
connection with any subsequent Change in Control. "Fair Market Value" with
respect to any securities shall be the Current Market Price thereof as of the
close of business on the date of measurement. The Fair Market Value of any asset
other than cash and securities shall be determined by the Board of Directors.
(c) Notice of any redemption of shares of Series A Preferred
Stock pursuant to Section 5(a) shall be mailed at least 30 Business Days prior
to the date fixed for redemption to each holder of shares of Series A Preferred
Stock to be redeemed, at such holder's address as it appears on the transfer
books of the Corporation. No redemption of shares of Series A Preferred Stock
pursuant to Section 5(a) shall take place unless such notice shall have been
mailed in accordance with this Section 5(c)(i). In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of Directors may fix
a record date for the determination of shares of Series A Preferred Stock to be
redeemed, not more than sixty days nor less than thirty days prior to the date
fixed for such redemption.
(i) Within five Business Days following an event
giving a holder of shares of Series A Preferred Stock the right, pursuant to
Section 5(b), to require the Corporation to redeem all of such shares, the
Corporation shall give notice by mail to each holder of Series A Preferred
Stock, at such holder's address as it appears on the transfer books of the
Corporation, of such event, which notice shall set forth each holder's right to
require the Corporation to redeem all, but not less than all, shares of Series A
Preferred Stock held by it which are eligible for redemption pursuant to the
terms of Section 5(b), the redemption date (which date shall be no more than 30
Business Days following the date of such mailed notice), and the procedures to
be followed by such holder in exercising its right to cause such redemption. In
the event a record holder of shares of Series A Preferred Stock shall elect to
require the Corporation to redeem all such shares of Series A Preferred Stock
pursuant to Section 5(b), such holder shall deliver within 20 Business Days of
the mailing to it of the Corporation's notice described in this Section
5(c)(ii), a written notice to the Corporation so stating, specifying the number
of shares to be redeemed pursuant to Section 5(b). The Corporation shall, in
accordance with the terms hereof, redeem the number of shares so specified on
the date fixed for redemption. Failure of the Corporation to give any notice
required by this Section 5(c)(ii), or the formal insufficiency of any
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such notice, shall not prejudice the rights of any holders of shares of Series A
Preferred Stock to cause the Corporation to redeem all such shares held by them.
Notwithstanding the foregoing, the Board of Directors of the Corporation may
modify any offer pursuant to this Section 5(c)(ii) to the extent necessary to
comply with the Exchange Act and the rules and regulations thereunder.
(ii) The Corporation shall publish the fact that it
is redeeming, or offering to redeem, shares of Series A Preferred Stock through
a nationally prominent newswire service on or before the date of mailing any
notice of redemption or right of redemption. At any time after a notice of
redemption shall have been mailed and before such date of redemption the
Corporation may deposit for the benefit of the holders of the Series A Preferred
Stock called for redemption the funds necessary for such redemption with a bank
or trust company doing business in the Borough of Manhattan, the City of New
York, and having a capital and surplus of at least $1,000,000,000. Any interest
allowed on moneys so deposited shall be paid to the Corporation. Upon the
deposit of such funds or, if no such deposit is made, upon the date fixed for
redemption (unless the Corporation shall default in making payment of the
appropriate redemption amount), whether or not certificates for shares so called
for redemption have been surrendered for cancellation, the shares of Series A
Preferred Stock to be redeemed shall be deemed to be no longer outstanding and
the holders thereof shall cease to be stockholders with respect to such shares
and shall have no rights with respect thereto, except for the rights to receive
the amount payable upon redemption, but without interest, and, up to the close
of business on the date immediately preceding the date fixed for such
redemption, the right to convert such shares pursuant to Section 8 hereof. Such
deposit in trust shall be irrevocable except that any funds deposited by the
Corporation which shall not be required for the redemption for which they were
deposited because of the exercise of conversion rights shall be returned to the
Corporation forthwith, and any funds deposited by the Corporation which are
unclaimed at the end of one year from the date fixed for such redemption shall
be paid over to the Corporation upon its request, and upon such repayment the
holders of the shares of Series A Preferred Stock so called for redemption shall
look only to the Corporation for payment of the appropriate amount. Any such
unclaimed amounts paid over to the Corporation shall, for a period of six years
from the date fixed for such redemption, be set apart and held by the
corporation in trust for the benefit of the holders of such shares of Series A
Preferred Stock, but no such holder shall be entitled to interest thereon. At
the expiration of such six-year period, all right, title, interest and claim of
such holders in or to such unclaimed amounts shall be extinguished, terminated
and discharged, and such unclaimed amounts shall become part of the general
funds of the Corporation free of any claim of such holders.
(d) Notwithstanding anything to the contrary herein, the
Corporation shall not effect a redemption pursuant to Section 5(a) hereof unless
simultaneously therewith the Corpora tion redeems shares of Series A Preferred
Stock pro rata with the Series B Preferred Stock based on the respective numbers
of outstanding shares as of the date on which the notice of redemption is given.
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(e) If the Corporation shall fail to comply with any of the
provisions of this Section 5 (other than the timely giving of notice pursuant to
Section 5(c)(i)), then in any such event, the Dividend Rate shall be increased
by an amount equal to the Default Rate during the period in which such failure
shall be continuing.
Section 6. REACQUIRED SHARES.
Any shares of Series A Preferred Stock converted, redeemed, purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof, and, if necessary
to provide for the lawful redemption or purchase of such shares, the capital
represented by such shares shall be reduced in accordance with the General
Corporation Law of the State of Delaware. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock, par value
$.01 per share, of the Corporation and may be reissued as part of another series
of Preferred Stock, par value $.01 per share, of the Corporation.
Section 7. LIQUIDATION, DISSOLUTION OR WINDING UP.
If the Corporation shall adopt a plan of liquidation or of dissolution,
or commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Corporation shall be entered
by a court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order shall be unstayed and
in effect for a period of 90 consecutive days and on account of such event the
Corporation shall liquidate, dissolve or wind up, or upon any other liquidation,
dissolution or winding up of the Corporation (a "Liquidation"), the holders
shall be entitled to receive the greatest of (i) the Liquidation Preference of
the shares of Series A Preferred Stock held by the holder, and (ii) the Fair
Market Value (as defined below) of the cash, securities and other property that
such holder of the Series A Preferred Stock would have received had they
converted their Series A Preferred Stock (including for such purposes any shares
of Series A Preferred Stock issuable in respect of Accrued Dividends) into
shares of Common Stock immediately prior to such Liquidation, plus Accrued
Dividends payable in cash to the extent not otherwise reflected pursuant to the
parenthetical phrase of this clause (ii)(including for such purposes any shares
of Series A Preferred Stock issuable in respect of Accrued Dividends through the
date of the Liquidation), before any distribution shall be made or any assets
distributed in respect of Junior Stock to the holders of any Junior Stock
including, without limitation, Common Stock of the
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Corporation. If upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the amounts payable with respect to the Series A
Preferred Stock and all other Parity Stock are not paid in full, the holders of
the Series A Preferred Stock and the Parity Stock will share equally and ratably
in any distribution of assets of the Corporation first in proportion to the full
liquidation preference to which each is entitled until such preferences are paid
in full, and then in proportion to their respective amounts of accumulated but
unpaid dividends. After payment of the full amount of the greatest of the
amounts set forth in clause (i) or (ii) above to which they are entitled, the
holders of shares of Series A Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Corporation. For the
purposes of this Section 7, the voluntary sale, conveyance, exchange or transfer
of all or substantially all of the property or assets of the Corporation or the
consolidation or merger of the Corporation with or into one or more other
corporations shall not be deemed to be a liquidation, winding-up or dissolution
of the Corporation.
Section 8. CONVERSION INTO COMMON STOCK.
Each share of Series A Preferred Stock, including any shares
of Series A Preferred Stock issued as Accrued Dividends (including Accrued
Dividends that have been accelerated in connection with a Change in Control and
assuming any shares of Common Stock into which such shares are converted will be
treated in all respects as shares of Common Stock outstanding prior to the
Change in Control), may, at the option of the holder thereof, be converted into
shares of Common Stock at any time, whether or not the Corporation has given
notice of redemption under Section 5, on the terms and conditions set forth in
this Section 8. Any such conversion shall be into shares of Class A Common Stock
for so long as Class A Common Stock shall remain a separate class of the
Corporation's Common Stock.
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall be convertible in the manner
hereinafter set forth into a number of fully paid and nonassessable shares of
Common Stock equal to the product obtained by multiplying the Applicable
Conversion Rate (as defined below) by the number of shares of Series A Preferred
Stock being converted. The "Applicable Conversion Rate" means the quotient
obtained by dividing the Conversion Value on the date of conversion by the
Conversion Price as adjusted pursuant to Section 8(b) on the date of conversion.
(b) The Conversion Price shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the original issuance of the Series A Preferred Stock declare
a dividend, or make a distribution, on the outstanding shares of Common Stock in
either case, in shares of Common Stock, or effect a subdivision, combination,
consolidation or reclassification of the outstanding shares of Common Stock into
a greater or lesser number of shares of Common Stock, then, and in each such
case, the Conversion Price in effect immediately prior to such event or the
record date
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therefor, whichever is earlier, shall be adjusted by multiplying such Conversion
Price by a fraction, the numerator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event and the denominator
of which is the number of shares of Common Stock outstanding immediately after
such event. An adjustment made pursuant to this Section 8(b)(i) shall become
effective (x) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination of holders
of shares of Common Stock entitled to receive such dividend or distribution, or
(y) in the case of any such subdivision, reclassification, consolidation or
combination, at the close of business on the day upon which such corporate
action becomes effective.
(ii) In case the Corporation shall issue (other than
upon the exercise of options, rights or convertible securities) shares of Common
Stock (or options, rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) at a price per share (or having an
exercise or conversion price per share) less than the Current Market Price as of
the Business Day immediately preceding the Measurement Date, other than (v)
issuances in a private placement of securities, other than to an affiliate of
the Corporation, at a price for the securities sold in such private placement
(and the underlying common stock, as applicable) of not less than 95% of the
Current Market Price thereof, (w) in a transaction to which Section 2(a), 2(b)
or 8(b)(i) applies, (x) pursuant to options or other securities under any
employee or director benefit plan or program of the Corporation approved by the
Board of Directors of the Corporation or shares of Common Stock issued upon the
exercise thereof, (y) pursuant to the conversion of the Series A Preferred
Stock, the Series B Preferred Stock or the Class B Common Stock or (z) as
dividends on the Series A Preferred Stock or the Series B Preferred Stock (the
issuances under clauses (v), (w), (x), (y) and (z) being referred to as
"Excluded Issuances"), then, and in each such case, the Conversion Price in
effect immediately prior to the Measurement Date shall be reduced so as to be
equal to an amount determined by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock of all
classes outstanding at the close of business on the Measurement Date plus the
number of shares of Common Stock (or the number of shares of Common Stock
issuable upon the conversion, exchange or exercise of such options, rights,
warrants or other securities convertible into or exchangeable for shares of
Common Stock) which the aggregate consideration receivable by the Corporation in
connection with such issuance would purchase at such Current Market Price and
the denominator shall be the number of shares of Common Stock of all classes
outstanding at the close of business on the Measurement Date plus the number of
shares of Common Stock (or the number of shares of Common Stock issuable upon
the conversion, exchange or exercise of such options, rights, warrants or other
securities convertible into or exchangeable for shares of Common Stock) so
issued. For purposes of this Section 8(b)(ii), the aggregate consideration
receivable by the Corporation in connection with the issuance of shares of
Common Stock or of options, rights, warrants or other convertible securities
shall be deemed to be equal to the sum of the gross offering price (before
deduction of customary underwriting discounts or commissions and expenses
payable to third parties) of all such securities plus the minimum aggregate
amount, if any, payable upon conversion or exercise of any such options, rights,
warrants or other convertible securities into shares of Common Stock, less any
original issue discount, premiums
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and other similar incentives which have the effect of reducing the effective
price per share. For purposes of this Section 8(b)(ii), such adjustment shall
become effective immediately prior to the opening of business on the Business
Day immediately following the Measurement Date.
(iii) For so long as any of the Series B Preferred
Stock is outstanding, the initial Conversion Price shall be adjusted in the same
manner and to the same extent as the Series B Preferred Stock pursuant to
Section 8(b)(iii) of the Series B Certificate of Designation.
(iv) In addition to the adjustments in Sections
8(b)(i)-(iii) above, the Corporation will be permitted to make such reductions
in the Conversion Price as it considers to be advisable in order that any event
treated for Federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the holders of the shares of Common Stock.
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least 0.1% of the Conversion Price; provided, that any adjustments which by
reason of this Section 8(b)(v) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 8 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(c) In case of any capital reorganization or reclassification
of outstanding shares of Common Stock (other than a reclassification covered by
Section 8(b)(i)), or in case of any consolidation or merger of the Corporation
with or into another Person, or in case of any sale or conveyance to another
Person of the property of the Corporation as an entirety or substantially as an
entirety (each of the foregoing being referred to as a "Transaction"), each
share of Series A Preferred Stock then outstanding shall thereafter be
convertible into, in lieu of the Common Stock issuable upon such conversion
prior to the consummation of such Transaction, the kind and amount of shares of
stock and other securities and property (including cash) receivable upon the
consummation of such transaction by a holder of that number of shares of Common
Stock into which one share of Series A Preferred Stock was convertible
immediately prior to such Transaction (including, on a pro rata basis, the cash,
securities or property received by holders of Common Stock in any tender or
exchange offer that is a step in such Transaction). In any such case, if
necessary, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 8 with respect to rights and interests thereafter of the holders of
shares of Series A Preferred Stock to the end that the provisions set forth
herein for the protection of the conversion rights of the Series A Preferred
Stock shall thereafter be applicable, as nearly as reasonably may be, to any
such other shares of stock and other securities and property deliverable upon
conversion of the shares of Series A Preferred Stock remaining outstanding (with
such adjustments in the conversion price and number of shares issuable upon
conversion and such other adjustments in the provisions hereof as the Board of
Directors shall determine in good faith to be appropriate). In case securities
or property other than Common Stock shall be issuable or deliverable upon
conversion as aforesaid,
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then all references in this Section 8 shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the consummation
thereof, (i) the Surviving Person (as defined in Section 10) thereof, if other
than the Corporation, shall assume, by written instrument mailed to each record
holder of shares of Series A Preferred Stock, at such holder's address as it
appears on the transfer books of the Corporation, the obligation to deliver to
such holder such cash, property and securities to which, in accordance with the
foregoing provisions, such holder is entitled. Nothing contained in this Section
8(c) shall limit the rights of holders of the Series A Preferred Stock to
convert the Series A Preferred Stock in connection with the Transaction or to
exercise their rights to require the redemption of the Series A Preferred Stock
under Section 5(b).
(d) The holder of any shares of Series A Preferred Stock may
exercise its right to convert such shares into shares of Common Stock by
surrendering for such purpose to the Corporation, at its principal office or at
such other office or agency maintained by the Corpora tion for that purpose, a
certificate or certificates representing the shares of Series A Preferred Stock
to be converted duly endorsed to the Corporation in blank accompanied by a
written notice stating that such holder elects to convert all or a specified
whole number of such shares in accordance with the provisions of this Section 8.
The Corporation will pay any and all documentary, stamp or similar issue or
transfer tax and any other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of Series A Preferred Stock
pursuant hereto. As promptly as practicable, and in any event within three
Business Days after the surrender of such certificate or certificates and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Corporation that
such taxes are inapplicable), the Corporation shall deliver or cause to be
delivered (i) certificates registered in the name of such holder representing
the number of validly issued, fully paid and nonassessable full shares of Common
Stock to which the holder of shares of Series A Preferred Stock so converted
shall be entitled and (ii) if less than the full number of shares of Series A
Preferred Stock evidenced by the surrendered certificate or certificates are
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates less
the number of shares converted. Such conversion shall be deemed to have been
made at the close of business on the date of receipt of such notice and of such
surrender of the certificate or certificates representing the shares of Series A
Preferred Stock to be converted so that the rights of the holder thereof as to
the shares being converted shall cease except for the right to receive shares of
Common Stock, and the person entitled to receive the shares of Common Stock
shall be treated for all purposes as having become the record holder of such
shares of Common Stock at such time.
(e) Shares of Series A Preferred Stock may be converted at any
time and, if subject to mandatory redemption, up to the close of business on the
last Business Day immediately preceding the date fixed for such mandatory
redemption of such shares.
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(f) In connection with the conversion of any shares of Series
A Preferred Stock, no fractions of shares of Common Stock shall be issued, but
in lieu thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series A Preferred Stock are deemed to have been converted.
(g) In case at any time or from time to time the Corporation
shall pay any dividend or make any other distribution to the holders of its
Common Stock, or shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or any other right,
other than pursuant to the Rights Offering or the Rights Plan, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days' prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the registered holders of the
Series A Preferred Stock at the addresses of each as shown on the books of the
Corporation of the date on which (i) the books of the corporation shall close or
a record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
sale or conveyance, dissolution, liquidation or winding up shall take place, as
the case may be, provided that in the case of any Transaction to which Section
8(c) applies the Corporation shall give at least 30 days' prior written notice
as aforesaid. Such notice shall also specify the date, if known, as of which the
holders of the Common Stock and of the Series A Preferred Stock of record shall
participate in said dividend, distribution or subscription rights or shall be
entitled to exchange their Common Stock or Series A Preferred Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance, or participate in
such dissolution, liquidation or winding up, as the case may be.
Section 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which each share of
Series A Preferred Stock is convertible (or the number of votes to which each
share of Series A Preferred Stock is entitled) is adjusted as provided in
Section 8, the Corporation shall promptly mail to the holders of record of the
outstanding shares of Series A Preferred Stock at their respective addresses as
the same shall appear in the Corporation's stock records a notice stating that
the number of shares of Common Stock into which the shares of Series A Preferred
Stock are convertible has been adjusted and setting forth the new number of
shares of Common Stock (or describing the new stock, securities, cash or other
property) into which each share of Series A Preferred Stock is convertible, as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof, and when such adjustment became
effective.
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Section 10. DEFINITIONS.
For the purposes of the Certificate of Designation of Series A
Convertible Preferred Stock which embodies this resolution:
"Accrued Dividends" to a particular date (the "Applicable Date") means
(i) all dividends accrued but not paid on the Series A Preferred Stock pursuant
to Section 2(a), whether or not earned or declared, accrued to the Applicable
Date, plus (ii) all dividends or distributions payable pursuant to Section 2(b)
for which the Triggering Distribution was declared, ordered, paid or made on or
prior to the Applicable Date; provided that if a Change of Control or
Liquidation occurs at any time on or prior to the sixth anniversary of the
Series B Preferred Stock Issuance Date, Accrued Dividends payable on the date of
the Change of Control or Liquidation shall be deemed to include all dividends on
the entire amount of the Series A Preferred Stock outstanding on the date of the
Change of Control or Liquidation which have not been previously paid but which
otherwise would accrue through and including the sixth anniversary of the Series
B Preferred Stock Issuance Date (assuming that all dividends were paid solely in
additional shares of Series A Preferred Stock rather than cash), which dividends
shall be deemed to have been accelerated, recalculated and paid on their
respective Dividend Payment Dates, in each case payable solely in additional
shares of Series A Preferred Stock; provided, however, that with respect to any
holder of Series A Preferred Stock, no such dividends shall be deemed to have
been accelerated, recalculated or paid in connection with a Change in Control in
the event such holder has not elected, in connection with such Change in
Control, to have all of its shares of Series A Preferred Stock either (i)
redeemed by the Corporation pursuant to Section 5 or (ii) converted pursuant to
Section 8.
"affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
by the Securities and Exchange Commission under the Exchange Act.
"associate" shall have the meaning set forth in Rule 12b-2 promulgated
by the Securities and Exchange Commission under the Exchange Act.
"Business Day" means any day other than a Saturday, Sunday, or a day on
which commercial banks in the City of New York are authorized or obligated by
law or executive order to close.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
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"Cash Percentage" means, as to any date, the amount calculated on the
basis of the following formula (expressed as a percentage), with the dividend
payment period ("DPP") referring to the number of Dividend Payment Dates that
have occurred prior to such date: 73,125/ (7,000,000 times 1.024375 raised to
the power of DPP (i.e., 1.024375(DPP)), plus 3,000,000).
"Change in Control" means any of the following:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (an "Acquiring
Person"), other than the Corporation, or any of its Subsidiaries or any Investor
or Excluded Group, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the combined voting power
or economic interests of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors; provided,
however, that any transfer from any Investor or Excluded Group will not result
in a Change in Control if such transfer was part of a series of related
transactions the effect of which, absent the transfer to such Acquiring Person
by the Investor or Excluded Group, would not have resulted in the acquisition by
such Acquiring Person of 35% or more of the combined voting power or economic
interests of the then outstanding voting securities; or
(b) during any period of 12 consecutive months after the
Series B Preferred Stock Issuance Date, the individuals who at the beginning of
any such 12-month period constituted a majority of the Class A Directors and
Class C Directors (the "Incumbent Non-Investor Majority") cease for any reason
to constitute at least a majority of such Class A Directors and Class C
Directors; provided that (i) any individual becoming a director whose election,
or nomination for election by the Corporation's stockholders, was approved by a
vote of the stockholders having the right to designate such director and (ii)
any director whose election to the Board or whose nomination for election by the
stockholders of the Corporation was approved by the requisite vote of directors
entitled to vote on such election or nomination in accordance with the Restated
Certificate of Incorporation of the Corporation, shall, in each such case, be
considered as though such individual were a member of the Incumbent Non-Investor
Majority, but excluding, as a member of the Incumbent Non-Investor Majority, any
such individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the directors
of the Corporation (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) and further excluding any person who is an
affiliate or associate of an Acquiring Person having or proposing to acquire
beneficial ownership of 25% or more of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors; or
(c) the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to which all
or substantially all of the individuals and entities who were the respective
beneficial owners of the voting securities of the Corporation immediately prior
to such reorganization, merger or consolidation do not, following
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<PAGE>
such reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 57.5% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
Corporation resulting from such reorganization, merger or consolidation; or
(d) the sale or other disposition of assets representing 50%
or more of the assets of the Corporation in one transaction or series of related
transactions;
provided, that the occurrence of any event identified in subparagraphs (a)
through (d) above that would otherwise be treated as a Change in Control shall
not constitute a Change in Control hereunder if a majority of the Class B
Directors, by vote duly taken, shall so determine.
"Class A Common Stock" means the Class A Common Stock, par value $0.01
per share, of the Corporation.
"Class A Directors" has the meaning set forth in the Restated
Certificate of Incorporation.
"Class B Common Stock" means the Class B Common Stock, par value $0.01
per share, of the Corporation.
"Class B Directors" has the meaning set forth in the Restated
Certificate of Incorporation.
"Class C Directors" has the meaning set forth in the Restated
Certificate of Incorporation.
"Closing Price" per share of Common Stock on any date shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported on the Nasdaq National
Market or in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or American Stock Exchange, as the case may be, or, if the Common Stock
is listed or admitted to trading on the New York Stock Exchange or American
Stock Exchange, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange, the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use, or, if
on any such date the Common Stock is not quoted by any such organization, the
average of the Closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors.
"Common Stock" means the Class A Common Stock and the Class B Common
Stock or, if there shall no longer be separate classes, the common stock, par
value $0.01 per share, of the Corporation.
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<PAGE>
"Conversion Price" shall initially be equal to $8.75, subject to
adjustment as provided in Section 8(b).
"Conversion Value" per share of Series A Preferred Stock shall be an
amount equal to the Stated Amount plus all Accrued Dividends thereon to the date
of conversion or redemption, as the case may be.
"Current Market Price" per share of Common Stock on any date shall be
the average of the Closing Prices of a share of Common Stock for the five
consecutive Trading Days selected by the Corporation commencing not less than 10
Trading Days nor more than 20 Trading Days before the date in question. If on
any such Trading Day the Common Stock is not quoted by any organization referred
to in the definition of Closing Price, the Current Market Price of the Common
Stock on such day shall be determined by the Board of Directors.
"Dividend Payment Date" means the following dates: (i) the date that is
three months after the Series B Preferred Stock Issuance Date; (ii) the date
that is six months after the Series B Preferred Stock Issuance Date; (iii) the
date that is nine months after the Series B Preferred Stock Issuance Date; (iv)
the date that is the first anniversary of the Series B Preferred Stock Issuance
Date; and the anniversaries of the foregoing dates.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each quarterly period from a Dividend Payment Date to the next following
Dividend Payment Date (but without including such later Dividend Payment Date).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more of the Investors;
provided, that the voting securities of the Corporation "beneficially owned" (as
such term is used in Rule 13d-3 promulgated under the Exchange Act) by such
Investors represents a majority of the voting securities "beneficially owned"
(as such term is used in Rule 13d-3 promulgated under the Exchange Act) by such
group.
"Initial Dividend Period" means the dividend period commencing on the
Series A Preferred Stock Issuance Date and ending on the first Dividend Payment
Date to occur thereafter (but without including such later Dividend Payment
Date).
"Investors" means Apollo Real Estate Investment Fund III, L.P., Apollo
Investment Fund IV, L.P., Thomas H. Lee Equity Fund IV, L.P., Thomas H. Lee
Foreign Fund IV, L.P., Thomas H. Lee Charitable Investment L.P., THL-CCI Limited
Partnership, Beacon Private Equity, Inc., Beacon Capital Partners, L.P. and
Strategic Real Estate Investments I, L.L.C., together with each of their
Permitted Assignees and Permitted Third Party Transferees (as each such term is
defined in the Purchase Agreement), and all of their respective successors by
operation of law.
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<PAGE>
"Junior Stock" means all classes of Common Stock of the Corporation and
each other class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation currently existing or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Series A Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation.
"Liquidation Preference" means, in the event of a liquidation or
winding up of the Corporation, an amount per share of Series A Preferred Stock
equal to the greater of (i) the amount the holders of the Series A Preferred
Stock would have received had they converted their Series A Preferred Stock
(including for such purposes any shares of Series A Preferred Stock issuable in
respect of Accrued Dividends through the date of liquidation) into Common Stock
immediately prior to such liquidation or winding up and (ii) the Stated Amount
of their Series A Preferred Stock plus any Accrued Dividends.
"Measurement Date" means, for purposes of Section 8(b)(ii), (i) in the
case of an offering of rights, warrants or options to all or substantially all
of the holders of the Common Stock or any other issuance contemplated by such
Section where a record date is fixed for the determination of stockholders
entitled to participate in such issuance, such record date and (ii) in all other
cases, the Business Day immediately preceding the date of issuance of shares of
Common Stock (or options, rights, warrants or other securities convertible into
or exchangeable for shares of Common Stock) contemplated by such Section.
"Parity Stock" means any class of Capital Stock of the Corporation or
series of preferred stock of the Corporation hereafter created the terms of
which expressly provide that such class or series will rank on a parity with the
Series A Preferred Stock as to dividend distributions, redemptions (other than
redemptions in connection with the Rights Offering) and distributions upon
liquidation, winding-up and dissolution, including the Series B Preferred Stock.
"Person" means an individual, partnership, corporation, limited
liability company or partnership, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof, or other
entity of any kind.
"PIK Percentage" means, as to any date, the amount determined by
subtracting the Cash Percentage with respect to such date from 2.4375%.
"Preferred Stock" means the preferred stock, par value $0.01 per share,
of the Corporation.
"Purchase Agreement" means the Securities Purchase Agreement, dated as
of February 18, 1999, by and among the Corporation, Patriot, Wyndham
International Operating Partnership, L.P. and Patriot American Hospitality
Partnership, L.P. and each of the Investors party thereto.
"Rights Offering" has the meaning set forth in the Purchase Agreement.
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<PAGE>
"Senior Stock" means each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
that has been approved by the holders in accordance with Section 3(b) hereof and
the terms of which expressly provide that such class or series will rank senior
to the Series A Preferred Stock as to dividend distributions and distribu tions
upon liquidation, winding-up and dissolution of the Corporation.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Corporation, the terms of which are set forth in the Series A
Certificate of Designation.
"Series A Preferred Stock Issuance Date" means the original date of
issuance of the Series A Preferred Stock.
"Series B Certificate of Designation" means the Certificate of
Designation of the Series B Preferred Sock filed with the Secretary of State of
the State of Delaware on the Series B Preferred Stock Issuance Date, as it may
be amended from time to time.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Corporation, the terms of which are set forth in the Series B
Certificate of Designation.
"Series B Preferred Stock Issuance Date" means the original date of
issuance of Series B Preferred Stock to the Investors.
"Set Apart for Payment" means the Corporation shall have irrevocably
deposited with a bank or trust company doing business in the Borough of
Manhattan, the City of New York, and having a capital and surplus of at least
$1,000,000,000 in trust for the exclusive benefit of the holders of shares of
Series A Preferred Stock, funds sufficient to satisfy the Corporation's payment
obligation.
"Stated Amount" means $100 per share.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
"Surviving Person" means the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the properties and assets of the
Corporation, or the Person consolidating with or merging into the Corporation in
a merger, consolidation or other corporate combination in which the Corporation
is the continuing or surviving Person, but in connection with which the Series A
Preferred Stock or Common Stock of the Corporation is exchanged, converted or
reinstated into the securities of any other Person or cash or any other
property; provided, however, if such Surviving Person is a direct or indirect
Subsidiary of a Person, the parent entity also shall be deemed to be a Surviving
Person.
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<PAGE>
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is quoted, listed or admitted to trading is
open for the transaction of business or, if the Common Stock is not quoted,
listed or admitted to trading on any national securities exchange (including the
Nasdaq Stock Market), any day other than a Saturday, Sunday, or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
"Trading Price" per share of Common Stock on any date shall be the last
sales price for the Common Stock reported on the Nasdaq Stock Market (or if the
Common Stock is not then quoted thereon, then for the principal national
securities exchange on which the Common Stock is listed or admitted to trading)
or, if the Common Stock is not quoted on the Nasdaq Stock Market and is not
listed or admitted to trading on any national securities exchange, in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Corporation.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Convertible Preferred Stock to be duly executed by its
President and attested to by its Secretary and has caused its corporate seal to
be affixed hereto, this ____ day of __________, 1999.
WYNDHAM INTERNATIONAL, INC.
By:
------------------------------------
President
ATTEST:
By:
--------------------------------
Secretary
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<PAGE>
Exhibit 99.6
EXHIBIT G
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
WYNDHAM INTERNATIONAL, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Wyndham International, Inc., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in its
Restated Certificate of Incorporation, as amended (the "Restated Certificate of
Incorporation"), and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors (the
"Board of Directors") has adopted the following resolution creating a series of
its Preferred Stock, par value $.01 per share, designated as Series B
Convertible Preferred Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $.01
per share, of the Corporation be hereby created, and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. DESIGNATION AND AMOUNT; RANK.
(a) DESIGNATION AND AMOUNT. The shares of such series shall be
designated as the "Series B Convertible Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting such series shall be
31,840,000 shares of Series B Preferred Stock. Section 11 contains the
definitions of certain defined terms used herein.
(b) RANK. The Series B Preferred Stock shall, with respect to
dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation, rank (i) senior (to the extent set forth herein)
to all Junior Stock; (ii) on a parity with Parity Stock; provided that any such
Parity Stock other than the Series A Preferred Stock that was not approved by
the holders in accordance with Section 3(b) shall be deemed to be Junior Stock
and
<PAGE>
not Parity Stock; and (iii) junior to all Senior Stock; provided, that any such
Senior Stock that was not approved by the holders in accordance with Section
3(b) shall be deemed to be Junior Stock and not Senior Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series B Preferred Stock shall be
entitled to receive on each Dividend Payment Date in respect of the Dividend
Period ending on such Dividend Payment Date (but without including such Dividend
Payment Date) (i) commencing on the first Dividend Payment Date and continuing
through the sixth anniversary of the Issuance Date, (A) cumulative dividends
payable in cash on each such Dividend Payment Date equal to the then applicable
Cash Percentage of the Stated Amount of each share of the then outstanding
Series B Preferred Stock, and (B) cumulative dividends payable in additional
shares of Series B Preferred Stock on each such Dividend Payment Date equal to
the then applicable PIK Percentage of the Stated Amount of each share of the
then outstanding Series B Preferred Stock, (ii) commencing with the first
Dividend Period occurring after the sixth anniversary of the Issuance Date and
continuing through the tenth anniversary of the Issuance Date, or earlier
redemption or conversion of the Series B Preferred Stock, (A) cumulative
dividends payable entirely in cash on each such Dividend Payment Date at a rate
per annum equal to 9.75% of the Stated Amount of each share of the then
outstanding Series B Preferred Stock or (B) upon the vote of a majority of the
Class A Directors and Class C Directors with respect to each dividend,
cumulative dividends payable entirely in additional shares of Series B Preferred
Stock on each such Dividend Payment Date at a rate per annum equal to 9.75% of
each share of the then outstanding Series B Preferred Stock, provided that (x)
with respect to any such dividend that is to be paid in cash, the dividend
payable on the Series A Preferred Stock on the corresponding Dividend Payment
Date shall be paid in cash and (y) with respect to any such dividend that is to
be paid in additional shares of Series B Preferred Stock, the dividend payable
on the Series A Preferred Stock on the corresponding Dividend Payment Date
shall be paid in additional shares of Series A Preferred Stock, and (iii)
commencing with the first Dividend Period occurring after the tenth anniversary
of the Issuance Date, cumulative dividends payable entirely in cash on each such
Dividend Payment Date at a rate per annum equal to 9.75% of the Stated Amount of
each share of the then outstanding Series B Preferred Stock. If cash dividends
on the Series B Preferred Stock are in arrears and unpaid for a period of 60
days or more, then an additional amount of dividends shall accrue at a rate per
annum equal to 2.00% of the Stated Amount of each share of the then outstanding
Series B Preferred Stock (the "Default Rate") from the last Dividend Payment
Date on which cash dividends were to be paid in full until such time as all cash
dividends in arrears have been paid in full, such additional dividends to be
cumulative and payable in shares of Series B Preferred Stock (including
fractional shares) at the Stated Amount. Any reference herein to "cumulative
dividends" or "accrued dividends" or similar phrases means that such dividends
are fully cumulative and accumulate and accrue on a daily basis (computed on the
basis of a 360-day year of twelve 30-day months) and compound quarterly on the
Dividend Payment Dates at the rate indicated above (the "Dividend Rate") and in
the manner set forth herein, whether or not they have been declared and whether
or not there are profits, surplus or other funds of the Corporation
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<PAGE>
legally available for the payment of dividends. All dividends payable in
additional shares of Series B Preferred Stock shall be paid through the issuance
of additional shares of Series B Preferred Stock (including fractional shares)
at the Stated Amount.
(b) In case the Corporation shall at any time or from time to
time declare, order, pay or make a dividend or other distribution (including,
without limitation, any distribution of stock or other securities or property
or rights or warrants to subscribe for securities of the Corporation or any of
its Subsidiaries by way of dividend or spin off) on the Common Stock, other than
any dividend or distribution of shares of Common Stock covered by Section
8(b)(i), the Rights Offering or any issuance of rights pursuant to the Rights
Plan, as it may be amended from time to time, or any successor shareholder
rights agreement of the Corporation, then, and in each such case (a "Triggering
Distribution"), the holders of shares of Series B Preferred Stock shall be
entitled to receive from the Corporation, with respect to each share of Series B
Preferred Stock held, in addition to the dividends payable under Section 2(a),
the same dividend or distribution received by a holder of the number of shares
of Common Stock into which such share of Series B Preferred Stock is convertible
on the record date for such dividend or distribution, after giving effect to
the contemporaneous issuance of any additional shares of Series B Preferred
Stock as described in Section 2(a) above with respect to Accrued Dividends
provided, however, that with respect to a fraction (i) the numerator of which
shall be the Cash Percentage and (ii) the denominator of which shall be 2.4375%,
multiplied by the Stated Amount of each share of the Series B Preferred Stock
then outstanding, the Corporation may pay any portion of such dividend or
distribution in additional shares of Series B Preferred Stock valued at the
Stated Amount thereof. Any such dividend or distribution shall be declared,
ordered, paid or made on the Series B Preferred Stock at the same time such
dividend or distribution is declared, ordered, paid or made on the Common Stock
and shall be in addition to any dividends payable under Section 2(a).
(c) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any Parity
Stock for any period unless the Accrued Dividends have been or contemporaneously
are declared and paid in full, or declared and, if payable in cash, a sum in
cash Set Apart for Payment, on the Series B Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of such full dividends on
such Parity Stock. If any dividends are not so paid, all dividends declared upon
shares of the Series B Preferred Stock and any other Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on the
Series B Preferred Stock and such Parity Stock shall in all cases bear to each
other the same ratio that the Accrued Dividends per share on the Series B
Preferred Stock and the accrued dividends on such Parity Stock bear to each
other.
(i) So long as any share of the Series B Preferred
Stock is outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Stock (other than dividends in Junior
Stock to the holders of Junior Stock), or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Stock or any warrants,
rights, calls
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<PAGE>
or options exercisable for or convertible into any of the Junior Stock whether
in cash, obligations or shares of the Corporation or other property (other than
in exchange for Junior Stock), and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to purchase or
redeem any of the Junior Stock or any such warrants, rights, calls or options
(other than in exchange for Junior Stock) unless the Accrued Dividends on the
Series B Preferred Stock for all Dividend Periods ended on or prior to the date
of such payment in respect of Junior Stock have been or contemporaneously are
paid in full.
(ii) So long as any share of the Series B Preferred
Stock is outstanding, the Corporation shall not (except with respect to
dividends as permitted by Section 2(c)(i)) make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Parity Stock or any
warrants, rights, calls or options exercisable for or convertible into any of
the Parity Stock, and shall not permit any corporation or other entity directly
or indirectly controlled by the Corporation to purchase or redeem any of the
Parity Stock or any such warrants, rights, calls or options unless the Accrued
Dividends on the Series B Preferred Stock for all Dividend Periods ended on or
prior to the date of such payment in respect of Parity Stock have been or
contemporaneously are paid in full.
Section 3. VOTING RIGHTS.
In addition to any voting rights provided elsewhere herein,
and any voting rights provided by law, and subject to the provisions of the
Restated Certificate of Incorporation of the Corporation, the holders of shares
of Series B Preferred Stock shall have the following voting rights:
(a) For so long as the Series B Preferred Stock is
outstanding, each share of Series B Preferred Stock shall entitle the holder
thereof to vote on all matters voted on by holders of the capital stock of the
Corporation into which such share of Series B Preferred Stock is convertible,
voting together as a single class with the other shares entitled to vote, at all
meetings of the stockholders of the Corporation. With respect to any such vote,
each share of Series B Preferred Stock shall entitle the holder thereof to cast
the number of votes equal to the number of votes which could be cast in such
vote by a holder of the shares of capital stock of the Corporation into which
such share of Series B Preferred Stock is convertible on the record date for
such vote or, if no such record date is established, on the date any written
consent of stockholders is solicited. Notwithstanding anything to the contrary
contained herein, any action required or permitted to be taken by the holders of
Series B Preferred Stock at any meeting of the holders of Series B Preferred
Stock may be taken without a meeting, without prior notice and without a vote,
if a consent in writing, setting forth the action so taken, shall be signed by
the Requisite Holders (as defined in Section 3(b)).
(b) So long as any shares of Series B Preferred Stock shall be
outstanding and unless the consent or approval of a greater number of shares
shall then be required by law,
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<PAGE>
without first obtaining the consent or approval of the Requisite Holders, voting
as a single class, given in person or by proxy at a meeting at which the holders
of such shares shall be entitled to vote separately as a class, or by written
consent, the Corporation shall not: (i) authorize, create or issue any class or
series, or any shares of any class or series, of Senior Stock; (ii) authorize,
create or issue any class or series, or any shares of any class or series, of
Parity Stock (other than the issuance of the Series A Preferred Stock pursuant
to the Rights Offering); (iii) reclassify any shares of stock of the Corporation
into shares of Senior Stock or Parity Stock; (iv) authorize any security
exchangeable for, convertible into, or evidencing the right to purchase any
shares of Senior Stock or Parity Stock; (v) alter or change the rights,
preferences or privileges of the Series B Preferred Stock or the Series A
Preferred Stock or the rights of the Class B Common Stock; (vi) alter or change
the rights of the Class A Common Stock in a manner adverse to the holders of the
Series B Preferred Stock; (vii) increase or decrease the authorized number of
shares of Series B Preferred Stock or Series A Preferred Stock or issue shares
of Series B Preferred Stock or Series A Preferred Stock other than to holders of
Series B Preferred Stock or Series A Preferred Stock, respectively, pursuant to
its terms or pursuant to the Rights Offering; (viii) amend, modify or waive any
provision of the Restated Certificate of Incorporation or the By-laws of the
Corporation affecting (A) the composition of, or other matters relating to, the
Board of Directors, (B) the voting rights of the stockholders of the
Corporation, or (C) indemnification of directors or officers; (ix) amend, modify
or waive any provision of the Shareholder Rights Agreement of the Corporation,
dated as of the Closing Date (as defined in the Purchase Agreement) (the
"Rights Plan"), or enter into any other similar agreement; or (x) enter into or
authorize any transaction constituting a Change of Control. For purposes hereof,
the "Requisite Holders" means the holders of at least two-thirds of the shares
of Series B Preferred Stock outstanding on the record date for such vote or, if
no such record date is established, on the date any written consent of
stockholders is solicited.
(c) If (i) cash dividends on the Series B Preferred Stock are
in arrears and unpaid for six quarterly Dividend Periods, whether or not
consecutive and such failure thereafter continues (the period during which such
failure shall continue being referred to herein as a "Voting Period"), and (ii)
the holders of Series B Preferred Stock no longer have the right to elect any
directors under Sections V(D) and V(E) of the Restated Certificate of
Incorporation, then the number of directors constituting the Board of Directors
shall be increased by the number, if any, necessary to permit the holders of the
Series A Preferred Stock and Series B Preferred Stock, voting as a single class,
to elect a minimum of two directors upon such default. If the holders of Series
A Preferred Stock and Series B Preferred Stock are entitled to elect directors
pursuant to the preceding sentence, as soon as practicable after the
commencement of the Voting Period, the Corporation shall call a special meeting
of the holders of Series A Preferred Stock and Series B Preferred Stock by
mailing a notice of such special meeting to such holders, such meeting to be
held not more than 30 days after the date of mailing of such notice. If the
Corporation fails to send a notice, the meeting may be called by any such holder
on like notice. The record date for determining the holders entitled to notice
of and to vote at such special meeting shall be the close of business on the
fifth business day preceding the day on which such notice is mailed. At any such
special meeting and at each meeting of holders of shares of Series A Preferred
Stock and
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Series B Preferred Stock held during a Voting Period at which directors are to
be elected (or with respect to any action by written consent in lieu of a
meeting of stockholders), such holders, voting as a single class on a
one-vote-per-share basis (to the exclusion of the holders of all other
securities and classes of capital stock of the Corporation), shall be entitled
to elect such directors. The terms of office of all persons who are directors of
the Corporation at the time of a special meeting of the holders of Series A
Preferred Stock and Series B Preferred Stock to elect directors shall continue,
notwithstanding the election at such meeting of the additional directors that
such holders are entitled to elect, and the persons so elected, together with
the remaining incumbent directors, shall constitute the duly elected directors
of the Corporation. The Voting Period shall terminate at such time as all
cumulative cash dividends in respect of all previously completed full Dividend
Periods that are in arrears on the Series A Preferred Stock and the Series B
Preferred Stock have been paid in full in cash or until non-cumulative cash
dividends in respect of all previously completed full Dividend Periods that are
in arrears on the Series A Preferred Stock and Series B Preferred Stock have
been paid regularly for at least one year. Simultaneously with the termination
of a Voting Period the terms of office of the directors elected by the holders
of the Series A Preferred Stock and Series B Preferred Stock pursuant to this
Section 3(c) and Section 3(b) of the Series A Certificate of Designation shall
terminate, the remaining directors shall constitute the directors of the
Corporation and the voting rights of such holders to elect additional directors
pursuant to this Section 3(c) and Section 3(b) of the Series A Certificate of
Designation shall cease.
Section 4. CERTAIN RESTRICTIONS.
(a) Whenever the Corporation shall have not redeemed the
shares of Series B Preferred Stock on the date such redemption is required by
Section 5 (a "Redemption Default"), thereafter and until all redemption payments
shall have been made or all necessary funds shall have been Set Apart for
Payment, if and so long as any shares of Series B Preferred Stock remain
outstanding, the Corporation shall not, nor shall it permit any of its
Subsidiaries other than wholly-owned Subsidiaries to: (A) declare or pay
dividends, or make any other distributions, on any shares of Junior Stock other
than dividends or distributions payable in Junior Stock; (B) declare or pay
dividends, or make any other distributions, on any shares of Parity Stock,
except dividends paid ratably on the Series B Preferred Stock and all Parity
Stock on which dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled; (C) redeem or
purchase or otherwise acquire for consideration (other than Junior Stock) any
shares of Junior Stock or Parity Stock (other than, with respect to Parity
Stock, ratably with the Series B Preferred Stock); or (D) purchase or otherwise
acquire for consideration any shares of Series B Preferred Stock, other than
purchases ratably among all holders of the Series B Preferred Stock.
(b) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
Section 4(a), purchase or otherwise acquire such shares at such time and in such
manner.
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Section 5. REDEMPTION.
(a) Except as provided in this Section 5(a), the Corporation
shall have no right to redeem any shares of Series B Preferred Stock. At any
time after the sixth anniversary of the Issuance Date, the Corporation shall
have the right, at its sole option and election, to redeem all, or part, of the
outstanding shares of Series B Preferred Stock by paying therefor in cash 101%
of the Stated Amount thereof plus all Accrued Dividends thereon to the date of
redemption; provided that in the event of any partial redemption, at least
1,000,000 shares of Series B Preferred Stock shall remain outstanding after
giving effect to such partial redemption and the Series B Preferred Stock must
be redeemed pro rata based on the holders' respective holdings of Series B
Preferred Stock. For a period of 170 days following the Issuance Date, the
Corporation shall also have the option to redeem no more than 3,000,000 shares
of Series B Preferred Stock at 102% of the outstanding Stated Amount plus
Accrued Dividends thereon to the date of redemption (which shall be no later
than 170 days following the Issuance Date). This redemption shall be effected by
the action of the Board of Directors of the Corporation, except that it may be
effected, solely by action of a majority of the Class A Directors and Class C
Directors, substantially from (i) the proceeds of the Rights Offering and (ii)
if the Identified Assets (as defined in the Purchase Agreement) are sold after
the Issuance Date but prior to the closing of the Rights Offering and the net
proceeds therefrom are in excess of the amounts set forth in Section 1.1(c) of
the Company Disclosure Letter (as defined in the Purchase Agreement), such
excess proceeds, with the number of shares of Series B Preferred Stock so
redeemed not to exceed the sum of (i) the number of shares of Series A Preferred
Stock issued pursuant to the Rights Offering and (ii) the number of shares equal
to the excess proceeds from the sale of the Identified Assets divided by the
Stated Amount. The holders shall be permitted to convert their Series B
Preferred Stock at any time prior to the redemption date, but may not convert
more than 7,000,000 shares of Series B Preferred Stock prior to 170 days
following the Issuance Date. Notwithstanding the provisions of this Section
5(a), the Corporation shall have no right to redeem the shares of Series B
Preferred Stock pursuant to this Section 5(a) until the Corporation shall have
reserved from its authorized and unissued Class B Common Stock such number of
shares of Class B Common Stock as shall be sufficient to effect the conversion
of all then outstanding shares of Series B Preferred Stock into Class B Common
Stock.
(b) In the event there occurs a Change in Control, the
Corporation shall offer to purchase from each holder all of the Series B
Preferred Stock held by such holder for an amount in cash equal to the greatest
of (i) the Liquidation Preference of the shares of Series B Preferred Stock held
by the holder, (ii) in case of any Change in Control in which the shares of
Series B Preferred Stock are not converted into (or entitled to receive) any
cash, securities or property, the amount of the cash that such holder of the
Series B Preferred Stock would have received had it converted its Series B
Preferred Stock (including for such purposes any shares of Series B Preferred
Stock issuable in respect of Accrued Dividends) into shares of Common Stock
immediately prior to such Change in Control and received in respect of all such
shares cash at the same effective value per share of Common Stock as is being
paid by or on behalf of the acquiror
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of shares or assets in such transaction, plus Accrued Dividends payable in cash
to the extent not otherwise reflected pursuant to the parenthetical phrase of
this clause (ii), and (iii) in all other cases, the Fair Market Value (as
defined below) of the cash, securities and other property that such holder of
the Series B Preferred Stock would have received had it converted its Series B
Preferred Stock (including for such purposes any shares of Series B Preferred
Stock issuable in respect of Accrued Dividends) into shares of Common Stock
immediately prior to such Change in Control, plus Accrued Dividends payable in
cash to the extent not otherwise reflected pursuant to the parenthetical phrase
of this clause (iii) (the greatest of (i), (ii) and (iii) above being referred
to as the "Change in Control Redemption Price"), in each case by delivery of a
notice of such offer (a "Change in Control Redemption Offer") within five
Business Days following the Change in Control. In the event of a Change in
Control, each holder of Series B Preferred Stock shall have the right (but not
the obligation) to require the Corporation to purchase any or all of the Series
B Preferred Stock held by such holder for an amount in cash equal to the Change
in Control Redemption Price. Each holder of Series B Preferred Stock shall also
be permitted, until the fifth Business Day following a Change in Control, to
convert all, and not less than all, of the shares of Series B Preferred Stock
held by such holder (including shares of Series B Preferred Stock issuable to
such holder as Accrued Dividends that have accelerated or will accelerate as a
result of a Change in Control) pursuant to Section 8 below; provided that any
shares of Common Stock issuable upon conversion of any Series B Preferred Stock
converted pursuant to this sentence after a Change in Control has occurred shall
be entitled to receive the same amount of cash, securities and other property in
connection with such Change in Control as the Common Stock outstanding prior to
the Change in Control. In the event a holder of Series B Preferred Stock does
not elect to have all of its shares of Series B Preferred Stock either (i)
redeemed by the Corporation pursuant to Section 5 or (ii) converted pursuant to
Section 8 below, in each case in connection with a specific Change in Control
event, then no dividends shall be deemed to have been accelerated in connection
with such Change in Control. In the event that any holder does not elect to
convert or redeem such holder's shares of Series B Preferred Stock pursuant to
the foregoing sentence, such holder shall retain any rights it has to convert or
redeem its shares of Series B Preferred Stock in connection with any subsequent
Change in Control. "Fair Market Value" with respect to any securities shall be
the Current Market Price thereof as of the close of business on the date of
measurement. The Fair Market Value of any asset other than cash and securities
shall be determined jointly by the Corporation and the Requisite Holders. In the
event any dispute between the Corporation and the Requisite Holders as to the
Fair Market Value or Current Market Price (which dispute remains unresolved for
10 Business Days), such dispute shall be submitted for final determination to a
mutually acceptable investment banking firm of national reputation familiar with
the valuation of companies in the hospitality and lodging industry ("Investment
Banking Firm"). In the event that the Corporation and the Requisite Holders
cannot agree on a mutually acceptable Investment Banking Firm within 10 Business
Days, the Corporation, on the one hand, and the Requisite Holders, on the other
hand, shall each select one Investment Banking Firm, and shall cause such firms
to promptly select a third firm within five Business Days. The three firms so
selected shall, by majority vote, render their final determination as promptly
as practicable and in any event within 20 Business Days, which
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determination shall be final and binding on the Corporation and the holders. The
fees and expenses of any such determination shall be borne by the Corporation.
(c) Notice of any redemption of shares of Series B Preferred
Stock pursuant to Section 5(a) shall be mailed at least 30 Business Days (or, in
the case of a redemption pursuant to the third sentence of Section 5(a), at
least five Business Days) prior to the date fixed for redemption to each holder
of shares of Series B Preferred Stock to be redeemed, at such holder's address
as it appears on the transfer books of the Corporation. No redemption of shares
of Series B Preferred Stock pursuant to Section 5(a) shall take place unless
such notice shall have been mailed in accordance with this Section 5(c)(i). In
order to facilitate the redemption of shares of Series B Preferred Stock other
than pursuant to the third sentence of Section 5(a), the Board of Directors may
fix a record date for the determination of shares of Series B Preferred Stock to
be redeemed, not more than sixty days nor less than thirty days prior to the
date fixed for such redemption.
(i) Within five Business Days following an event
giving a holder of shares of Series B Preferred Stock the right, pursuant to
Section 5(b), to require the Corporation to redeem all of such shares, the
Corporation shall give notice by mail to each holder of Series B Preferred
Stock, at such holder's address as it appears on the transfer books of the
Corporation, of such event, which notice shall set forth each holder's right to
require the Corporation to redeem all, but not less than all, shares of Series B
Preferred Stock held by it which are eligible for redemption pursuant to the
terms of Section 5(b), the redemption date (which date shall be no more than 30
Business Days following the date of such mailed notice), and the procedures to
be followed by such holder in exercising its right to cause such redemption. In
the event a record holder of shares of Series B Preferred Stock shall elect to
require the Corporation to redeem all such shares of Series B Preferred Stock
pursuant to Section 5(b), such holder shall deliver within 20 Business Days of
the mailing to it of the Corporation's notice described in this Section
5(c)(ii), a written notice to the Corporation so stating, specifying the number
of shares to be redeemed pursuant to Section 5(b). The Corporation shall, in
accordance with the terms hereof, redeem the number of shares so specified on
the date fixed for redemption. Failure of the Corporation to give any notice
required by this Section 5(c)(ii), or the formal insufficiency of any such
notice, shall not prejudice the rights of any holders of shares of Series B
Preferred Stock to cause the Corporation to redeem all such shares held by them.
Notwithstanding the foregoing, the Board of Directors of the Corporation may
modify any offer pursuant to this Section 5(c)(ii) to the extent necessary to
comply with the Exchange Act and the rules and regulations thereun der.
(ii) The Corporation shall publish the fact that it
is redeeming, or offering to redeem, shares of Series B Preferred Stock through
a nationally prominent newswire service on or before the date of mailing any
notice of redemption or right of redemption. At any time after a notice of
redemption shall have been mailed and before such date of redemption the
Corporation may deposit for the benefit of the holders of the Series B Preferred
Stock called for redemption the funds necessary for such redemption with a bank
or trust company doing business
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in the Borough of Manhattan, the City of New York, and having a capital and
surplus of at least $1,000,000,000. Any interest allowed on moneys so deposited
shall be paid to the Corporation. Upon the deposit of such funds or, if no such
deposit is made, upon the date fixed for redemption (unless the Corporation
shall default in making payment of the appropriate redemption amount), whether
or not certificates for shares so called for redemption have been surrendered
for cancellation, the shares of Series B Preferred Stock to be redeemed shall be
deemed to be no longer outstanding and the holders thereof shall cease to be
stockholders with respect to such shares and shall have no rights with respect
thereto, except for the rights to receive the amount payable upon redemption,
but without interest, and, up to the close of business on the date immediately
preceding the date fixed for such redemption, the right to convert such shares
pursuant to Section 8 hereof. Such deposit in trust shall be irrevocable except
that any funds deposited by the Corporation which shall not be required for the
redemption for which they were deposited because of the exercise of conversion
rights shall be returned to the Corporation forthwith, and any funds deposited
by the Corporation which are unclaimed at the end of one year from the date
fixed for such redemption shall be paid over to the Corporation upon its
request, and upon such repayment the holders of the shares of Series B Preferred
Stock so called for redemption shall look only to the Corporation for payment of
the appropriate amount. Any such unclaimed amounts paid over to the Corporation
shall, for a period of six years from the date fixed for such redemption, be set
apart and held by the corporation in trust for the benefit of the holders of
such shares of Series B Preferred Stock, but no such holder shall be entitled to
interest thereon. At the expiration of such six-year period, all right, title,
interest and claim of such holders in or to such unclaimed amounts shall be
extinguished, terminated and discharged, and such unclaimed amounts shall become
part of the general funds of the Corporation free of any claim of such holders.
(d) Notwithstanding anything to the contrary herein, the
Corporation shall not effect a redemption pursuant to Section 5(a) hereof unless
simultaneously therewith the Corporation redeems shares of Series A Preferred
Stock pro rata with the Series B Preferred Stock based on the respective numbers
of outstanding shares as of the date on which the notice of redemption is given.
(e) If the Corporation shall fail to comply with any of the
provisions of this Section 5 (other than the timely giving of a notice pursuant
to Section 5(c)(i)), then in any such event, the Dividend Rate shall be
increased by an amount equal to the Default Rate during the period in which such
failure shall be continuing.
Section 6. REACQUIRED SHARES.
Any shares of Series B Preferred Stock converted, redeemed, purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof, and, if necessary
to provide for the lawful redemption or purchase of such shares, the capital
represented by such shares shall be reduced in accordance with the General
Corporation Law of the State of Delaware. All such shares shall upon their
cancellation
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become authorized but unissued shares of Preferred Stock, par value $.01 per
share, of the Corporation and may be reissued as part of another series of
Preferred Stock, par value $.01 per share, of the Corporation subject to the
conditions or restrictions on authorizing, creating or issuing any class or
series, or any shares of any class or series, set forth in paragraph (b) of
Section 3.
Section 7. LIQUIDATION, DISSOLUTION OR WINDING UP.
If the Corporation shall adopt a plan of liquidation or of dissolution,
or commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Corporation shall be entered
by a court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order shall be unstayed and
in effect for a period of 90 consecutive days and on account of such event the
Corporation shall liquidate, dissolve or wind up, or upon any other liquidation,
dissolution or winding up of the Corporation (a "Liquidation"), the holders
shall be entitled to receive the greatest of (i) the Liquidation Preference of
the shares of Series B Preferred Stock held by the holder, and (ii) the Fair
Market Value (as defined below) of the cash, securities and other property that
such holder of the Series B Preferred Stock would have received had they
converted their Series B Preferred Stock (including for such purposes any shares
of Series B Preferred Stock issuable in respect of Accrued Dividends) into
shares of Common Stock immediately prior to such Liquidation, plus Accrued
Dividends payable in cash to the extent not otherwise reflected pursuant to the
parenthetical phrase of this clause (ii) (including for such purposes any shares
of Series B Preferred Stock issuable in respect of Accrued Dividends through the
date of the Liquidation), before any distribution shall be made or any assets
distributed in respect of Junior Stock to the holders of any Junior Stock
including, without limitation, Common Stock of the Corporation. If upon any
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, the amounts payable with respect to the Series B Preferred Stock
and all other Parity Stock are not paid in full, the holders of the Series B
Preferred Stock and the Parity Stock will share equally and ratably in any
distribution of assets of the Corporation first in proportion to the full
liquidation preference to which each is entitled until such preferences are paid
in full, and then in proportion to their respective amounts of accumulated but
unpaid dividends. After payment of the full amount of the greatest of the
amounts set forth in clause (i) or (ii) above to which they are entitled, the
holders of shares of Series B Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Corporation. For the
purposes of this Section 7, the voluntary sale, conveyance, exchange or transfer
of all or substantially all of the
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property or assets of the Corporation or the consolidation or merger of the
Corporation with or into one or more other corporations shall not be deemed to
be a liquidation, winding-up or dissolution of the Corporation.
Section 8. CONVERSION INTO COMMON STOCK.
Each share of Series B Preferred Stock, including any shares
of Series B Preferred Stock issued as Accrued Dividends (including Accrued
Dividends that have been accelerated in connection with a Change in Control and
assuming any shares of Common Stock into which such shares are converted will be
treated in all respects as shares of Common Stock outstanding prior to the
Change in Control), may, at the option of the holder thereof, be converted into
shares of Common Stock at any time, whether or not the Corporation has given
notice of redemption under Section 5, on the terms and conditions set forth in
this Section 8. Any such conversion shall be into shares of Class B Common Stock
for so long as Class B Common Stock shall remain a separate class of the
Corporation's Common Stock.
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall be convertible in the manner
hereinafter set forth into a number of fully paid and nonassessable shares of
Common Stock equal to the product obtained by multiplying the Applicable
Conversion Rate (as defined below) by the number of shares of Series B Preferred
Stock being converted. The "Applicable Conversion Rate" means the quotient
obtained by dividing the Conversion Value on the date of conversion by the
Conversion Price as adjusted pursuant to Section 8(b) on the date of conversion.
(b) The Conversion Price shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall at any time or
from time to time after the original issuance of the Series B Preferred Stock
declare a dividend, or make a distribution, on the outstanding shares of Common
Stock, in either case, in shares of Common Stock, or effect a subdivision,
combination, consolidation or reclassification of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common Stock, then,
and in each such case, the Conversion Price in effect immediately prior to such
event or the record date therefor, whichever is earlier, shall be adjusted by
multiplying such Conversion Price by a fraction, the numerator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Section 8(b)(i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of any such subdivision,
reclassification, consolidation or combination, at the close of business on the
day upon which such corporate action becomes effective.
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(ii) In case the Corporation shall issue (other than
upon the exercise of options, rights or convertible securities) shares of Common
Stock (or options, rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) at a price per share (or having an
exercise or conversion price per share) less than the Current Market Price as of
the Business Day immediately preceding the Measurement Date, other than (v)
issuances in a private placement of securities, other than to an affiliate of
the Corporation, at a price for the securities sold in such private placement
(and the underlying common stock, as applicable) of not less than 95% of the
Current Market Price thereof, (w) in a transaction to which Section 2(a), 2(b)
or 8(b)(i) applies, (x) pursuant to options or other securities under any
employee or director benefit plan or program of the Corporation approved by the
Board of Directors of the Corporation or shares of Common Stock issued upon the
exercise thereof, (y) pursuant to the conversion of the Series B Preferred
Stock, the Series A Preferred Stock or the Class B Common Stock or (z) pursuant
to the issuance of the Series A Preferred Stock in connection with the Rights
Offering or as dividends on the Series A Preferred Stock or the Series B
Preferred Stock (the issuances under clauses (v), (w), (x), (y) and (z) being
referred to as "Excluded Issuances"), then, and in each such case, the
Conversion Price in effect immediately prior to the Measurement Date shall be
reduced so as to be equal to an amount determined by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of shares of
Common Stock of all classes outstanding at the close of business on the
Measurement Date plus the number of shares of Common Stock (or the number of
shares of Common Stock issuable upon the conversion, exchange or exercise of
such options, rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) which the aggregate consideration
receivable by the Corporation in connection with such issuance would purchase at
such Current Market Price and the denominator shall be the number of shares of
Common Stock of all classes outstanding at the close of business on the
Measurement Date plus the number of shares of Common Stock (or the number of
shares of Common Stock issuable upon the conversion, exchange or exercise of
such options, rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) so issued. For purposes of this Section
8(b)(ii), the aggregate consideration receivable by the Corporation in
connection with the issuance of shares of Common Stock or of options, rights,
warrants or other convertible securities shall be deemed to be equal to the sum
of the gross offering price (before deduction of customary underwriting
discounts or commissions and expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any, payable upon conversion or
exercise of any such options, rights, warrants or other convertible securities
into shares of Common Stock, less any original issue discount, premiums and
other similar incentives which have the effect of reducing the effective price
per share. For purposes of this Section 8(b)(ii), such adjustment shall become
effective immediately prior to the opening of business on the Business Day
immediately following the Measurement Date.
(iii) (A) The initial Conversion Price shall first
be reduced by an amount equal to $0.16 to adjust for the issuance of shares of
Common Stock pursuant to the Corporation's payment of a dividend in respect of
the fourth quarter of 1998.
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(B) To the extent that there are Losses attributable
to the Forward Equity Shares pursuant to Section 10.2(e) of the Purchase
Agreement, then the Conversion Price (after giving effect to all previous
adjustments) shall be reduced by the amount of any such Loss divided by
167,025,942.
(C) To the extent that the Companies'
indemnification obligations pursuant to Section 10.2(b) of the Purchase
Agreement are to be satisfied in the form of a conversion price adjustment and
not in cash, then the Conversion Price (after giving effect to all previous
adjustments) shall be reduced by the amount of any such Loss divided by
167,025,942.
(D) Any adjustment to the Conversion Price pursuant
to this Section 8(b)(iii) shall be effective as of the Issuance Date; PROVIDED,
that in the event that an additional adjustment is determined following an
adjustment of the Conversion Price pursuant to this Section 8(b)(iii), the total
amount of the adjustment shall be recalculated and the Conversion Price shall be
readjusted on the basis of such recalculated adjustment.
(iv) In addition to the adjustments in Sections 8(b)(i)-(iii)
above, the Corporation will be permitted to make such reductions in the
Conversion Price as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the holders of the shares of Common Stock.
(v) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 0.1% of
the Conversion Price; provided, that any adjustments which by reason of this
Section 8(b)(v) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 8
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(c) In case of any capital reorganization or reclassification
of outstanding shares of Common Stock (other than a reclassification covered by
Section 8(b)(i)), or in case of any consolidation or merger of the Corporation
with or into another Person, or in case of any sale or conveyance to another
Person of the property of the Corporation as an entirety or substantially as an
entirety (each of the foregoing being referred to as a "Transaction"), each
share of Series B Preferred Stock then outstanding shall thereafter be
convertible into, in lieu of the Common Stock issuable upon such conversion
prior to the consummation of such Transaction, the kind and amount of shares of
stock and other securities and property (including cash) receivable upon the
consummation of such transaction by a holder of that number of shares of Common
Stock into which one share of Series B Preferred Stock was convertible
immediately prior to such Transaction (including, on a pro rata basis, the cash,
securities or property received by holders of Common Stock in any tender or
exchange offer that is a step in such Transaction). In any such case, if
necessary, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 8 with respect to rights and interests thereafter of the holders of
shares of Series B Preferred Stock to the end that the
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provisions set forth herein for the protection of the conversion rights of the
Series B Preferred Stock shall thereafter be applicable, as nearly as reasonably
may be, to any such other shares of stock and other securities and property
deliverable upon conversion of the shares of Series B Preferred Stock remaining
outstanding (with such adjustments in the conversion price and number of shares
issuable upon conversion and such other adjustments in the provisions hereof as
the Board of Directors shall determine in good faith to be appropriate). In case
securities or property other than Common Stock shall be issuable or deliverable
upon conversion as aforesaid, then all references in this Section 8 shall be
deemed to apply, so far as appropriate and as nearly as may be, to such other
securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the consummation
thereof, (i) the Surviving Person (as defined in Section 11) thereof, if other
than the Corporation, shall assume, by written instrument mailed to each record
holder of shares of Series B Preferred Stock, at such holder's address as it
appears on the transfer books of the Corporation, the obligation to deliver to
such holder such cash, property and securities to which, in accordance with the
foregoing provisions, such holder is entitled. Nothing contained in this Section
8(c) shall limit the rights of holders of the Series B Preferred Stock to
convert the Series B Preferred Stock in connection with the Transaction or to
exercise their rights to require the redemption of the Series B Preferred Stock
under Section 5(b).
(d) The holder of any shares of Series B Preferred Stock may
exercise its right to convert such shares into shares of Common Stock by
surrendering for such purpose to the Corporation, at its principal office or at
such other office or agency maintained by the Corporation for that purpose, a
certificate or certificates representing the shares of Series B Preferred Stock
to be converted duly endorsed to the Corporation in blank accompanied by a
written notice stating that such holder elects to convert all or a specified
whole number of such shares in accordance with the provisions of this Section 8.
The Corporation will pay any and all documentary, stamp or similar issue or
transfer tax and any other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of Series B Preferred Stock
pursuant hereto. As promptly as practicable, and in any event within three
Business Days after the surrender of such certificate or certificates and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Corporation that
such taxes are inapplicable), the Corporation shall deliver or cause to be
delivered (i) certificates registered in the name of such holder representing
the number of validly issued, fully paid and nonassessable full shares of Common
Stock to which the holder of shares of Series B Preferred Stock so converted
shall be entitled and (ii) if less than the full number of shares of Series B
Preferred Stock evidenced by the surrendered certificate or certificates are
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates less
the number of shares converted. Such conversion shall be deemed to have been
made at the close of business on the date of receipt of such notice and of such
surrender of the certificate or certificates representing the shares of Series B
Preferred Stock to be converted so that the rights of the holder thereof as to
the shares being converted shall cease except for the right to receive shares of
Common Stock, and the
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<PAGE>
person entitled to receive the shares of Common Stock shall be treated for all
purposes as having become the record holder of such shares of Common Stock at
such time.
(e) Shares of Series B Preferred Stock may be converted at any
time and, if subject to mandatory redemption, up to the close of business on the
last Business Day immediately preceding the date fixed for such mandatory
redemption of such shares.
(f) In connection with the conversion of any shares of Series
B Preferred Stock, no fractions of shares of Common Stock shall be issued, but
in lieu thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series B Preferred Stock are deemed to have been converted.
(g) In case at any time or from time to time the Corporation
shall pay any dividend or make any other distribution to the holders of its
Common Stock, or shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or any other right,
other than pursuant to the Rights Offering or the Rights Plan, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days' prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the registered holders of the
Series B Preferred Stock at the addresses of each as shown on the books of the
Corporation of the date on which (i) the books of the corporation shall close or
a record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
sale or conveyance, dissolution, liquidation or winding up shall take place, as
the case may be, provided that in the case of any Transaction to which Section
8(c) applies the Corporation shall give at least 30 days' prior written notice
as aforesaid. Such notice shall also specify the date, if known, as of which the
holders of the Common Stock and of the Series B Preferred Stock of record shall
participate in said dividend, distribution or subscription rights or shall be
entitled to exchange their Common Stock or Series B Preferred Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance, or participate in
such dissolution, liquidation or winding up, as the case may be.
Section 9. CONVERSION INTO SERIES A PREFERRED STOCK.
(a) Each share of Series B Preferred Stock may, at the option
of the holder thereof, be converted into shares of Series A Preferred Stock at
any time, whether or not the Corporation has given notice of redemption under
Section 5, on the terms and conditions set forth in this Section 9. Each share
of Series B Preferred Stock shall be convertible into an equal number of fully
paid and nonassessable shares of Series A Preferred Stock. The procedures for
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converting into Series A Preferred Stock shall be the same as those as are set
forth in Section 8(d).
(b) Subject to Section 9(c), in the event of any transfer of
any share of Series B Preferred Stock to any Person other than to one of the
Investors, such share of Series B Preferred Stock shall automatically, without
any further action, convert into one share of Series A Preferred Stock. In the
event of any transfer to a Person other than an Investor, the transferring
Investor shall promptly notify the Corporation of the date of the transfer, the
number of shares of Series B Preferred Stock so transferred and the identity of
the transferor.
(c) Notwithstanding anything to the contrary in Section 9(b),
a holder of shares of Series B Preferred Stock may pledge all or a portion of
such holder's shares of Series B Preferred Stock pursuant to a bona fide pledge
of such shares of Series B Preferred Stock as collateral security for any
indebtedness or other obligation of any Person due to the pledgee or its
nominee; provided, however, that upon any foreclosure, realization or similar
action by the pledgee, each share of Series B Preferred Stock that is so pledged
shall automatically convert into one share of Series A Preferred Stock unless
all right, title and interest in such Pledged Stock shall be transferred
concurrently by the pledgee or its nominee or the purchaser in such foreclosure
to an Investor.
(d) Any conversion pursuant to Section 9(b) shall be deemed to
have been effected at the time the transfer occurred (the "Conversion Time"). At
the Conversion Time, the certificate or certificates that represented
immediately prior thereto the shares of Series B Preferred Stock which were so
converted (the "Converted Series B Preferred Stock") shall, automatically and
without further action, represent the same number of shares of Series A
Preferred Stock. Holders of Converted Series B Preferred Stock shall deliver
their certificates, duly endorsed in blank or accompanied by proper instruments
of transfer, to the principal office of the Corporation or the office of any
transfer agent for shares of the Series B Preferred Stock, together with a
written notice setting out the name or names and denominations in which the
certificate or certificates representing such shares are to be issued and
including instructions for delivery thereof. Upon such delivery, the Corporation
or its transfer agent shall promptly issue and deliver a certificate or
certificates representing the number of shares of Series A Preferred Stock to
which such holder of shares of Series B Preferred Stock is entitled by reason of
such conversion, and shall cause such shares of Series A Preferred Stock to be
registered in the name of such holder. The person entitled to receive shares of
Series A Preferred Stock issuable upon conversion shall be treated for all
purposes as the record holder of such shares of Series B Preferred Stock at and
as of the Conversion Time, and the rights of such person as a holder shares of
Series B Preferred Stock that have been converted shall cease and terminate at
and as of the Conversion Time.
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Section 10. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which each share of
Series B Preferred Stock is convertible (or the number of votes to which each
share of Series B Preferred Stock is entitled) is adjusted as provided in
Section 8, the Corporation shall promptly mail to the holders of record of the
outstanding shares of Series B Preferred Stock at their respective addresses as
the same shall appear in the Corporation's stock records a notice stating that
the number of shares of Common Stock into which the shares of Series B Preferred
Stock are convertible has been adjusted and setting forth the new number of
shares of Common Stock (or describing the new stock, securities, cash or other
property) into which each share of Series B Preferred Stock is convertible, as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof, and when such adjustment became
effective.
Section 11. DEFINITIONS.
For the purposes of the Certificate of Designation of Series B
Convertible Preferred Stock which embodies this resolution:
"Accrued Dividends" to a particular date (the "Applicable Date") means
(i) all dividends accrued but not paid on the Series B Preferred Stock pursuant
to Section 2(a), whether or not earned or declared, accrued to the Applicable
Date, plus (ii) all dividends or distributions payable pursuant to Section 2(b)
for which the Triggering Distribution was declared, ordered, paid or made on or
prior to the Applicable Date; provided that if a Change of Control or
Liquidation occurs at any time on or prior to the sixth anniversary of the
Issuance Date, Accrued Dividends payable on the date of the Change of Control or
Liquidation shall be deemed to include all dividends on the entire amount of the
Series B Preferred Stock outstanding on the date of the Change of Control or
Liquidation which have not been previously paid but which otherwise would accrue
through and including the sixth anniversary of the Issuance Date (assuming that
all dividends were paid solely in additional shares of Series B Preferred Stock
rather than cash), which dividends shall be deemed to have been accelerated,
recalculated and paid on their respective Dividend Payment Dates, in each case
payable solely in additional shares of Series B Preferred Stock; provided,
however, that with respect to any holder of Series B Preferred Stock, no such
dividends shall be deemed to have been accelerated, recalculated or paid in
connection with a Change in Control in the event such holder has not elected, in
connection with such Change in Control, to have all of its shares of Series B
Preferred Stock either (i) redeemed by the Corporation pursuant to Section 5 or
(ii) converted pursuant to Section 8.
.
"affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
by the Securities and Exchange Commission under the Exchange Act.
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"associate" shall have the meaning set forth in Rule 12b-2 promulgated
by the Securities and Exchange Commission under the Exchange Act.
"Business Day" means any day other than a Saturday, Sunday, or a day on
which commercial banks in the City of New York are authorized or obligated by
law or executive order to close.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"Cash Percentage" means, as to any date, the amount calculated on the
basis of the following formula (expressed as a percentage), with the dividend
payment period ("DPP") referring to the number of Dividend Payment Dates that
have occurred prior to such date: 73,125/(7,000,000 times 1.024375 raised to the
power of DPP (i.e., 1.024375(DPP)), plus 3,000,000).
"Change in Control" means any of the following:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (the "Acquiring
Person"), other than the Corporation, or any of its Subsidiaries or any Investor
or Excluded Group, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the combined voting power
or economic interests of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors; provided,
however, that any transfer from any Investor or Excluded Group will not result
in a Change in Control if such transfer was part of a series of related
transactions the effect of which, absent the transfer to such Acquiring Person
by the Investor or Excluded Group, would not have resulted in the acquisition by
such Acquiring Person of 35% or more of the combined voting power or economic
interests of the then outstanding voting securities; or
(b) during any period of 12 consecutive months after the
Issuance Date, the individuals who at the beginning of any such 12-month period
constituted a majority of the Class A Directors and Class C Directors (the
"Incumbent Non-Investor Majority") cease for any reason to constitute at least a
majority of such Class A Directors and Class C Directors; provided that (i) any
individual becoming a director whose election, or nomination for election by the
Corporation's stockholders, was approved by a vote of the stockholders having
the right to designate such director and (ii) any director whose election to the
Board or whose nomination for election by the stockholders of the Corporation
was approved by the requisite vote of directors entitled to vote on such
election or nomination in accordance with the Restated Certificate of
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<PAGE>
Incorporation of the Corporation, shall, in each such case, be considered as
though such individual were a member of the Incumbent Non-Investor Majority, but
excluding, as a member of the Incumbent Non-Investor Majority, any such
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the
Corporation (as such terms are used in Rule 14a-11 of Regulation 14A promul
gated under the Exchange Act) and further excluding any person who is an
affiliate or associate of an Acquiring Person having or proposing to acquire
beneficial ownership of 25% or more of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors; or
(c) the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to which all
or substantially all of the individuals and entities who were the respective
beneficial owners of the voting securities of the Corporation immediately prior
to such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 57.5% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
Corporation resulting from such reorganization, merger or consolidation; or
(d) the sale or other disposition of assets representing 50%
or more of the assets of the Corporation in one transaction or series of related
transactions;
provided, that the occurrence of any event identified in subparagraphs (a)
through (d) above that would otherwise be treated as a Change in Control shall
not constitute a Change in Control hereunder if a majority of the Class B
Directors, by vote duly taken, shall so determine.
"Class A Common Stock" means the Class A Common Stock, par value $0.01
per share, of the Corporation.
"Class A Directors" has the meaning set forth in the Restated
Certificate of Incorporation.
"Class B Common Stock" means the Class B Common Stock, par value $0.01
per share, of the Corporation.
"Class B Directors" has the meaning set forth in the Restated
Certificate of Incorporation.
"Class C Directors" has the meaning set forth in the Restated
Certificate of Incorporation.
"Closing Price" per share of Common Stock on any date shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported on the Nasdaq National
Market or in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or American Stock Exchange, as the case may be, or, if the Common Stock
is listed or
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admitted to trading on the New York Stock Exchange or American Stock Exchange,
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if on any
such date the Common Stock is not quoted by any such organization, the average
of the Closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors and
reasonably acceptable to the Requisite Holders.
"Common Stock" means the Class A Common Stock and the Class B Common
Stock or, if there shall no longer be separate classes, the common stock, par
value $0.01 per share, of the Corporation.
"Conversion Price" shall initially be equal to $8.75, subject to
adjustment as provided in Section 8(b).
"Conversion Value" per share of Series B Preferred Stock shall be an
amount equal to the Stated Amount plus all Accrued Dividends thereon to the date
of conversion or redemption, as the case may be.
"Current Market Price" per share of Common Stock on any date shall be
the average of the Closing Prices of a share of Common Stock for the five
consecutive Trading Days selected by the Corporation commencing not less than 10
Trading Days nor more than 20 Trading Days before the date in question. If on
any such Trading Day the Common Stock is not quoted by any organization referred
to in the definition of Closing Price, the Current Market Price of the Common
Stock on such day shall be determined by agreement between the Corporation and
the Requisite Holders, provided that if such agreement is not reached within 10
business days, such Current Market Price shall be determined as set forth in
Section 5(b).
"Dividend Payment Date" means the following dates: (i) the date that is
three months after the Issuance Date; (ii) the date that is six months after the
Issuance Date; (iii) the date that is nine months after the Issuance Date; (iv)
the date that is the first anniversary of the Issuance Date; and the
anniversaries of the foregoing dates.
"Dividend Period" means the period from the Issuance Date to the first
Dividend Payment Date (but without including such Dividend Payment Date) and,
thereafter, each Dividend Payment Date to the following Dividend Payment Date
(but without including such later Dividend Payment Date).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more of the Investors;
provided, that the voting securities
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of the Corporation "beneficially owned" (as such term is used in Rule 13d-3
promulgated under the Exchange Act) by such Investors represents a majority of
the voting securities "beneficially owned" (as such term is used in Rule 13d-3
promulgated under the Exchange Act) by such group.
"Investors" means Apollo Real Estate Investment Fund III, L.P., Apollo
Investment Fund IV, L.P., Thomas H. Lee Equity Fund IV, L.P., Thomas H. Lee
Foreign Fund IV, L.P., Thomas H. Lee Charitable Investment L.P., THL-CCI Limited
Partnership, Beacon Private Equity, Inc., Beacon Capital Partners, L.P. and
Strategic Real Estate Investments I, L.L.C., together with each of their
Permitted Assignees and Permitted Third Party Transferees (as each such term is
defined in the Purchase Agreement), and all of their respective successors by
operation of law.
"Issuance Date" means the original date of issuance of Series B
Preferred Stock to the Investors.
"Junior Stock" means all classes of Common Stock of the Corporation and
each other class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation currently existing or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Series B Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation.
"Liquidation Preference" means, in the event of a liquidation or
winding up of the Corporation, an amount per share of Series B Preferred Stock
equal to the greater of (i) the amount the holders of the Series B Preferred
Stock would have received had they converted their Series B Preferred Stock
(including for such purposes any shares of Series B Preferred Stock issuable in
respect of Accrued Dividends through the date of liquidation) into Common Stock
immediately prior to such liquidation or winding up and (ii) the Stated Amount
of their Series B Preferred Stock plus any Accrued Dividends.
"Measurement Date" means, for purposes of Section 8(b)(ii), (i) in the
case of an offering of rights, warrants or options to all or substantially all
of the holders of the Common Stock or any other issuance contemplated by such
Section where a record date is fixed for the determination of stockholders
entitled to participate in such issuance, such record date and (ii) in all other
cases, the Business Day immediately preceding the date of issuance of shares of
Common Stock (or options, rights, warrants or other securities convertible into
or exchangeable for shares of Common Stock) contemplated by such Section.
"Parity Stock" means any class of Capital Stock of the Corporation or
series of preferred stock of the Corporation hereafter created the terms of
which expressly provide that such class or series will rank on a parity with the
Series B Preferred Stock as to dividend distributions, redemptions (other than
redemptions in connection with the Rights Offering) and distributions upon
liquidation, winding-up and dissolution, including the Series A Preferred Stock.
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"Person" means an individual, partnership, corporation, limited
liability company or partnership, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof, or other
entity of any kind.
"PIK Percentage" means, as to any date, the amount determined by
subtracting the Cash Percentage with respect to such date from 2.4375%.
"Preferred Stock" means the preferred stock, par value $0.01 per share,
of the Corporation.
"Purchase Agreement" means the Securities Purchase Agreement, dated as
of February 18, 1999, by and among the Corporation, Patriot, Wyndham
International Operating Partnership, L.P. and Patriot American Hospitality
Partnership, L.P. and each of the Investors party thereto.
"Rights Offering" has the meaning set forth in the Purchase Agreement.
"Senior Stock" means each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
that has been approved by the holders in accordance with Section 3(b) hereof and
the terms of which expressly provide that such class or series will rank senior
to the Series B Preferred Stock as to dividend distributions and distribu tions
upon liquidation, winding-up and dissolution of the Corporation.
"Series A Certificate of Designation" means the Certificate of
Designation of the Series A Preferred Sock filed with the Secretary of State of
the State of Delaware on the Issuance Date, as it may be amended from time to
time.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Corporation, the terms of which are set forth in the Series A
Certificate of Designation.
"Set Apart for Payment" means the Corporation shall have irrevocably
deposited with a bank or trust company doing business in the Borough of
Manhattan, the City of New York, and having a capital and surplus of at least
$1,000,000,000 in trust for the exclusive benefit of the holders of shares of
Series B Preferred Stock, funds sufficient to satisfy the Corporation's payment
obligation.
"Stated Amount" means $100 per share.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
"Surviving Person" means the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the
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properties and assets of the Corporation, or the Person consolidating with or
merging into the Corporation in a merger, consolidation or other corporate
combination in which the Corporation is the continuing or surviving Person, but
in connection with which the Series B Preferred Stock or Common Stock of the
Corporation is exchanged, converted or reinstated into the securities of any
other Person or cash or any other property; provided, however, if such Surviving
Person is a direct or indirect Subsidiary of a Person, the parent entity also
shall be deemed to be a Surviving Person.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is quoted, listed or admitted to trading is
open for the transaction of business or, if the Common Stock is not quoted,
listed or admitted to trading on any national securities exchange (including the
Nasdaq Stock Market), any day other than a Saturday, Sunday, or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
"Trading Price" per share of Common Stock on any date shall be the last
sales price for the Common Stock reported on the Nasdaq Stock Market (or if the
Common Stock is not then quoted thereon, then for the principal national
securities exchange on which the Common Stock is listed or admitted to trading)
or, if the Common Stock is not quoted on the Nasdaq Stock Market and is not
listed or admitted to trading on any national securities exchange, in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Corporation and reasonably acceptable
to the Requisite Holders.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series B Convertible Preferred Stock to be duly executed by its
President and attested to by its Secretary and has caused its corporate seal to
be affixed hereto, this ____ day of __________, 1999.
WYNDHAM INTERNATIONAL, INC.
By:
------------------------------------
President
ATTEST:
By:
----------------------------
Secretary
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Exhibit 99.7
MEDIA INQUIRIES: ANALYST INQUIRIES:
Suzanne Cottraux Paul Keung
V.P. of Corp. Comm., Public Affairs V.P. of Finance, Investor Relations
214/863-1258 214/863-1265
PATRIOT AMERICAN SIGNS DEFINITIVE AGREEMENT
WITH INVESTOR GROUP FOR $1 BILLION EQUITY INFUSION
WILL REDUCE BANK DEBT AND SETTLE FORWARD EQUITY CONTRACTS
CARREKER REPLACES NUSSBAUM AS CEO; NEW BOARD IDENTIFIED
WILL CONVERT FROM REIT TO C CORPORATION NAMED
WYNDHAM INTERNATIONAL; WILL FOCUS ON CORE BRANDS
----------------------------------------------------------------------
DALLAS, TX, MARCH 1, 1999 -- Patriot American Hospitality, Inc.
(NYSE:PAH), whose shares are paired and trade with those of its operating
company, Wyndham International, Inc., today announced a comprehensive
restructuring plan which will strengthen the Company's financial position,
streamline its corporate structure and sharpen its business focus.
Patriot said it has signed a definitive agreement with an investor
group providing for an equity investment of $1 billion. Under the terms of the
agreement, the investor group will purchase $1 billion of 9.75% convertible
preferred stock, callable after six years, with an initial conversion price of
$8.59 per share (previously announced $8.75 per share as adjusted for Patriot's
fourth quarter stock dividend). The Company will have the ability to conduct a
rights offering in which common shareholders can purchase up to $300 million of
convertible preferred stock with the same economic terms, which would reduce the
investor group's investment to $700 million. The investor group includes
affiliates of Thomas H. Lee Company; Apollo Real Estate Advisors, L.P.; Apollo
Management, L.P.; Beacon Capital Partners, Inc.; and Rosen Consulting Group. The
investor group will initially own an approximate 29% interest in the Company,
assuming full subscription to the rights offering by non-investor group
shareholders.
The Company will use the $1 billion in proceeds to reduce its bank debt
and settle its forward equity obligations. In addition, Patriot said it has
definitive financing commitments for $2.45 billion, consisting of $1.8 billion
of senior bank facilities from Chase Manhattan Bank and $650 million of
five-year senior secured loans from Chase Manhattan Bank and The Bear Stearns
Companies Inc. The proceeds from these commitments will be used to refinance the
balance of the Company's bank debt and provide additional revolver capacity.
"This equity infusion will enable the Company to significantly
strengthen its balance sheet, reducing leverage and providing the resources it
needs to execute a focused growth strategy building on
<PAGE>
its core businesses," said Milton Fine, a member of the Coordinating Committee
of the Patriot and Wyndham Boards, which negotiated the equity infusion.
"Despite recent balance sheet issues, operating performance has remained solid.
The actions we are announcing today will restore financial and operating
flexibility, while providing an excellent platform to further strengthen
Wyndham's competitive position."
MANAGEMENT AND BOARD CHANGES
James D. Carreker, 51, Chairman and Chief Executive Officer of Wyndham
International, has been named to the additional position of CEO of Patriot
American, effective immediately. Paul A. Nussbaum, 51, has resigned his position
as Chairman and CEO of Patriot American. He has been named Chairman Emeritus and
will continue as a director.
"Jim Carreker is a superb hotel executive whose organizational
leadership makes him the right CEO for the Company in the next phase of its
development," said Fine. "During a turbulent time, he built a strong operating
team and maintained its focus on delivering results. At the same time, we
appreciate the entrepreneurial vision of Paul Nussbaum and the contribution he
has made to Patriot American."
Carreker, who joined Wyndham Hotels & Resorts in 1988 as President, led
Wyndham through its initial public offering in 1996 and its merger with Patriot
American in January 1998. In 1994-5, he also served as President of The Trammell
Crow Company. Earlier in his career, Carreker was President of the Burdines
division of Federated Department Stores and Senior Vice President and Chief
Financial Officer of Sanger Harris.
Upon consummation of the investment, the new Board of Directors will
consist of 8 representatives from the current Patriot/Wyndham Boards, 8
representatives from the investor group, and three additional directors to be
mutually agreed-upon. Currently identified as directors are:
<TABLE>
<CAPTION>
Company Investor Group
<S> <C>
Karim Alibhai Thomas H. Lee
Leonard Boxer Alan Leventhal
James D. Carreker William Mack
Milton Fine Lee Niebart
Susan T. Groenteman Kenneth Rosen
Paul A. Nussbaum Marc Rowan
Rolf Ruhfus Scott Schoen
Sherwood Weiser Scott Sperling
</TABLE>
CONVERSION TO C CORPORATION AND NAME CHANGE
The Boards of Patriot American and Wyndham have unanimously approved
the combination of the two companies into a single entity and conversion from a
paired-share real estate investment trust (REIT) structure to a C Corporation.
As a result, Patriot American Hospitality, Inc., a REIT, will be
<PAGE>
merged into and become a subsidiary of Wyndham, a C Corporation, and the
combined company will be called Wyndham International, Inc. Carreker will be
President and CEO of this unified entity. "The Boards have carefully studied
conversion to a C Corporation in light of current circumstances. While a REIT
structure has certain advantages, the Boards determined that a traditional
corporate structure will give us added flexibility to take advantage of
strategic opportunities that facilitate focused long-term growth, including
greater reinvestment in our assets and brands," Fine said.
MORE FOCUSED BUSINESS PLAN
The Boards said they have endorsed a business plan designed to maximize
the Company's potential by focusing on selective growth of its core brands,
capital investment in existing hotels, and the integration and streamlining of
its organization. The Company's core brands are Wyndham and Grand Bay. Wyndham
is a multi-product brand consisting of hotels, resorts, Wyndham Gardens and
Summerfield Suites, its extended-stay all-suite product.
Carreker said, "With our financial situation stabilized, our 1999
mission is to simplify, streamline and intensify our core businesses. Wyndham
and Grand Bay are both outstanding brands with exciting growth potential. We
have all the necessary tools - superior operating management, assets and brands
- - to successfully execute a focused growth strategy that will create a top-tier
lodging company. Our longer-term priorities are to maximize the value of our
real estate portfolio, build brand equity, achieve economies of scale, and
realize synergies as a fully integrated organization." Scott A. Schoen and Scott
M. Sperling, Managing Directors of the Thomas H. Lee Company, commented, "We are
enthusiastic about the opportunity to invest with Jim Carreker and his
management team in the growth of Wyndham International. We believe that with our
equity infusion, and with a revised capital and corporate structure that
provides substantial liquidity and operating flexibility, Wyndham will have a
platform for growth in its hotels, resorts, and luxury properties, and
management will have the opportunity to execute its strategic plan."
William Mack, President of Apollo Real Estate Advisors, L.P., said, "We
share management's and the boards' vision of the new Wyndham International. We
believe Wyndham and Grand Bay will become first-tier lodging brands. Our equity
investment will stabilize the Company and provide funds for capital investment
and selective growth."
CONDITIONS
The equity infusion and C Corp. conversion are subject to shareholder
approval and both are expected to be completed by June 30, 1999. The equity
infusion is also subject to antitrust clearance and certain other conditions and
consents.
ABOUT PATRIOT AMERICAN HOSPITALITY, INC. AND WYNDHAM INTERNATIONAL, INC.
Patriot American Hospitality, Inc. ranks among the nation's largest
hotel companies, with its portfolio of 472 owned, managed, leased or franchised
hotels and resorts with a total of more than 100,000 rooms. Its paired operating
company, Wyndham International, Inc., comprised of the Grand Bay Hotels &
Resorts Division, the Wyndham Hotel Group, the All-Suites Division and PAH
<PAGE>
Management Services, leases, manages and franchises primarily upscale and luxury
hotel and resort properties represented by its proprietary brands and provides
management services for third-party owned hotels and resorts.
This press release contains forward-looking statements within the
meaning of Sections 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors that might cause such a difference include competition for guests from
other hotels, dependence upon business and commercial travelers and tourism, the
seasonality of the hotel industry, and the availability of equity or debt
financing at terms and conditions favorable to the Companies.
# # #
<PAGE>
Exhibit 99.8
TRANSACTION RATIONALE
- --------------------------------------------------------------------------------
THE INVESTOR GROUP PROPOSAL PROVED SUPERIOR IN FOUR KEY AREAS: LIQUIDITY,
LEVERAGE, MANAGEMENT STRUCTURE, AND GROWTH OPPORTUNITIES
Liquidity (Issue: Threat of dilutive FET unwind; immediate debt maturities)
- - Investment provides a cash infusion to retire forward equity transactions
(FETs) and meet debt obligations (and avoids costs associated with bank
loan extension and bridge facilities)
Leverage (Issue: Leverage had crept above industry norms)
- - Investment strengthens balance sheet by decreasing leverage and solving
liquidity constraints
- Debt / 1998 Pro-forma EBITDA reduced from 5.95x to 5.25x
- - Investment has facilitated the arrangement of new credit facilities with
longer dated maturities
- --------------------------------------------------------------------------------
0
<PAGE>
TRANSACTION RATIONALE
- --------------------------------------------------------------------------------
Management Structure (Issue: Financial instability creates employee instability)
- - The Investment helps the Company to retain and attract key executives
- promoting continued operating strength
- - Investor group brings a team of experienced real estate and lodging
industry players
- focused on integrating and streamlining the organization to promote
greater efficiency
- promoting the pursuance of future growth strategies
Targeted Growth Opportunities (Issue: Daily business decisions interrupted by
liquidity constraints)
- - Significant availability under credit facility provides capacity for
strategic investment opportunities
- - Allows the Company to maximize the value of its asset base, by taking a
strategic, long-term approach to creating value
- --------------------------------------------------------------------------------
1
<PAGE>
$1 Billion Vote of Confidence
- --------------------------------------------------------------------------------
After conducting extensive real estate and corporate due diligence, the Investor
Group has confirmed its intention to invest, endorsing the Company's multi-tier,
multi-product, multi-brand strategy
Diligence included:
- - site visits to 70 largest hotels
- - engineering and environmental review of top 100 hotels
- - review of financial statements, MIS, central reservation system, etc.
Conducted by:
- - over 150 professionals from the Investor Group, PriceWaterhouseCoopers, IV
Engineering/Environmental, and Skadden, Arps
Conclusion: Industry-savvy, "smart-money" investors have committed to a
long-term investment and will work to assist the Company achieve its strategic
objectives
- --------------------------------------------------------------------------------
2
<PAGE>
TRANSACTION SUMMARY
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
Form of Investment - Convertible Preferred Stock
Amount - Up to $1.0 Billion
Conversion Price - $8.75; Automatic Reduction to $8.59 due to dilutive 4Q
stock dividend
Form of Investment - 30%(going-in) - 36% (with PIK) after 6 years with
$300mm rights offering; 41% (going-in) - 52% (with PIK)
after years 6 with $1 billion investment
Dividend - 9.75%
Payment of Dividends - 70% PIK, 30% cash years 1 - 6; quarterly payments and
compounding
Optional Redemption - Up to $300mm at 102% within 170 days after initial
closing date; balance after 6 years at 101%
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
TRANSACTION SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investors - Affiliates of:
Thomas H. Lee Company;
Apollo Real Estate Advisors, L.P.;
Apollo Management, L.P.;
Beacon Capital Partners, Inc.;
and Rosen Consulting Group
Board Representation - 8 representatives from the current Patriot/Wyndham Boards,
8 representatives from the investor group, and
3 additional directors to be mutually agreed-upon
- Investors' right to Directors steps down on a
straight-line basis once they have sold 50% of their
shares
- The Board of Directors will have three staggered
classes until the 2002 annual meeting
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
TRANSACTION SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Board Representation Company Investor
(cont.) ------- --------
<S> <C> <C>
Karim Alibhai Thomas H. Lee
Leonard Boxer Alan Leventhal
James Carreker William Mack
Susan Groenteman Lee Neibart
Milton Fine Kenneth Rosen
Paul Nussbaum Marc Rowan
Rolf Ruhfus Scott Schoen
Sherwood Weiser Scott Sperling
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
TRANSACTION SUMMARY
- --------------------------------------------------------------------------------
Rights Offering - The Rights Offering Preferred would have the following
features:
- Economics almost identical to the Investors'
Preferred Stock
- Listed; detachable; non-voting
- Decision to execute the Rights Offering to be made by
non-investor Directors
- Note that the Investors will have the right to
participate in the Rights Offering by purchasing
rights
- Company can reduce investment through Rights Offering
of up to $300 million to existing shareholders within
170 days after the closing of the transaction
- --------------------------------------------------------------------------------
6
<PAGE>
FINANCING STRATEGY
The Company will achieve a long-term capital-structure solution by lengthening
the maturity profile of its debt and redeeming the forward equity transactions
(FETs)
- - Less than 15% of the Company's debt will be due prior to 2003
- - While the Company may choose to access the bond market, it is not required
to do so given the flexible financing that has been arranged
- - Company resisted alternatives that were contingent upon capital market
executions to create a permanent capital structure solution
- --------------------------------------------------------------------------------
7
<PAGE>
NEW CREDIT FACILITIES
<TABLE>
<S> <C> <C>
Facility: - $ 800 million Revolving Credit ("R/C")
$ 1 billion Tranche B Term Loan ("T/L B")
Arranger: - Chase Securities
Maturity - R/C : 5 years
T/L B : 7 years
Amortization: - R/C : none
T/L B : $ 10 million annually years 2 - 6
- -------------------------------------------------------------------------------------
Facility: - $ 650 Increasing Rate Loan ("IRL")
Lead Arranger: - Chase Securities
Co-Arranger: - Bear Stearns
Maturity: - 5 years
Amortization: - none
Purpose: - To be replaced / repaid by bonds either simultaneous or
post-closing, at the Company's option (without penalty)
- -------------------------------------------------------------------------------------
Covenants: - 6.5x Debt/EBITDA until 12/31/00
- 2.0x EBITDA/Interest Expense until 12/31/00
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
SOURCES & USES
<TABLE>
<CAPTION>
USES OF FUNDS SOURCES OF FUNDS
<S> <C> <C> <C>
Settle Forward Equity $ 330.0 New Revolver * $ 485.9
Revolver $ 876.0 New Term Loan B $ 1000.0
Term Loans $ 1,848.8 IRL Facility $ 650.0
Repayment Debt due 1999 $ 313.7 New Mortgage Debt $ 325.0
Redemption of Series B Preferred Shares $ 16.0 Convertible Preferred $ 700.0
Banking and Professional Fees $ 166.4 Rights Offering $ 300.0
Corporate Working Capital $ 100.0 Asset Sale Proceeds $ 140.0
Cash $ 50.0
Total $ 3,650.9 Total $ 3,650.9
</TABLE>
- ----------
* $800 million R/C facility
- --------------------------------------------------------------------------------
9
<PAGE>
DEBT MATURITIES - POST-CREDIT AMENDMENT
- --------------------------------------------------------------------------------
[CHART]
Figures for Post-Credit Amendment chart:
<TABLE>
<S> <C> <C> <C> <C>
1999 2000 2001 2002 2003+
459 11 193 31 504
0 900 0 0 649
0 350 0 0 0
0 400
450
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
DEBT MATURITIES - POST-TRANSACTION
[CHART]
Figures for Debt-Maturies-Post-transaction chart:
<TABLE>
<S> <C> <C> <C> <C>
1999 2000 2001 2002 2003+
145 11 193 31 504
0 0 0 0 336.3
0 0 0 0 1000
1000
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
CAPITAL STRUCTURE & CREDIT STATISTICS
<TABLE>
<CAPTION>
Pro-forma Capitalization at Closing
- -----------------------------------
<S> <C>
Revolving Credit Facility $ 481
Term Loan B $ 1,000
IRL $ 650
Other Debt $ 1,215
- ---------------------------------------------- -------
Total Debt $ 3,346
Convertible Preferred $ 700
Rights Offering $ 300
Current Capitalization (167mm shares x $5.40)1 $ 908
Total Equity $ 1,906
- ---------------------------------------------- -------
Total Capitalization $ 5,252
Debt / 1998 Pro-forma EBITDA 5.25x
EBITDA / Interest Expense (1998 Pro-forma) 2.30x
</TABLE>
(1) Share price as of 2/26/99
- --------------------------------------------------------------------------------
12
<PAGE>
OVERVIEW OF RESTRUCTURING PLAN
- - Patriot American Hospitality, Inc. a real estate investment trust (REIT),
will merge into and become a subsidiary of Wyndham, a C-Corp
- - The final result will consist of a single entity, Wyndham International,
Inc.
- - The new C-Corp structure promotes:
- simpler structure
- Capital market perception
- Single, unified credit
- Easier structure for future sales and acquisitions
- No REIT constraints
- - Retains cash for growth
- - Current OP holders have opportunity to receive liquid security on a tax
deferred basis
- --------------------------------------------------------------------------------
13
<PAGE>
BUSINESS STRATEGY
- - Focus on Upscale and Luxury hotel sectors
- High barriers to entry due to locational and capital constraints
- Past "Best-of-class" acquisitions of operating teams provide
competitive advantage
- Recent capital markets conservatism to maintain demand/supply
equilibrium
- - Leveraging brand equity:
- Occupancy gap opportunity
- Greater share of customer spending
- Marketing efficiencies, regional and national
- Central reservations and national sales penetration
- Management and franchise fee streams
- - Benefits of integrated operations:
- Collapsing two corporate forms into a single, streamlined C-Corp
organization
- - Target of $25 million in total annual expense reductions through 2002
- --------------------------------------------------------------------------------
14
<PAGE>
Business Strategy
- - Harvesting the benefits from $4.5 billion in 1998 acquisitions and nine
operating companies
- Integrating "Best-of-Class" operating practices for training and
retention
- Centralization of support functions to improve costs and controls
- Maximize operating margins through economies of scale in purchasing
- - Mining existing portfolio for conversion and renovation opportunities
- Completed 38 Wyndham conversions in 1998 and an additional 10 in 1999
- Over $175 million invested in 1998 and an estimated $130 million to be
invested in 1999
- Capital deployment focused on brand consistency and product quality
- Cited as the fastest growing brand in 1998 by Hotel Business Magazine
- - Non-core, non-strategic asset divestitures and redeployment of capital into
the brands
- Fifteen hotels under contract or negotiation for approximately $232
million
- Spin-off of Interstate Hotel Management, Inc.
- Sale of Bay Meadows racetrack for $10 million
- --------------------------------------------------------------------------------
15
<PAGE>
FOCUS ON PROPRIETARY BRANDS
EBITDA REPRESENTATION OF PROPRIETARY BRANDS VS. NON-PROPRIETARY BRANDS
[Pie Chart]
Pre-Interstate Spin-off [Pie Chart figures]:
Proprietary 55%
Non-Proprietary 45%
[Pie Chart]
Post-Interstate Spin-off (1) [Pie Chart Figures]:
Marriott Conversions to Wyndham 8%
Proprietary 57%
Non-Proprietary 35%
(1) Also reflects the anticipated sales of 15 hotels currently under contract or
negotiation
- --------------------------------------------------------------------------------
16
<PAGE>
Landscape for Multi-Brand Hotel Companies
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Wyndham Int'l Marriott Int'l Starwood Hilton Promus
<S> <C> <C> <C> <C> <C>
Luxury Grand Bay Ritz Carlton St. Regis
Upscale Wyndham Hotels Marriott Hotels Sheraton Hotels Hilton Hotels
Wyndham Resorts Marriott Resorts Sheraton Resorts Hilton Resorts
Wyndham Grand Heritage JW Marriott / Marquis Westin Hotels Hilton Inns
Wyndham Garden Hotels
Malmaison Hotels Renaissance Hotels W Hotels Doubletree
All-Suite Summerfield by Wyndham Residence Inns Sheraton Suites Hilton Suites Embassy Suites
Sierra Suites TownePlace Suites Doubletree Guest Suites
Marriott Suites Homewood Suites
Midscale Clubhouse Inns Courtyard by Marriott Four Points Hilton Gardens ClubHotels
Sheraton Inns Hampton Inn
Economy Fairfield Inns by Marriott
</TABLE>
17
- --------------------------------------------------------------------------------
<PAGE>
GROWTH OF THE WYNDHAM BRAND
- --------------------------------------------------------------------------------
Over the last five years the number of Wyndham hotels has increased more than
threefold
[Bar Chart]
[Figure for Wyndham Growth Bar chart.]
<TABLE>
<CAPTION>
1990 1992 1994 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
34 40 49 71 96 120
0 0 0 0
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
BRAND POTENTIAL
COMPANY'S BRANDS HAVE BOTH MEANINGFUL DISTRIBUTION AND UNIT GROWTH POTENTIAL
[Bar Chart]
[Figures for Brand Potential Bar Chart:]
Number of Hotels in FYE 1998
Wyndham-120, Hilton-238, Marriott-229, Sheraton-176, Hyatt-108
Summerfield by Wyndham-47, Residence Inn-273, Homewood Suites-52, Hawthorn
Suites-36
Grand Bay-6, Four Seasons-24, Ritz Carlton-22, Peninsula-2
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
FOURTH QUARTER & FULL YEAR HIGHLIGHTS
- --------------------------------------------------------------------------------
- - STRONG REVENUE PERFORMANCE
- REVPAR AT THE OWNED ASSETS INCREASED 4.3% FOR THE QUARTER AND 8.1% FOR
THE YEAR
- REVPAR AT THE WYNDHAM BRANDED COMPARABLE HOTELS INCREASED 8.1% FOR THE
QUARTER AND 9.2% FOR THE YEAR
- - IMPROVED OPERATING MARGINS
- GOP MARGIN AT OWNED ASSETS UP TO 35.4% FROM 33.3%
- GOP MARGIN AT WYNDHAM COMPARABLE HOTELS INCREASED TO 34.7% FROM 31.3%
- ANNUAL FLOW-THROUGH INCREASED BY MORE THAN TWO TIMES THE PACE OF
REVPAR
- - CONTINUED REINVESTMENT IN BRANDS AND ASSETS
- OVER $175 MILLION INVESTED IN CAPITAL EXPENDITURES
- 38 HOTELS CONVERTED TO PROPRIETARY BRANDS
- - ASSET DIVESTITURE PROGRAM INITIATED
- SALE OF 8 HOTELS IN THE FOURTH QUARTER FOR $45 MILLION
- NEGOTIATED SALES OF 15 HOTELS IN 1999 FOR $232 MILLION
- --------------------------------------------------------------------------------
20
<PAGE>
SUMMARY
- --------------------------------------------------------------------------------
THE ANNOUNCED EQUITY INVESTMENT AND RESTRUCTURING PLAN STRENGTHENED THE
COMPANY'S FINANCIAL POSITION, STREAMLINED ITS CORPORATE STRUCTURE AND SHARPENED
ITS FOCUS:
- - INDUSTRY-SAVVY, "SMART-MONEY" INVESTORS INFUSE UP TO $1 BILLION, WITH THE
COMPANY RETAINING THE OPTION TO PURSUE A RIGHTS OFFERING UP TO $300
MILLION TO REDUCE THE INVESTMENT
- - $ 2.45 BILLION OF NEW FINANCING IS COMMITTED
- - CONVERSION TO A C-CORPORATION
- - FORWARD EQUITY TRANSACTIONS ARE REPAID
- - MULTI-TIER, MULTI-PRODUCT AND MULTI-BRAND STRATEGY
- - WYNDHAM AND GRAND BAY TO BECOME FIRST-TIER LODGING BRAND
21
- --------------------------------------------------------------------------------
